Case No: 2008 Folio 958
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MRS JUSTICE GLOSTER, DBE
Between :
A/S DAN BUNKERING LIMITED | Claimant |
- and - | |
(1) F G HAWKES (WESTERN) LIMITED | Defendants |
(2) ALANI SHIPPING CO (UK) LIMITED | |
(3) DAVID JOHN ORRELLS |
John Russell Esq (instructed by Clyde & Co LLP) for the Claimant
Neil Hart Esq (instructed by Morgan Cole) for the Defendants
Hearing dates: 15th – 17th July 2009; 23rd July 2009;
Further written submissions 29th July 2009
Judgment
Mrs Justice Gloster, DBE:
Introduction
In this action the claimant, A/S Dan Bunkering Ltd (“Dan”), a company incorporated under the laws of Denmark, which at all material times carried on the business of suppliers of marine bunkers, claims the principal sum of US $458,630.87, together with interest, in respect of bunkers delivered to the merchant vessel “Hohefels” on 6 April 2008, at the port of Nantong, and delivered to the same vessel on 19 April 2008 at the port of Kelang.
The claim is brought against the first defendant, F. G. Hawkes (Western) Limited (“FGH”), purportedly pursuant to the terms of an alleged guarantee (“the Guarantee”), alleged by Dan to have been signed on behalf of FGH on 6 December 2006. FGH is a plywood merchant, and one of the largest importers of plywood into the UK and Ireland. It is a privately owned company, in respect of which, at all material times, the founder of its business, Frederick Geraint Hawkes (“Mr. Hawkes”), was the principal director and owner of 51% of its issued share capital, and the only other director was his mother, Mrs J Hawkes (“Mrs Hawkes”), who owned the remaining 49% of its share capital. At the relevant time FGH had its registered office and head office at Lock Head, King’s Dock, Swansea, where it also had a stockholding facility. It also had an office and stockholding facility in Londonderry; an office and warehouse in Glasgow; sales offices in Bristol and Leeds; and offices in Penang and Shanghai, from where it purchased plywood. According to its audited annual accounts for the year ended 30 April 2008, it had a turnover of approximately £40 million for that year.
The second defendant, Alani Shipping Co (UK) Ltd (“Alani UK”), was a shipping agent, apparently set up by the third defendant, David Orrells (“Mr. Orrells”), and in relation to which Mr. Orrells was shown as the principal shareholder and director, in the information registered at the UK Companies Registry. Mr. Orrells was also apparently registered as the principal shareholder and director of Alani Shipping Co Ltd (“Alani Cyprus”), a company incorporated under the laws of Cyprus, which (Footnote: 1) had chartered the “Hohefels” pursuant to a Time Charter dated 20 March 2008, at the time Dan delivered the bunkers to the vessel, which are the subject matter of the claim. At all material times Alani UK acted as UK agent for Alani Cyprus.
Pursuant to order confirmations dated 27 March, 3 April and 9 April 2008, contained in e-mails passing between Dan and Alani UK, Dan agreed to supply the bunkers to the “Hohefels” for the account of:
“M/V Hohefels and/or master and/or owners and/or charterers and/or managers and/or operators and/or Alani Shipping Co Ltd”.
The invoices were sent by Dan to Alani Cyprus in the respective sums of $170,475 (in respect of the bunkers stemmed on 6 April 2008) and $405,155.87 (in respect of the bunkers stemmed on 19 April 2008). On 9 July 2008, Alani UK paid the sum of $125,000 due in respect of the first invoice, leaving a balance of $450,630.87 unpaid in respect of both invoices. Neither Alani UK nor Alani Cyprus paid the balance, both companies having apparently got into serious financial difficulties in 2008. Dan demanded payment from FGH pursuant to the terms of the Guarantee, but FGH refused to pay, on the grounds that it had never signed the Guarantee.
Although in the Particulars of Claim, Dan contended that FGH was the principal under the contracts for the sale of bunkers, at trial its claim against FGH was limited to the alternative claim pursuant to the Guarantee. In the alternative, if, contrary to its primary case, the Guarantee was a forgery, Dan claimed damages against Alani UK and Mr. Orrells for breach of warranty of authority, fraudulent or negligent misrepresentation, and deceit. Neither Alani UK nor Mr. Orrells acknowledged service of the claim, and, on 6 March 2009 they were debarred from defending Dan’s claim. As the claim against them was in the alternative to Dan’s claim against FGH, to date no judgment has been entered against them.
Background chronology
Until 2006, historically FGH had booked cargo space on vessels chartered in by carriers. Bookings were made by Mr. Orrells, through his firm David Orrells &Co, acting as a de facto chartering manager for FGH. In 2006 FGH changed the basis of its operations to time chartering on trip time charter terms. There were four charter parties concluded in 2006 where FGH was named as the time charterer. It was FGH’s case that, although FGH was the nominal time charterer for these vessels, in practice, the vessels were managed, and freights collected, by its brokers, either Mr. Orrells’ firm and/or Aquila Maritime Transport GmbH (“Aquila”), through a Mr. Andre Marcano (“Mr. Marcano”), a broker, who was subsequently involved with Mr. Orrells in Alani Cyprus and Alani UK. Mr. Marcano had his own ship-broking firm, company or trading name, GoodFight International Ltd (“GoodFight”), which was subsequently renamed Alani Shipping GmbH (“Alani GmbH”). FGH also contended that none of those entities remitted any of the freights collected to FGH, because FGH was the time charterer only in name.
Dan supplied bunkers to the four vessels under charter to FGH and addressed its invoices variously to “FGH and/or Aquila” or to Aquila or GoodFight “c/o FGH”.
Thereafter, from December 2006, vessels were chartered in the name of Alani Cyprus. Bunkers were supplied by Dan to the various vessels, and invoiced to Alani Cyprus, or “Alani Cyprus/Alani GmbH”. There was a dispute between the parties as to the extent of FGH’s involvement in the chartering business carried out by Alani Cyprus. In summary:
Dan contended that Alani Cyprus was a chartering vehicle for FGH, and that, although third party cargoes were carried on some of the vessels, that was simply as a means of reducing the net shipping cost to FGH.
FGH contended that, in effect there was an arm’s length relationship between FGH and Alani Cyprus/Alani UK/Mr. Orrells. Orrells and FGH booked space with Alani Cyprus, through Orrells/Alani UK in the same way that it would have done with any other shipping company.
The court was supplied with a schedule (prepared by counsel for FGH, which, while not formally agreed, was not challenged by counsel for the claimant, listing all of the vessels relevant to the case, which party chartered them, the charterparties, and the details of the bunkers supplied by Dan, including the party to which the relevant invoice was addressed and the party from which payment was received. I attach that schedule as appendix 1 to this judgment.
The terms of most (although not all) of the time charters in the name of Alani Cyprus, as charterer, purported to provide that its performance was fully guaranteed by FGH. In relation to three time charters, a guarantee was actually provided by FGH, signed on each occasion, as was accepted on both sides, by Mr. Hawkes personally, on behalf of FGH. Thus, on 14 November 2006, in relation to the time charter of the M/V “Morgenstond”, Mr. Hawkes signed his name “FG Hawkes” in manuscript, under the typed words “For and on behalf of F. G. Hawkes (Western) Limited”, and under the manuscript there appeared the typed words “F. G. Hawkes”. The wording is in similar, although not identical, terms and format to the Guarantee, which strongly suggests that either the draftsman of both documents was the same, or that the draftsman of the latter used the former document as a model. Similarly, in July 2008, in relation to the vessels “Baltic Strait” and “Manfred”, FGH provided performance guarantees of Alani Cyprus’ obligations as charterer. These guarantees were signed by Mr. Hawkes.
On 26 September 2006, Mr. Marcano, on behalf of GoodFight, and from a GoodFight email address, sent an email to Mr. Kasper Fulton, the senior bunker trader at Dan (“Mr. Fulton”), stating as follows:
“Please note that as from October, all F G Hawkes Biz will be dealt under the name of Alani Shipping Co Ltd in Cyprus. F G Hawkes will guarantee all orders and therefore, please let us know what kind of documents you will need (from FG hawkes) to cover such operations.
Note that although FG hawkes will guarantee the invoices, it should only be addressed to Alani Shipping Co Ltd.”
Dan does not appear to have responded to this request and no guarantee had in fact been provided by FGH by early December 2006. On 4 December 2006, Mr. Fulton e-mailed Mr. Marcano at an Alani Shipping email address, stating: “by the way we never received the requested letter from FG Hawkes?” On the same day, Mr. Marcano replied, under the name “Alani Shipping GmbH”, saying: “Did u send us a draft of the letter?”, to which Mr. Fulton replied
“It would satisfy management here if FG Hawkes could sent [sic] short letter to us confirming they are liable for payments to Dan-Bunkering from Alani Shipping Co Ltd “
In response, just over a week later, on 12 December 2006, Mr. Orrells, also from the Alani Shipping email address, but this time under the name “Alani Shipping UK”, sent a scanned and purportedly signed copy of the Guarantee to Mr. Fulton at Dan, apologising “for delay in supplying letter fro [sic] FGH as requested”. Mr. Marcano was also copied into this e-mail.
The Guarantee was in the following terms:
“In consideration that Alani Shipping Company Ltd, Limassol, Cyprus is our agents and representatives in what the maritime and transportation of our cargoes are concerned, we F G Hawkes (western) Ltd, guarantee their performance and we renouncing the benefit of the right to have the default of the principal debtor proved and all other privileges accordingly to the prevailing law, hereby unconditionally and irrevocably guarantee as co-debtor for the due performance of the bunkers orders by Alani Shipping Company Ltd.
In case Messrs. Alani Shipping Co Ltd will not perform and observe their obligation under their contract (s) with A/S Dan Bunkering, we, F G Hawkes (Western) Ltd, will effect the performance of the contract as guaranteed as if it would be in our name and any due payment will be made on your first written demand whilst all other claims will be settled after proof of default of the principal debtor on your first written demand.
This guarantee and all rights, obligations and liabilities arising hereunder shall be construed according to English law. Any dispute shall be referred to the Arbitration in London according to the arbitration clause of the governing contract.
This guarantee shall remain valid under our written confirmation otherwise.
For and on behalf of
F. G. Hawkes (Western) Limited
[in manuscript] F G Hawkes”
The manuscript signature, “F G Hawkes”, was in a distinctive hand, with the “H” of “Hawkes”, resembling an “A”. It was common ground by the end of the trial that the signature was not in Mr. Hawkes’ handwriting. As I have already stated, the typed wording and format were in similar terms to the guarantee given in respect of the Morgenstond.
When Dan obtained a search and seizure order against Mr. Orrells and Alani UK, the original hardcopy of the Guarantee itself was found at Mr. Orrells’ office, which were the offices of Alani UK.
After receiving the Guarantee, Dan supplied bunkers to numerous vessels chartered by Alani Cyprus. It was only in relation to the balance of its invoice in relation to the Hohefels that it did not receive payment.
Mr. Marcano left Alani UK/Alani Cyprus in June 2007.
The principal contentions of the parties
Mr. John Russell, counsel appearing on behalf of Dan, put its case in the following way:
The Guarantee was given by someone with actual authority so to do:
The signature on the Guarantee was probably made by someone employed or engaged by FGH in its Swansea office who had actual authority to, and regularly did, sign documents on behalf of Mr. Hawkes and his brother, Darren Hawkes, operations manager at FGH (“Mr. Darren Hawkes”). Such person had actual authority to sign the Guarantee.
Alternatively, the Guarantee was signed by
Mr. Orrells, or
by someone employed or engaged by Mr. Orrells in Maidstone, and authorised by him to sign the Guarantee.
Mr. Orrells had express actual, or implied actual, authority to sign the Guarantee (and, if the Guarantee was signed by an employee or agent, directed the employee or agent to do so on his behalf).
Alternatively Mr. Orrells had ostensible authority to sign the Guarantee, even if he did not have actual authority to do so; (and, if the Guarantee was signed by an employee or agent, directed the employee or agent to do so on his behalf).
Alternatively, in any event, even if Mr. Orrells did not have actual or ostensible authority to sign the Guarantee, Mr. Orrells had actual, implied or ostensible authority to represent to third parties such as Dan that a guarantee was valid, and, by forwarding the Guarantee as he did, he so represented. Dan relied on that representation. Accordingly FGH was now estopped from denying the validity of the Guarantee.
By the time of its closing submissions, Dan did not advance the case that the Guarantee was signed by Mr. Hawkes or by his brother, Mr. Darren Hawkes. Realistically, Dan accepted that the manuscript signature “F G Hawkes” on the Guarantee, was not the normal signature of either of them. Nor did it suggest that either Mr. Hawkes, or Mr. Darren Hawkes, had signed the Guarantee, and deliberately adopted a different signature. Nor did it advance the suggestion that Mr. Marcano had signed the Guarantee; this was not least because the distinctive “F G Hawkes” signature on the Guarantee also appeared on a series of other documents, one of which was a fixture note for the Manfred, signed on 30 June 2008, which was after Mr. Marcano had left Alani Cyprus/UK. Likewise it was not contended that Mr. Hawkes was the ultimate beneficial owner of the shares in Alani Cyprus.
Mr. Neil Hart, counsel appearing on behalf of FGH, in summary, put its case in the following way:
The Guarantee was not signed by anyone authorised on behalf of FGH.
There was no evidence to support Dan’s case that an unidentified worker at FGH signed the guarantee with actual authority.
The evidence did not support the allegation that Mr. Orrells had either express actual authority from FGH to sign the Guarantee or implied actual authority from FGH to do so; it therefore followed that nobody authorised by him could have had actual authority to do so. In particular, the fact that Mr. Orrells specifically asked Mr. Hawkes to sign the three guarantees of the time charters relating to the Morgenstond, Baltic Straight and Manfred.
There was no evidence to support Dan’s case that Mr. Orrells, or anyone authorised by him, had ostensible authority to sign the Guarantee.
If Mr. Orrells lacked ostensible authority to sign the Guarantee, Dan would have to present very cogent evidence that Mr. Orrells, or one of the agency companies with whom he was associated, had nevertheless been clothed with an additional, specific, ostensible authority to represent that the disputed guarantee had been validly signed. There was no such evidence.
The relevant legal principles
These were not really in dispute. Although, initially there was some debate as to whether, for the purposes of the Statue of Frauds, the Guarantee should be construed as merely a guarantee, or as a guarantee and an indemnity, it was accepted on both sides that the reality was that, since FGH’s liability, whether as a guarantor or as an indemnifier, depended upon whether the Guarantee had been signed by someone having its actual (whether express or implied) or ostensible authority, the issue as to whether it should be construed as an indemnity was irrelevant.
Thus, it was common ground that the principles in relation to actual authority were as stated by Diplock LJ (as he then was) in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, at pp.502-503, and approved by the House of Lords in Armagas Frost Ltd v Mundogas SA (The Ocean Frost) [1986] 1 AC 717:
“An ‘actual’ authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties. To this agreement the contractor is a stranger; he may be totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if the agent does enter into a contract pursuant to the ‘actual’ authority, it does create contractual rights and liabilities between the principal and the contractor.”
So far as ostensible authority is concerned, the relevant principles of law are set out in Bowstead on Agency,(18th ed., 2006) at pages 335-343. Again, the classic summary of the position is the statement of Diplock LJ in Freeman & Lockyer at p.503,
“An ‘apparent’ or ‘ostensible’ authority [...] is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.”
Thus here, the alleged third-party contractor, Dan, cannot rely upon “representations” which it had not heard about by the time it accepted the guarantee on 12 December 2006 (in the absence of any plea of a later ratification, which was not put forward here). The holding out by the principal must be to the particular individual who says he relied on it, or under such circumstances of publicity as to justify the inference that he knew of it and acted upon it: Bowstead paragraph 8-026. If an agent lacks actual authority to make representations about his own authority, he cannot have ostensible authority to do so: see in particular British Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd [1983] 2 LLR 9 (HL) and Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The Rafaella). [1985] 2 Lloyd’s Rep. 36 (CA).
In relation to the third way in which Dan put its case, counsel agreed that, even if an agent does not have actual or ostensible authority to give a guarantee, he may have authority (actual or ostensible) to represent that his principal has given a guarantee. In that event, such representation will be binding on the principal, whether or not the principal had in fact given the guarantee; see by way of analogy First Energy (UK) Ltd. v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194 (CA).
However, in circumstances where an alleged agent lacks actual or ostensible authority to sign a document, I accept Mr. Hart’s submissions that Dan would have to present very cogent evidence that Mr. Orrells, Mr. Marcano, or any of the companies on behalf of which they acted, had nevertheless been clothed with an additional, specific, ostensible authority to represent that the disputed guarantee had been validly signed; see The Ocean Frost (supra).
Summary of the position taken by the respective parties in evidence
On behalf of Dan, I heard oral evidence from Mr. Fulton. In addition to dealing with the history of bunkering transactions as between Dan and the various vessels, he gave evidence to the following effect:
He had had various conversations with Mr. Marcano in 2006 in which effectively Mr. Marcano stated that Alani Cyprus was being established as the new chartering arm of FGH and that all obligations of Alani Cyprus would be fully underwritten by FGH. He considered that Mr. Marcano was authorised to make comments to this effect on behalf of FGH. Mr. Marcano also told him that Mr. Orrells, as the chartering manager of FGH, was the appropriate person to provide a valid guarantee from FGH.
In August 2006 Dan performed various credit checks on FGH. It obtained a Lloyd’s MIU company report on FGH dated 24 August 2006. This stated inter-alia as follows:
“Directors:
Mr Frederick Geraint Hawkes – Managing Director.
Ms Janis [sic] Hawkes – Director & Company Secretary.
Managers
Mr David Orrells – Chartering Manager (David Orrells & Co).
…
Operations
…
In the past, FGH has voyage chartered tonnage to meet its import requirements, with vessels being loaded from Brazil, China, Malaysia, Europe, and the USA. However, in early-2006 a decision was made to move over to time-charter-trip charters with the company expanding the role of David Orrells in Maidenhead, to include the booking of additional 3rd-party freight to supplement plywood cargo imports. FGH generally lifts one vessel per month from China/Malaysia into the UK with discharge being handled at Londonderry in Northern Ireland, Swansea in Wales, Glasgow in Scotland, and in Liverpool for England. Discharges may also be arranged into the Thames estuary although we are yet to confirm this. So far it has taken three vessels on time-charter-trip terms, the Luxury SW (built 1999, 23,519 dwt), Ivory Star (built 1990, 26793 dwt) and Clipper Frontier (built 1996, 29,458 dwt). All three are understood to have been bunkered at Singapore and topped off at Gibraltar, although supply is also sought at other ports. It is currently negotiating another charter at this time. We are told that the flexibility it obtains from time-charter-trip arrangements have been very much welcomed by the business community and it is expected to grow its 3rd-party break-bulk freight activity in the next year.
Mr. David Orrells of David Orrells and Co, along with a Germany-based colleague is responsible for the chartering and freight booking functions. However, we are reliably informed that all fixtures and supplies are contracted in the name of FGH itself.”
(I comment, however, that there was no reference to Alani in the report and that as at its date no vessels had been chartered in Alani’s name).
As a result, Mr. Fulton believed that Alani Cyprus, working in association with Alani UK and Alani GmbH, was the chartering arm of FGH.
The first time that Dan was in correspondence with Mr. Orrells was upon receipt of the Guarantee by the latter’s e-mail dated 12 December 2006. Dan never received or asked for the original copy of the Guarantee. Mr. Fulton believed that the copy sent by e-mail was satisfactory and had no reason to believe that it was not genuine. Dan would not have continued to supply bunkers to Alani Cyprus on an ongoing basis without the Guarantee from FGH.
After Mr. Marcano left Alani Shipping in June 2007, Mr. Fulton dealt with Mr. Orrells in relation to bunkers supplied by Dan to Alani Cyprus.
After non-payment of the sums claimed under the Guarantee, he and/or a colleague, Mr. Claus Klausen had had a number of conversations with Mr. Marcano. He produced transcripts of tapes of four such conversations, although more took place. In such transcripts, Mr. Marcano stated that he had forwarded the wording of the proposed guarantee to Mr. Orrells, and that Mr. Orrells had e-mailed Mr. Marcano with the signed version. In such transcripts, Mr. Marcano further stated that on several occasions Mr. Hawkes would just tell Mr. Orrells or himself, over the telephone, to go ahead and sign documents such as an “LOI” (in context, likely to have been a letter of indemnity).
Subsequently, following on from 15 August 2008, Mr. Fulton stated that he had been “closely liaising” with Mr. Marcano in order to obtain a witness statement from the latter, since at that date Mr. Marcano had appeared prepared to provide such a statement. On 20 May 2009 Mr. Fulton sent Mr. Marcano a draft witness statement, prepared in conjunction with Clyde and Co (Dan’s solicitors), which Mr. Fulton said was based on his conversations with Mr. Marcano and accurately reflected the content of such conversations. The draft statement included the following passages:
“15. On 4th December 2006, whilst co-ordinating the bunker supplies for the ‘Morgenstond’, Mr. Fulton emailed me asking about the requested letter from Hawkes (Exhibit the December 06 email chain of emails that attached the guarantee of December 06).
16. In response to this request, I contacted Mr. Orrells about obtaining a guarantee from Hawkes. [ANDRE PLEASE CONFIRM – WE CAN DELETE THIS PARAGRAPH]
17. I exhibit at AM1 pp the email from Mr. Orrells to Mr. Fulton which attached the signed Dan-Bunkering guarantee.
18. This was normal procedure. Hawkes asked Mr. Orrells and myself to carry out the chartering activities of Hawkes and we did so on his behalf. We had no standing in the market and since Hawkes was an established trader we advised Mr Hawkes that he would need to guarantee our charters and purchases of bunkers. Mr Orrells was the main contact with Mr Hawkes but I spoke to Mr Hawkes quite regularly. Mr Hawkes made it clear that we should provide Hawkes’ guarantees for whatever contracts were necessary. We would regularly provide guarantees or letters of indemnity on behalf of Hawkes and with his authority. For example, [ANDRE – CAN YOU RECALL A GOOD EXAMPLE OF THIS? THE EXAMPLES WE HAVE ARE WHEN ANDRE SIGNED AS ALANI GMBH] Mr. Orrells would get various documents signed by Hawkes and there was an understanding at the time that Mr. Orrells or indeed myself could sign documents for and on behalf of Mr. Hawkes. I therefore did not think anything of the guarantee which had been sent by Mr. Orrells to Dan-Bunkering in December 2006.
19 [EXHIBIT VARIOUS DOCUMENT SIGNED BY ORRELLS AS HAWKES, FOR AND ON BEHALF OF HAWKES, IN HIS OWN NAME]
20. Regarding the guarantee provided to Dan-Bunkering by David Orrells in December 2006, it would seem that as the guarantee emanated from David Orrells’ email account, that Mr. Orrells either got Mr. Hawkes to sign the guarantee or that he signed the guarantee himself. There was nothing unusual about this. Mr. Orrells would regularly sign guarantees, charters or indemnities on Hawkes’ behalf. He confirmed to me that Mr. Hawkes had authorised him to do so.”
However, on the same date Mr. Fulton said that Mr. Marcano telephoned him and said that he would not be willing to sign the statement in its existing form. According to Mr. Fulton, Mr. Marcano said:
“I am afraid to give my own opinion on this issue as I do not know what will happen to me if I did so ... I cannot give my own opinions.”
According to Mr. Fulton, Mr. Marcano conveyed to him the impression that he was frightened of Mr. Hawkes. Subsequently he refused a request from Clydes to sign the statement, although at no time did he deny that the facts contained with the draft witness statement were correct. He was merely unwilling to put himself forward as a witness.
On 22 July 2008, Mr. Fulton wrote to Mr. Hawkes at FGH explaining that Alani Cyprus had failed to pay the invoice sum and that accordingly Dan was looking to FGH under the terms of the guarantee to pay the outstanding sums due. Mr. Fulton explained that:
“… we have been unable to get in contact with Mr Orrell for the past week and not getting any reply to e-mails either. “
Mr. Fulton subsequently spoke to Mr. Hawkes on the telephone on 30 July 2008. He stated that Mr. Hawkes did not seek to suggest in the course of that short conversation that there were any doubts regarding the authenticity of the Guarantee. Mr. Hawkes said that he would need to receive a copy of it to refresh his memory but would be open to assist Dan in the matter.
Mr. Fulton followed up this telephone conversation with an e-mail on the same date, which attached copies of the invoices. There was no suggestion in that e-mail that during the course of the telephone conversation Mr. Hawkes had denied the validity of the Guarantee. FGH did not reply to this e-mail.
Dan also produced a witness statement from a Mr. Olaf Pastoors, who worked with Mr. Orrells at Alani UK from 1 July 2007 to 15 September 2007. He said that:
“when I was interviewed at Stansted airport in June 2007 for the position at Alani UK, I asked Mr Orrells, who was interviewing me, about the financial security of Alani. Mr Orrells informed me that Alani was 100% backed financially by [FGH]”.
The statement was subject to a hearsay notice because Mr. Pastoors was out of the jurisdiction.
Mr. Hawkes provided a written witness statement and gave evidence. In summary his evidence in chief was to the following effect:
It was not his signature on the Guarantee and he had never seen the document until a copy was provided to him on 30 July 2008 by Mr. Fulton. Dan did not contact FGH at the time that the Guarantee was purportedly provided to check that the Guarantee had been given with FGH’s authority, nor did Dan ever contact Mr. Hawkes or his staff during the course of its trading relationship with Alani Cyprus.
He gave no-one permission to sign the Guarantee because nobody signed guarantees on behalf of FGH without him knowing about it and authorising it. Indeed he would normally have signed a guarantee himself. He certainly did not know about or authorise the Guarantee.
He did not give authority to Mr. Orrells, or any of the Alani companies, to sign the Guarantee. Mr. Orrells would certainly have known that, if FGH was being asked to underwrite Alani’s liability, then Mr. Orrells would have had to raise the matter with Mr. Hawkes. Mr. Orrells was not an employee of FGH.
The fact that Mr. Orrells expressly asked Mr. Hawkes to sign the guarantees for the Morgenstond, Baltic Strait and Manfred time charters showed that the former had no authority to sign guarantees on FGH’s behalf and that he knew he specifically had to ask Mr. Hawkes to do so.
So far as Mr. Marcano was concerned, Mr. Orrells introduced him to Mr. Hawkes in May 2006. Mr. Marcano was never authorised to sign anything on behalf of FGH.
FGH never represented to Dan that either Mr. Orrells or Mr. Marcano had authority to sign the Guarantee on its behalf, or to represent that the Guarantee had been validly signed.
The Lloyd’s MIU Report was prepared without reference to him and was full of errors, as was a subsequent one prepared in 2008. FGH did not have an in-house chartering arm or broker, or control, or have any interest in, Alani Cyprus.
Once the vessels began to be chartered in the name of Alani Cyprus, no further bunker invoices were sent by Dan to FGH, although they had been previously when the vessels were chartered in the name of FGH.
Originally Mr. Orrells acted as FGH’s broker in booking cargo space on its behalf on various vessels. Mr. Hawkes described the various changes in the business relationship between FGH and Mr. Orrells as follows:
“26. As far as I am aware, until they began trading as Alani UK/Cyprus/GmBH, Mr Orrells and his business partner Mr Marcano worked on behalf of David Orrells & Co, Goodfight or Aquila.
27. On 5 May 2006, whilst I was attending a ship-brokers dinner …, Mr Orrells and Mr Marcano met me and over a drink before dinner they made me a business proposal. Prior to that meeting I had never met Mr Marcano.
28. At that time FG Hawkes Ltd’s turnover was steadily increasing and Mr Orrells was finding it increasingly difficult to book cargo space on our behalf. He told me that the problem was caused by our increasing preference for using container ships but with break-bulk cargoes, and that finding suitable vessels was becoming difficult. …
29 Mr Orrells and Mr Marcano explained that they intended to set up a ship chartering business. The idea was that their new company would act as a disponent shipowner, chartering in ships and sub-letting space on board. They wanted to establish what the demand would be from potential key customers, and to sound me out to see if FG Hawkes Ltd would be one of them. They were looking for a close relationship with FG Hawkes Ltd, because to start up the venture they wanted to be sure they could count on us to send them business. For me, the hope was that the new venture would provide better flexibility and capacity (because they would be chartering in a whole ship in their own right, rather than just trying to find cargo space for us on another ship). I had no problem with being the new company’s main customer. In some ways that suited me – we would get better service (in the sense that they would come to us first to offer us cargo space in their vessels, and be flexible about our requirements), and hopefully better rates from a company who saw us as one of their main customers, and who we had helped get on its feet by sending it business in the early days.
30. Before trading as the new venture, Mr Orrells and Mr Marcano needed my company’s help in two ways.
31. First, during the period from June until September 2006, Goodfight, Aquila or David Orrells & Co chartered a number of vessels acting as brokers for FG Hawkes Ltd. In other words, I agreed to allow FG Hawkes Ltd to be the nominal time charterer and the disponent owner as far as the cargo interests on board the vessel were concerned (other cargoes were carried apart from FG Hawkes cargoes). Mr Orrells (through David Orrells & Co) and Mr Marcano (through Goodfight or Aquila) managed the vessels.
32. I agreed to do this at the request of Mr Orrells because they wanted to gain experience and establish a track record in managing vessels, so that they could use that as a springboard for the new business in the autumn of 2006. After managing four vessels … Mr Orrells and Mr Marcano were able to ‘go it alone’ as Alani, which acted as a charterer in its own right.
33. Although FG Hawkes Ltd was the nominal time charterer for these vessels, David Orrells & Co, Goodfight and Aquila (i.e. Mr Orrells and Mr Marcano managed the entire process, from identifying the right vessel, conducting the time charter negotiations through to the loading of the cargo, the ship’s voyage and the purchase of bunkers.
…
35. The other way in which we helped Mr Orrells and Mr Marcano to manage these vessels in the run-up to going it alone as charterers was by paying our ‘freight’ in advance, rather than after the cargo had been shipped on to the vessel. In fact, I often paid freight in advance even after they started trading as Alani, at first to help them with their cash flow when starting out, and latterly out of necessity, because Alani was so badly run that if we didn’t pay in advance our cargo would not be moved.
36. I agreed to help in these ways, because I wanted Mr Orrell’s venture to succeed as it seemed that his success would benefit my company and its transport requirements (for the reasons I have outlined above), and because at the time I got on well with Mr Orrells and quite liked the man (that has changed). I could also remember what it was like to set up a business and how the early customers can make or break it, especially as regards cash flow.
37. At no point did I, or Mr Orrells or Mr Marcano contemplate that my company would have any financial interest in their new venture, such as receiving any profit, shareholding, dividends or the like. Nor did they ask us to invest or take any equity or debt in their business. …”
He did not know that on a number of occasions the charter party agreements entered into by Alani Cyprus purported to provide that the latter’s obligations were “fully guaranteed by FGH”. At one stage in his statement he said that he had only discovered that practice as a result of the current litigation; although in another part of the witness statement he said that “I told Mr. Orrells to stop it immediately when I found out.”
During the lifetime of Alani Cyprus, FGH did not place any of its freight needs with any other carrier. However Alani Cyprus, as a charterer, provided freight positions to a great number of parties in addition to FGH. Thus Alani Cyprus was not reliant upon FGH for its livelihood. For example, in relation to a number of vessels the volume of FGH’s cargo ranged from as little as 22% to 43%. On two occasions no cargo at all was carried for FGH, and in relation to the Morgenstond (which was subject to FGH’s guarantee), only 32% of the cargo was referable to FGH. Likewise in relation to the Hohefels itself, only 42% was referable.
Mr. Hawkes was made aware of Alani Cyprus’ increasing financial difficulties during the course of 2008. Although FGH helped by paying up front, due to Mr. Orrells’ mismanagement of the various vessels, its cargo got into more and more trouble. Mr. Hawkes had to help sort out the financial problems which Mr. Orrells had created. When Alani Cyprus and Alani UK ceased trading, FGH had pre-paid freight for cargo on two vessels, with the result that FGH had to take over the charters in relation to those vessels.
FGH also produced a witness statement from Mr. Darren Hawkes, confirming that the Guarantee was not signed by him, nor was any other relevant document.
Actual authority
The parties’ submissions
Mr. Russell, on behalf of Dan, relied upon the following headline points to support Dan’s case that the Guarantee was signed with actual authority, either by someone within FGH’s own organization, or by Mr. Orrells, or by someone in his office, at his direction:
the lack of credibility of Mr. Hawkes as a witness;
the de facto or evidential presumption that the Guarantee is what it purports to be, namely a guarantee signed on behalf of FGH;
the fact that, apparently, FGH had made no attempt to find out who had actually signed the Guarantee, despite the fact that other relevant documents, which had authorised acts on behalf of FGH, and which had not been disowned as forgeries, were clearly signed with similar signatures;
the existence of such other documents, bearing the same signature, which clearly did authorise certain acts to be carried out on behalf of FGH;
the fact that Mr. Orrells was authorised to, and did, enter into binding contracts on behalf of FGH and signed contractual documents on its behalf.
Mr. Hart, on behalf of FGH, emphasised the following headline points which, he contended, pointed against any finding of actual authority:
There was no evidence that an unidentified office worker at FGH would have signed the Guarantee. There was no attempt to cross-examine Mr. Hawkes as to who the relevant office worker might be. The allegation is also inconsistent with Mr. Hawkes’ evidence in cross-examination that no-one in his office would sign a guarantee without his being aware of it. It was not an allegation that Dan had ever sought to pursue before, despite having access to Mr. Orrells’ Office files as a result of the search and seizure exercise it conducted at his home. Dan had not even raised a prima facie case that (for example) Mr. Hawkes’ fellow director, his mother, signed the guarantee, let alone any other nominated employee.
Dan’s suggestion that it was telling that FGH had not made any attempts to find out who signed the Guarantee was misconceived, in circumstances where Dan had chosen not to admit that the Guarantee had been signed by Mr. Hawkes himself, and had not advanced any positive case that he (or anyone else) had signed it. If Dan had wanted to develop its unnamed office worker theory, it should have sought disclosure of a list of employees, and documents relating to their function, and at the very least named a shortlist of suspects. The evidential burden was not upon FGH to exculpate one by one all of its employees, in whichever unidentified locations (potentially Londonderry, Bristol, Glasgow, Leeds or Swansea), the unnamed employees are said to have worked in.
Thus, although Dan contended that FGH’s case that the Guarantee was signed without Mr. Hawkes’ authority depended on the evidence of Mr. Hawkes, this was not so. Rather, FGH’s defence depended upon a lack of any particularised case stated against it, and a lack of any evidence from which such a case could be inferred.
In reality, Dan’s only arguable case was that the guarantee was signed by Mr. Orrells. But this was unsustainable on the evidence. In particular:
The alleged implied actual authority would be inconsistent with the course of dealings between Alani Cyprus and FGH on three occasions (one before and two after the date of the Guarantee, 12 December 2006), when Mr. Hawkes was specifically asked to provide and sign guarantees on behalf of FGH to secure the liabilities of Alani Cyprus under various time charters.
It was unnecessary for Alani UK to have implied actual authority to provide a FGH guarantee for Alani Cyprus’ bunker liabilities, because it was unnecessary for such a guarantee to be in place before Alani Cyprus could buy bunkers. Thus there was no need for the alleged actual authority to be implied into the relationship between FGH and any of Alani UK, Alani Cyprus or Mr. Orrells.
The fact that Mr. Orrells may have signed, in FGH’s name, rain letters and letters of indemnity relating to cargo operations for FGH cargoes, was not relevant and no comparison could be made, or basis put forward for implying authority simply because of the existence of such letters. The nature of such operational communications was entirely different from a guarantee. Although Mr. Hawkes may have, if not authorised, then, at least, tolerated, the signing of rain letters and letters of indemnity by Mr. Orrells, a guarantee was clearly not the same kind of document, since the latter type of document was liable to (and did) engage FGH in far greater liabilities than the type of risk involved in the signing of an operational document.
The difference between what were essentially operational documents, such as a rain letter or letters of indemnity, and documents which were liable to (and did) engage FGH in far greater liabilities which ran beyond its control, such as guarantees, was illustrated by the way in which, as shown by the contemporaneous documents, Mr. Hawkes had reacted when he discovered what Alani UK had purported to do in FGH’s name. Likewise, in his oral evidence, Mr. Hawkes made it clear that
“he didn’t like it, he didn’t authorise it, he usually didn’t even know about it, but even when he did find out about it, it was, by comparison with documents such as guarantees, unimportant.”
But when Mr. Orrells used FGH’s name in other contexts, where the risk involved was not simply an operational risk, but of incurring liabilities at Alani Cyprus’s discretion, Mr. Hawkes was less sanguine. This point, Mr. Hart submitted, was illustrated, for example, by an e-mail from Mr. Hawkes dated 20 February 2008 to Alani UK, concerning the damage to the goods on board m/v Katarina:
“This cant happen again – don’t ever use my companies name again Dave in any shipping dealings you have”
which was re-sent at noon that day to David Orrells & Co in the following terms:
“Don’t use my companies name for any purpose whatsoever whilst booking freight ever again”.
Moreover, Dan had not sought to suggest that either of these emails were “staged”.
There was no sound basis for the attack on the credibility of Mr. Hawkes.
No weight should be attached to Mr. Marcano’s “draft witness statement”, since the document was produced in questionable circumstances. Moreover no notes were produced of unrecorded conversations, between Mr. Fulton and Mr. Marcano, and such notes as had been produced from Clydes which were said to have formed the basis of Mr. Marcano’s draft statement, provided no basis for the suggestion that Mr. Marcano had reason to be physically afraid of Mr. Hawkes.
No weight should be given to the statement of Mr. Pastoors. Likewise no weight could be attached to a video produced by Mr. Orrells’ son, relied upon by Dan as to the nature of the relationship between FGH and Mr. Orrells and the nature of FGH’s business.
The court’s determination
In my judgment, having reviewed the entirety of the evidence, I conclude that it is overwhelmingly likely that whoever signed the Guarantee with the distinctive signature “FG Hawkes” was indeed duly authorised by Mr. Hawkes, and therefore by FGH, to do so (Footnote: 2). My reasons for this conclusion may be summarised as follows.
It is significant that there are four other documents in evidence, all purporting, like the Guarantee, to be signed “for & on behalf of FG Hawkes (Western) Ltd”, and signed in a similar way to the Guarantee, in the style “FG Hawkes” or “D Hawkes”. These documents span the period December 2006 to June 2008. I find, as a fact, that all such documents were signed by the same person who signed the Guarantee. Indeed, although no handwriting expert was called, this was not realistically in dispute between the parties. Details of the four documents are as follows:
The first letter, which is a letter dated 20 August 2007, authorised the Master of m/v “Port Pirie” to discharge in the rain. The letter is signed “D Hawkes”, instead of “FG Hawkes”, but the “Hawkes” part of the signature is clearly written in the same hand as the signatory of the Guarantee. This document was found at Mr. Orrells’ premises in the course of the search and seizure order. I find on the balance of probabilities that either the document was signed by Mr. Orrells at his office, with Mr. Hawkes’ authority, or was signed at FGH’s Swansea office, again with Mr. Hawkes’ authority, and was circulated to Mr. Orrells for his use.
The second document is a fixture note, dated 3 September 2007, in respect of the M/V “Margarita” cargo, as between Alani Cyprus as disponent owners and FGH as charterers. The signature on behalf of Alani Cyprus was clearly that of Mr. Orrells. The signature on behalf of FGH, in the style “FG Hawkes”, is very similar to that on the Guarantee. This document was disclosed by FGH (although it may have originated from Mr. Orrells) and the evidence suggests that it came into existence in connection with a claim by FGH under a goods in transit insurance policy for the cargo carried on board the vessel. Mr. Hawkes’ evidence was that arrangements between FGH and Mr. Orrells were very informal and that, usually, no fixture notes in relation to cargo were signed. I find as a fact that the document was prepared by Mr. Orrells, and either signed by him at his offices, with Mr. Hawkes’ authority, or sent to FGH’s offices at Swansea, where it would likewise have been signed with Mr. Hawkes’ authority, and then sent to the recovery agents dealing with the claim. There can be little doubt that the document would have been utilised as a document in the recovery claim.
The third document is another “rain letter” dated 25 January 2007 to the Master of the M/V “Norderoog” signed on behalf of FGH, in the style “D Hawkes”. The letter permitted discharge of cargo in the rain at Swansea. Again the signature is very similar to that on the Guarantee. This document was found at Mr. Orrells’ premises in the course of the search and seizure order. I find as a fact that either the document was signed by Mr. Orrells at his office, with Mr. Hawkes’ authority, or was signed at FGH’s Swansea office, again with Mr. Hawkes’ authority, and was circulated to Mr. Orrells for his use.
The fourth document is another fixture note, dated 30 June 2008, in relation to the m/v Manfred, between Alani Cyprus (signed for by Mr. Orrells) and FGH. The evidence showed that this fixture note was needed because FGH was taking over Alani Cyprus’ obligations in relation to the vessel because of the latter’s deteriorating financial position. The signature on behalf of Alani Cyprus was clearly that of Mr. Orrells. The signature on behalf of FGH, in the style “FG Hawkes”, is very similar to that on the Guarantee. This document was disclosed by FGH (although it may have originated from Mr. Orrells). Again the probability is that the document was prepared by Mr. Orrells, and either signed by him at his offices, with Mr. Hawkes’ authority, or sent to FGH’s offices at Swansea, where it would likewise have been signed with Mr. Hawkes’ authority.
In my judgment, it is wholly unrealistic to suppose that these documents, and the manner in which they were signed, only came to light in the course of this litigation, or that Mr. Hawkes was unaware of the fact that they had been signed on FGH’s behalf. Indeed, notwithstanding that Mr. Hawkes said in his evidence that he didn’t know who had signed the documents, FGH’s approach in its closing submissions effectively accepted that Mr. Hawkes may well have known about these documents and tolerated the fact that Mr. Orrells would have signed rain letters and letters of indemnity, either purporting to use the signature “F G Hawkes”, or signing in his own name, on behalf of FGH. I was not impressed by Mr. Hawkes’ evidence to the effect that he was baffled when he saw the fixture notes. The existence of these documents clearly supports Dan’s case that the Guarantee was indeed signed with FGH’s authority.
In addition there were numerous examples of documents in the chronological bundles, which showed Mr. Orrells frequently signing in his own name expressly on behalf of FGH, either as “authorised signatory” of FGH, or simply over the name of “F G Hawkes, Director”. Many examples of such committed FGH contractually to particular liabilities in respect of vessels, such as fixture notes, or letters of undertaking to owners of vessels. Many of these documents were copied to Mr. Hawkes, or he was an addressee in the relevant e-mail. Thus there can be no doubt that, on numerous occasions, Mr. Orrells was indeed expressly authorised by Mr. Hawkes to enter into binding contracts, and sign them, on FGH’s behalf. It may well be that, on particular occasions, as the e-mails in February 2008 show, Mr. Orrells abused his authority and committed FGH to liabilities which he had not previously discussed with Mr. Hawkes. However, I do not consider that this was the case in relation to the Guarantee.
Nor, contrary to Mr. Hart’s submissions, do I find it surprising, or inconsistent, that, prior to the signing of the Guarantee, on 14 November 2006, Mr. Orrells asked Mr. Hawkes to sign, and Mr. Hawkes did sign, a specific guarantee in relation to the time charter of the M/V Morgenstond. The owners may simply have insisted upon a separate guarantee letter, as opposed to having the reference to FGH included in the style of charterers. Likewise the later guarantees, which were given at a time when FGH had to step into Alani Cyprus’ shoes in respect of the “Baltic Strait” and the “Manfred” when Alani Cyprus had effectively failed, were obtained in very different circumstances.
In my judgment the overwhelming probability is that Mr. Orrells indeed discussed the issue of the guarantee with Mr. Hawkes; the Guarantee was typed out by Mr. Orrells (or perhaps by Mr. Marcano), on its date, 6 December 2006, based on the “Morgenstond” guarantee, and then sent to Swansea, where, no doubt because Mr. Hawkes was busy or possibly away, it was signed by someone in his office with his authority. It was then returned to Mr. Orrells in hardcopy (since the original was found in his office) before being scanned and being sent to Dan. This process would explain the six days’ delay between the date of the guarantee and the date of its being sent to Dan. Alternatively, it was signed by Mr. Orrells with Mr. Hawkes’ specific authority, likewise because Mr. Hawkes may have been too busy or otherwise occupied to sign the document himself, and would have simply told Mr. Orrells to sign it on FGH’s behalf.
In reaching this conclusion, I rely on the matters set out above and below, and, in particular, the adverse view which I formed of Mr. Hawkes’ credibility as a witness.
I consider that there is nothing in FGH’s submission that Dan had not identified a particular individual who might have signed the Guarantee on its behalf. Clearly, as I have found, some “authorised” FGH documents were signed in the same style and form, and by the same person, as the Guarantee. In those circumstances, the evidential burden in my view had clearly shifted to FGH to establish who had signed such documents. It was not entitled to shelter behind the bare submission that it was incumbent upon Dan to prove whose signature was on the document. I find it very surprising (if it be true) that Mr. Hawkes did not attempt to ascertain whose was the signature on the Guarantee and the four other documents. The inference that I draw is that he probably knew already. Indeed, it is highly surprising that he would not have known who had signed the two fixture notes.
I accept Mr. Fulton’s evidence (despite the fact that, on this topic, it was somewhat vague), to the effect that Mr. Hawkes did not deny the existence of the Guarantee when they spoke on the telephone in July 2008. Mr. Fulton was clearly an honest witness who gave his evidence in a straightforward and non-partisan way. I also find it significant that, in the circumstances, no denial was sent by FGH in response to Dan’s fax dated 22 July 2008, or the subsequent e-mail dated 30 July 2008. It was left to FGH’s solicitors, Morgan Cole, to deny liability.
Moreover, after Mr. Hawkes had spoken to Mr. Fulton on the telephone on 30 July, he e-mailed Mr. Orrells on the same date in angry terms. (Mr. Orrells as well as being in financial difficulties, was also apparently suffering a nervous breakdown at the time.) Although Mr. Hawkes had not seen the actual Guarantee at this stage, no suggestion was made by him that any guarantee given to Dan was a forgery. On the contrary, the thrust of the e-mail was that FGH was indeed liable for Alani Cyprus’ shipping liabilities, and that Mr. Orrells had been hopelessly incompetent. The e-mail read:
“I had just had a call from Dan bunkering who is after me for 460K . I am into Alani for 1.4 million usd and probably the same to [a Chinese party]. That is what I know of. So it seems that I will lose 1.9 million usd here. … What gives you the right to question what is Fair or not when I am faced with trying to clear up this fucking mess that Alani has created ... What you have done is used other people’s money and credit which is being given on the basis of my company and lost it.”
In cross-examination Mr. Hawkes had no adequate explanation of what he meant by the words underlined above.
Later the same day, and on the subsequent day, 31 July 2008, the following e-mail exchange took place between Mr. Hawkes and Mr. Orrells:
Mr. Hawkes wrote to Mr. Orrells on 30 July 2008, forwarding the e-mail received from Mr. Fulton with a copy of the Guarantee:
“This is not my signature is it Dave”,
and then
“I think you and I need to have a chat face to face don’t you think”.
Mr. Orrells then responded, the following morning:
“its not mine either – I have never seen this before in my life. Andre Marcano arranged the bunkers for all of the first vessels and after meeting with Dan Bunkering some time in 2006 he told me one day that he had agreed 30 day credit terms. I think I only spoke to Dan Bunkering twice before Andre left last year and it was in no way about this.”
I comment this was either a lie on the part of Mr. Orrells, or, in his state of health, he had forgotten the correct position, since not only had he forwarded the Guarantee to Dan but he had also been in communication with Dan.
Mr. Hawkes then emailed Mr Orrells:
“Is f g hawkes [western] included in any charter party agreement or guaranteeing anything to do with Tette rickmars.” [Another vessel]
Mr. Orrells responded
“Yes – they have all been this way since nobody will book a ship to Alani”.
Mr. Hawkes then responded:
“Send me the charter party. After the last time you had used my company name without authorization you were told under no circumstances to use my company name in any transactions you concluded. This was not only made clear verbally but also by e-mail. Why have you done this?”
Mr. Orrells responded:
“You know perfectly well that every vessel booked by Alani has been underwritten by FGH. We have discussed this on several occasions.”
Mr. Hawkes responded:
“When it came to light that you falsely used my company name you were specifically told to stop. I am loosing hundreds of thousands of pounds every day I come into work and you want me to consider your feelings? You have personally cost me I don’t know how much yet you expect me not to be upset – I can’t believe your attitude. Well lets spell it out shall we Dave. The forged guarantee was done by an employee if Alani as you say although you have no proof although it is clear that the forgery was done by Alani shipping which means you. This is a criminal act and if Alani goes down you personally will not be able to hide behind the limited liability thing.
Also you were specifically told not to use my companies name in any transactions – you have ignored this and caused hundreds of thousands of dollars losses. This is not something you can hide behind in your role as a director. Your actions are both fraudulent and criminal.
All this and you are giving me grief over my attitude. I am receiving calls from your bunker broker so what do I tell him Dave as you won’t talk to him will you?
Shall we just direct them to Andre the Brazilian if they can find him?”
It is not necessary for me to decide whether this e-mail exchange was staged (whether as between Mr. Hawkes and Mr. Orrells, or simply on Mr. Hawkes’ side), as Dan contends. No doubt Mr. Hawkes was, at this time, justifiably incensed at Mr. Orrells’ financial incompetence and the consequential liabilities which had been imposed on FGH. However, as Mr. Russell submitted, it is somewhat surprising that this email exchange was attached to the initial letter from Morgan Cole, FGH’s solicitors, denying liability, and was even pleaded in the Defence. The subsequent e-mail correspondence shows that, within ten days, Mr. Hawkes had invited Mr. Orrells to go to Hamburg with him, and in November 2008 was offering him “support”. What, in my judgment, is clear is that the probably self-serving exchange of emails provides no support whatsoever for FGH’s contention that the Guarantee was a forgery.
It was perhaps not surprising that Mr. Orrells was not called as a witness by FGH. If he were to support the defence, he would have had to incriminate himself by admitting sending the Guarantee to Dan, having had it signed in his office, or elsewhere, without FGH’s authority, which would have necessarily subjected him to liability in respect of Dan’s claim. Otherwise, his evidence could only have supported Dan. In those circumstances, it is perhaps surprising that he was identified in the case management memorandum as a possible witness on behalf of FGH. However I draw no inference adverse to FGH from the fact that he was not called.
Mr. Hawkes’ evidence, and the manner in which he gave it, resulted in my having serious doubts as to his credibility. His witness statement was obviously wrong, or self-contradictory, in various respects. Although he attempted to correct the errors, I was not impressed with the explanation that he gave for the original misstatements. In particular, his evidence given by way of declarations in attachment proceedings brought by Bridge Oil Limited and Dan in the United States District Court, Southern District of New York (“the Rule B Proceedings”) was inconsistent in material respects with the evidence given in these proceedings. The matters in question were not minor ones.
Nor was I impressed with the accusations of dishonesty levelled by Mr. Hawkes against Dan and others in this case. For example:
In his solicitor’s declaration in the Rule B proceedings, it was alleged that Dan “knew or likely knew” that the Guarantee was a forgery “from the outset”. Such an allegation can only have been made on instructions. There was no evidence to support such an allegation, and it was not made at this trial or put to Mr. Fulton.
Morgan Cole’s initial letter denying the claim alleged that:
“We can point to other instances where bogus guarantees have been offered without our clients knowledge or consent.”
However, no such “bogus” guarantee was in fact identified.
Serious, and apparently unfounded, allegations of dishonesty were made against the supervising solicitor on the execution of the search and seizure order.
Serious allegations were made against Mr. Marcano and Mr. Orrells that they dishonestly represented that they were the “chartering arm of FGH”. In fact the evidence showed that, notwithstanding that, as matter of law, Alani Cyprus, was operating as a separate corporate entity, and, as such, might not have been acting as agent for FGH, as principal, in relation to all chartering operations, the commercial reality was that FGH was funding to a substantial extent Alani Cyprus’ operations, in its own interests, and was using Alani Cyprus as its chartering arm. On any basis there was a very close commercial relationship between the two entities.
There were numerous other examples of inadequacies in Mr. Hawkes’ evidence in relation to his dealings with Mr. Orrells and Alani UK/Alani Cyprus, with which it is not necessary for me to deal in detail, other than to say that, at the end of his evidence, I was not satisfied that I could accept him as a witness of truth. Indeed there had been another example of him falsely alleging forgery of a document in litigation.
Accordingly, I conclude that the Guarantee was signed with the actual authority of FGH, probably given expressly by Mr. Hawkes to the person in FGH’s office who actually signed the Guarantee, or, if it was actually signed by Mr. Orrells (or someone in his office), with authority given expressly to Mr. Orrells. Alternatively, if the actual authority to sign the Guarantee was not given expressly, then I conclude that such authority was implied from Mr. Hawkes’ course of dealings, either with Mr. Orrells or (if it was not Mr. Orrells or someone in his office who signed the Guarantee), with the person who signed the Guarantee in FGH’s office.
In reaching this conclusion, I have done so without attaching any weight to the draft witness statement of Mr. Marcano or the witness statement of Mr. Pastoors. It has not been necessary for me to consider what weight, if any I should attach to such statements.
Ostensible authority - estoppel
In the light of my conclusion on the issue of actual authority, this issue does not strictly arise for determination. However, if I were wrong in my conclusion that the Guarantee was signed with FGH’s actual authority, either by Mr. Orrells (or someone in his office), or by someone duly authorised within FGH’s office, then I would have dismissed Dan’s alternative claim that Mr. Orrells had ostensible authority to sign the Guarantee, or had ostensible authority to represent to third parties such as Dan that the Guarantee was valid, and that, by forwarding the Guarantee, he so represented.
In my judgment, there is no evidential basis for suggesting that, in any dealings with Dan, FGH made any representations whatsoever as to the authority of Mr. Orrells, Alani UK or Alani Cyprus or as to the validity of the Guarantee. Indeed, FGH had no direct dealings with Dan. The authorities make it clear that ostensible authority is based on the principal holding out the agent as having certain authority. It cannot be based on representations made by the agent itself. There was no such holding out in the present case by FGH, so far as Dan was concerned. The 2006 Lloyds MIU Report, whatever the extent of its accuracy, contained no such representations as to the authority of Mr. Orrells, Alani UK, or Alani Cyprus to sign such a guarantee on FGH’s behalf or to make representations as to the validity of any purported guarantee. Accordingly, had it been necessary to do so, I would have dismissed Dan’s claim under this head.
Disposition
It follows that Dan is entitled to judgment in the full amount of its claim.
I am grateful to both teams of counsel and solicitors for the extensive and helpful written and oral submissions and for the efficient manner in which the trial was conducted.