Western Bulk Shipowning III A/S v (Carbofer Maritime Trading APS & Ors

The “Western Moscow” is a geared bulk carrier of 32,450 grt, which was completed by the Dayang shipyard in 2011. She was delivered into charter service in mid October 2011. Her disponent owners (“Owners”) – Western Bulk Shipowning III A/S - seek to have continued a worldwide freezing injunction granted ex parte by Popplewell J on 10 April 2012 against OceanTask Corp. (“OceanTask”), the second defendants, and SeaTask Corp. (“SeaTask”), the third defendants, who were sub and sub-sub charterers of the vessel from Owners - together, “the Respondents”. The Respondents are Marshall Island corporations with “branch offices” at an address in Athens. They now apply to discharge the injunction on the ground that the Court has no substantive jurisdiction against SeaTask and in any event that there is no risk of dissipation in respect of either Respondent. The charterers of the vessel from the owners were Carbofer Maritime Trading ApS (“CMT”), the first defendants.

The vessel was, at the material time, the subject of a long chartering chain, which was as follows:

On 7 June 2010, the Owners chartered the vessel to CMT on a time charter of 34 – 38 months duration from the date of her delivery (the CMT charter). The hire was US $ 17,700 per day. The charter was an amended NYPE charter. It provided for LMAA arbitration and English law (clause 17). It contained an amended NYPE lien clause 18 (see para 29 below); and clauses 37 and 41 (see para 26 below) providing for the deduction of bunkers from hire on redelivery.

For some reason – perhaps because of requirements by those financing the Western Bulk Group - it was subsequently decided that the registered ownership would vest in WA II L.P. (“the Head Owners”) who on 30 September 2010 concluded a Charterparty with Owners for a period of 72 – 75 months at a daily rate of US $ 17,000. That charterparty contained the same clauses 17, 18 and, so far as material, 37 and 41.

In November 2010, as appears from a fixture recap of 2 November 2010 relating to a fixture of the previous day, CMT sub-chartered the vessel to OceanTask on back-to-back terms save as to hire and speed & consumption (“the OceanTask charter”). That charter thus contains an English law and arbitration clause. The hire, at any rate initially, was $ 18,000 per day. OceanTask’s case is that the hire was subsequently reduced to $ 15,725 per day as from December 2011 when OceanTask agreed to charter the “Heilan Rising”.

At this stage SeaTask were OceanTask’s managers, pursuant to a Management Agreement dated 10 September 2008 which was to continue in force for as long as OceanTask continued to exist, subject to termination by either party on the occurrence of certain specified events, being in essence the insolvency of, or a material breach committed by, the other party. The Agreement (in respect of which SeaTask and OceanTask were advised by different firms of English lawyers) is subject to English law and LMAA arbitration. The two companies have separate shareholders. Whether the shareholders are linked to each other in any, and, if so, what way is not apparent.

According to the evidence of Mr Charalambos Katsamas, who is a director of both Respondents, in the summer of 2011 an understanding was reached between representatives of the shareholders of the two companies that at a mutually convenient time OceanTask would be taken over by SeaTask and the two operations would be amalgamated into one. This was because some of the interests behind OceanTask had lost their enthusiasm for shipping. Until the takeover, whose precise form was to be decided, SeaTask was to charter OceanTask’s vessels at rates current at or shortly before the engagement. By this time OceanTask was very substantially in debt to SeaTask.

According to the Respondents, the first vessel to be operated in this manner was the “Aqua Atlantic” which was chartered by OceanTask to SeaTask on 3 September 2011. OceanTask had chartered this vessel from Carbofer General Trading SA of Lugano, although all hire was paid to CMT as agreed by a C/P addendum. According to the Respondents, the charterparty between OceanTask and SeaTask in respect of the “Aqua Atlantic” incorporated a Greek law and arbitration clause (clause 17) and provided by clause 18 that Owners should not have any lien. It also provided by Clause 45 that “Charterers may offset hire against debt owed to Charterers by the Owners”.

On what is said to be 10 October 2011 OceanTask sub-sub-chartered “Western Moscow” to SeaTask Corp. (“the SeaTask charter”) for 6 months +/- 30 days. (That it did so on some terms is something that the Owners are prepared to accept for the purpose of this application). There is a dispute over the terms of the SeaTask charter and, in particular whether it contained (as on the face of the document which is said to be that charter it does) the same clauses in relation to Greek law and arbitration, absence of lien, and set off as the “Aqua Atlantic”. The hire is said to be $ 13,500, although the authenticity of that figure is, also, in dispute.

The SeaTask charter was signed by Mr Katsamas on behalf of SeaTask and by Mr Marios Gerardis on behalf of OceanTask.

On 12 October 2011 SeaTask acting (as it claims and as for the purposes of the present application Owners are prepared to accept) as principal, sub-sub-sub-chartered the vessel to a company called China National Chartering Co. Ltd (“Sinochart”), for a time charter trip, on terms incorporating terms materially the same as the CMT charter (the Sinochart charter). The hire payable by Sinochart is $ 14,825. The charter period was about 4 to about 6 months, “about” meaning +/- 15 days.

Sinochart in turn further sub chartered the vessel to Oceana Shipping AG (“Oceana”) either for a voyage or a short period. Sinochart and Oceana are not parties to these proceedings.

The vessel was delivered as a newbuilding into service under the CMT charter and the OceanTask charter direct from the yard on 14 October 2011. She was delivered into service under the Sinochart charter on the following day.

On 8 February 2012, Owners terminated the CMT charter and withdrew the vessel from the charter service, on the grounds of CMT’s repudiation of that charter and non-payment of hire. CMT appears to have accepted what it regarded as OceanTask’s repudiation of the OceanTask charter (on account of non-payment of hire) the previous day. OceanTask claim that the repudiation was that of CMT. Owners now have outstanding claims against CMT for unpaid hire, disbursements and damages for repudiation. The total amount of those claims exceeds $ 6 million. The major part of that relates to the claim for repudiation.

As is apparent from the above both the CMT and the OceanTask charters contain a term giving Owners a lien over all sub-hire in respect of any amounts due under the CMT charter.

Owners have exercised their lien under the CMT charter, by giving notice to CMT’s sub-charterer, OceanTask. Owners claim to be entitled, either at law or in equity, to pursue CMT’s claims for unpaid hire against OceanTask under the OceanTask charter. According to CMT, the amount of that claim is around $ 380,000. OceanTask say that nothing is due.

In addition, by exercising that lien, Owners claim that they have acquired CMT’s equivalent lien under the OceanTask charter. Owners have exercised that second lien, by giving notice to SeaTask. Owners claim to be entitled, either at law or in equity, to pursue OceanTask’s claim (if any) for unpaid hire against SeaTask under the SeaTask charter. SeaTask say that nothing is due under the SeaTask charter. Owners contend that it is to be inferred that around $ 380,000 is likely to be outstanding.

By this route Owners say that they have good arguable claims on the merits against both OceanTask and SeaTask; and they say that there is a real risk that OceanTask and SeaTask will dissipate their assets so as to avoid paying them unless restrained by injunction.

The injunctions were obtained under section 44 of the Arbitration Act 1996 and section 37(1) of the Senior Courts Act 1981 on the footing that the OceanTask charter contained an English law and London arbitration clause, and that it was to be inferred that the (true) SeaTask charter contained one as well.

OceanTask and SeaTask now apply to discharge the freezing injunction or to resist its continuance. They have produced what they say is the SeaTask charter. As I have said, the terms of that document differ from those of the OceanTask charter in that:

The features to which I have referred in the previous paragraph are said by the Owners to be suspicious and to prompt the inference that what has been presented in evidence as the SeaTask charter is not the true SeaTask charter; and that the true SeaTask charter contains different terms.

The applications to continue and discharge, thus, raise the following issues:

According to Owners’ final hire statement in respect of the CMT charter, as at the date of termination of the CMT charter (8 February 2012) CMT owed Owners $ 602,275.47. CMT’s final hire statement puts the figure at $ 176,689.10 in favour of Owners.

Part of the undisputed balance represents US $ 87,855.27 in expenses incurred for CMT’s account in connection with the vessel’s transit of the Panama Canal in December 2011. The remainder represents unpaid hire, less various deductions. The dispute is over those deductions. Leaving aside matters of no material consequence:

Owners say that the vessel was not off-hire as CMT allege. The delays at Cristobal and Balboa were the result of the shippers’ loading too much cargo on board the vessel contrary to the Master’s orders, with the result that the vessel had to be lightened in order to transit the Panama Canal. This version is contradicted by the charterers, starting with Oceana, who have sought to deduct hire up the chain. They say that the Master failed to exercise proper supervision on loading. It is not possible now to determine who is right on this issue. I am satisfied that Owners have an arguable case that the vessel was not off hire as charterers allege.

Owners also have a good arguable case that CMT is not contractually entitled to be credited with the cost of the bunkers remaining on board on the date of termination of the CMT charter. Clauses 37 and 41 of the CMC charter provide that:

“37

…Charterers are entitled to deduct from last sufficient hire payments …estimated quantities of bunkers on redelivery

41

Value of bunkers on delivery to be paid together with first hire payment, value of bunkers on redelivery to be deducted from last sufficient hire payment”

It is arguable that these clauses are applicable if there is a contractual redelivery but not if there is a resumption of possession following the acceptance of a repudiation as Owners claim has happened in this case: see The “Span Terza” [1984] 1 WLR 27. For the purposes of the present application only, Owners accept that CMT is arguably entitled to claim a sum equivalent to the value of the bunkers remaining on board on a restitutionary basis. But such a claim is not available against a claim for hire, since it is not a claim for some breach of obligation which has denied the charterers the use of the vessel or prejudiced them in their use of it: The Nanfri [1978] QB 927,976.

There is, thus, as Mr Nigel Jacobs QC for the Respondents accepted, an arguable claim for $ 602,257.91, being the admitted figure of $ 176,689.10, plus CMT’s figure for deductions in respect of off-hire – $ 114,491.11, plus CMT’s figure for the cost of bunkers on redelivery – $ 311,077.70.

In addition, Owners have an arguable claim for damages for wrongful repudiation of the CMT charter in the sum of $ 5,907,055. CMT might arguably be entitled to set off its cross-claim in respect of the value of the redelivery bunkers against this damages claim. But that would still leave a net damages claim for over US $ 5.5 million.

The lien clause in the CMT charter (and the OceanTask charter) is an amended version of clause 18 of the NYPE 1946 form. It provides in material part as follows (amendments underlined):

“That the Owners shall have a lien upon all cargoes, and all sub-freights, hire and sub-hire for any amounts due under this Charter, including General Average contributions …”

Owners’ claim for the balance of hire plainly falls within the clause. Mr Macey-Dare for the Owners submitted that a claim for damages for repudiation arguably falls within the clause on the following basis:

It is not, however, necessary to express any view on this point (and I did not hear submissions from Mr Jacobs upon it) since the amount arguably due under the CMT charter exceeds what is arguably due under the sub-charters: see paras 56 and 98 below.

The true nature of the lien provided for in the amended NYPE form, has still not been determined by any appellate tribunal whose judgment is binding on me. Decisions as to its nature have been reached by judges at first instance of great distinction (Lloyd, Nourse, Saville, Steyn and Kerr JJ) and obiter by Lord Russell of Killowen; but a contrary view has been expressed, probably obiter, by Lord Millett in a Privy Council decision.

Mr Jacobs suggested that, since the question was one of law and affected whether relief could be given, it was or might be necessary for me to decide it: see the cases referred to at Dicey and Morris 11.15 footnote 13. In Hutton & Co v Mofarrij [1989] 1 WLR 488, 495 LJ said that a plaintiff could rely on the concept or test of good arguable case only in situations which leave room for further investigation of issues of fact or of mixed fact or law as to whether or not some requirement of Order 11 was satisfied. Whether or not Owners have any right in the nature of an assignment of CMT’s claims against OceanTask (or OceanTask’s claims against SeaTask) does not seem to me to fall within that category.

Certain matters can be stated. A lien over sub-hire is a right to receive sub-hire as hire and to stop it at any time before it has been paid to the time charterer or his agent: Tagart v Fisher [1903] 1 KB 391 at p 395 per Lord Alverstone CJ (a case on sub-freight). In that case the freight due under the bill of lading had been paid to the charterers, whose bill it was. Earl Halsbury said that:

“the right over the freight must be exercised at a time when there is freight to be paid as such, and ... when the freight has once been paid the lien is gone”

and that

“the right to stop the payment of freight to the person to whom it is due must be exercised while the right for such payment exists”.

The shipowner perfects his right of lien by giving notice to the sub-charterer that he is exercising his lien. If the sub-charterer has already paid the charterer by the time the notice is given, the lien fails to bite on anything: The Spiros C [2000] 2 Lloyd’s Rep 319, para 11, per Rix LJ.

There have been said to be two realistically possible juridical bases for the lien:

The problem arises because of the use of the word “lien” which ordinarily refers to a right to retain possession of a chattel until payment of a sum due from its owner. By extension the word may cover a right to property, such as a debt owed for sub-freight or sub-charter hire, which is assigned by the person to whom the debt is owed as security for an obligation, which he owes to the assignee. The debtor, once he has notice of the lien, may not make payment to his creditor if the obligation to the lienor is unpaid; and the lienor may claim the debt in fulfilment of the creditor’s obligation to him. That that was the basis of the lien appears from the judgment of Lloyd, J, as he then was, in Care Shipping v Lamsco (“The Cebu”) (No.1) [1983] 1 QB 1005.

The alternative view, propounded by an article by Dr Fidelis Oditah entitled “The juridical nature of a lien on subfreights” [1989] LMCLQ 191, is that adopted and expressed by Lord Millett, giving the opinion of the Privy Council in Agnew v Commissioners of Inland Revenue [2001] 2 AC 710, that the lien is a creature of the maritime law and is “a contractual non-possessory right of a kind which is sui generis”. The basis for this analysis is that, if the lien is a charge, it is of a kind unknown to equity. An equitable charge would confer a proprietary interest by way of security, so that, if the subfreight was paid to a third party – at any rate if he had notice of the lien – he would be bound by it. But a lien on sub freights is defeasible on payment. In expressing the view that he did in Agnew v CIR Lord Millett espoused, by way of judgment - obiter but in an opinion concurred in by Lords Bingham, Nicholls, Hoffmann and Hobhouse - the submission which, as counsel, he had unsuccessfully advanced before Nourse J, as he then was, in The “Ugland Trailer” [1985] 2 Lloyd’s Rep 372.

It was common ground before Lloyd J that the mechanism which required sub-charterers, if given notice, to pay the owners was an equitable assignment of freight due under the sub-charter. Kerr J had said something to that effect in The Nanfri [1978] QB 927, 942. In the House of Lords [1979] AC 757, 787 Lord Russell of Killowen said:

“The lien operates as an equitable charge upon what is due from the shipper to the charterer, and in order to be effective requires an ability to intercept the sub-freight (by notice of claim) before it is paid by shipper to charterer”.

Lloyd J was satisfied that the assignment, although by way of security, was an absolute assignment for the purpose of section 136 of the Law of Property Act 1925, following Hughes v Pump House Hotel [1902] 2 KB 190. He thought that the legal analysis might be different if the true nature of the lien was that it took effect as an equitable charge but, in the light of the arguments presented, he did not find it necessary to consider that possibility further. In The “Spiros C” [2000] 2 Lloyd’s Rep 319 Rix, LJ said that the nature of the lienor’s rights “is thought to be an equitable assignment by the time charterer to the shipowner by way of security”.

Owners did all that was required to perfect their lien over the sub-hire payable under the SeaTask charter, by giving notices of lien to OceanTask c/o SeaTask as in The Cebu (No.1), cit. There was no need for OceanTask to give its own separate notice to SeaTask. Those notices were given on 10 January, 17 January, 7 February and 5 April 2012. All of Owners’ claims against CMT were due under the CMT charter as at the date of that last notice. Substantially the whole of the Owners’ claim for the balance of hire under the CMT charter was due as at the dates of the earlier notices.

In that case Nourse J held (by way of ratio) that the shipowner’s lien on sub-freights was a form of equitable assignment made by the charterer by way of security for what is owed by the charterer to the shipowner, and, being an equitable assignment of a chose by way of security, created an equitable charge on the chose. The assignment was necessarily equitable because it was made in the charterparty without notice (at the time of the charter) to the shipper. He rejected the submission of Mr Millett, QC that the shipowner’s inability to follow the sub-freight into the hands of the charterer demonstrated that the lien gave the shipowner no proprietary right to the subfreight on the basis that the submission confused the nature of the right with the event which defeats it. He held that, if the shipper made payment of the freight to a third party with notice, “it could not be doubted that the shipowner could follow the money into the hand of the third party”. But he could not do so once payment was made to the charterer because that was the event which defeated the right. The equitable charge was one that required registration under the Companies Act.

In The “Annangel Glory” [1988] 1 Lloyd’s Rep 45 Saville J, as he then was, had to consider whether the Ugland Trader was rightly decided. He decided that Tagart (in which, as appears from reports of the case in 88 LT 451 and 72 LJKB 202 there had been argument as to whether the lien was in truth some form of charge or other equitable right) was concerned with the extent of the right and not its nature. I agree. He rejected the argument of Mr Richard Aikens QC, as he then was, that the lien clause simply gave the owners the authority of the charterer to collect the sub-freight. As to the further argument that at the time of the charter there was nothing to assign, he held that that was not determinative. The parties could agree to assign future choses in action and if they did so, once those choses in action came into existence, “the assignor automatically and immediately becomes a trustee and the assignee the beneficiary of that chose in action”. He held that clause 18 in its unamended form constituted an agreement by the charterers to assign to owners by way of floating security the right to payment of sub freights falling due under contracts to be made by the charterers in respect of the vessel the subject of the head charter. He also held that clause 18 created a floating charge on a specified part of the charterers’ property namely sub-freights to become due to charterers in respect of the vessel and was registrable.

In The “Attika Hope” [1988] 1 Lloyd’s Rep 439 Steyn J, as he then was, was content to adopt Lord Russell’s description of the right in The Nanfri. In that case there was a conflict between the owners and the assignees. The latter had given earlier notice of assignment and, under the rule in Dearle v Hall, they prevailed. In The Cebu (No 2) [1990] 2 Lloyd’s Rep 316 Steyn J referred with approval to The Ugland Trader, The Annangel Glory and The Attika Hope, whilst holding, contrary to the decision of Lloyd J in The Cebu No 1 that “sub freights” in clause 18 did not cover sub-time charter hire. Since the present case concerns the amended clause 18 which covers sub-hire, that question does not here arise.

In Samsun Logix Corp v Oceantrade [2008] 1 Lloyd’s Rep 450 Gross J, as he then was, found it both unnecessary and rash to enter into territory disputed by (inter alios) Lord Millet and Nourse J.

In Cosco Bulk Carriers v Armada Shipping [2011] EWHC 216 Briggs J considered the juridical nature of the lien on sub-hire but did not find it necessary to decide between the rival theories.

In Agnew Lord Millett said that the inability of the shipowner to enforce the lien against the recipient of the subfreight arose (i) irrespective of the identity of the recipient; and (ii) not because payment was the event which defeated it but because the right depended on an underlying property right that the lien did not give.

As to the first, Nourse J had thought it indisputable that under the lien clause the shipowner could follow the money into the hands of a third party i.e. someone who was not the person to whom the sub-freight was payable, such as the charterer or his agent, if that third party had notice of the lien. I have doubts about that. The right is, on one view, an assignment by the charterer of the future sub-freight. If payment of that sub-freight is made to the charterer the right ceases to exist. There is no longer any freight due to which it can attach. Nourse J’s example would appear, therefore, to cover the rare but not impossible case in which the freight (or, in different circumstances, sub-hire) is paid to the person who is not the charterer or his agent. In such a case (a) it must be doubtful whether the payment of a sum equivalent to the freight/hire due to a person who was not entitled to receive it is, in truth, to be characterized as a payment of freight/hire, whatever the payer might have thought or called it; and (b) if the freight/hire has been paid to someone who is not the charterer or his agent the charterer’s right to it remains. He has not been paid. If, however, payment of that sum to such a person is properly to be regarded as freight or hire paid as such I do not see why it cannot be followed if, but not unless, the payee has prior notice of the assignment.

As to the second, I do not see why the clause cannot be regarded as amounting to an agreement to assign future debts by way of security, which gives rise to rights in equity: Taillby v Official Receiver [1888] 13 App Cas 523; In re Lund [1915] 2 Ch 345. The right cannot be exercised if nothing is due to the owner and, being an agreement to assign a debt, it cannot subsist if the debt in question is paid without notice of the assignment. Although the lien provides an immediate security interest at the date of the charter, it may be that it creates no proprietary interest in favour of the owner until the owner gives notice (Footnote: ¹) because, until then, it is open to the charterer to claim the debt in the ordinary course of business (Footnote: ²). The assignment may, in respect of an English Corporation, be registrable and void for want of registration against a liquidator and creditors; and there may be questions as between different competing claimants to the debt or the monies representing them (Footnote: ³).

But none of that seems to me to be a reason to hold that there is no assignment at all. In Agnew Lord Millet described the lien as similar to a floating charge while it floats but incapable of crystallization and said that the lien did not give any property right. I do not, however, with respect, follow why the lien is incapable of crystallization by notice from the owner so that, upon notice, gives rise to a property right.

Further, if the right is only some form of sui generis contractual right it is one of restricted use. It would give the owners no direct claim against the sub-charterer; but only a right to have the charterers restrained from receiving the sub-charter hire or ordered to direct its payment to the owners or to a blocked account. (If the account was that of the charterer’s solicitors the right would probably be lost: see Samsun Logix). It may be that the sub-charterers would be in contempt if, with notice of the injunction, they made payment to the charterers, and it may be that they could be joined in any action against the charterers for the purpose of securing protective relief; but there would be no direct right of the owners against them.

In those circumstances, on the assumption, which seems to me correct, that it is necessary for me to decide the question, and, with a degree of trepidation in advancing into territory into which Gross J felt it rash to tread, I prefer to hold that the clause creates an assignment by way of charge (Footnote: ⁴), following the authorities at first instance decided by distinguished judges of this court which must have been acted on as authoritative for many years. I am fortified in so doing by the analysis in an article “Liens on Sub-freights” by Graeme Bowtle in 2002 LMCLQ 289. At the lowest it is well arguable that that is the correct analysis.

Owners claim that $ 381,803.80 remains owing from OceanTask to CMT in unpaid hire. OceanTask say there is a balance of $ 3,054.75 in their favour. The difference largely relates to three issues. The first two are:

I am satisfied that CMT has an arguable claim for about $ 256,000 against OceanTask under the OceanTask charter but no further. The agreement to reduce the hire after the first 60 days is set out in emails passing between Mr Morten Jacobsen of CMT and Mr Jesper Lollesgaard of SeaTask, acting for OceanTask, of 13 September 2011. It is apparent from these that the hire was to be reduced in order to provide that the hire for the “Heilan Rising” and the “Western Moscow” should be the average of the rates under the existing charter for each (namely $ 18,000 and $ 13,450). The “Heilan Rising”was to be delivered by CMT to OceanTask in March or April 2012. Mr Jacobsen’s email of 13 September suggests that, should Mr Lollesgaard accept his proposal for the reduction /increase of hire on the two vessels, the P & I Club lawyers should be asked to draft an agreement. But the two emails contain a proposal and its acceptance, neither of which are expressed as conditional or subject to contract. The fact that lawyers might be asked to draft an agreement does not signify that no agreement was made by the exchange. In December 2011 hire was paid twice at the $ 18,000 rate; but the difference between that and the $ 15,725 was expressly paid as an advance on future hire.

CMT’s final hire statement of 24 January 2012 applied the original rate. CMT is reported in an email of 20 March 2012 from Mr Houghton, the Respondents’ solicitor, to have confirmed that the governing charterparty was never amended so as to vary the rate of hire. But the emails of 13 September show that there was an agreed variation of hire. The person reporting from CMT is not identified; nor is it apparent whether he was talking about a formal amendment or whether he was aware of the email exchange.

Accordingly, Owners have a good arguable case that they became entitled, legally or equitably, to claim about $ 256,000 from OceanTask under the OceanTask charter on or before 5 April 2012. That charter contains an English law and jurisdiction clause.

The Owners contend that they have a lien in respect not only of the amounts due by OceanTask to CMT but also in respect of amounts due by SeaTask to OceanTask.

Where there is a chain of charters each containing lien clauses, the party at the top of the chain become the assignee (in the sense of being the beneficiary of a contract to assign future debts) not only of the sub-hire owed to the head charterer by a sub-charterer [i.e. here the hire payable by OceanTask to CMT], but also of the hire payable under the sub-sub-charter by the sub-sub- charterer, [i.e. here the hire payable by SeaTask to OceanTask]: “The Cebu” (No.1).

In The Cebu (No.1), cit., p. 1016 E-G the head charter and the sub-charter both contained an unamended version of NYPE 1946 clause 18 (without express references to hire and sub-hire). Lloyd J held that, on the proper construction of that clause, the time charterer had assigned to the owners by way of equitable assignment, not only sub-hire due to it under its direct sub-charter, but also any sub-hire due under any sub-sub-charter of which it was equitable assignee. In that case the string of charters was:

Mr Richard Siberry for the defendants had submitted that Naviera Tolteca could claim sub-freights due from Itex to Lamsco and Owners could claim sub freights due from Lamsco to Naviera Tolteca. But there was no way in which Owners, who lacked privity of contract with Lamsco or Itex, could claim against Itex. Mr Jacobs has repeated that submission before me. Lloyd J rejected that submission on the basis that Naviera Tolteca was capable of assigning to owners the right which it had itself received by way of equitable assignment. It did not matter that it had received that right by way of security. He held that it was the clear intention of the parties to be derived from the language used in clause 18 that Naviera Tolteca had assigned not only sub freights due to it as charterers but also any sub freights due under any sub-sub-charter of which it was equitable assignee.

I respectfully agree with that analysis. In using the expression “all … sub-hire” the draftsman was not simply seeking to make clear that all, as opposed to some, of the sub charter hire was the subject of the lien; but to provide that it was to extend to all sub-hire down the line. If that be the right construction it is one to which the law can and should give effect. Equity considers as done that which ought to be done. If A (e.g. Lamsco) agrees to assign to B (e.g. Naviera Tolteca) a future debt which is to be owed to him by D (e.g. Itex) and B agrees that that debt shall be assigned by him to C (e.g. Owners) by way of security, then, when the debt arises and the security becomes enforceable, the debt owed by D to A is to be treated in equity as due to C. The agreement to transfer as between A and B and as between B and C binds the consciences of A and B.

On 10 January, 17 January, 7 February and 5 April 2012 Owners gave notice to SeaTask, although the first two notices were to OceanTask c/o SeaTask.

Accordingly, Owners have a good arguable case that they became entitled, legally or equitably, to claim any amount due from SeaTask under the SeaTask charter on or before 5 April 2012.

The Respondents contend that there can be no question of a freezing order being continued against SeaTask because there is no claim against them in respect of which the English Court has substantive jurisdiction. This is because the SeaTask charter is subject to Greek law and arbitration. If so, it is submitted, there is no scope for service out either on the basis of a direct claim by Owners as assignees against SeaTask as debtors or under s 44 of the Arbitration Act 1996. Owners contend that there are strong reasons to doubt whether the SeaTask charterparty now put forward is in truth the charterparty which was entered into between SeaTask and OceanTask.

On the assumption that it is necessary, in order to establish English jurisdiction, that the SeaTask Charter be subject to English law it would be necessary for Owners to establish that they have a good arguable case. In the present context that means showing that the Owners have either much the better or the better side of the argument as to the falsity of the supposed SeaTask charter: Bols Distilleries BV v Securicor Yacht Services Ltd [2007] 1 WLR 12, paras 26-28; Cecil v Bayat [2010] EWHC 641. In considering that question it is necessary to take account of the fact that the argument for the Owners is (a) that the SeaTask charter that has been produced is probably a forgery in that it purports to be, but is not, the actual agreement between the parties; and (b) that Mr Katsamas’ evidence that it is the true agreement is probably knowingly false. I turn therefore to consider the factors relied on by the Owners.

The Owners submit that it is surprising that the SeaTask charter is in the form of a formal charterparty and not something agreed, as were the OceanTask and Sinochart charters by an informal email recap. I do not find this particularly surprising. The charter was not fixed through brokers; and the parties to it were closely connected, and dealing with each other face to face in Athens. SeaTask was the management agent of OceanTask. In those circumstances, whilst a formal document could be expected, as a matter of prudence, for accountancy reasons, I do not regard the absence of emails preceding it as suspicious.

On 12 October SeaTask emailed to the Master asking him, after delivery of the vessel from the Dayang Yard, to revert with a signed delivery certificate, a proforma of which was attached, certifying delivery by SeaTask to Sinochart. The Master delivered such a certificate dated 15 October. These contemporaneous documents are consistent with the making of a prior charter between OceanTask and SeaTask.

The rate specified in the SeaTask charter is $ 13,500 per day. Owners submit that that is unlikely to be the true rate because, if it was, it would mean that OceanTask was chartering out to SeaTask at $ 13,500 and SeaTask was then chartering out to Sinochart at $ 14,825, thus making a profit. That would be inconsistent with SeaTask’s fiduciary duty as OceanTask’s agent. It is much more likely that the charter hire was at the rate of $ 18,000 per day, the rate payable under the OceanTask charter. Otherwise OceanTask would not be able to fulfil its obligations to CMT.

I do not find this compelling. First, it is not clear to me why OceanTask should put in $ 13,500 if the true figure was $ 18,000. It could, I suppose, have been to ensure that there was less hire for parties up the chain to attach, whilst ensuring that, in reality more was paid to OceanTask. Owners suggested that the rate appears because it could be made to fit in with the amounts paid by SeaTask to OceanTask which appear in the OceanTask bank statements. But there seems to me a much more plausible reason for the $ 13,500 figure. The $ 18,000 figure was agreed in 2010 (for a much longer charter) and by 2011 rates of hire had fallen. So it is not surprising that there was a lower figure in 2011. If the market rate was around $ 13,500 - $ 14,900, it would make little sense to agree to pay $ 18,000, particularly given OceanTask’s indebtedness to SeaTask.

The $ 13,500 hire in the SeaTask charter is less than the $ 14,825 hire in the Sinochart charter. But the former figure was for a charter which could end after 5 months; whereas the Sinochart charter could end after 3.5. Mr Jacobs proffered a calculation which showed that the difference in net hire (i.e. after commissions) between the two charters was $ 921.5 per day. In the event that both charters lasted for the minimum time the Sinochart charter would end first. The profit during the minimum period of the Sinochart fixture of about S 96,000 would have been wiped out if SeaTask was unable to employ the vessel for 7.5 days. Mr Macey-Dare submitted that it was, nevertheless, surprising to find a gap of nearly $ 1,000 per day under the two charters. But, as it seems to me, the difference in their lengths provides a plausible commercial reason for it.

There is no brokerage evidence before the court as to what the market rates were and in those circumstances the only evidence that $ 13,500 was a market rate is that of Mr Katsamas: paras 10 & 13. In those circumstances I am not minded to conclude that $ 13,500 was, or was perceived to be, an undervalue.

Owners submit that the inclusion in the SeaTask charter of the Greek law and arbitration clause, the no lien clause, and the set off clause is very surprising and unlikely to have been agreed in arm’s length negotiations. As to the former it does not seem to me particularly odd that a charter between two corporations, which represent Greek interests or, at any rate, are managed (in part) from Greece should have a Greek law and arbitration clause. The position could be expected to be different if the fixture was negotiated through a broking chain by those accustomed to insert London arbitration clauses. It is true that the Management Agreement provided for LMAA arbitration. But that agreement was drafted by English lawyers on both sides. Mr Katsamas’ evidence was that the parties’ relationship became closer as time passed. I do not find it particularly surprising that, in those circumstances, London arbitration was not selected.

A lien clause is very frequently seen in charterparties. It is part of the NYPE form. But it is open to parties to exclude it or to provide – as in Cosco v Armada Shipping - that there shall be no assignment of hire. If that is done the charterer avoids possible exposure to interpleader suits and interference with his cash flow - particularly important in circumstances where someone in the position of SeaTask may be owed substantial sums by someone in the position of OceanTask which are not capable of being set off against hire and thus fall due in full to an assignee even though OceanTask would not seek to claim them.

The set off clause appears to me entirely rational particularly in circumstances where OceanTask owed so much to SeaTask. It was not in fact relied on by SeaTask in the final hire statement.

Next, Owners draw attention to the recap of the Sinochart charter. This records the charter chain as being Head Owners – Owners – CMT – OceanTask – SeaTask, and describes the vessel as:

“AS PER OWS BTB CP (CL29)”.

The recap, which was drafted by Chinese brokers, then sets out the key commercial terms and provides:

“OWISE AS PER ATTACHED OWS PROFORMA NYPE CP (BASED ON B-T-B C/P) STRICTLY AND LOGICALLY AMENDED AS PER MAIN TERMS AGREED WITH FOLL ALTERATIONS”.

….

-Cls 30: 3^rd line 1 to be replaced by 2 – owise clause to remain as per b-t-b cp, no deletions

…

-Cls 56

Delivery notices: On fixing and then daily notices as per b-t-b c/p except 5/3/2/1 days definite redly notice”

The attached proforma consists of an amended NYPE form with details blanked out, including the identity of the owners and the charterers, to which are attached additional clauses 29 - 111. The amended NYPE form appears to be virtually the same as the amended NYPE form for the CMT Charter: see for instance the reference to Oslo in the first line, the references to clause 41 in clause 3, clause 37 in clause 4 and clause 71 in clause 10 and the amendment to clause 19 (Footnote: ⁵). It thus contains terms as to arbitration and lien, which are materially the same as those of the CMT and OceanTask charters. Clause 37 (Hire Payment) of the additional clauses and the attached questionnaire show the disponent owner as SeaTask. The attached clauses are similar but not identical to those contained in the CMT Charter and the SeaTask Charter.

The Respondents say that the words “based on B-t-B C/P” show that the Sinochart charter was not being put forward as identical to the SeaTask charter. Owners accept that the proforma would not be identical to the SeaTask charter insofar as the proforma names SeaTask as the disponent owner and requires hire to be paid to it. But otherwise it is, they say, clear from the words in the final recap and, in particular the general reference to the terms being “BASED ON B-T-B C/P” in the “OWISE AS PER” clause and the reference to “as per b-t-b c/p” in respect of clauses 30 and 56 that the terms of the proforma are the terms of SeaTask’s back-to-back charter.

I do not regard these words as necessarily having that significance. The recap did not attach the charter to SeaTask (i.e. the actual back to back charter) and provide that it would apply to Sinochart charter subject to specified exceptions. It attached what was described as a proforma charter by a blanked out owner to an unidentified charterer which was said to be “based on” the (actual) back to back charterparty. That at least allowed for the possibility that there were some clauses in the actual back to back charterparty which differed from the attached proforma. If SeaTask wanted the charter with Sinochart to contain a term which differed from the attached proforma it would, of course, have been necessary to specify that in the charter negotiations and the recap. But insofar as they were content for the terms to be the same as the proforma, it was not necessary to explain, if it was the case, that the actual back to back charter had some different provision. There are in fact a number of differences between the clauses forming part of the proforma and the SeaTask charter: e.g. clauses 55, 59, 62 and 81.

I do not think it matters for these purposes whether the references in clauses 30 and 56 in the recap to “as per b-t-b c/p” were (as Mr Jacobs suggested) references to the proforma, for which “b-t-b c/p” was shorthand, or to the actual charter to SeaTask.

I turn then to consider the documents which bear on the authenticity of the charter.

On 6 October SeaTask wrote to the Master introducing themselves as OceanTask’s managers and describing Mr Gerardis as one of those in charge of its operations. No mention was made of a charter to SeaTask. But the charter had not then been made. It is only said to have been made on 10 October. The email of 12 October to the Master presumes a charter to SeaTask. The Sinochart recap of 13 October describes the charterparty chain including SeaTask.

On 10 January 2012 SeaTask, as OceanTask’s agents, emailed CMT to say that in consequence of owners’ (i.e. CMT’s) notice and in anticipation of their withdrawing “we have ourselves withdrawn the vessel from the service of our sub-charterers, with effect from abut 16:00 yesterday”. The CMT notice appears to have been given because of a failure of OceanTask to pay hire to CMT, which happened because OceanTask feared that, if they did, they would be left in debit because they would never get paid for the bunkers on board when, as was expected, CMT collapsed. (CMT is now in liquidation). It is not clear on the face of that email who are “our sub-charterers”. Mr Katsamas’ evidence is that he was referring to Sinochart. It is clear from a further email sent by Mr Gerardis to the Master on the same day on behalf of SeaTask that the vessel had been withdrawn from the services of Sinochart.

Owners submit that it should have been SeaTask who were withdrawing the vessel from Sinochart and that the draftsman of the first email must have thought that OceanTask was chartering direct to Sinochart. It is plain from Mr Katsamas’ evidence that he was the draftsman and that that was not what he thought. In circumstances where SeaTask was both agent for OceanTask in respect of the CMT charter and principal under the Sinochart charter I do not regard the ambiguity in the expression “our sub-charterers” as of any great significance.

On 19 January 2012 Mr Katsamas emailed a number of addressees to say that there was no contractual right for others to lien any sub hires belonging to SeaTask or down the chain from them. There was, thus, early reference to the absence of a lien at what appears to be the first occasion when the point was relevant. A similar message was sent by him on 19 January 2012 to CMT.

On 10 February 2012 Sinochart told SeaTask that they understood that SeaTask had said that the liens claimed were not valid because their charter did not contain a lien clause and asked whether SeaTask could provide them with documents to support this. Mr Katsamas replied to say that SeaTask owed no hire to OceanTask and that there was no lien because of clause 18 of the SeaTask charterparty, the terms of which he set out. He did not attach a copy of the charter. Owners say that this is suspicious. I do not take that view. Mr Katsamas set out the clause in which Sinochart were interested. Sinochart did not thereafter, so far as appears, ask for a copy of the charter itself.

I also think there is force in Mr Jacobs’ point that, if the SeaTask charter put forward is a forgery, SeaTask must have had a considerable degree of foresight as to how this litigation was going to pan out, and in his submission that the emails appear to be a genuine response to the situation as it unfolded.

Owners draw attention to the absence of interim hire statements and to the fact that the final hire statement shows payments of hire in round numbers (e.g. $ 275,000, $ 360,000, $ 248,500), and that on only one of the payment debit advices is there a reference to the payment being on hire account (on the others there is a blank under “payment details”). None of this strikes me as particularly surprising given the closeness of the relationship between the two companies.

The document which purports to be the SeaTask Charter of 10 October 2011 was produced in evidence on Monday 23 April 2012 i.e. the Monday before the return date. I do not find that particularly suspicious. It was produced when the evidence in response to the applications was filed and as part of it.

I am not persuaded that Owners have either much the better, or the better, side of the argument as to the validity of the SeaTask Charter of 10 October 2011. On the contrary it seems to me that the Respondents have much the better side of the argument. I decline to hold that there is a good arguable case that the document produced is not the true SeaTask charter. Nor is there a good arguable case that the charter had a rate of hire of anything other than $ 13,500.

It follows that the SeaTask charter is not shown to be one subject to English law or arbitration and is probably subject to Greek law and arbitration. There is, therefore, no basis for serving SeaTask out of the jurisdiction on the footing that Owners have a claim against them which is subject to English law. I consider below whether service out is possible even if the arbitration is to be held in Greece and under Greek law.

According to the Respondents there is no hire outstanding under the SeaTask charter. SeaTask’s preliminary final hire statement shows about $ 141,000 to be due to it. This sum is reached by using $ 13,500 as the hire rate. The Respondents contend that there would be a small balance due to SeaTask even if they were unsuccessful in relation to the off-hire and related overloading issues. That would involve deducting from $ 141,012.01 figures of $ 72,765, $ 14,818, $ 795, $ 6,453, $ 434 and $ 24,000 which would make $ 120,176.29. Owners contend that it would also be necessary to add the expense of transit of the canal which would produce a total figure of $ 208,031.56 which, after deduction of $ 141,012.01, would produce a debt of at least $ 67,019.55. I regard that as arguable.

Mr Jacobs contends that, even if that be so, the debt owed by OceanTask to SeaTask can be set off under clause 37. That clause provides that the charterers shall pay hire semi monthly in advance and that “Charterers may offset hire against debt owed to the Charterers by the Owners”. Mr Macey-Dare submits that this clause gives the charterers an option either to pay hire to the nominated bank account or to offset hire against the debt. But the latter option requires charterers to choose it. That had not occurred by the time of the exercise of the lien. Thereafter it was too late. Indeed, as Mr Jacobs was keen to emphasize, the set off was not relied on by SeaTask even in the final hire statement issued by them. The effect of the assignment is that payment must be made to the assignee. Set off is a form of payment and after notice from the assignee payment must be to him. This submission appears to me to be correct and certainly arguable.

Mr Jacobs has another string to his bow. He submits that the Owners’ claim as assignees is in any event subject to equities which would include the pre-existing debt. As to that Mr Macey-Dare submitted that the rule that an assignee takes subject to equities rests on the basis that it would be unjust to deprive the debtor of a right of set off which had arisen before the assignee’s right was perfected. But it would not be unjust to deprive him of that right where he knew of the assignment because he negotiated it. That was the position in this case in relation to the lien clause in the OceanTask charter, in respect of which SeaTask acted as agent for OceanTask. Secondly, he submits that SeaTask does not come to equity with clean hands because they have put forward what is probably a false version of the SeaTask Charter or because that charter involves a fraudulent preference.

I am not persuaded that either of these points is sound. As to the first I do not regard the fact that SeaTask negotiated the OceanTask charter as good reason to deprive them of the benefit of the fact that all assignees take subject to equities. When SeaTask on behalf of OceanTask agreed to the lien in the charter it must be taken to have agreed to a lien which would operate in the usual way in which assignments operate and subject to the usual equities.

As to the second I am not persuaded that SeaTask do not come with clean hands on either basis.

It seems to me however that Owners are entitled to claim the $ 62,000 free from the set off on the basis that the right of set off given by the SeaTask charter is a right which requires to be exercised. If it is not exercised the hire becomes due. An assignment taking effect after the hire becomes due and before the exercise of any right of set off takes priority. It is not suggested that the debt owed by OceanTask to SeaTask is a debt which would, in accordance with The Nanfri be capable of setting off against hire, absent the specific contractual provision. Although the SeaTask charter is governed by Greek law it has not been shown that Greek law is any different to English law in this respect.

Lastly Mr Jacobs submitted that the Owners as assignee must give credit as against SeaTask for Owners’ retention of the bunkers. I do not regard that submission as well founded. The final hire statements evidence what is in essence a sale of the bunkers from SeaTask to OceanTask and then to CMT. I cannot regard SeaTask as having any subsisting claim against OceanTask.

Accordingly it seems to me that Owners have an arguable claim against SeaTask for about $ 62,000.

Owners submit that there is a clear risk of dissipation in this case. The basis upon which this was put in the skeleton argument, and further developed in submission, together with my observations thereon are as follows:

In TTMI Ltd. v. ASM Shipping Ltd. [2006] 1 Ll.R. 401 at paras 24-27 I said this:

“25 The purpose of the Mareva jurisdiction is sometimes referred to as the prevention of the “dissipation of assets”. Without explanation that phrase is, itself, obscure. As Colman J stated in Gangway Ltd v Caledonian Park Investments (Jersey) Ltd (2001) 2 Lloyd's Rep 715 the underlying purpose of the jurisdiction is not to provide a claimant with security for its claim but to restrain a defendant from evading justice by disposing of assets otherwise than in the ordinary course of business so as to make itself judgment proof with the result that any judgment or award in favour of the claimant goes unsatisfied. The purpose is not to provide security for the claimant in respect of his claim. It is well established that it is not necessary to establish that the defendant is likely to act with the object of putting his assets beyond reach. What has to be shown is that there is, absent an injunction, “ a real risk that a judgment or award in favour of the plaintiffs would go unsatisfied ”: The “Niedersachsen”: [1983] 2 Lloyd's Rep 600. That formulation cannot, however, be regarded as a complete statement of the law. A defendant may be likely to make perfectly normal dispositions, such as the payment of ordinary trading debts, the effect of which may be that, when any award is made, it is, in whole or in part unsatisfied when, absent those payments, it might have been satisfied or satisfied to a greater extent. Something more than a real risk that the judgment will go unsatisfied is required.

26 Thus in a case in the Court of Appeal of Ontario — Chitel v Robart [1982] 39 O.R. (2d) 513, 532–3 — the Court said:

“The applicant must persuade the court by his material that the defendant is removing or there is a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of judgment, or that the defendant is otherwise dissipating or disposing of its assets, in a manner clearly distinct from his usual or ordinary course of business or living , so as to render the possibility of future tracing of the assets remote, if not impossible in fact or in law”.

27 To similar effect, in Ketchum International Plc v Group Public Relations Holdings (1997) 1 W.L.R. 4 Stuart Smith, L.J. referred to the jurisdiction of the Court of Appeal to ensure that its judgments on appeal were not rendered valueless “by an unjustifiable disposal of assets”.

I am not persuaded that there is a real risk of OceanTask or SeaTask making unjustifiable disposals of assets otherwise than in the ordinary course of business with the intention, or having the effect, that any judgment against either of them goes unsatisfied or is very difficult to enforce. On the contrary this seems to me a relatively standard dispute as to what is due, and from whom to whom, at the end of the various charters of the vessel, and whether any liens have been validly exercised and with what effect.

In those circumstances I would not be minded to continue the order of Popplewell J against either Respondent.

That conclusion makes it unnecessary to determine whether I have jurisdiction to make such an order against SeaTask even though it is not a party to a London arbitration governed by English law.

As to that, section 2 of the Arbitration Act 1996, which is in Part 1 provides that

“ (1) The provisions of this Part apply where the seat of the arbitration is in England and Wales or Northern Ireland.

(3)

The powers conferred by the following sections apply even if the seat of the arbitration is outside England and Wales or Northern Ireland or no seat has been designated or determined–

(a)

section 43 (securing the attendance of witnesses), and

(b)

section 44 (court powers exercisable in support of arbitral proceedings);

but the court may refuse to exercise any such power if, in the opinion of the court, the fact that the seat of the arbitration is outside England and Wales or Northern Ireland, or that when designated or determined the seat is likely to be outside England and Wales or Northern Ireland, makes it inappropriate to do so”. [Bold added]

Section 44, which is in Part 1 of the Act, provides:

“Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.

Order 62.5 provides as follows:

“(1)

The court may give permission to serve an arbitration claim form out of the jurisdiction if:

…

(b)

the claim is for an order under section 44 of the 1996 Act

It seems to me plain that section 44 of the Arbitration Act 1996 gives the Court jurisdiction, in the circumstances to which it refers, to entertain an action for an injunction when the seat of the arbitration is outside the United Kingdom (in which case the law to be applied is quite likely not to be English law), and that Order 62.5 (1) (b) gives the Court power to give permission to serve an arbitration form out of the jurisdiction whether the seat of the arbitration is London or Athens (cf Order 62.5 (1) (c) where the seat must be within the jurisdiction), and regardless of the law which applies to the contract. Thus it is not necessary in order to found jurisdiction to establish that the SeaTask charter is subject to English law: see Mobil Cerro Negro v Petroleum de Venezuela [2008] 1 Lloyd’s Rep 684 where permission was granted to serve out under CPR 62.5 (1) (b) where the contract in question was subject to the law of Venezuela and to arbitration in New York.

A similar position arises under section 25 of the Civil Jurisdiction and Judgments Act 1982, as extended by the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997, which enables the High Court "to grant interim relief" in relation to "proceedings" that have been or are about to be commenced in a foreign state.

It is, however, highly material to a claim for relief under section 44 that no Greek arbitration has been commenced nor has any undertaking been given to commence one. In the absence of either it would not be appropriate to grant relief against SeaTask in support of any substantive claim against it.

Mr Macey-Dare sought to place some reliance on the jurisdiction to grant relief against third parties recognized in TSB Private Bank International SA v Chabra [1992] 1 WLR 231 and other authorities. Under this jurisdiction the Court may grant relief against a third party, against whom the claimant does not have a cause of action, who is holding the assets of someone against whom the claimant does have a cause of action. Thus, it was submitted, if there was no substantive jurisdiction against SeaTask because of the Greek law clause in the SeaTask charter, nevertheless relief could be granted against them upon the footing that there were claims which a liquidator of OceanTask could pursue against SeaTask and SeaTask should be restrained from disposing of its assets in a way that might frustrate recovery in respect of those claims.

In response to these submissions Mr Jacobs submitted that there would be no basis for granting permission to serve SeaTask out of the jurisdiction. He referred to Vale do Rio v Bao Steel [2000] 2 Lloyd’s Rep 1 in which Thomas J, as he then was, held that the provisions of what was CPR PD 49G did not permit service out of the jurisdiction of a claim by owners that brokers had had authority to contract on Bao Steel’s behalf. That was a claim against someone who was not a party to the arbitration and involved a different provision of the then rules (which did also provide for service out of an application under section 44). Thomas J held that the relevant paragraph of the rules, the then equivalent of CPR 62.5 (1) (c) applied only to applications by and against parties to an arbitration.

By contrast in Tedcom Finance v Vetabet Holdings [2011] EWCA Civ 191, in an interlocutory decision, the Court of Appeal thought that there was an arguable case that the court had power to order service of an arbitration claim form under section 44 and Part 62.5 (1) (b) against the second defendants, who were not parties to the relevant arbitration, in order to preserve assets which were the subject matter of the proceedings. The Court also held that the second defendants were arguably necessary or proper parties to the claim against the first defendants.

In BNP Paribas SA v OJSC Russian Machines [2012] 1 Lloyd’s Rep 61 Blair J gave permission for the service out of the jurisdiction of what were in effect applications for anti-suit injunctions against:

I do not propose to resolve this controversy (although I incline to the view regarded as arguable by the Court of Appeal and espoused at para 6.039 of Gee on Commercial Injunctions) since, assuming that I have jurisdiction I would not be minded to grant permission.

In relation to this head of claim Owners seek to rely on the principles stated by the High Court of Australia in Cardile v LED Builders Pty Ltd [1999] 162 ALR 294. In that case the High Court said this:

“What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word “may”, be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which:

(i)

the third party holds, is using, has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including “claims and expectancies”, of the judgment debtor or potential judgment debtor; or

(ii)

some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against the actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.’

That case was followed by Briggs J in Revenue & Customs Commissioners v Egleton [2006] EWHC 2313 (Ch); [2007] 1 All ER 606.

It was said that, in the present case:

The effect of that is said to create a fraudulent preference in favour of SeaTask. SeaTask is a substantial creditor of OceanTask, which may well have been insolvent at all material times. By having a rate of $ 13,500 in the SeaTask charter when the market rate was $ 14,825 SeaTask ensured that less of OceanTask’s debt to it was paid off than should have been. By inserting itself in the chain of charterparties with a set off clause SeaTask (a) was able to recoup the debt due to it from OceanTask by setting that debt off against the hire due from it to OceanTask and (b) prevented those further up the chain from claiming the hire due by SeaTask in satisfaction of the debts owed to them. The no lien clause prevented those higher up the chain from claiming hire from those below SeaTask in the chain whilst SeaTask was able to do so. SeaTask could thereby intercept monies which would ordinarily pass upwards for the benefit of other creditors and obtain payment for itself. Further the charter to SeaTask at $ 13,500 is a transaction at an undervalue and the same is likely to be true of the “Aqua Atlantic” charter.

A liquidator of OceanTask could claim from SeaTask the difference between $ 14,825 and $ 13,500 per day as damages for breach of fiduciary duty, or as a secret profit or as a fraudulent preference or a transaction at an undervalue. The fact that SeaTask and OceanTask have behaved in this illicit manner is indicative of a risk of further dissipation.

I do not regard these submissions as convincing. First, as I have said, I do not accept that the $ 13,500 rate has arguably been shown to have been, or to have been understood to have been, a below market rate. Nor do I see how OceanTask could be regarded as fraudulently preferring SeaTask as a creditor by receiving less than the market rate of hire. The effect of that would be to delay the time when SeaTask was paid off.

Secondly, I do not regard the no lien and set off clauses as commercially unjustifiable and, if they are not, there does not seem to me any real prospect that their inclusion in the SeaTask charter is to be regarded as a fraudulent preference of SeaTask over OceanTask’s other creditors. The effect of the set off clause is that SeaTask can set off the debt due to it by OceanTask notwithstanding the restrictions on set off prescribed by The “Nanfri”. That may have the effect that CMT cannot recover (by assignment) against SeaTask in respect of the debt owed by OceanTask to SeaTask. Such an inability means that the security constituted by the assignment is not what it might have been if the set off clause had not existed. However, I find it difficult to treat that as a fraudulent preference by OceanTask of one of its creditors in favour of another. The effect is that a creditor of OceanTask has a less efficacious security than he might otherwise have had.

The insertion of SeaTask in the chain does have the effect that SeaTask may secure payment of OceanTask’s debt to it by setting it (or some of it) off against hire. But this is, in effect, payment for obligations owed by SeaTask to OceanTask for the provision by OceanTask of the services of the vessel, from which SeaTask derives the benefit of the charter to Sinochart.

So far as the no lien clause is concerned, its effect is to preclude OceanTask from claiming, by way of assignment, against those below SeaTask in the chain, and thus to prevent those above OceanTask from so claiming either. But I see no basis upon which OceanTask should be regarded as making a fraudulent preference on account of the absence of a lien clause. SeaTask cannot be regarded as bound to grant OceanTask an assignment of debts due to it (which is, in essence what the lien provides for) however common such lien clauses may be.

Thus, the claims which the Owners contemplate might be brought by a liquidator against SeaTask appear to me remarkably unpromising. A claim based on the difference between $ 13,500 and $ 14,875 per day (less commission) for the 113 days of the Sinochart charter would be worth about $ 100,000. The likelihood of it being pursued by a liquidator of OceanTask seems remote. Whether anyone will actually seek to put OceanTask into liquidation is doubtful. The Owners have given no undertaking that they will do so, much less that they will finance any claim. If a claim was to be brought, it would be met by a claim for the very large sum owed by OceanTask to SeaTask, which, whether or not it could be set off, would be one of OceanTask’s debts.

In those circumstances I would not have been minded to grant any relief on the basis of Cardile v LED Builders as followed in Revenue Commissioners v Egleton.

For these reasons I propose to discharge the injunctions granted by Popplewell J.

I am grateful to the parties for their helpful submissions. I would have been more grateful if they had not been accompanied by so woefully inadequate an estimate [2 hours] of the time for the hearing.