Royal Courts of Justice
The Strand
London WCA 2LL
B e f o r e:
MR JUSTICE TOMLINSON
Between
CHEMICALS & PLASTICS LIMITED & OTHERS
Claimant
-v-
MARITTIMA ETNEA SRL
Defendant
Tape transcription by Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Telephone 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MR N PHILLIPS appeared on behalf of the Claimant.
MR R THOMAS appeared on behalf of the Defendant.
J U D G M E N T
MR JUSTICE TOMLINSON: This is an application by the defendant ship owners in a damage to cargo action. The carriage in question took place as long ago as December 1998. In circumstances which I must describe the claimant cargo interests on 17th December 2002 obtained a judgment for damages to be assessed in default of acknowledgement of service. The defendants seek the setting aside of that judgment on the basis that the court lacked jurisdiction over them in respect of this claim. They are domiciled in Italy. It is common ground that the defendants have never agreed to English jurisdiction. The jurisdiction of the court was invoked and service upon the defendants in Italy made possible upon the basis of an incorrect certificate by the claimants’ solicitors to the effect that this court has power under the Civil Jurisdiction and Judgments Act 1982 to hear the claim.
The claimants did not apply for judgment in default of acknowledgement of service until nearly eight months had elapsed since service upon the defendants; a time during which the defendants were, as I find, and as is for most of the period accepted, under the impression that they were not required to take any steps to protect their position. The claimants then applied for judgment in default of acknowledgement of service without giving notice to the defendants that they intended so to do. By way of compounding their earlier error, the solicitors for the claimants placed before the judge on a without notice paper application an affidavit which (1) failed to draw attention to the earlier error; (2) referred to jurisdiction in a manner which, even if it was not intended to, was calculated to mislead; and (3), for good measure, failed to refer either to the circumstances which had led the defendants to believe that no action was required of them, or to the fact that no notice had been given to the defendants to warn them that the moratorium was now over and required immediate action from them if they were not to be in jeopardy of a judgment in default.
In these circumstances it may be thought surprising that the claimants came to this application in an attempt to uphold the default judgment. In their evidence filed in support they did not acknowledge -- they did not even come close to acknowledging -- that they had made an error in stating at the outset that the court had jurisdiction. In fact the witness statement of Judy Tamsin Allen, an assistant solicitor in the firm of Messrs Clyde & Co, seems, on its face, to attempt to justify the assertion of jurisdiction and to suggest that any challenge to the jurisdiction is unsustainable. I accept the assurance of the claimants’ counsel, Mr Neville Phillips, on instructions, that by the time this witness statement was prepared the error was realised and that there was never any intention to mislead. However in the light of this it is most unfortunate that the error was not simply acknowledged and such points as could legitimately be made then put forward upon a more straightforward basis.
Mr Phillips, very sensibly, confined his approach before me to a submission that I should impose a term upon the setting aside of judgment to the effect that the defendants undertake not to rely in Italy upon an accrued time bar defence. Mr Phillips suggested that the defendants must be regarded as having conducted themselves in such a manner as to indicate, principally by their failure to object to the prospect of proceedings in England, that they would not object to English jurisdiction for the resolution of the dispute, and that it would be inequitable that they should now be permitted to resile from that representation.
The claimants are alleged to be the owners and/or consignees and/or lawful bill of lading holders and/or insurers of a cargo of sodium hydroxide (caustic soda liquid) shipped on board the vessel Sarah Wonsild at Rotterdam in the Netherlands, and carried pursuant to a bill of lading number 39675, dated 19th December 1998, and discharged in Arklow, Republic of Ireland. The defendants are, as I have already indicated, the registered owners of the motor tanker Sarah Wonsild.
The claim is in respect of contamination of the cargo by dicyclopenthadine, a previous cargo carried by the vessel, which allegedly resulted in an offensive smell and the depreciation in value of the cargo. The claimants claim for their losses caused by that contamination, including costs and expenses, and also losses suffered in respect of the contamination of cargo already contained within the shore tank into which this cargo was discharged together with interest and costs.
The claim against the defendants is for their failure properly to clean the vessel’s tanks, pumps and lines prior to the loading of the caustic soda liquid, and an alleged failure to care for the cargo and to deliver it in the same good order and condition in breach of the contract of carriage. The bill of lading incorporates the terms and conditions of the contract of affreightment, dated 12th December 1997, and the claimants claim that the defendants were in breach of the terms thereby imported, and also in breach of Article 3 Rules 1 and 2 of the Hague Visby Rules, which likewise form part of the contract of carriage.
The defence is one of the exercise of due diligence. The owners rely upon the fact that, after butterworthing of the vessel’s stainless steel cargo tanks, all tanks were inspected on behalf of the shippers and certified as clean, dry and suitable for loading. There is also a point to the effect that the claimants allegedly failed reasonably to mitigate their loss. The claim is for €265,104.68, together with survey fees.
The cargo was apparently discharged on or about 21st December 1998. The contractual time bar therefore expired on or about 21st December 1999. It was repeatedly extended by agreement, but the defendants failed to respond to a further request to extend made on 12th December 2001.
In the light of the defendants’ failure to respond, the claimants launched these proceedings by claim form issued on 18th December 2001, and re-issued on amendment on 19th December 2001. That claim form contained this statement:
“I state that the High Court of England and Wales has power under the Civil Jurisdiction and Judgments Act 1982 to hear this claim and that no proceedings are pending between the parties in Scotland or Northern Ireland or another Convention territory or of any contracting state as defined by Section…of the Act”.
(I should mention that the relevant part of that certificate is obliterated in the photocopying.)
Up until this point the matter had been handled in Holland. Dr Postmar of Messrs Schud & Grossheider, lawyers in Amsterdam, acted for the claimants. On the defendants’ side the matter was dealt with by Mr Van der Shay of Scandinavian Underwriting Agency, SCUA Holdings BV, the Dutch correspondents of the defendants’ P & I club, Skuld. There does not appear to have been, prior to issue of proceedings here, any very focused discussion as to the applicable jurisdiction.
On 28th August 2000 Dr Postmar wrote to Mr Van der Shay in these terms. Firstly, he referred to the cleaning clause in what he described as “the charter party”, and then continued as follows:
“As you will understand, we will not withdraw our claim if we do not hear from you within the next 14 days that your principals are now willing to discuss an amicable settlement than we will seek instructions to start proceedings in the UK.”
The correspondence before the court is incomplete. However, it is clear that there was no discussion as to the basis upon which proceedings would be started in the UK on the assumption that Dr Postmar carried through his statement of intention in that regard. This is not altogether surprising, bearing in mind that it is common ground that the defendant owners did not see the contract of affreightment, to which reference was made in the bill of lading, until February 2003. The owners were not themselves party to the contract of affreightment.
At the relevant time the vessel was time-chartered to Wonsild Tankers Limited. The bill of lading, on its face, recites:
“This shipment is carried under pursuant to the terms of the charter- party between Wonsild & Sons, Denmark, as owners, and Axo Nobel Amesfort, as charterers, and all terms whatsoever of the said charter, except the rate and payment of freight specified therein, apply to and govern the rights and obligations of the parties concerned in this shipment.”
However there is no such charter. Rather there is a contract of affreightment dated 12th December 1997 between the same identified parties. Clause 13 of the contract of affreightment reads:
“York Antwerp Rules 1974 (amended 1980) to apply and general average to be held in London. English law to apply. Arbitration to be held in London.”
15. The general words of incorporation in the bill of lading are insufficient to bring in the arbitration clause. The situation is thus one in which the Italian ship owners must be sued in the courts of the state of their domicile, unless one of the provisions of the Brussels Convention conferring jurisdiction on the courts of another state is engaged.
It might have been possible to rely upon Article 5(1) and/or Article 5(3) in an attempt to found jurisdiction in either Holland or the Republic of Ireland, as being either the place of performance of the obligation in question or the place where a tortious or delictual harmful event occurred. It should be noted, however, that there is no agreement conferring jurisdiction upon the courts of England, or even of the United Kingdom (to use the expression employed by Dr Postmar), so that Article 17 is not engaged.
I have already referred to Dr Postmar’s reference in August 2000 to proceedings in the UK. On 29th January 2001 Dr Postmar again wrote to Mr Van der Shay. He said this:
“This is to refer to your fax of 15th December 2000. As you know, subrogation forms are superfluous documents. Insurers are automatically subrogated when they have paid. Please let us go to the merits of this case. Do you or your principals really have the intention to start settlement discussions or not? Please be informed that I have just instructed my correspondents in order to start arbitration. If, however, you would confirm to me, at the latest before the end of this week, that indeed you are willing to discuss a settlement, then please let me have a settlement proposal before the end of this week so that I can stop the arbitration.”
Mr Van der Shay’s response to this message is important. It is the high point of the claimants’ case as to the existence of a representation made by the defendants, upon which they have relied. Mr Van der Shay’s faxed response on the same day, 29th January 2001, reads as follows:
“Thank you for your fax this afternoon. We do not consider subrogation forms as superfluous documents. We would really like to know by whom and respectively on whose behalf this claim is being pursued. Particularly if the handling of this matter should be transferred to England, the question of documentation will play an important role. We certainly expect you to make a little effort by handing over the subrogation form yet. We do not like the rest of your story at all. We have waited for you to reply ever since 15th December 2000, and the threatening tone of your fax is therefore not appropriate. First things first. First, you are to prove your identity and title to claim, after which the question of settlement can be looked into further. Your early reply would oblige.”
19. The first thing to be noted is that this is a response to a request for a settlement proposal so that Dr Postmar could “stop the arbitration”. Dr Postmar had indicated in his fax, to which this was a response, that he had just instructed his correspondents in order to start arbitration. Secondly, Mr Van der Shay does not in any way go along with the suggestion that proceedings, whether in court or in arbitration, should be in England. He merely remarks that if the handling of the matter should be transferred to England (emphasis supplied) documentation, in particular that proving title to sue, will play an important role. This is a very far cry from an unequivocal representation that the owners would be content to submit to the jurisdiction of the English court.
20. On 25th September 2001 Dr Postmar faxed Mr Van der Shay as follows:
”Thank you for your last fax. Please note that we have received instructions to start proceedings if we do not hear from you with a reasonable settlement proposal before 20th November 2001”.
On 24th December 2001 Dr Postmar faxed Mr Van der Shay as follows:
“Thank you very much for your fax of 21st December last… As you will understand, due to the fact that we didn’t receive in time a time bar extension, we have started proceedings in the UK. On the other hand, we are having the lead in this dance. Therefore, if a reasonable settlement proposal is made we are always willing to consider this. For your information, the back side of the bill of lading was blank.”
On 25th March 2002 Dr Postmar again faxed Mr Van der Shay, as follows:
“Reference is made to my fax of 24th December 2001, which met no reply. As I informed you, proceedings are on its way in the UK and as you know I expect that a lot of costs will have to be made on both sides. We can avoid this if settlement negotiations are initiated, but the initiative should come from you at this moment. Please let me know if your principals at all are willing to discuss a settlement or not. If not, then it is clear that we will continue with the proceedings full speed. May I have your views within the next 14 days.”
On 2nd April 2002 Mr Van der Shay reported to his principals at Skuld. His fax of that date to Mr Leonardo Pollito, after a heading which made clear that it referred to the particular voyage of the Sarah Wonsild, reads as follows:
“This is to refer to our telephone conversation with Mr Pollito a little while ago. Dr Postmar is still willing to look into the possibility of an amicable settlement. Last week he went on to say that he would therefore give appropriate instructions to Messrs Clyde & Co. This morning Dr Postmar reverted to tell us that Messrs Clyde & Co. had explained that the position is to be secured adequately by serving the writ one of these days. The most expedient and cheapest way would be for Messrs Clyde & Co to notify English solicitors, for them to accept service of proceedings on behalf of your members. Once this has been taken care of we will be allowed some reasonable time to sort things out, i.e. to obtain legal advice from Messrs Holmes Hardingham Walser Johnston and Winter, like we proposed in the past. We therefore recommend that you authorise these solicitors to accept service of the proceedings. You may care to send a copy of your instructing fax to us. Hopefully the aforesaid issue can be settled this afternoon, because we are to inform Dr Postmar not later than tomorrow morning.”
It will be apparent that at this stage the proceedings had not been served. Evidently the club or their member did not take the advice of Mr Van der Shay so far as concerned the appointment of English solicitors to accept service of proceedings on their behalf. However, service was effected in Italy on 15th April 2002.
23. Mr Van der Shay was under the impression, from his dealings with Dr Postmar, that it was not incumbent upon the defendants to take any step in the proceedings for so long as the parties were speaking to each other. This is borne out by Dr Postmar’s fax to Mr Van der Shay of 10th June 2002, and by what he has subsequently said in a witness statement. In the former, Dr Postmar said this:
“Please be informed that we are being pushed by our UK correspondent with regard to the continuation of the proceedings. They are living under a tight time schedule under the new CPR. As far as I can check, we have already agreed, on several occasions, for a further delay on your side, giving you the opportunity of bringing forward a reasonable settlement proposal. I am now also being chased by my clients, and they have instructed me to go on with the proceedings. Please let me have a settlement proposal before 26th June next, by default whereof I have no alternative but to continue the proceedings. May we have your views.”
As to the latter, in paragraph 11 of a witness statement dated 9th April 2003, Dr Postmar said, describing the period after the defendants had been served:
“Once that claim form was served the defendants were under an obligation, under the CPR, to lodge an acknowledgement of service. I had no discretion to waive the need to comply with that. To the extent that I thereafter indicated that further time for settlement might be permitted, and that the claimants would take no further steps in the proceedings for the duration of such extension, I was indicating merely that the claimants would not seek formally to progress the claim by, for example, serving particulars of claim requiring the service of a defence or, more immediately and if appropriate, obtaining judgment in default of their acknowledgement of service.”
Dr Postmar rightly described this, at paragraph 13 of his witness statement, as a “moratorium”.
On 25th October 2002 Dr Postmar faxed Mr Van der Shay in these terms:
“This is to refer to your letter dated 11th June 2002. I note that you are asserting that owners can rely upon shipper’s negligence as a defence and completely ignore the fact that the contamination occurred whilst the cargo was on board the vessel. The owners did not present a clean ship for the safe carriage of the cargo and the onus is upon owners to show which defences are available to them. Arguing that the shippers did not carry out proper sampling is not a defence. The report of Dr Cosulich focuses on the events at Arklow and the failure of the cargo owners to mitigate their loss. Please be informed that your surveyors were continuously informed about the steps to be taken and were present at the important meetings. We deny that cargo owners did not mitigate their loss as best as possible. We will revert on the comments made by Dr Cosulich in due course. We have had the experience that your principals are not willing at all to co-operate, vide the fact that your principals were not willing to nominate an English solicitor to accept service of proceedings. We were therefore compelled to make a lot of additional costs. Further, you are only suggesting a nuisance value settlement. This is unacceptable. Of course, we are willing to discuss a settlement, but our views about the merits are totally different. That means that I have instructed our London correspondents to go ahead with the proceedings. As you know, I am always willing to discuss a case like this, so please call me if your principals instruct you to do so.”
Dr Postmar describes this fax as the expiry of the moratorium.
There was no indication in that fax that the defendants were now required to acknowledge service immediately, or risk the entry against them of judgment in default. On the contrary, the clear indication was that the proceedings would be taken ahead by Dr Postmar’s London correspondents, in fact Clydes, rather than that it was incumbent upon the defendants to make the next move.
26. Mr Van der Shay’s belief, that it was not yet incumbent upon the defendants to take any step in the proceedings, was quite reasonably reinforced by the fact that thereafter nothing at all happened, so far as he was concerned, until mid-January 2003. What happened on the ground was this. Default judgment was entered by the claimants on 17th December 2002. Notice of the judgment appears to have been despatched the following day by ordinary mail, but it was not received by the defendants at their office in Augusta until 27th December 2002. Due to the Christmas break, this notice was not forwarded to the defendants’ head office in Palma until 3rd January 2003, where it was received on 7th January 2003. The head office duly forwarded it to Messrs PL Ferrari (the Italian P & I brokers for the defendants), where it was received on 13th January. It is usual and customary for all communication between Skuld and its members on the question of claims to be passed through them. The defendants’ P & I club, Skuld, was then notified on 16th January 2003 and the matter was referred to the defendants’ present solicitors, Messrs Thomas Cooper & Stibbard, on 23rd January 2003. Thereafter, some time was spent in taking instructions and investigating the position, establishing the facts, and drafting the application to set aside, which was issued on 4th February 2003.
As I have already mentioned, the application for judgment in default was supported by an affidavit sworn by Miss Allen on 5th December 2002. At paragraph 13 she said this:
“The claim form has been properly served by Italian lawyers upon the registered office of the defendants in Italy. The time for lodging an acknowledgement of service after service of proceedings in Italy is 21 days, so that the defendants had until 7th May 2002. Since service of the claim form, Schud & Grossheider have continued to attempt to reach an amicable resolution to this dispute with the defendants’ Dutch P & I representatives. Almost seven months have passed since the deadline, but no acknowledgement of service has been filed.”
Miss Allen made no mention whatever of the moratorium, still less of the manner in which its expiry had been signalled. The impression was given that the defendants had simply ignored the proceedings for seven months. As to jurisdiction, Miss Allen said this:
“The bill of lading is signed by the master and has the stamp of the defendants’ ship owners endorsed thereon. This bill evidences the contract of carriage and incorporates the terms and conditions of the above-mentioned contract of afreightment. Clause 13 of the contract of afreightment provides: ‘English law to apply. Arbitration to be held in London’. As the bill of lading does not specifically incorporate the London arbitration clause, London arbitration does not apply to the bill of lading, but as English law does apply to the bill of lading contract it is implied that the dispute may be determined by the High Court. In these circumstances, the English High Court is the appropriate forum to decide this dispute and there is no other court that has exclusive jurisdiction under the Civil Jurisdiction and Judgments Act 1982 to deal with the claim. The bill of lading and contract of afreightment are at pages 38 to 44 of ‘JTA1.’”
The paper application for leave to enter judgment in default came before Moore-Bick J. He gave leave for the entry of judgment in default. Miss Allen describes this episode in paragraph 33 of her witness statement of 26th February 2003 in these terms:
“In any event, the bill of lading incorporates, as Miss Liversedge notes in paragraph 5 of her statement, all terms whatsoever of a contract of afreightment dated 12th December 1997, clause 13 of which provides for the application of English law. This was drawn to the attention of the court in paragraph 14 of my first affidavit, which was filed for the purposes of obtaining the judgment in default. This was considered by Mr Justice Moore-Bick, who proceeded to grant the judgment.”
Here the reference is only to the application of English law; a highly relevant consideration for the purpose of obtaining leave to serve out of the jurisdiction under CPR Part 6. No longer is it suggested that this carried with it an implication that the dispute may be determined by the High Court, which was presumably intended as some form of reference to Article 17 of the Brussels Convention. As is now conceded, the proposition, whatever it is, is unsustainable. Since Miss Allen went on to assert in her affidavit placed before Moore-Bick J. that the English High Court is the appropriate forum to decide the dispute, I expect that he thought, as I probably would have done, that he was dealing with a case in which leave to serve out had been obtained under CPR Part 6, rather than a case in which jurisdiction had been purportedly invoked as of right without leave.
The defendants then made their application to set aside. At the end of her witness statement, dated 5th February 2003, Miss Liversedge, for the defendants, said:
“With regard to the question of jurisdiction, the defendants are presently at something of a disadvantage in that they do not have a copy of the voyage charter to which reference is made in the bill of lading. However unless it contains an English jurisdiction clause it is, in my submission, plain that there can be no basis for bringing this claim in England. It is also unclear whether the bill of lading clause would be effective to incorporate a jurisdiction clause, even if the voyage charter contained one. This, however, can probably only be determined once the terms of the voyage charter have become clear. In the light of the uncertainty set out above, the defendants’ position is as follows. They invite the representatives of the claimants to provide a copy of the voyage charter. Once this has been provided, the defendants will wish to consider whether to pursue the present application to dispute the jurisdiction of the court, but at present they see no basis for asserting such jurisdiction.”
32. The contract of affreightment was supplied to the defendants’ solicitors on 7th February 2003 on the basis of which they maintained, rightly, as it is now accepted, that the English court has no jurisdiction pursuant to the Convention.
In these circumstances it is, to my mind, axiomatic that the judgment in default should be set aside. The matter has only come before the court as a result of an abuse of process. The statement in the claim form as to jurisdiction is a vital safeguard, designed to ensure that proceedings are not brought in courts which do not have jurisdiction under the Convention. It is the quid pro quo for not having to make an application for leave to serve out of the jurisdiction. On the basis of this certificate, a party secures to himself the ability without more to serve notice of English process out of the jurisdiction upon a party domiciled in another Convention state. This is a valuable right, which must not be permitted to be abused. It was here abused, albeit, as I accept, through error, notwithstanding it was an error very untypical of Messrs Clyde & Co, than whom few firms of lawyers in the world can be more experienced in the field of establishing jurisdiction for cargo claims. It is said by Mr Phillips on instructions that the error was made under pressure of work and time; the latter pressure being the impending expiry of the time bar. I accept this, although, as I have already remarked, it would had been preferable had Miss Allen gracefully acknowledged the error in her witness statement of 26th February 2003, by which time, apparently, she had been made aware of it.
Mr Phillips ultimately accepted that the default judgment must be set aside, as in my judgment it must, and he accepted also that the court must decline jurisdiction. He suggested, however, that whilst I might have no power to impose terms upon the manner in which jurisdiction is declined (since the court simply lacks jurisdiction), nonetheless, a judgment in default now having been obtained, I do have power to impose terms pursuant to which it shall be set aside, that power deriving from CPR 3.1.3 and from the fact that this is not a case in which CPR 13.2 requires the judgment to be set aside.
As to the latter point, CPR 13.2 provides:
“The court must set aside a judgment entered under Part 12 if judgment was wrongly entered because (a) in the case of a judgment in default of acknowledgement of service any of the conditions in Rule 12(3)(i) and 12(3)(iii) was not satisfied.”
Turning to CPR 12.3, this provides, at 12(3)(i):
“The claimant may obtain judgment in default of acknowledgement of service only if (a) the defendant has not filed an acknowledgement of service or a defence to the claim or any part of the claim and (b) the relevant time for doing so has expired.”
12(3)(iii) provides:
“The claimant may not obtain a default judgment if…”
Various matters are then referred to, none of which are here relevant.
This is, therefore, a case governed by CPR 13.3. That provides:
“In any other case the court may set aside or vary a judgment entered under Part 12 if (a) the defendant has a real prospect of successfully defending the claim, or (b) it appears to the court that there is some other good reason why (i) the judgment should be set aside or varied or (ii) the defendant should be allowed to defend the claim.”
Mr Phillips’ submission potentially raises a point of principle as to whether, in a case in which the court has never had jurisdiction, it can be appropriate to impose terms upon which the court will be prepared to adhere to the mandatory scheme of the Convention. I do not need to address that point of principle here, since I am satisfied that, if it ever would be appropriate so to proceed, this is not such a case. Were I to accede to Mr Phillips’ suggestion, the result would be that the claimants would have secured to themselves an advantage by obtaining judgment in default. Had the defendants raised the point as to lack of jurisdiction as soon as they were told that proceedings had been issued in England, the claimants would already have been too late to issue timely proceedings in Italy. As it is, the judgment in default was obtained nearly a year later, and then by what I regret I must characterise as sharp practice.
In the light of the history which I have summarised it was, in my judgment, incumbent upon the claimants to make clear that with the end of the moratorium came an obligation upon the defendants now to acknowledge service, failing which, within a reasonable time (which should have been spelt out), the claimants would regard themselves as at liberty to enter judgment in default. The failure of Miss Allen to draw attention to the moratorium in her affidavit of 5th December 2002 was itself most unfortunate. These features alone would cause me to set aside the judgment in default, without imposition of any terms. The position is a fortiori when I take into account that in any event the court lacks jurisdiction and that the court has only ever become seized as a result of an abuse of process, consisting of an incorrect certificate as to the existence of jurisdiction. However, I should add that, in my judgment, the claimants have fallen far short of showing that it would be unconscionable now to allow the defendant ship owners to take the point that this court lacks jurisdiction, with the consequence that they can no longer be sued anywhere. That matter must, in my judgment, be tested as at December 2001, which is when the claimants chose to issue proceedings in England and nowhere else.
The defendants were informed on 24th December 2001 that proceedings had been commenced in the UK. By then it was already too late for the claimants to proceed elsewhere. Dr Postmar says that he gave Mr Van der Shay:
“Lots of warning that proceedings would be commenced in the UK, and I told them that I had instructed Clyde & Co in London.”
I quote from paragraph 18 of his witness statement of 9th April 2003. Mr Phillips suggests that in such circumstances Mr Van der Shay, or the defendants, was or were under a duty to speak out if they did not accept English jurisdiction in relation to this dispute.
Mr Phillips referred me to The Stolt Loyalty, a decision of Clarke J, reported at [1993] Vol 2 LlLR 281. That case concerned an extension of time granted by a P & I club, which insured the liabilities of both the owners and the demise charterers. The extension was requested simply from owners. Clarke J found that the club knew that in asking for an extension from registered owners, if that is what they had done, cargo owners were making an error. He held that it would be unconscionable to allow the demise charterers to rely upon the time bar if the extension was properly to be regarded as given only on behalf of the registered owners. In fact he regarded the extension as properly to be regarded as given on behalf of the demise charterers as well, so that his observations on the duty to speak and estoppel were strictly obiter. Nevertheless, his judgment contains a valuable summary of the cases bearing on this important area of the law. At page 289 Clarke J said this:
“The question is whether, on those facts, the demise charterers are estopped from relying on the one year time limit. I was referred to a number of cases in which estoppel by acquiescence or estoppel by silence or inaction has been discussed. An estoppel of this type is an inequitable estoppel. In recent years there has been a tendency to reject ‘any rigid classification of equitable estoppel into exclusive and defined categories’ -- per Robert Goff J in Amalgamated Investments & Property Co Limited v. Texas Commerce International Bank Limited [1982] 1QB 84 at 103 to 104. Nevertheless, the following cases appear to me to establish that before a person can be held to be estopped as a result of mere inaction, he must be shown to be under a legal duty to take action of some kind – Spiria v Linton [1973] 1 WLR 1002; The Henrik Sif [1982] 1 LlR 456. The question then arises in what circumstances a person may be held to be under such a legal duty. In The Henrik Sif Webster J, after citing a dictum of Lord Wilberforce in Moorgate Mercantile Co Limited v Twitchings [1977] AC 890 at 903, answered that question in this way at page 465:
‘Nonetheless, the dictum which I have cited seems to me to be most persuasive authority for the proposition that the duty necessary to found an estoppel by silence or acquiescence arises where a reasonable man would expect the person against whom the estoppel is raised, acting honestly and responsibly, to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations.’
Webster J also cited with approval the following passage from the judgment of Oliver J in Taylor Fashions Limited v. Liverpool Victoria Trustees Co Limited [1982] 1QB 133 at page 147:
‘In a case of mere passivity it is readily intelligible that there must be shown a duty to speak, protest or interfere, which cannot normally arise in the absence of knowledge or at least a suspicion of the true position.’
The underlying basis for the existence of this estoppel, as in the case of all equitable estoppel, is that it must be unconscionable to allow the party estopped to deny that which he has allowed the other party to assume to be true. In the case just cited, Oliver J put it thus at 151 to 152:
‘Furthermore, the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson LR1 House of Lords 129 principle, whether you call it proprietary estoppel, estoppel by acquiescence, or estoppel by encouragement, is really immaterial, requires a very much broader approach, which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to enquiring whether the circumstances can be fitted within the confines of some pre-conceived formula serving as a universal yardstick for every form of unconscionable behaviour.’
That statement of principal was expressly approved by the Court of Appeal in Habib Bank Limited v. Habib Bank AG Zurich [1981] 1WLR 1265.
There is a further aspect of this type of estoppel which is of importance. It was put in this way by Carr LJ giving the judgment of the Court of Appeal in The August Leonhardt [1985] 1 LlR 28 at 35:
‘The applicability of the doctrine of estoppel in any given case can also be tested in another way. There cannot be any estoppel unless the alleged representor has said or done something or failed to do something, with the result that, across the line between the parties, his action or inaction has produced some belief or expectation in the mind of the alleged representee so that, depending on the circumstances, it would thereafter no longer be right to allow the alleged representor to resile by challenging the belief or expectation which he has engendered. To that extent at least, therefore, the alleged representor must be open to criticism.’”
41. Then a little further on, at page 290, Clarke J. said this:
“I agree with Mr Cooke that the court should indeed be careful before acceding to arguments which assert duties of disclosure in new situations. I also accept the points he makes that Clyde & Co are experienced solicitors and that there can be no general duty upon one party to litigation or potential litigation to point out the mistakes of another party or his legal advisors. However, each situation must be judged in the light of its particular circumstances. The mere fact, for example, that this was a commercial dispute is not conclusive. There is no reason, for example, why the doctrine of unilateral mistake should not apply as between parties to commercial contracts. In my judgment, Guard were under a duty to inform Clyde & Co of the true position here if they were going to reply to that part of the telex of 3rd March which asked for an extension of time. It seems to me that a reasonable man would expect someone in the position of Guard, knowing or even suspecting that Clyde & Co had mistakenly failed to refer expressly to the demise charterers, acting honestly and responsibly, to draw that mistake to their attention in any reply to the relevant part of the telex. If that is correct, it follows that their failure to do so cannot have been a breach of duty to their members, as was suggested in argument.”
Finally, at page 291, Clarke J concluded:
“It seems to me that the fact that Guard failed to point out the mistake and deliberately allowed Clyde & Co to labour under the illusion that all was well, as indeed they hoped that they would, was one of the causes of the fact that Miss Cresswell was not alerted to her mistake and therefore of her continued belief that she had done all that was necessary. It is, in my opinion, sufficient that Guard’s action or inaction was one of the causes, even if it was not the only cause -- see the Amalgamated Property case per Robert Goff J at page 104. The letter did produce, or at least encourage, an expectation in the mind of Miss Cresswell that she need take no further action in order to preserve time against those concerned for the ship. Moreover, that is precisely what it was intended to do. In these circumstances it would, in my judgment, be unconscionable to allow the demise charterers now to rely upon the one year time bar. It follows that the demise charterers are estopped from contending that the extension was not granted by the demise charterers or, as I would prefer to put it, from relying upon the time bar.”
Mr Phillips did not suggest that the defendants had said anything sufficiently unequivocal to found any form of estoppel. Nonetheless, he submitted that the defendants’ conduct as a whole is sufficient to make it unconscionable for them now to rely upon a time bar defence.
Mr Phillips relied upon Mr Van der Shay’s fax of 29th January 2001 as the high water mark of his case, and suggested that Dr Postmar was lulled by Mr Van der Shay into a belief that UK jurisdiction would be acceptable. I have already referred to Mr Van der Shay’s fax of 29th January 2001. It said nothing whatever from which Dr Postmar could or should reasonably have inferred that the defendants would accept English jurisdiction; still less that the defendants shared the claimants’ view that, in the light of the contractual documents, England was the or an applicable jurisdiction. It was not even clear at that stage whether Dr Postmar envisaged court proceedings as opposed to arbitration.
The critical point in The Stolt Loyalty was that the club appreciated that the claimants were making a mistake and deliberately allowed them to labour under the illusion that all was well. Mr Van der Shay is not a lawyer, albeit he is experienced in this area. The claimants had the benefit of advice from Dutch and English lawyers. If anything, Mr Van der Shay was entitled to infer that, if those lawyers had between them elected to start proceedings in England, to the exclusion of anywhere else, that is because they had concluded that the contractual documents and any relevant rules of law or jurisdiction conventions rendered that an appropriate forum, to which the defendants could not object. He did not know that they were wrong. He had not seen -- and nobody on the defendants’ side had seen -- the contract of affreightment to which reference was made in the bill of lading, to which they were not party. That was a contract made between the Danish time charterers and the fourth claimants, Axo Nobel Chemicals BV.
As the subsequent history demonstrates, the plain fact is that neither Dr Postmar nor Messrs Clyde & Co properly analysed the contractual situation revealed by the documents which were in their possession but not in the defendants’ possession. The claimants are the authors of their own misfortune.
I reject the suggestion that the defendants lulled the claimants into a belief that English jurisdiction was either appropriate or acceptable. I reject also the suggestion that the situation was one in which the defendants had any duty to speak, if they were not thereafter to be precluded from saying that England was neither an appropriate nor an acceptable jurisdiction. There is nothing unconscionable in allowing the defendants now to rely upon the accrued time bar defence.
For all these reasons, therefore, I set aside the judgment in default. I declare that the court has no jurisdiction and I set aside the proceedings herein.
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