Gold Shipping Navigation Co SA v Lulu Maritime Ltd, Court of Appeal - Admiralty Division, June 18, 2009, [2009] EWHC 1365 (Admlty)

Resolution Date:June 18, 2009
Issuing Organization:Admiralty Division
Actores:Gold Shipping Navigation Co SA v Lulu Maritime Ltd
 
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Neutral Citation Number: [2009] EWHC 1365 (Admlty)Case No: 2008 FOLIO 1062and FOLIO 2009 106IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONADMIRALTY COURTRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 18/06/2009Before :MR. JUSTICE TEARE- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Nigel Jacobs QC (instructed by Ince and Co.) for the DefendantTimothy Hill QC (instructed by Holman Fenwick and Willan) for the ClaimantHearing dates: 4 June 2009- - - - - - - - - - - - - - - - - - - - -JudgmentMr. Justice Teare : 1. On 17 October 2005 a collision occurred in the Suez Canal between the vessels PEARL OF JEBEL ALI and PRIDE OF AL SALAM 95 as a result of which PRIDE OF AL SALAM 95 sank. The collision has given rise to a claim by the owners of PRIDE OF AL SALAM 95 of about US$10,600,000 and to a claim by the owners of PEARL OF JEBEL ALI of about US$1,500,000. By a Collision Jurisdiction Agreement dated 1 November 2005 the owners of the two vessels agreed English law and jurisdiction and to provide security for the other's claim. Pursuant to section 190 of the Merchant Shipping Act 1995 (the successor to section 8 of the Maritime Conventions Act 1911) there was a two year time limit for commencing proceedings. 2. Between May and September 2007 there were discussions between the owners' London solicitors, Inces and Holman Fenwick and Willan, about commencing proceedings in Egypt for the purpose of obtaining VTS and VHF data relating to the collision. Such proceedings would require an amendment of the Jurisdiction Agreement.3. On 26 September 2007 Inces e-mailed Holman Fenwick and Willan as follows:``We now have instructions to sign the side letter, start proceedings in Egypt and agree a mutual indefinite extension of time from 16/10/07 to commence proceedings in England subject to 1 months notice by either said to commence proceedings. How are you now placed on instructions ?...''4. On 27 September Holman Fenwick and Willan replied that they were seeking instructions. On the same day Inces said by e-mail:``Concern I have is that if you are not in a position to sign the side letter will have to issue proceedings in England and apply for leave to issue proceedings in Egypt as we have discussed. We will have to do this if the side letter is not signed on Monday first thing latest in order to issue a claim form on 1/10 given the Egyptian lawyers tell me they need to know if they start proceedings by 2/10. Suppose bottom line is say 1100 Monday.''5. On 2 October at 1751 Inces e-mailed Holman Fenwick and Willan as follows:``We are instructed by our clients to agree a mutual unlimited extension of time from 16/10/07 within which to commence proceedings in England subject to one month's notice of termination of intention to proceed by either side. Please advise if any extension on this basis is agreed. ''6. At 1806 on the same day Holman Fenwick and Willan replied:``This agreed on behalf of our clients.''7. Thus an agreement was reached between the parties on the terms of the e-mail exchange of 2 October 2007. It does not appear that a side letter was signed. 8. On 16 October 2007, the day on which the two year limitation period expired, Holman Fenwick and Willan e-mailed Inces as follows:``This is just to confirm that both sides have granted the other a mutual extension of time beyond the 2 year time bar terminable on 1 month's notice.''9. Between November 2007 and March 2008 there were updates on and discussions about the Egyptian proceedings.10. On 19 September 2008 Holman Fenwick and Willan e-mailed Inces:``Please consider this e-mail as notice to start proceedings in England within one month from today.''11. On 14 October 2008 Holman Fenwick and Willan issued a Claim Form (2008 Folio 1062). They did not inform Inces that they had done so. 12. The claim form was not served until 26 January 2009. On the same day Inces sent the following e-mail to Holman Fenwick and Willan:``Please consider this email as notice on behalf of our clients to commence proceedings within one month from today.''13. Inces issued a claim form on that day and served it on 29 January.14. On 12 February Holman Fenwick advised Inces by e-mail that Inces Claim Form was time barred. 15. On 23 February Inces issued related applications in both 2008 Folio 1062 and 2009 Folio 106 for a declaration that their clients' counterclaim or claim respectively is not time barred or, alternatively, an extension of time within which to bring any such counterclaim or claim pursuant to section 190(5) of the Merchant Shipping Act 1995. However, at the hearing the primary focus of the argument was in relation to the counterclaim in 2008 Folio 1062. 16. Since then collision statements of case have been served on 1 and 3 April 2009. The owners of PEARL OF JEBEL ALI have counterclaimed in the action commenced by the owners of PRIDE OF AL SALAM 95. 17. The issues which now arise for determination are:a. What is the effect of the agreement reached on 2 October 2008 ?b. Is a counterclaim subject to the two year limitation period in section 190 of the Merchant Shipping Act 1995 ?c. Is this a proper case for extending time in favour of the owners of PEARL OF JEBEL ALI so that the counterclaim in 2008 Folio 1062 is not time barred ? The agreement of 2 October 200818. The terms agreed on 2 October were ``a mutual unlimited extension of time from 16/10/07 within which to commence proceedings in England subject to one month's notice of termination of intention to proceed by either side.'' Something has gone wrong with the latter part of the agreement. The parties had contrasting suggestions as to how to make sense of it. On behalf of the owners of PEARL OF JEBEL ALI it was submitted that the words ``of termination'' should be deleted. The effect of such deletion was, it was submitted, that the parties had agreed a mutual unlimited extension of time and that if either party wished to proceed with its claim it must give one month's notice of its intention to do so. On behalf of PRIDE OF AL SALAM 95 it was submitted that the words ``of intention to proceed'' should be deleted. The effect of such deletion was, it was submitted, that the mutual unlimited extension of time could be ended by either party on one month's notice. An alternative suggestion by the owners of PEARL OF JEBEL ALI was that the word ``and'' or ``or'' should be inserted after ``termination''. The effect of such insertion was, it was submitted, that either party could end the mutual unlimited extension of time by giving one month's notice and/or give one month's notice of its intention to proceed with its claim.19. Construction of the Agreement reached on 2 October must be answered by reference to the principles expounded by Lord Hoffman in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 not only because those are the applicable principles but also because they deal expressly with cases where something has gone wrong with the language in which the parties have chosen to express their agreement. The relevant principles are as follows: (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] 2 WLR 945)(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201: ". . . if detailed...

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