WATERMAN INC v. SLIPFORM ENGINEERING LTD.

IN THE COURT OF APPEAL

1993, No. 33
(Civil)

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J U D G M E N T

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Litton, J.A. (giving the judgment of the court):

1. The defendant, Slipform Engineering Ltd., is part of the Hopewell Group of companies and was, in early 1990, involved in the Navotas power plant project in Manila, Philippines. By a contract dated 8 February 1990 the plaintiff, Waterman Inc., was engaged by the defendant as transportation contractor to handle the loading, unloading and installation of three electrical generators at the Navotas power plant. This involved the shipment of heavy moving equipment from the United States to the Philippines for the purpose.

2. Under the contract, if the use of the transportation equipment should be delayed for reasons not under the control of the plaintiff, "demurrage" at the rate of US$1,500 was payable by the defendant. Two of the generators arrived safely from the USA and were off-loaded and installed at the new power station. However No. 3 generator was damaged in transit and had to be sent by sea to Hong Kong for repairs. This resulted in much delay. It was the plaintiff's claim for demurrage, consequent upon this delay, which gave rise to the proceedings resulting in the present appeal.

The plaintiff's claim

3. The plaintiff issued its writ in December 1990. By its Points of Claim, it claimed against the defendant the total sum of US$206,476.20 based upon invoices issued between 16 April and 31 December 1990. On 12 May 1992, long after the pleadings had closed, the plaintiff took out a summons under Order 14 r.1 of the Rules of the Supreme Court for summary judgment against the defendant for US$61,500, being part of the claim mentioned in the Points of Claim. This related to an invoice dated 9 October 1990 in the sum of US$109,500, being a claim for demurrage for 73 days, for the period 30 May to 10 August 1990. Of this sum, US$48,000 had been paid, leaving US$61,500 which the plaintiff claimed in the Order 14 application. By his order dated 19 February 1993 Mayo J. entered judgment for this amount against the defendant who now appeals to this court.

The collateral agreement

4. On the facts before the court, the sum of US$109,500 was undoubtedly due under the contract. The question before the court was quite simply whether, by a collateral agreement made between the parties, the right to claim the full amount of US$109,500 had been compromised. The issue first emerged in the pleadings in this way: By para. 6 of the Defence, the defendant avers that by a letter of 3 July 1990 the plaintiff offered to reduce the equipment demurrage due for the period from 30 May 1990 to the date of completion of the project, to the fixed amount of US$48,000 in consideration of the defendant agreeing to secure and pay for containers and transportation services necessary for the return of the plaintiff's equipment to the USA after the completion of the project. The defendant further avers by para. 7 of the Defence that this offer was accepted on 4 August 1990; the project was completed on 14 August 1990; thereafter the plaintiff issued an invoice dated 15 August 1990 showing the demurrage due for the period 30 May to 10 August 1990 in the amount of US$48,000, a sum discounted from US$109,500, which the defendant subsequently paid. If what the defendant avers be true, then plainly the plaintiff's right to claim the full amount of US$109,500 had been compromised.

5. On an Order 14 summons, judgment can only be entered when on the affidavits before the court there are no triable issues: namely, that, despite the defendant's averments upon the pleadings as set out above, the full claim for US$109,500 remained fully effective in law and had not been compromised as the defendant alleged. If, arguably, that was not so, then the judge would have erred in giving summary judgment.

6. It is the plaintiff's case that in its letter of 3 July 1990, putting forward the proposal to compromise the demurrage claim, three conditions were imposed: (i) that the US$48,000 should be paid within 7 days "after completion of the off-load activity on Generator No. 3"; (ii) that the No. 3 generator should arrive by 25 July 1990 and (iii) that the defendant, by 10 August 1990, should have secured and paid for containers and transportation services for shipping the plaintiff's equipment back to the USA.

7. There can be no dispute about these conditions as they are clearly set out in the plaintiff's letter of 3 July 1990. It is common ground between the parties that the terms of the letter of 3 July were accepted by the defendant: see para. 7 of the Defence and para. 3(vi) of the Reply. The question then arises: what is the effect in law of the defendant's acceptance on 4 August 1990 of the terms of the letter of 3 July 1990?

8. One of the conditions of the plaintiff's offer to compromise the demurrage claim was that generator No. 3 should arrive by 25 July 1990. In fact, by 4 August 1990 it had still not arrived: it did not arrive until 10 August 1990. It is not the function of the court to remake the agreement for the parties. Since it is common ground that the offer contained in the letter of 3 July 1990 was accepted by the defendant on 4 August 1990, all that the court can do is to construe the agreement in the light of the circumstances prevailing as at 4 August 1990 and to give effect to it, as best it can. For the date "25 July 1990", being the date when the generator No. 3 should have arrived, one must substitute "within a reasonable time", for the arrangement to be effective. As it seems to us, construing the collateral agreement in this light, the arrival of generator No. 3 by 10 August 1990 was within the time limit agreed. This then leaves the next point for determination: What meaning is to be attached to the condition that the payment of US$48,000 must be "within 7 days after completion of the off-load activity on generator No. 3"? On the facts as they emerged, this time limit would probably have expired by 17 August (seven days after the "off-load activity") and would certainly have expired by 21 August 1990, that it is to say 7 days after generator was fixed on the site at the Navotas power station.

Payment of US$48,000

9. At no time did the defendant pay to the plaintiff a specifically identified sum of US$48,000; but it did eventually pay a sum of $154,623.55 on 20 November 1990 on account of the various invoices which the plaintiff had submitted. It is common ground that this included the US$48,000. This was, on any view, not within any time limit which the parties had agreed. The defendant having plainly failed to meet the condition as regards payment of the sum of US$48,000, how then can it be argued that the plaintiff was nevertheless not entitled to the full contractual payment of US$109,500?

10. The defendant referred to an invoice dated 15 August 1990 from the plaintiff which stated as follows:

INVOICE

15 AUGUST 1990

11. We cannot see how this invoice assists the defendant in "showing cause" under Order 14 r.4, in answer to the plaintiff's claim for summary judgment. As at the date of the invoice, 15 August 1990, the plaintiff could not have demanded the full sum of US$109,500 as the time limit for payment had not expired. If payment had been made promptly, then, subject to another point the plaintiff raises which we deal with later, the plaintiff's right to the full claim for demurrage for the period 30 May to 10 August 1990 would have been compromised. But payment was not made.

12. On 9 October 1990, the plaintiff "reinstated" its invoice for the full sum of US$109,500. We can see no answer to the plaintiff's claim and are of the view that the judge was right in giving summary judgment.

Condition (iii): Transportation arrangements

13. We leave out of account altogether the separate argument of counsel for the plaintiff, Mr. Faulkner, to the effect that the defendant has failed to meet another condition: namely, to arrange and pay for transportation of the plaintiff's moving material back to the USA on or before 10 August 1990. That date, 10 August 1990, was stipulated upon the basis of No. 3 generator arriving on or before 25 July 1990: We would have thought that, by implication, the parties had agreed on 4 August 1990 that the date "on or before 10 August 1990" had been extended. Further, there is material before the court that the defendant did arrange for transportation of the equipment. Although the bills of lading are not marked "freight prepaid" there is an issue between the parties as to whether freight was ultimately paid by the defendant. The facts surrounding the return of the moving equipment to the USA need exploration and if the plaintiff's case had depended on an allegation of failure on the defendant's part to fulfil that condition, it would not in our view have succeeded in its claim for summary judgment. But Mayo J. did not base his judgment on that point.

"Some other reason" for trial

14. Another point raised by Mr. Clifford Smith, counsel for the defendant, as a reason for dismissing the application for summary judgment is that to award part of the plaintiff's claim as particularised in the Points of Claim would embarrass the fair trial of the remaining issues. He relies upon the words "some other reason to be a trial" in Ord. 14 r.3(1). Like Mayo J. in the court below, we cannot see the validity of this point. As is apparent from the schedule annexed to the Points of Claim, the bulk of the claim related to invoices dated after 10 August 1990. It is the defendant's case that after 14 August 1990, when No. 3 generator was off-loaded and placed on permanent foundations, no further demurrage could accrue, as the contract provided for demurrage only "during the course of the project": see para. 12 of the Defence.

15. The invoice for US$109,500 related to the period 30 May to 10 August 1990 and therefore plainly falls outside the scope of the averment in para. 12 of the Defence. We cannot see how interlocutory judgment for the plaintiff for the amount claimed, giving the defendant the benefit of US$48,000 having been paid, can prejudice the fair trial of the remaining issues.

Conclusion

16. We would accordingly dismiss this appeal and make an order nisi that the defendant (appellant) should pay the costs.