ATLANTIC WIND SHIPPING LLC v. ZHOUSHAN XINZHOU OCEAN FISHERY CO LTD

HCAJ 166/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION ACTION NO. 166 OF 2011

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ASSESSMENT OF DAMAGES

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Background

1.  This is the hearing for the assessment of damages arising out of a breach of a Transport Agreement made between the plaintiff and the defendant dated 14 December 2010 (“the Transport Agreement”).

2.  Pursuant to the Transport Agreement, the plaintiff as the carrier agreed with the defendant as the shipper to transport some fishery cargoes for the defendant from South America to China for the period from 1 January to 31 December 2011.

3.  Clause 9 of the Transport Agreement provides inter alia that demurrage is fixed at US$10,000 per day.  Laytime is to be counted upon Notice of Readiness has been duly tendered.  Payment of demurrage and dispatch is to be made within 15 days after completion of discharge.

4.  Clause 4 of the Transport Agreement also provides inter alia that the supply of food to the carried fishermen on board of the fishing vessels are to be paid by the defendant.

5.  In accordance with the terms of the Transport Agreement, it is the plaintiff’s case and that it had provided the defendant with vessels MV San Diego on the 11^th voyage and MV Salvador on the 13^th voyage for the carriage of the cargo for the defendant.

6.  It is also the plaintiff’s case that it had on behalf of the defendant, provided nourishments to 11 fishermen on board MV Salvador for 39 days between 30 August to 8 October 2011 (“the Passengers Provision”).  However, in breach of clause 9 and clause 4 of the Transport Agreement, the defendant has failed and/ or refused to pay the outstanding demurrage in the sum of US$1,645,286.74 and the Passengers Provision in the sum of US$3,003.

7.  On 30 November 2011, the plaintiff commenced the present proceedings against the defendant.  As no defence has been filed by the defendant, on 17 July 2012, Interlocutory Judgment was entered against the defendant in favour of the plaintiff with damages to be assessed together with costs of this action.

8.  On 5 October 2012, the plaintiff filed the 1^st Affirmation (“1^st Affirmation”) of a Mr Kirill Listov (“Mr Listov”) in support of its claim for damages.  Mr Listov is the Marine Operation Manager of the plaintiff.

9.  On 26 October 2012, Madam Justice Au-Yeung ordered that the attendance of Mr Listov at the assessment hearing be dispensed with and that the 1^st Affirmation is to be read at the hearing.

10.  Pursuant to the order of Mr Justice Ng dated 15 July 2013, the plaintiff was also granted leave to rely on the 2^nd Affirmation of Mr Listov (“the 2^nd Affirmation”) filed on 11 July 2013 at the adjourned hearing on 22 July 2013.

The Assessment

11.  At the hearing on 20 May 2013 and 22 July 2013, the defendant has failed to attend court despite due notice has been given by the plaintiff’s solicitors. Pursuant to the said order of Madam Justice Au-Yeung and that of Mr Justice Ng, I treat that the 1^st and 2^nd Affirmation of Mr Listov as having been read at the hearing.  As no evidence has been adduced by the defendant to contradict the plaintiff’s claim, I accept the evidence of the plaintiff as per the Affirmation evidence of Mr listov including the documents exhibited to his 2 Affirmations.

12.  In Islamic Republic of Iran Shipping Lines v Ierax Shipping Co [1991] 1 Lloyd’s Rep. 81 (which is cited in paragraph 15.4 of Voyage Charters, 3^rd edition, 2007), Hobhouse J explained that the liability for demurrage continues to accrue minute by minute as the failure to complete discharge continues.  At page 87 of the Islamic Republic of Iran Shipping Lines, Hobhouse J stated:-

“A liability for demurrage is a liability for liquidated damages for breach of contract. The breach of contract is the failure to discharge (or load) within the permitted laytime. The obligation has two different aspects: the first is the obligation to discharge and the second is to do so within the limited time. There is no breach before that limited time has expired. Once the limited time has been exceeded there is a continuing breach for which the liability in liquidated damages (that is so say demurrage) continues to accrue minute by minute as the failure to complete discharge continues.”

13.  Having considered the Affirmation evidence of Mr Listov, I accept that the defendant has failed to pay the plaintiff the outstanding demurrage and the charges for the Passengers Provision in the respective sum of US$1,645,286.74 and US$3,003.  The full particulars of these outstanding payments have been set out in the 2 Affirmations of Mr Listov and are summarized below: -

MV San Diego – Voygae 11

a) Loading Demurrage

i) MV San Diego arrived the fishing ground for loading on 12 January 2011. The allowed laytime for loading was 15 days 18 hours 9 minutes (at the loading rate of 200mt/day for loading 3150.122mt of cargo).  The laytime commenced at 0800 hours on 12 January 2011 and ended at 0020 hours on 18 March 2011.  The time used was 64 days 16 hours 20 minutes.

ii) the plaintiff is therefore entitled to demurrage of US$489,243.10 ie US$10,000@ 48 days 22 hours 11 minutes (after taking into account of the laytime allowed).

b) Discharging Demurrage at Zhoushan

i) MV San Diego arrived at Zhoushan Port on 23 August 2011.  The allowed laytime for discharging was 7 days 2 hours 16 minutes (at the discharging rate of 400mt/day for discharging 2,837.775mt of cargo).  The laytime commenced at 0800 hours on 24 August 2011 and ended at 1600 hours on 19 October 2011.  After deducting the time of 35 days 19 hours 45 minutes used for discharging cargo for a third party, the time used was 20 days 16 hours 20 minutes.

ii) the plaintiff is therefore entitled to demurrage in the sum of US$137,076.40 ie US$10,000@ 13 days 16 hours 59 minutes (after taking into account of the laytime allowed)

c) Discharging Demurrage at Qingdao

i) MV San Diego arrived at Qingdao Port on 13 November 2011.  The laytime commenced at 2345 hours on 13 November 2011 and ended at 1425 hours on 14 November 2011.  The time used was 14 hours 40 minutes.  The laytime allowed for discharging 150mt of cargo was 9 hours.

ii) the plaintiff is therefore entitled to demurrage in the sum of US$2,361.10 ie US$10,000@ 5 hours 40 minutes (after taking into account of the allowed laytime of 9 hours)

MV Salvador – Voyage 13

d) Loading Demurrage

i) MV Salvador arrived the fishing ground in Peru on 20 May 2011.  The allowed laytime for loading was 43 days 11 hours 39 minutes (at the loading rate of 200mt/day for loading 8,697.143mt of cargo).  The laytime commenced at 1005 hours on 20 May 2011 and ended at 2030 hours on 30 August 2011.  After deducting the time for bad weather and setting cargo gear, the time used was 81 days 20 hours 55 minutes.

ii) the plaintiff is entitled to demurrage in the sum of US$383,861.10 ie US $10,000@ 38 days 9 hours 16 minutes (after taking into account of the laytime allowed).

e) Discharging Demurrage

i) MV Salvador arrived at Zhoushan Port on 4 October 2011.  The allowed laytime for discharging was 21.7429 days (at the discharging rate of 400mt/day for discharging 8,697.143mt of cargo).  The laytime commenced at 1940 hours on 4 October 2011 and ended at 1415 hours on 28 December 2011.  After deducting the times affected by drizzle, the time used was 85.0174 days.

ii) the plaintiff is therefore entitled to demurrage in the sum of US$632,745.04 ie US$10,000@ 63.2745 days (after taking into account of the laytime allowed).

Passengers Provision

f) The plaintiff claims for a sum of US$3,003 as nourishments provided to the 11 fishermen on board of MV Salvador between 30 August to 8 October 2011. The claim is supported by invoice and vouchers.  As the documentary evidence has not been challenged, I accept the claim.

Summary

14.  The amount of damages awarded is summarized as follows: -

MV San Diego – Voyage 11
	US$
(a)   Loading demurrage at fishing ground	489,243.10
(b)   Discharge demurrage at Zhoushan	137,076.40
(c)   Discharge demurrage at Qingdao	2,361.10
	628,680.60

MV Salvador – Voyage 13
	US$
(a)   Loading demurrage at fishing ground	383,861.10
(b)   Discharge demurrage due Zhoushan	632,745.04
(c)   Passengers Provision	3,003.00
	1,019,609.14
Total:	1,648,289.74

Interest

15.  The plaintiff also seeks interest on the damages awarded at the rate of 1% above US$ prime.  Mr Chu, solicitor for the plaintiff submitted that this is in accordance with the practice of the Admiralty Court.  He cited the Judgments of Mr Justice Reyes in Synehon (Xiamen) Trading Co Ltd v American Logistics Limited (HCAJ 72/2009), unreported decision dated 8 July 2009; and the case of Star Line Traders Limited v Transpac Container System Limited trading as Blue Anthor Line & other (HCAJ 180/2008), unreported decision dated 4 September 2009.  He also refers the court to the Hong Kong Civil Procedure 2012, paragraphs 6/L/11 and 6/L/16.  Having considered the cases, I am prepared to allow interest at 1% over the US$ Prime.  According to Mr Chu, the USD Prime Rate as at 16 May 2013 is 3.25% as per the extract of the website of Industrial and Commercial Bank of China (Asia) Limited, I therefore allow interest at 4.25% from the various dates on which demurrages fell due and from the date of the plaintiff’s invoice was issued (for Passengers Provision) up to the date of assessment ie 22 July 2013.  Thereafter interest will be at judgment rate until payment.

Costs

16.  On the question of costs, I see no reason why the plaintiff should not be entitled to the costs of the assessment.  I therefore order that the defendant do pay costs of assessment hearing to the plaintiff save that there be no costs for the hearing on 22 July 2013.  The assessment hearing on 20 May 2013 had to be adjourned part-heard to 22 July 2013 because the plaintiff’s solicitor required time to file further evidence to support the claim.  This resulted in the 2^nd Affirmation of Mr Listov filed on 11 July 2013 pursuant to the order of Mr Justice Ng (see para 10 above).

17.  At the hearing on 22 July 2013, the Mr Chu submitted a Revised Statement of Costs and seeks for a summary assessment of its costs.  This costs shall include the costs of the action as per the Interlocutory Judgment entered on 17 July 2012.

18.  According to the Revised Statement of Costs, the plaintiff seeks for costs in the total sum of US$258,040.  The main fee earners involved in the case are a Ms Brenda Chark admitted as a solicitor in 2000.  The other fee earner is Mr Chu, who has the conduct of these proceedings before me, was admitted as a solicitor in 2011.  They claimed a respective hourly rate of $4,000 and $2,000 which in my view is proper and reasonable.  However, I am of the view that the time claimed by them for communicating with client and the defendant is on the high side.  The same applies to the time spent for preparation of court documents.  The total time claimed by Ms Chark for attending client and the defendant is 33.1 hours.  For Mr Chu, it is 11.6 hours.  For preparation of court documents, Ms Chark claimed that she has spent in total 6.7 hours.  For Mr Chu, it is 13.5 hours.  Bearing in mind that this is a rather simple and straight forward case involving no complicated issue of law and that the defendant has not filed any document to contest the claim, I am of the view that the total time claimed by both fee earners in the matter is excessive.  For this reason, the total time spent by them should be reduced. On the item for communicating with client and the defendant, I tax off 8 hours for Ms Chark and 2.6 hours for Mr Chu.  For the item on preparation of court documents, I tax off 2.7 hours for Ms Chark.  For Mr Chu, I deduct 2.5 hours. Having taken into account of the other items such as perusal of documents, preparation for hearing and other disbursement items, I am of the view that on a summary assessment basis, a sum of $195,000 shall be allowed and I so order.