S AND M CO S.A. v. GLENMORE SHIPPING INCORPORATED AND ANOTHER

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J U D G M E N T

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Cons, V.P.:

1. These particular proceedings, which have been adjourned from two days ago, were commenced by a Notice of Motion which asks for "an order for directions for the expedited hearing of the appeals ..... from two Orders of Mr. Justice Mayo made on the 15th and 18th December, 1989 respectively or for such interim order pending appeal arising out of the said orders of Mr. Justice Mayo or for such other orders or directions which may be given by the Court of Appeal".

2. Insofar as an expedited appeal is concerned the Motion, with respect, is misconceived. We observed at the last hearing that the business of the Court of Appeal is in the hands of the Chief Justice; the separate divisions will only deal with cases which have already been assigned to their lists. The object of the other Directions, I understand from Mr Waung who appears also for the Plaintiffs in the proceedings overall, is to preserve the status quo.

3. Very briefly the relevant facts are that in early May of this year the Plaintiffs purchased a vessel, the "Ocean Queen", through the 2nd Defendant acting as shipbrokers. They then executed a demise charter to the 1st Defendant for two years, which charter was guaranteed by the 2nd Defendant. The charter is said to be partly oral and partly written. It is admittedly incomplete, but such of it as was written in the first instance, provided for it to be completed in detail within 30 days. In fact it was not so completed within that time, or at all. Despite that the ship was at some stage handed over to the Defendants.

4. It is not surprising then that disputes have arisen. Litigation started on the 26th September this year and has carried on extensively since. Points of Claim have been issued and Points of Defence. There are many issues between the parties. In the meantime the Defendants have time chartered the vessel.

5. The immediate problem, which has given rise to these proceedings, is damage to the No. 4 hold of the vessel. I say "the immediate problem", but the damage occurred at least before any of this year. There is apparently dispute as to the cause of the damage. The Plaintiffs say it is due to bad stowage, the Defendants suggest that there may have been a latent defect. But the real problem is as to when that damage is to be made good. The Plaintiffs would like it done as soon as possible, and the ship being in Japan at the moment there would be little difficulty in implementing their wish that the ship should go for repair to Shanghai. That suggestion in itself indicates that they consider the ship seaworthy. Reports put before the judge below, and more recent reports that we have seen, confirm the same. The only fear, as I read the reports, is that if unrepaired the ship should encounter very severe weather or founder, the resultant damage would be significantly greater than it would have been had she been first repaired.

6. The Defendants wish to delay the repairs until they have completed the time charter into which they entered on the 8th December this year, which was apparently for a voyage to Karachi. Counsel tells us he is instructed that the Defendants have, after that, made firm arrangements for the ship to be repaired in Greece sometime about mid-February.

7. There is a further problem, in that the classification of the "Ocean Queen" will expire on the 31st of this month. The Defendants hope for an extension of that period, or I should say further extension, because apparently there have been several extensions already. There are difficulties in the way of that extension, unless the Plaintiffs assist the Defendants by joining in or making their own the application for extension. Unfortunately there is yet another dispute between the parties as to whether the Plaintiffs are contractually obliged to assist in that manner.

8. To further each of their own aims the parties took out summonses before Mayo, J. In essence the Plaintiffs asked for an Order that the Defendants sail the ship to Shanghai and there effect the repairs; alternatively for an Order restraining them from sailing her anywhere commercially speaking that is, in the sense of carrying cargo - until the repairs had been done.

9. The Defendants asked for Orders that the Plaintiffs should forthwith request the Bureau Veritas, the classification authority, to extend the vessel's class certificate to enable them to complete the time charter I have already mentioned "and such further voyages being no more than one laden and one in ballast to safely and economically reach a repair yard". I am told that the inclusion of the one further laden voyage was to profit by the chance, should it happen, of a cargo between Karachi and Greece. Nothing else was intended.

10. The hearing of the two Summonses came on before Mayo, J., within a few days each other. On the Plaintiffs Summons, which was dealt with by the judge on the 15th, the judge refused the application. He was satisfied that the ship was in good condition. He saw no real difficulties in the way of classification and the balance of convenience was in his words, "nearly one way" in favour of the Defendants. The Defendants' Summons came up on the 18th, that is in the end of last week. The judge was very concerned with evidence which to his mind indicated that the Plaintiffs had been improperly interfering with the communications between the Defendants and the Bureau Veritas. He made an Order that the Plaintiffs should assist in the application for extension, but not in quite such extensive terms as the Defendants had requested. He merely ordered that the Plaintiffs "do by close of business on the 22nd December, 1989 (that is today) request Bureau Veritas to extend the vessel's class certificates for such period so as to permit the 1st Defendant to perform their contractual commitment and the time charter dated the 8th December".

11. It is these decisions which are the subject of the appeals which the Plaintiffs are in the course of bringing. When those appeals will be heard we do not know, for no application has yet been made to the Chief Justice for an early hearing.

12. The primary object today is to obtain the discharge of the injunction to request the Bureau Veritas to extend the vessel's certificates. I would emphasize that proceedings today are very much interlocutory. They are not the hearing of the appeal itself, although we have been addressed at times on matters that would seem more germane thereto.

13. The situation is unusual and has this peculiarity in particular, that although on the face of it the Plaintiffs are subject to a mandatory injunction, a proper analysis shows that it might be looked at otherwise. The Bureau Veritas has been very much confused by the conduct of the Plaintiffs. The judge, as I have mentioned, thought that it was improper interference. Whether that was so or not, whatever the rights or wrongs of what has happened in the past, it has led to the position that the Bureau Veritas will now not act in any way upon an application for extension unless that application is made by or with the authority of the Plaintiffs. What the judge's Order did, therefore, was no more than to reinstate the previous position. So it seems to me that the special rules with regard to mandatory injunctions, to which our attention has been directed, are of little assistance at the moment.

14. To allow the judge's Order to stand would not make a significant change in the Plaintiffs' situation. For some time now the vessel has been in use with the damage unrepaired. I can appreciate the Plaintiffs' desire to get her put right as soon as possible, but the prejudice to them in the future will be the same only, to use perhaps a common expression, a little more so. Furthermore, as I have already mentioned, the judge's Order is limited to the present contractual commitment.

15. On the other hand, if we set aside the judge's Order, the prejudice to the Defendants will be extensive. They will lose whatever profit they would have made under the time charter, they will find themselves liable in damages to their shippers and they will certainly suffer in their reputation. There will be also inconvenience to those shippers who are at the moment loading or have already loaded cargo. To my mind the balance of convenience is more than overwhelming.

16. I have been concerned to some extent that the Defendants are apparently men of straw. Mr. Mitchell, who appears for them, concedes that they have no assets other than their charter on the ship and the profits they hope to make from it. But it has to be remembered that that was the position when the Plaintiffs negotiated with them in respect of the charter and again when the Plaintiffs allowed them to take delivery of the ship.

17. It seems to me also that the likelihood of the excessive damage which Mr. Waung forecasts is, on the reports, little less than remote.

18. Thus, so far as I am advised at the moment on this very much interlocutory application, it seems to me that the judge very likely came to the right conclusion. Therefore I would for my part not set aside the injunction he granted on the second occasion. Mr Waung concedes that in that case there is really no point in seeking any relief with regard to the first. So I would make no Order at all on this application.

Clough, J A:

19. I agree

Power, JA:

20. I also agree, and I only wish to add that I am mindful when so doing of the statement on instructions by Mr. Mitchell, for the Defendant, that it is their firm intention, and that they have made firm arrangements pursuant to that intention, to repair the vessel in Greece in mid-February.