Feoso Maritime v. Faith Maritime
DMC Rating Category: Developed
The master of "Daphne L" issued a bill of lading ("the original bill"), which described the cargo as crude oil slops. The original bill stipulated that "All terms and exceptions, liberties and exceptions of the charter party … are herewith incorporated."
Without Faith’s knowledge, Ever Bright procured the issue of switched bills of lading describing the cargo as fuel oil. Feoso became holder of the switched bills but not the original bill. The original bill had been put into the usual banking chain by the named shipper (a third party supplier).
"Daphne L" arrived at the customary anchorage of Huangpu, China and tendered Notice of Readines ("NOR"). Feoso insisted on taking delivery against presentation of the switched bills. Faith objected to the switched bills when it learnt of their existence. There being no agreement between Feoso and Faith, the vessel sailed to Singapore. On Faith’s application, the cargo was sold by the Sheriff in Singapore.
Faith asserted a lien on the cargo for demurrage based on the lien clause incorporated into the original bill. Feoso sued for breach of contract contained in the switched bills of lading and for conversion of the cargo.
The trial judge allowed Faith’s claim for demurrage and dismissed Feoso’s action for breach of contract and conversion. Feoso appealed.
At the appeal, Feoso argued that the vessel was not on demurrage because it was not an "arrived ship" when it tendered its NOR in Huangpu, because joint inspection by the Chinese custom authorities had not taken place. It also argued that the contractual lien in the original bill could not be asserted against Feoso, who was not the holder of the original bill. For the first time, Feoso also raised the argument that the demurrage clause in the head charter was not incorporated into the original bill.
1. Feoso’s argument that the demurrage clause in the head charter was not incorporated into the original bill was not pleaded in its Defence or raised at the trial. At the trial, Feoso’s counsel did not dispute the argument of Faith’s counsel that the incorporation clause in the original bill was wide enough to incorporate the lien clause in the head charter. If the matter had been raised before the trial judge, leave to amend the Defence would have been required and, if granted, further findings and evidence and specific answers might well have been made, given or raised. The result was that the Court of Appeal was deprived of any findings and reasoning of the trial judge on this point. Therefore, Feoso was not allowed leave to introduce the new point at the appeal.
2. The lien clause was good against Feoso even though Feoso was not the holder of the original bill of lading. The absence of a contractual nexus between Faith and Feoso only meant that Feoso had no rights of suit under the Bills of Lading Act (Cap 384).The right of possession conferred on Faith by the bill of lading contract survived any transfer of ownership by the shipper to Ever Bright and from Ever Bright to Feoso. The contractual lien was dependent on continued possession of the cargo. The right operated as a remedy in rem in that it was asserted against the cargo. It would not operate against Feoso in personam.
3. Clause 6 of the head charter provided that NOR was to be tendered upon arrival at the customary anchorage at each port of loading or discharge. "Daphne L" was anchored at the customary anchorage stipulated in clause 6 of the head charter at the time NOR was tendered. By the terms of clause 6, she had reached the recognised waiting place for the port even though the customary anchorage was some 20 miles from the port. Even though the vessel had not passed joint inspection by the Chinese authorities, joint inspection simply involved an inspection of documents and was a mere formality having no appreciable effect on the commencement of laytime. If joint inspection had to be completed before NOR could be tendered, such a requirement could easily have been written into the charter. There was no such express requirement in this case and the NOR was valid.
4. The crude oil slops could not be safely discharged from "Daphne L" at Huangpu. The whole situation in China was brought about by Feoso’s attempt to import into China crude oil slops as fuel oil. By refusing to take delivery under the original bill, Feoso had effectively placed Faith in a position that it could not deliver the cargo, such that the vessel was left waiting with unclaimed cargo while incurring demurrage. Accordingly, Feoso was estopped from denying that "Daphne L" was an "arrived ship".
5. As Faith was entitled to claim demurrage and to enforce that claim by asserting the lien against the cargo, the claim in conversion would fail.
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.