AL Dawood Shipping Lines Ltd v Dynastic Maritime Incorporated [2010] EWCA Civ 104

Case No A3/2009/1189 AND A3/2009/1189(C)[2010] EWCA Civ 104IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION
COMMERICAL COURT
MR JUSTICE COOKE
Claim No 2007 Folio 470
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19/02/2010
Before
LORD JUSTICE PILLLORD JUSTICE ETHERTONLORD JUSTICE AIKENS
Between
AL DAWOOD SHIPPING LINES LIMITEDAppellantDYNASTIC MARITIME INCORPORATEDRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Mr James Weale (instructed by Messrs Andrews, Solicitors, London) for AppellantMr Sudhanshu Swaroop (instructed by Hill Dickinson LLP, London) for RespondentHearing Hearing dates : 5 th February 2010
JudgmentLord Justice Aikens :
[1]This is an appeal by Al Dawood Shipping Lines Limited, which is the defendant in an action brought by Dynastic Maritime Incorporated in the Commercial Court. I shall call Al Dawood Shipping Lines Limited the appellant and Dynastic Maritime Incorporated, the respondent. The case arises out of a charterparty for a motor tanker called the MT “NAPA”, (“the vessel”), which was owned by the respondent. By a charterparty dated 25 October 2006 (“the charterparty”) on the BPTime 3 form with additions, the respondent time chartered the vessel to the appellant for a period of one year from November 2006 to November 2007. In the action, the respondent claimed unpaid hire and damages of over US$3 million for wrongful repudiation of the charter by the appellant. The appellant counterclaimed damages for breach of an express warranty by the respondents concerning the vessel’s International Oil Pollution Prevention Certificate (“IOPP Certificate”). That counterclaim has never been quantified.[2]The appellant appeals the order of Cooke J dated 15 May 2009. By that order, Cooke J refused to set aside paragraph 2 of the order of HHJ Mackie QC dated 17 October 2008 whereby judgment was entered dismissing the counterclaim of the appellant in claim number 2007, Folio 470 and entering judgment in respect of that counterclaim in favour of the respondent. However, in the order of 15 May 2009, Cooke J did agree to set aside paragraph 2 of the order of HHJ Mackie QC dated 31 October 2008, whereby judgment for the respondent had been entered against the appellant on the respondent’s claim in the action, provided that certain stringent conditions were fulfilled by the appellant. Those conditions were, broadly, that a part of the claim (for unpaid hire of the vessel), costs to date and future costs of the action, must be paid by the appellants. Those conditions have not been fulfilled.[3]Permission to appeal the order of Cooke J was given on only limited grounds by the Rt Hon Sir Richard Buxton on 3 July 2009. In order to understand how the order of Cooke J came about and the nature of the current appeal, it is necessary to go into the history of events and this action.

The Charter terms

[4]Some of the terms of the charterparty are in dispute between the parties. However, it is agreed that it was on the BPTIME3 form. Lines 10 – 12 and lines 16 – 17 of the Preamble provided as follows:
“…conditions of this Charter which comprises this PREAMBLE, PART 1 and PART 2, together with the OCIMF Vessel Particulars Questionnaire or Q88 current at the date hereof and the BPTIME2 Questionnaire (together referred to as the “Questionnaire”) as attached hereto…. In the event of any conflict between the provisions of PART 1 or PART 2 of this Charter and any provisions in the Questionnaire, the provisions of PART 1 or PART 2 of this charter shall prevail…”
[5]Part 1 Clause B defined the charter period as from November 2006 to November 2007. It also gave the appellant an option to purchase the vessel “within three months or at anytime but not exceeding the ninth month of the time charter as per governing NSF 93 MOA dated on or around 30 January 2007”. Part 1 clause C of the charterparty stated that the Cancelling date would be 1600 hours local time on 30th November 2006. That was later amended to 8 December 2006. The rate of hire stipulated in Clause H of Part 1 was US$ 15,000 per day.[6]Clause 8.2 of Part 2 provided that the first payment of hire was to be received “as cleared funds by buyers (sic) one banking day before the date of delivery, paying the hire in advance up to, but not including the first day of the succeeding month”.[7]Part 2 clause 8.4 deals with the consequences of a failure to pay hire on the due date. It provides:
“8.4 Where there is a failure to pay hire by the due date, Owners shall notify Charterers in writing of such failure. Within five (5) banking days of receipt of such notification Charterers shall pay the amount due, failing which Owners shall have the right to suspend the performance of any or all of their obligations under this Charter and/or to withdraw the Vessel. If Owners elect to suspend performance of the Charter in respect of a particular late payment, they may still, notwithstanding that suspension of performance, withdraw the Vessel from the Charter in respect of that late payment provided they give a further twenty-four (24) hours’ notice in writing of their intention to withdraw. Under no circumstances shall the act of suspending performance be construed as a waiver by Owners of the right to withdraw in respect of the continuing failure to pay hire or any subsequent late payment of hire under this Charter. Throughout any period of suspended performances under this Clause, the Vessel is to be and shall remain on hire. Charterers undertake to indemnify Owners in respect of any liabilities incurred by Owners under the bill of lading or any other contract of carriage as a consequence of Owners’ proper suspension of and/or withdrawal from any or all of their obligations under this Charter.”
[8]Under the heading “Owners’ Obligations”, clause 9 of Part 2 provides, at clause 9.6.5, as follows:
“9.6.5. all documentation required to permit the Vessel to trade within the Trading Limits set out in PART 1 Section 1 including but not limited to the certificates and documentation confirmed by Owners in the Questionnaire to be in place and such documentation shall be maintained in force during the currency of the Charter.”
[9]Clause 19 of Part 2, which is headed “Off Hire” provides that the vessel will be off hire on each and every occasion that there is a loss of time arising out of or in connection with the vessel being unable to comply with Charterers’ instructions on account of, amongst other things, “any breach of clause 9.6.5”: see clause 19.1.3.[10]Each of the pages of Parts 1 and 2 of the charterparty were signed on behalf of the respondent and the appellant.[11]It is not in dispute that the charterparty had attached to it a document headed “Questionnaire 88 (version 2). The wording under this heading is:
“INTERTANKO’S STANDARD TANKER VOYAGE CHARTERING QUESTIONNAIRE 1988 (Version 2) (Metric system to be applied, HVPQ reference specified where applicable)”
. The reference to HVPQ is to the “Harmonised Vessel’s Particulars Questionnaire”.[12]Questionnaire 88 (Version 2) is then set out in the form of several sections, each in tabular form, with three columns in each table. The right hand column is headed “HVPQ Reference”. On the second page of the Questionnaire the heading for one table is “Certification”. Underneath that is a box which states:
“Owners warrant following certificates to be valid throughout the Charter Party period”
. Beneath that there is reference to standard certificates such as the SOLAS Safety Equipment, and the Load Line Certificate.[13]In the fifth row in this table headed “Certification” it says, in the first column, “IOPPC”. In the second column is the one word “Yes”, which must mean that the owner of the vessel does warrant that that certificate will be valid throughout the Charter Party period. In the third column there are just two numbers: “2.6”. It is fairly obvious that those numbers in fact refer to a particular paragraph number in a standard form produced by the Oil Companies International Marine Forum, which form is called the “Revised Ship Inspection (SIRE) Programme” form.[14]This SIRE form, as it was called at the hearing before us, is a comprehensive document which is intended to set out information about the vessel concerned. Again it is divided into sections and each section is in a tabular form. In the left hand column of each table is a number for the particular row in the table, although the numbering is consecutive throughout the document. On the second page of the document there is a table headed “Classification”. That has 15 rows in it.[15]Before the judge, and before us, a SIRE form for the MT “NAPA” was produced. This had been completed. In the first row of the first table it states, in the first column:
“Date this VPQ document completed” and in the next column it states “23-10-2006”
. That, however, is not credible as a date, if one looks further into the document. In a table headed “Classification”, the date of last dry dock is given as 20-11-2006, ie. nearly a month after the document was, purportedly, completed. In the same table it gives the same date for the last annual survey and the last boiler survey.[16]Then, in the table headed “Certification and Documentation” there is a row which is given the number 2.6. In the next column are the words “International Oil Pollution Certificate (IOPPC)”. In the next column, which is headed “Issued”, is the date 20-11-2006. In the next column under the heading “Expires” is the date 20-11-2009.[17]It was the appellant’s case that the SIRE form was attached to the charterparty at the time that the charter was signed on 25 October 2006. This was disputed by the respondent. There was no evidence to suggest that the SIRE form was attached to the charterparty and I am not satisfied, on the evidence of the surrounding documents, that it ever was. For instance, there is no reference to it in the “recap” email from the respondents to the brokers on 12 October 2006. However, Mr Weale, on behalf of the appellant, argued forcefully that the terms of the SIRE form that was actually produced (presumably some time after 20 November 2006) nevertheless formed a part of the charterparty terms. That submission was rejected by the judge but formed a key part of the appellant’s submissions before us.

The IOPP Certificates

[18]It is not in dispute that the actual position on the vessel’s IOPP Certificates was as follows: the first relevant certificate was issued in Panama on 25 May 2005 and remained valid until 15 June 2007. However, it appears to be of very limited applicability, because it is marked “to operate exclusively within jurisdiction of Cuba acuatic (sic) territory”. The second IOPP Certificate, dated 6 December 2006, is called an “Interim Certificate”. It is valid until 15 May 2007. It has no limitations on the area of operation of the vessel and it is not subject to any other conditions or restrictions. The third certificate is one dated 12 April 2007, ie. just over one month before the second certificate expired. That is a full certificate valid until 5 December 2011. It is not subject to any restrictions or limitations.[19]Just after the charterparty had been concluded, there was email correspondence about the IOPP certificate between the brokers and the appellant. It is tolerably clear that the appellant wanted to see the IOPP Certificate and wished to show it to a potential sub-charterer. On 23 November 2006, the brokers asked the respondent if it was normal for charterers to ask for that and other certificates. The respondent replied that usually charterers asked for the IOPP Certificate and a vessel’s P&I insurance certificate and indicated that the former would be forwarded to the brokers as soon as it was issued by the vessel’s Class and Flag authorities.

Events between 25 October 2006 and the withdrawal of the vessel

[20]On 27 November 2006 there was an email from the brokers to the appellant. It is clear (as Mr Weale argued) that the brokers were trying to arrange a sub-charter for the vessel on behalf of the appellant as disponent owners. The broker says in the email of 10.16 that day: “Considering that I am not being able to get employment for the tanker, I have been talking with Owners for some more time to get a fixture for the tanker prior to making your first payment of hire plus bunkers. To this end they propose seven more days to assist me get a first voyage. If you agree with this I shall return to them for another delivery laycan. Please let me know if this is acceptable to you”.[21]Captain DO Labinjo, the President of the appellant company, responded to the brokers, thanking the respondent for this offer. Captain Labinjo indicated that a potential sub-charterer had stated that it would make a decision (I assume on whether or not to sub-charter the vessel) “once he gets the IOPP certificate”. Captain Labinjo said that he had assured the sub-charterer that he would forward the certificate to him by 28 November 2006 and asked the broker to forward the certificate to him as soon as he had it.[22]The brokers passed on this message to the respondent with a request that the respondent accept a later date, ie. 8 December 2006, for the payment of the first instalment of hire and the cost of bunkers received on board at delivery. The message of the brokers continued: “In other words they would like to know if you’d accept to allow them to search for a fixture and in case they get one, the tanker should be ready in all respects around this time. In case they do not get a fixture you would have given them one more week after the delivery date of 29th…”.[23]On 5 December 2006 the brokers sent a chasing email to the respondent, saying that the appellant had asked about the prospects of receiving the IOPP Certificate that day. The respondent replied that the IOPP Certificate would be issued the following day and that the vessel was “performing her last test/inspections”. On the same day the respondent gave three days notice of delivery of the vessel under the charterparty. The IOPP Certificate was produced on 6 December 2006.[24]There is an email from the broker to a potential sub-charterer of the vessel, a Nigerian company called Oando Plc, at 12.17 on 6 December 2006 informing the latter that the IOPP Certificate had been received and saying:
“we await your decision to resume negotiating the T/C of the “NAPA””
. Shortly after, Mr Idris of the legal department of Oando Plc replied, asking the brokers to continue to liaise with Mr Rod Young of Oando, “as he will be keeping us informed of any conclusion reached”. On the same day, the appellant requested the respondent to amend the cancellation date of the charter to 8 January 2007. The brokers’ comment in an email to the respondent on 8 December was: “It looks like the fixture is in a lot of trouble”.[25]On 8 December 2006 the vessel was delivered to the appellant at Tusla anchorage. At that stage the appellant, as time charterer, had not issued any orders to the vessel for its employment, so the Master was told by the respondent, as owner of the vessel, to remain at the anchorage. In an email from the respondent to the brokers, intended to be passed on to the appellant, the respondent pointed out that it had not received the first instalment of hire. Therefore, the email said, the appellant “was in breach of the governing Time Charterer (sic) terms and conditions”.[26]On 8 December 2006 the respondent sent an email to the broker, for onward transmission to the appellant, which gave the appellant notice that because of the non – payment of the first instalment of hire, the appellant was in default. The email said: “Regrettably and pursuant to the relative clauses of the tcp, owners are herewith formally placing charterers on notice that they are in default and owners will withdraw the vessel pursuant to the relative tcp clause”.[27]The vessel remained at anchorage awaiting voyage orders.[28]On 11 December 2006 Captain Labinjo sent an email to the brokers saying that it had transferred the hire and cost of bunkers due, US$557,870 “to the nominated account”. At 1.33 pm on 14 December 2006 the respondent sent an email to the brokers for onward transmission to the appellant that, in view of the non – payment of hire, the respondent was giving the appellant 24 hours notice of its intention to withdraw the vessel unless the hire was received in the respondent’s bank “on 15 December 2006 at 1400 hrs close of banking hours in Greece”. In an email from the respondent to the brokers timed at 1.57 pm on 15 December 2006, the respondent said that it had not received the funds. At 15.22 the same day the appellant sent the brokers details of the SWIFT payment which it said had been made to the respondent’s bank in Greece. However, at 5.07 pm (Greek time), the respondent sent the brokers an e-mail, for onward transmission to the appellant, that the vessel was being withdrawn under the terms of clause 8.4 of Part 2 of the charter “with immediate effect”. A formal notice to that effect was sent.[29]The brokers tried to investigate the issue of the transfer of funds by SWIFT and asked the respondent to hold off withdrawing the vessel. But at 3.17 pm on 18 December the respondent sent an email to the brokers, to be passed on to the appellant, saying that it still had not received funds in its bank account at the close of banking hours in Greece. So, the respondent said:
“owners maintain their position”
.

The action

[30]The present action was begun by the respondent when the claim form was issued on 18 April 2007. In its re-amended Points of Claim it alleged that it validly terminated the charter on 15th December 2006 following the non-payment of hire by the appellants. As an alternative case it is alleged that if the withdrawal on 15 December 2006 was not valid, the respondent validly withdrew the vessel by its email on 18 December 2006. The respondent also claimed that the action of the appellant in not paying hire constituted a repudiation or renunciation of the charterparty by the appellant, which the respondent accepted. The respondent’s claim in the action was for hire due, the cost of bunkers received on board at delivery and for damages for wrongful repudiation of the charterparty. The latter sum was said to represent the lost earnings which would have been obtained by the respondent if the charterparty had been properly performed by the appellant. The total sum claimed was out at US$ 3,034,970.75. Of that sum US$ 135,436 represented hire (including the cost of bunkers) for the period between 8 December 2006 (the delivery date) to 15 December 2006 when (on the respondent’s primary case) the vessel was withdrawn and the charterparty was terminated by the respondent.[31]The appellant served a defence. The principal defence was that it was an express term of the charterparty that it contained a warranty that the vessel’s IOPP certificate would be issued on 20 November 2006 for a period of validity of three years until 20 November 2009. The basis for this allegation was that the “SIRE” report formed a part of the charterparty terms and paragraph 2.6 on page 6 of that report stipulated this express warranty in relation to the IOPP certificate. The defence went on to allege that the respondent was in breach of that warranty because no IOPP certificate was issued until 7 December 2006. Even then it was not valid for three years but only for five months and it was only an interim certificate. The appellant alleged that, as a result of the failure to fulfil the warranty, it was unable to sub-charter the vessel which had been their intention at the time of entering into the charterparty with the respondent. The inability to sub-charter the vessel led to the appellant’s own inability to pay the hire due at the time or just before delivery of the vessel under the charterparty. The appellant therefore alleged that any failure to pay hire by them was the result of the respondent’s own breach of charter.[32]It was also alleged that the respondent was not entitled to withdraw the vessel from the charterparty until after midnight at the end of five banking days after the date on which the hire was due on Saturday 8 December 2006. Therefore, it was alleged, the respondent was not entitled to withdraw the vessel until after midnight on Friday 15 December 2006. As the vessel was withdrawn before midnight on Friday, 15th December 2006, it was alleged that this withdrawal was premature and therefore wrongful.[33]The appellant also counterclaimed damages. This claim was put on two bases. First, damages were claimed because it was alleged that the premature withdrawal constituted a repudiatory breach of the charter by the respondent. Secondly, it was alleged that the failure to provide an IOPP certificate as provided in the charterparty meant that the appellant was unable to secure a sub-charter which in turn led to the non-payment of hire on or before 15 December 2006, the date of the withdrawal of the vessel.[34]Before us, Mr Weale accepted that the correct measure of damages would have been the appellant’s loss of profit that it would have made if it had been able to sub-charter the vessel. I take it from the form of the pleading that it was intended to claim loss of profits on any sub-charter or charters that the appellant would have concluded for the vessel during the period of the time charter.[35]Significantly, for present purposes, under the heading of “Particulars of Loss and Damage” said to flow from these breaches, the appellant said, somewhat casually, that it had not been able properly to assess its loss “in the time available and hoped to be in a position to do so shortly”.[36]In the reply, as amended, the respondent claimed that the IOPP Certificate warranty was only that a validly IOPP certificate would be in place at the date of the charter. It was said that the respondent was either only under an obligation to exercise due diligence to maintain that certificate thereafter for the period of the charter, or that such a certificate would remain in force thereafter during the period of the charter. It was expressly denied that the SIRE report was attached to the charter or formed a part of its terms.

The chronology of the proceedings

[37]After the close of pleadings, the procedural chronology of the proceedings is, briefly, as follows. First, on 4 February 2008 the respondent served a Request for Further Information (“RFI”), in relation to the appellant’s “IOPP certificate” case as put forward in paragraphs 3 and 23 of its defence. That request was not answered. A court order dated 27 February 2008 required a response to the RFI within 14 days. That court order was not obeyed.[38]The case management conference was held on 13 June 2008. The appellant did not attend. The court gave directions for trial and also ordered that paragraphs 3 and 23 of the defence and the entire counterclaim would be struck out unless, by 20 June 2008, the appellant answered the first RFI (to which I have referred), and provided particulars of the quantum of its counterclaim. That was the first Unless Order. The appellant did not comply with that order. Furthermore, the appellant failed to provide disclosure and to exchange witness statements as had been provided for in the case management order of 13 June 2008.[39]On 18 July 2008, the respondent served another request seeking further information on other aspects of the appellants’ case. This second RFI was not met. This failure resulted in a court order dated 23 September 2008 which required a response by the appellants on 7October 2008. That court order was not complied with.[40]On 17 October 2008, His Honour Judge Mackie QC gave judgment dismissing the appellant’s counterclaim because of the appellant’s breach of the first Unless order made on 13 June 2008. Judge Mackie also ordered that the respondent would be entitled to claim judgment on its claim unless, by 24October 2008, the appellant answered:(a) the second request for information made on 18 July 2008 (and the subject of the order dated 23 September 2008), and(b) the appellant also provided disclosure and exchanged witness statements as had been ordered on 13 June 2008. This was the second Unless order made by the court. That Unless order was not complied with.[41]Accordingly, on 31 October 2008, Judge Mackie gave judgment on the respondent’s claim in the sum of US$ 3,034,970.75 plus interest. He made other orders in relation to costs. The order was served on the appellant on 4 November 2008.[42]This finally prompted the appellant into action. On 17 November 2008, London solicitors appointed by the appellant applied under CPR Pt.3.9 for relief against sanctions, in this case to set aside Judge Mackie’s order dated 31October 2008. It is important to note that Judge Mackie’s order of 31 October 2008 only related to the respondent’s claim. It did not relate to the appellant’s counterclaim which was covered by the order of 17 October 2008. However, on 12 May 2009, shortly before the date fixed for the hearing of the appellant’s application in relation to the order of 31 October 2008, the appellant made a second application. This was for relief from the first Unless order dated 13 June 2008 and for an order setting aside the judgment of 17 October 2008 whereby Judge Mackie had given judgment dismissing the appellant’s counterclaim. That application was therefore over 6 months out of time: see CPR Pt 3.6(2).

The hearing before Cooke J

[43]The judge heard the two applications on Friday, 15 May 2009. He dealt first with the question of whether or not he should set aside the order of Judge Mackie of 17 October 2008, which dismissed the appellant’s counterclaim. It is clear from the transcript of that hearing that argument was first directed to the question of whether or not there was a real prospect (at the least) of demonstrating that the SIRE report was a part of the charterparty terms, so that there was an express IOPP certificate warranty as alleged in paragraphs 3 and 23 of the defence. The judge heard argument on that issue from counsel for the appellant. At the end of her argument the judge said (at page 15 of the transcript”): “I am sorry Miss Hilliard I am simply against you on this point. So I am going to deliver a short judgment on this particular point. I appreciate it means a lot of your further argument which you prepared is unnecessary, but that is how it is”.[44]The judge proceeded to give an ex tempore judgment on that issue. The judge concluded that the SIRE document was not attached to the charterparty and that its terms were not incorporated into the charterparty terms: see paragraphs 7 - 9 of the judgment. At the conclusion of that judgment, he said at paragraph 9: “This aspect of the defence cannot succeed and various consequences will flow from that in the context of the application which Miss Hilliard makes”.[45]There was then an exchange between the judge and Miss Hilliard. The judge asked Miss Hilliard whether she agreed that, irrespective of the second application, i.e. that to set aside the judgment of 31 October 2008, it followed that US$ 136,000 was extant on the judgment. (That represented the hire and cost of bunkers claim). Miss Hilliard replied:
“My lord, the entirety of the case turned upon that clause 2.6 being incorporated in the charter. It was that clause to which I referred your Lordship in relation to the entirety of the capital expense.”
[46]The judge then heard argument on the issue of whether or not the judgment of 31 October 2008 should be set aside. At the conclusion of that argument, the judge gave a second ex tempore judgment. The conclusions of the judge on the application to set aside the judgment and order of 31 October 2009[47]The judgment of Cooke J on this issue can be summarised as follows. First, the judge appreciated that he had to consider each of the factors set out both individually and cumulatively at CPR Pt 3.9 paragraphs (a) to (i): see paragraphs 18 – 19 of the judgment.

(a) under the heading:

“the administration of justice”
. Under that head he concluded that there were defences to the respondent’s claim for damages for repudiatory breach of the charterparty by the appellant which had a realistic prospect of success: paragraph 20. The judge found that two defences may well be said to have “a higher prospect than that”. That factor carried considerable weight. Thirdly, the judge went on to consider each of the other factors that are set out in CPR 3.9 which a court must consider on an application to set aside a judgment given because of a failure to comply with court orders. The judge considered all the factors, although he considered those under paragraphs (c), (d), (e) and (f) together. The judge found that the appellant had breached numerous court orders: paragraph 23. He also found that the appellant had repeatedly failed to attend hearings, ignored orders and ignored correspondence from the respondent: paragraph 23. The judge also found there was no good explanation for the appellant’s failure to comply with the various orders prior to the second Unless order. He held that the appellant was not entitled to blame its alleged financial position or its lawyers for these failures: paragraphs 24 – 32. The judge found there was no good explanation for the appellant’s failure to comply with the second Unless[48]Fourthly, the judge then considered the effect of the failure to comply with the orders on each of the parties and the effect of granting relief on each of the parties. At paragraph 39 of the judgment the judge concluded that if relief against the sanction of the judgment of 31 October 2008 was not granted to the appellant, the appellant would be deprived of “what appears to be good arguable defences on a claim of some US$ 3.5 million”. The judge said:
“This is, in the end, what leads me to decide that judgment should be set aside”
. However the judge then went on to set a number of stringent terms, which are set out at paragraph 40 of the judgment and are recorded in the order that he made, to which I have already referred.[49]As I have already noted, the appellants have not paid any of the sums ordered by Cooke J. Accordingly, the order of HHJ Mackie QC of 31 October 2008 has remained valid in its entirety.

The Notice of Appeal

[50]The notice of appeal sets out three grounds of appeal. The first is headed “Time to comply with the order”. Sir Richard Buxton refused permission to appeal on that ground and there is no renewed application in respect of it. The second ground is headed “Defence/counterclaim”. At paragraph 2.3 of the grounds of appeal it is said that the judge “rejected the appellant’s claim in relation to the significance of the value of the valid IOPP certificate in that the documents upon which the appellants placed reliance were not specifically incorporated by the charterparty. The learned judge consequently dismissed the appellants’ application to set aside the judgement dismissing the counterclaim”. Paragraph 2.4 of the ground says that the judge was in error in reaching that conclusion.[51]Ground 3 is headed “Article 6 and overriding objective CPR Pt 1”. This ground alleges that the judge omitted to consider or direct himself as to the application of Article 6 of the ECHR in considering overall the application of the overriding objective set out in CPR Pt.1. Reliance was placed on a judgment given by this court on an application for permission to appeal in the case of Momson v Azeez [2008] EWCA Civ 829.[52]Sir Richard Buxton gave permission to appeal on these latter two grounds only.

Ground 2 of the appeal

[53]As I understand it, the argument of Mr Weale on behalf of the appellant on this ground is that the judge did not consider properly the argument of the appellant on the allegation in the defence and counterclaim that the charterparty contained an express warranty by the respondent, as owners, that the vessel’s IOPP certificate would be issued on 20 November 2006 and the certificate would be valid continuously for a period of three years until 20 November 2009: see paragraph 3 of the defence. The judge should have found that this argument had a good prospect of success. Therefore, given the approach of the judge in relation to the other defences put forward by the appellant, the judge should have accepted that the judgment of 17 October 2008 (as well as that of 31 October 2008) should have been set aside, albeit on terms.[54]At the very end of his argument, Mr Weale, who had referred to a further signed witness statement of Captain Labinjo, made an application to adduce this statement as further evidence. Mr Weale told us that this witness statement, which had apparently been recently prepared, would say that the SIRE form was attached to the charterparty. The statement would also, apparently, deal with the quantification of the appellant’s counterclaim for damages for the respondent’s alleged breach of the IOPP certificate warranty.[55]This application was not foreshadowed in the Notice of Appeal or in any other application to the court in advance of the appeal hearing. Mr Weale told us frankly that he had not forewarned Mr Swaroop, counsel for the respondent, of an intention to make an oral application at the appeal hearing to adduce such evidence. Mr Swaroop objected to its introduction. He pointed out that if it were introduced then, at the least, he would need time to study it and take instructions. It may be he would need to put in further evidence in response. We rejected the application.[56]It is common ground that the recap email of 12 October 2006 sets out the agreed terms of the charterparty. It is clear. The vessel is described as “MT Napa as per Q88 dated September 2006”. There is no reference to the SIRE report. The recap email also refers to “Other Terms: As per BP Time 3 plus amendments/riders to be provided”. So the general form was clearly to be a BP Time 3 charter. In the appeal bundles (which were, I fear, ill – organised), we have the signed copy of the BP Time 3 Charter dated 25 October 2006. Line 11 refers to “OCIMF Vessel particulars Questionnaire or Q88 current at the date hereof together referred to as the Questionnaire as attached hereto”. That makes it abundantly plain that the parties intended that either the Q88 form or the SIRE form was to be attached to the charterparty and its terms thereby incorporated. As I have already noted, there is no evidence whatsoever that the SIRE report was attached to the charterparty of 25 October 2006. I am quite satisfied that the judge was correct to conclude that it was not.[57]Mr Weale submitted that even if the SIRE report was not incorporated physically into the charterparty, nevertheless its terms were incorporated. Lines 11 and 12 of the charterparty stipulate that it is either the OCIMF vessel’s particulars questionnaire (ie. the SIRE report) or the Q88 current at the date of the charterparty that is to be attached. In my view this therefore contemplates that the terms of the one or the other are to be incorporated into the charter, but not both. Mr Weale’s reliance on the words in brackets in line 12 – “together referred to as the Questionnaire” – is misplaced. Those words are just defining the documents generally as “the Questionnaire”. They are not an indication that both documents are attached to the charterparty and form part of its terms. It will be noted that there is a third form of questionnaire referred to in the standard form of line 11, which reference has been deleted in this case. It was obviously thought sensible to have a collective definition of these three types of questionnaire. But the creation of that definition cannot mean that each was incorporated into the charterparty terms.[58]On the footing that the Q88 form was attached and that its terms were incorporated into the charterparty, what form of warranty in relation to the IOPP certificate did the respondent give? Clause 9.6.5 of Part 2 of the charterparty stipulates expressly that the owner is obliged to provide and pay for all documentation that is required to permit the vessel to trade within the Trading Limits set out in Part 1 of the charterparty. Clause 9.6.5 then expressly stipulates that the owner that the certificates confirmed by the owners “in the Questionnaire” will be in place and that such documentation “shall be maintained in force during the currency of the Charter”. That means, in my view, that the respondent, as owner, was obliged to maintain, during the currency of the charterparty, a valid IOPP certificate for the vessel that would enable her to trade within the Trading Limits set out in Part 1 of the charterparty, ie. worldwide, with the exceptions noted in lines 74 – 77 of Part 1. The “currency of the charterparty” means from the time that the vessel was delivered under the charter until its expiry. There is no requirement, by virtue of this warranty, to have a valid IOPP certificate in advance of delivery of the vessel under the charterparty.[59]Mr Weale argued that the reference to “2.6” in the column headed “HVPQ Ref” in the Q88 form meant that the wording of item 2.6 in the SIRE report that was completed, presumably at some time after 20 November 2006, must be deemed incorporated into the charterparty. Therefore the respondent warranted that there would be one IOPP certificate valid for 3 years from 20 November 2006 to 20 November 2009. In my view that argument is hopeless. I agree with the judge’s conclusion that the simple reference to “2.6” in the Q88 cannot, by itself, incorporate such a warranty. The reference to “2.6” is a reference to a particular paragraph in the standard form of SIRE report. In this case it cannot be a reference to a particular paragraph in a SIRE report that has been completed. That is because there is no evidence that the SIRE report for this vessel and the paragraph 2.6 had been completed at the time that the charterparty was agreed on 25 October 2006.[60]Therefore, Ms Hilliard was right to accept before the judge that if paragraph 2.6 of the subsequently completed SIRE report was not incorporated into the charterparty, then it is not arguable that there was an express warranty in the terms pleaded in paragraphs 3 and 23 of the defence. Accordingly, the basis of the counterclaim, as pleaded, disappears.[61]Furthermore, on the evidence that we have, it is apparent that the respondent had obtained a valid IOPP certificate at the time that the vessel was delivered on 8 December 2006. Mr Weale argued that because it was an interim certificate and was not valid for the whole of the charterparty period it put the respondent in breach of the warranty in clause 9.6.5 of Part 2 of the charterparty. That is not pleaded in the defence and counterclaim. It would be a hopeless plea in any event. There is nothing in clause 9.6.5 that stipulates that there must be one IOPP certificate that is valid from the start to the finish of the charter period. The obligation is only to maintain the certificate in force during the charter period.[62]There are other insurmountable difficulties with the counterclaim in any event. Even assuming a warranty as alleged by the appellant and even assuming its breach, on its case the appellant would have to prove that this breach meant that it was unable to conclude a sub-charter for the vessel with Oando Plc. But there is nothing in the contemporary documents to demonstrate that Oando Plc was prepared and ready to sub-charter the vessel upon being satisfied that the vessel had a valid IOPP certificate. If Oando Plc had been about to sub-charter the vessel, I would have expected to see a “recap” email, setting out the important terms of the sub-charter, including the period of that charter and the rate of hire, but with a “subject” placed on it; viz. that the fixture was “subject” to the satisfactory production of the vessel’s IOPP certificate. That is commonly done where a survey is awaited and I would expect the same here. There is no hint of that. There is no email correspondence setting out proposals for detailed terms of a proposed sub-charter. The emails were in the vaguest of language.[63]Mr Weale referred us to paragraph 6 of the witness statement of Captain Labinjo on the sequence of events in late November and early December 2006. But this takes the matter no further than the emails I have referred to above. On the evidence that I have seen, I am quite satisfied that there was no likelihood of a sub – charter of the vessel by Oando Plc; not even for one month.[64]Even if I had been satisfied that it was reasonably arguable that Oando Plc would have sub-chartered the vessel, the appellant has failed to plead and has failed to adduce any evidence to support its case that the failure to sub-charter the vessel has resulted in a loss. Mr Weale accepted that the basis for a counterclaim would be that the sub-charter rate of hire was greater than that of the charter hire under the charterparty with the respondent and that the appellant would therefore have made a profit. But there is no evidence of any negotiations about the rate of sub-charter hire. There is no other evidence to demonstrate that there is a reasonable prospect of the appellant showing that it has suffered loss by an alleged breach of the IOPP certificate warranty.[65]Therefore, on the evidence before us, the appellant has failed to show that the judge was wrong to reach the conclusion that the proposed counterclaim had no prospect of success. Even if, despite all that, it were to be thought that appellant had a reasonable prospect of succeeding on the unparticularised counterclaim, there would still be the question of whether the judge was wrong, as a matter of his discretion, to refuse to set aside the judgment of 17 October 2008. Mr Weale did not advance any separate grounds for saying that the judge should have done so apart from the argument on the IOPP certificate warranty case.[66]Therefore, for the reasons I have given, the order of the judge refusing to set aside the judgment of 17 October 2008 must stand. Ground 3.[67]Mr Weale accepted that the judge had in fact taken an overall view of the factors in CPR Pt 3.9. He was right to do so. At paragraph 19 of his judgment, the judge directed himself on the need to look at all the factors in the round. At paragraph 39 of his judgment he undertook that exercise.[68]However, Mr Weale submitted that there is a further exercise that a judge must perform when considering whether to set aside a judgment pursuant to the power to give relief from sanctions as set out in CPR Pt 3.9. He submitted that the judge was required by Article 6 of the ECHR to consider whether the judge’s decisions(a) to refuse to set aside HHJ Mackie’s order of 17 October 2008; and/or(b) to set aside his order of 31 October 2009 on the terms that the judge set were both proportionate and for a legitimate purpose. Mr Weale submitted first, that the judge had to consider those aspects separately from an individual and collective consideration of the factors set out in CPR Pt 3.9 and, secondly, that he should have expressly stated in his judgment that he had done so. He relied on paragraph 161 of the judgment of Arden LJ in Stotzenburg v CIBC Mellon Trust Co Ltd [2004] EWCA Civ 827.[69]In summary, Arden LJ in that case (which was followed by this court in Momson v Azeez [2009] EWCA Civ 202), made the following statements of principle. First, Article 6 of the ECHR is concerned with rights of access to the courts. But, secondly, the state is entitled to impose restrictions on the right of access to the courts by making an order (eg under CPR Pt 3.9 refusing relief against sanctions) that has the consequence that a party will be deprived of a trial of its defence on its merits or will only be able to have such a trial on the fulfilment of conditions. However, thirdly, a court will only be entitled to impose restrictions on the right to access to the courts if the restriction serves a legitimate aim, is proportionate and does not destroy the very essence of the right. Therefore, if a judge decides to refuse relief against sanctions on an application under CPR Pt 3.9, where the effect of a refusal would be to deprive a party of a trial on the merits or would grant that right only on the fulfilment of conditions, the order will be compliant with that party’s Article 6 rights if the order is for a legitimate aim, is proportionate and does not destroy the essence of the right.[70]I am prepared to accept that where a judge is considering an application for relief against sanctions under CPR Pt 3.9 and the consequence of a refusal to grant relief or to do so on terms will be that there will not be a trial on the merits or only if conditions are fulfilled, the judge should, ideally, state expressly in his judgment that he has considered the issues of legitimate aim and proportionality and essence of the right under Article 6. However, the fact that the judge has not expressly used such words in his judgment cannot, by itself, be a ground for a successful attack on the judge’s conclusion and order. The questions must be, first, whether the judge’s decision to maintain the sanction, with or without conditions, constitutes a legitimate aim, is proportionate in the circumstances and does not destroy the very right; and, secondly, whether it is tolerably clear from the judge’s reasoning that this is so.[71]In this case, the decision to maintain the order of HHJ Mackie of 17 October 2008, striking out the counterclaim, did fulfil a legitimate aim, which is that hopeless cases should be disposed of at an early stage and without a full trial, because there are no merits to try. That decision of the judge was proportionate, because it was necessary for achieving that legitimate purpose and it also fulfilled the overriding objective of the CPR. The essence of the right of access to the courts is not destroyed because there is no right of further access once it is clear that the claim or defence is hopeless. That is all clear from the judgment that the judge gave. I have upheld his conclusion that the counterclaim was a hopeless case.[72]As to the decision to set aside HHJ Mackie’s order of 31 October 2008, but on stringent terms, it is clear (and Mr Weale did not really argue to the contrary) that the judge’s order fulfilled a legitimate aim. The modified sanction imposed by the judge’s order was aimed at ensuring that the appellant would be able to pursue its reasonably arguable defences, but at the same time it aimed at ensuring that the appellant made good its past failures to obey court orders and would ensure that the appellant would have do so in the future. That aim was legitimate. The order of the judge was proportionate because those orders were reasonably necessary to ensure fulfilment of that aim. The order also fulfilled the overriding objectives of the CPR. The essential right of access to the court by the appellant is not destroyed because it will be able to argue its defences if it complies with the orders laid down by Cooke J. That is also clear from his judgment.[73]In my view, therefore, the judge’s judgment complied with the requirements of Article 6. It cannot be impugned on that ground.

Conclusion and disposal

[74]For the reasons I have given, both grounds of appeal must fail. The order of the judge, in relation to the order of HHJ Mackie QC dated 17 October 2008 and that of 31 October 2008, must be maintained. Lord Justice Etherton[75]I agree. Lord Justice Pill[76]I agree.

order

see paragraphs 33 – 36. He concluded that the appellant brought the 31 October 2008 order on its own head by its own actions and that the appellant was reckless in allowing judgment to be entered: paragraphs 32 and 35. The judge also found that the original trial date could no longer be met.