“MMO was eager to obtain delivery of the long-delayed Cargo”
“1. Both the capture by pirates and the subsequent main engine breakdown are well made out instances of general average events; 2. Payment of the ransom and the cost of the tow to Salalah are allowable GA disbursements. 3. The Ship’s calls at Salalah and Hamina were not unjustifiable deviations. 4. The Owners have not breached any warranty in respect of seaworthiness or obligation to exercise due diligence. 5. The Owners are entitled to exercise a possessory lien over the Cargo for MMO’s contribution to GA disbursements. 6. Although the Owners have no power to compel MMO to provide GA security, their requests for GA security from MMO in the form of a bond supported by an insurer’s guarantee or a cash deposit were reasonable in principle, form, amount and circumstance. 7. MMO’s failure to discharge the lien by way of GA security or otherwise in respect of the entire Cargo was a breach of its obligation to take delivery pursuant to the contracts of carriage. MMO’s refusal to provide GA security other than a guarantee for 9% of the Cargo was unreasonable, incomprehensible and irrational. 8. The actions taken by the Owners to preserve their lien were reasonable, including taking the Cargo to Hamina and placing it in secure storage and not releasing the 98 coils covered by an insurer’s guarantee and not releasing a value-related proportion of the balance of the Cargo. 9. MMO’s conduct subsequent to the placing of the Cargo in store in Hamina has manifested not merely an abject failure to mitigate any losses they might be suffering as a consequence of being kept from the Cargo but also, inexplicably, an apparent intention to do all that was possible to avoid any form of negotiated outcome and to delay ultimate resolution… 12. MMO is solely responsible for the costs incurred by the Owners in connection with storing the Cargo at Hamina, including berthing and handling charges and reasonable legal costs. 13. The Owners have committed no breach of any contract of carriage in respect of the cargo; at no time have they converted any part of the Cargo; and they are not responsible for any loss or damage that MMO may have suffered arising from or connected with any of the matters considered herein.”
“Question 1: Are shipowners (here the Defendant Owner) entitled to refuse to deliver up cargo covered by a bill of lading (here, 98 steel coils covered by bill of lading 4) to the consignee under that bill (here, MMO) in purported exercise of their lien for general average contribution for that cargo even after they have received and accepted an unlimited general average contribution guarantee from the insurers of that cargo undertaking, in consideration of the delivery of that cargo to the consignee, to pay the shipowner any general average contribution due in respect of the cargo? Question 2: Are shipowners entitled to recover storage and other expenses incurred by them in exercising their lien over cargo after its discharge from the vessel?”
“In consideration of the delivery to us or to our order, on payment of the freight due, of the goods noted above we agree to pay the proper portion of any salvage and/or general average and/or special charges which may hereafter be ascertained to be due from the goods or the shippers or owners thereof under an adjustment prepared in accordance with the contract of affreightment governing the carriage of the goods or, failing any such provision, in accordance with the law and practice of the place where the common maritime adventure ended which is payable in respect of the goods by the shippers or owners thereof… We also agree: (i) to furnish particulars of the value of the goods, supported by a copy of the commercial invoice rendered to us or, if there is no such invoice, details of the shipped value (ii) to make a payment on account of such sum as is duly certified by the average adjusters to be due from the goods and which is payable in respect of the goods by the shippers or owners thereof and (iii) that this agreement shall be governed by English Law and the High Court of Justice shall have exclusive jurisdiction over any dispute arising out of this agreement, and each party shall irrevocably submit to the jurisdiction of the English Court, (iv) that any period of prescription whether provided by statute law, contract or otherwise, shall commence to run from the date upon which the general average adjustment is issued.”
“In consideration of the delivery in due course of the goods specified below to the Consignees thereof without collection of a deposit, we, the undersigned insurers, undertake to pay to the Shipowners or to the Average Adjusters, Stichling Hahn Hilbrich, on behalf of the various parties to the adventure as their interests may appear, any contribution to General Average and/or Salvage and/or Special Charges which may hereafter be ascertained to be properly due in respect of the said goods.”
“(1) All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated… (3) General Average General Average shall be adjusted, stated and settled according to theYork-Antwerp Rules 1994 , or any subsequent modification thereof, in London unless another place is agreed in the Charter Party…”
“12.13 With the intention of preserving the lien for so long as necessary, and having discounted berthing as being almost certain to lead to the loss of the lien, the Owners had only two options, wait at the St Petersburg anchorage or sail away. Having failed to make worthwhile progress in negotiations with MMO and not being confident that the Ship would not be forced by the St Petersburg authorities to berth, they chose the latter… 12.16 We find that the owners made their decision to order the Ship away from St Petersburg in good faith after five fruitless days at the anchorage, after careful consideration of the available options and concluding that there was no credible alternative. 12.17 It follows from the above that we find that the Ship sailing to Hamina was not an unjustifiable deviation; on the contrary it was a reasonable and necessary act for the preservation of the lien over the Cargo for the benefit of all parties to the common adventure.”
“13.26 The Ship arrived at the St Petersburg anchorage on 20 September. After waiting a few days, the Owners concluded from the advice received that they had three options: 1. Bring the ship into port knowing firstly that the Cargo would almost certainly have to be discharged and would pass out of the Owners’ control and that, in consequence, their lien would be lost and secondly, there was a high probability that the Ship would be arrested by MMO. 2. Let the Ship remain at the anchorage for an indeterminate time, uncertain as to what might happen, fearing that at any time she could be ordered into port. 3. Order the ship to leave Russian waters… 13.28 We are satisfied that the Owners’ decision to order the Ship to sail from St Petersburg anchorage on 25th September was commercially and legally legitimate. The decision was based on carefully considered commercial and legal advice and was, in essence, the only option short of capitulation. Having explored the alternatives with their local agents and lawyers the Owners concluded that departure was the only way of preserving the lien on the Cargo, not only for their own benefit but for the benefit of other cargo interests as well. We agree. 13.29 We find that the Owners’ actions at St Petersburg and subsequently have not prejudiced their lien over the Cargo.”
“14.1 Once a GA event has occurred and GA has been declared, the owner of the relevant ship holds a lien over all cargo on board the ship in respect of the liability of the owner of each piece of cargo to contribute towards the allowed GA disbursements. The lien over a given piece of cargo is customarily discharged by the provision of appropriate security. As it is usually the case that the full extent of the allowable GA disbursements is not known at the time GA security is provided, the level of security can only be based on the estimated expenditure. 14.2 GA security is generally provided in the form of two separate instruments, a bond and a guarantee; these are usually requested on well used, industry standard forms. The GA bond is furnished by the cargo interests to the effect that they will answer to a demand in due course for contribution to GA disbursements even if they might not otherwise be the liable party. The GA bond is supported by a GA guarantee which is provided by the insurers of the party providing the GA bond, insuring the bond provider’s liabilities under the bond. 14.3 In the event that an insurer’s guarantee is not available, the cargo interests will be required to support their bond by way of a cash deposit, bank guarantee or other form of acceptable security. For convenience, unless the context otherwise requires, further references to a GA guarantee and similar should be taken to include references to a cash deposit, bank guarantee and similar as well as an insurer’s guarantee. 14.4 In the present case…contrary to what is generally recognised as the almost invariable practice, MMO failed to provide GA security for the entirety of the Cargo. 14.5 A small part of the Cargo, 98 steel coils carried under B/L 4, was insured, for which an insurer’s guarantee was provided. The balance of 991 coils was uninsured; in respect of this balance, SSH sought a cash deposit from MMO on behalf of the Owners but no deposit has been provided. 14.6 Similarly, despite repeated requests from SSH, MMO has continued to refuse to provide a GA bond or bonds in respect of any of the Cargo. The Owners’ Position on GA Security (in Summary) 14.7 The Owners maintain that they are entitled to both a GA bond and a GA guarantee for all the Cargo in accordance with the established practice and, more importantly, in order to be properly secured. They argue that in the absence of a GA guarantee they have no means of obtaining payment if they are unable to recover sums due from the bond provider and, in the absence of a GA bond, they cannot be confident that the party whose liability is insured under the GA guarantee will be the party liable to contribute in GA. Without a GA bond, the Owners could find themselves unable to recover either from the liable party or the guarantor. MMO’s Position on the Need for a Bond 14.8 MMO disagrees with the Owners in respect of the claimed need for a GA bond. MMO is the consignee under the Bs/L and is therefore bound by the Bs/L terms. Clause 3 of the Bs/L imposes an obligation on MMO to contribute to GA disbursements that is comparable to the obligation in the proposed GA bond; the demand for a GA bond was therefore an unnecessary requirement and the additional security thus demanded was therefore unreasonable. 14.9 Furthermore, says MMO, a GA bond would have been a new and additional contract between the Owners and MMO but MMO was under no obligation to enter such an additional contract. Even if such an obligation existed, how can a breach of the obligation entitle the Owners to take and retain double security? 14.10 Finally, MMO argues that although there might have been a historic justification for a GA bond, with the passing of the Carriage of Goods bySea Act 1992 , that justification has passed. In particular, s. 3(1)(a) thereof provides that a receiver, like MMO, who demands delivery of goods to which a bill of lading relates, becomes subject to the same liabilities under the bill of lading contract as if he had concluded it himself, including the liability to contribute in GA. 14.11 MMO maintains that the Owners therefore have no right to, or need for, a GA bond. Our Findings on the Provision of GA Security 14.12 No authority has been cited to us by either party for or against the proposition that a cargo interest is, without more, obliged to provide GA security in response to a demand from a shipowner. 14.13 We have seen nothing in the Bs/L or the voyage charter suggesting that MMO is under an obligation to respond positively to a request for the provision of GA security from the Owners. 14.14 It is not disputed that the Owners were entitled to exercise a lien over the Cargo for MMO’s contribution for GA disbursements and we find that the Owners have done nothing to prejudice that lien; the lien therefore subsists. 14.15 The Owners have indicated that they will release their lien if security in the form of a GA bond supported by the existing GA guarantee for the B/L 4 coils and a cash deposit for the Bs/L 1, 2 and 3 coils is provided. 14.16 MMO declines to provide a GA bond in respect of any of the Cargo and a GA guarantee or a cash deposit for the Bs/L 1, 2 and 3 part of the Cargo. 14.17 We find that the amount of the cash deposit agreed between SSH on the Owners’ behalf and MMO of US$920,000 , and the terms upon which the deposit would be held are reasonable having regard to the approximate level of GA disbursements and the contributing values as assessed by SSH, and we note that there would be no cost to MMO in executing a GA bond in favour of the Owners. 14.18 Until either the GA security is provided or the Owners receive payment of MMO’s contribution to the GA disbursements or MMO does something else that leads to the discharge of the lien, the Cargo remains subject to the lien. 14.19 For MMO to become entitled to possession of the Cargo they must first procure the release of the lien by providing GA security or in some other way, as outlined above. 14.20 Unless and until MMO procures the release of the lien, or some other relevant intervening event occurs, the Owners must continue to care for the Cargo. 14.21 It is clear from the above that although there are remedies available to the Owners, who cannot be expected to care for the Cargo indefinitely, they cannot compel MMO to provide GA security. Nevertheless, the initiative for resolving the deadlock prima facie lies with MMO and we find that MMO has failed to do that which was reasonably expected of them by the Owners, namely to discharge the lien by providing GA security in the amount and form requested, or in some other way… The Guaranteed 98 Coils 14.30 Repeating its argument above about bonds, MMO says that the Owners’ refusal to release the 98 coils under B/L 4 which were covered by a GA guarantee was wrongful and the Owners were guilty of conversion of the 98 coils. 14.31 The Owners respond that they were entitled to demand a GA bond as part of the price of giving up their lien on the 98 B/L 4 coils; no bond has been provided so the lien remains. Findings 14.32 If the GA guarantee for the 98 coils, unaccompanied by a GA bond, was not sufficient to discharge the lien, our findings above about GA security of course include the B/L 4 part of the cargo. However, if, contrary to our findings above, the insurer’s GA guarantee, even though not accompanied by a GA bond is sufficient GA security to discharge the lien on the 98 B/L 4 coils, then, looking at the issue in isolation, the Owners should not have retained the 98 coils at Hamina. Instead they should have delivered the 98 coils to St Petersburg. However, it is not realistic to look at the 98 coils in isolation and it is necessary to apply a measure of proportionality. 14.33 The 98 coils represented less than 9% of the total of 1,089 coils and, on the evidence, were not sufficiently different from the other 991 coils to make it easy to identify them during unloading at Hamina or once they were in store. Furthermore, it is likely that the Owners anticipated that the entire Cargo would remain in storage for no more than a few weeks before being delivered as a whole to MMO. It is also likely that the labour costs and the risk of handling damage to the Cargo as a whole that would have been incurred if the 98 B/L 4 coils, which in storage were mixed in with all the other coils, had been sought and extracted, would have been disproportionately high when set against the possible benefit. Taking all the foregoing into account, the Owners’ actions in retaining the 98 coils with the other 91% of the Cargo was, regardless of issues of GA security, reasonable and consistent with their obligation to care for the Cargo as a whole. Summary 14.34 Once a GA event has occurred a shipowner is entitled and obliged to do all that is reasonably necessary to preserve its lien over all cargo for its own benefit and for the benefit of all the other parties in the common adventure. In the present case we find the Owners’ actions to be wholly consistent with this principle. By way of contrast, we find the behaviour of MMO, including particularly its refusal to provide a GA bond, inexplicable. 14.35 MMO, and only MMO, could at any time from the moment security was first demanded and still can even now, procure the release of the lien by providing (a) GA bonds for the Cargo at no cost to themselves, and (b) an appropriate cash deposit in respect of the uninsured part of the Cargo. The reasons why MMO has not done so are unfathomable. In particular, we do not accept MMO’s argument that the only option open to them was to arrange a cash transfer from their Russian bank and that Russian exchange control regulations prohibit them from so doing.”
“MMO’s Position 15.4 MMO argue that there are a number of reasons why the Owners are not entitled to the Hamina expenses: (i) Had the Owners exercised their lien off St Petersburg they would have been entitled to demurrage from the voyage charterers but this entitlement was lost when the Cargo was discharged ashore… (iii) On the basis of Somes v British Empire Shipping (1858) E B & E 353, in the absence of a contractual agreement there can be no claim for the costs of exercising a lien… Our Findings … 15.6 MMO accepts that had the Owners exercised their lien off St Petersburg they would have been entitled to demurrage for the time the Ship waited… 15.8 Not until 12 days after arriving at the St Petersburg anchorage did the Ship begin unloading the Cargo into secure storage at Hamina. Storage at Hamina was considered by the Owners to be a pragmatic solution to allowing damages for detention to accrue for an indefinite period at St Petersburg. We agree. 15.9 Whilst in warehouse storage in Hamina, the Cargo has remained under the control of the Owners. 15.10 We have already found that ordering the Ship away from St Petersburg was a rational, commercially expedient and legitimate means by which the Owners could retain their lien for GA security over the Cargo whilst continuing to care properly for the Cargo and minimising costs. We further find that, in the face of MMO’s continuing failure to provide acceptable GA security, the unloading into secure storage at Hamina was a proper, logical and natural extension of this action and is wholly consistent with the Owners’ duties and obligations towards MMO and the deck cargo interests and with protecting their own legitimate interests… 15.12 We find all three of the Owners’ bases for their claim for reimbursement of the storage costs to be persuasive: 1) MMO is deriving a benefit from the Owners’ abiding by their continuing duty as bailees to look after the cargo and on The Winson principles MMO should reimburse Owners for the costs incurred. 2) By failing to discharge the lien for GA security, MMO is in breach of its contractual obligation to take delivery of the Cargo and is liable to the Owners for the storage costs as damages arising from the breach. 3) The Hamina costs are a substitute expense for detention to which the Owners would have been entitled if the Ship had remained at St Petersburg waiting for MMO to discharge the lien… 15.16 As we have already found that the Owners were under no obligation to identify and release the 98 coils under B/L 4 for which insurers provided a GA guarantee…there is no basis for apportioning or adjusting the Hamina costs and we do not do so.” 15.4 MMO argue that there are a number of reasons why the Owners are not entitled to the Hamina expenses: (i) Had the Owners exercised their lien off St Petersburg they would have been entitled to demurrage from the voyage charterers but this entitlement was lost when the Cargo was discharged ashore… (iii) On the basis of Somes v British Empire Shipping (1858) E B & E 353, in the absence of a contractual agreement there can be no claim for the costs of exercising a lien… 15.6 MMO accepts that had the Owners exercised their lien off St Petersburg they would have been entitled to demurrage for the time the Ship waited… 15.8 Not until 12 days after arriving at the St Petersburg anchorage did the Ship begin unloading the Cargo into secure storage at Hamina. Storage at Hamina was considered by the Owners to be a pragmatic solution to allowing damages for detention to accrue for an indefinite period at St Petersburg. We agree. 15.9 Whilst in warehouse storage in Hamina, the Cargo has remained under the control of the Owners. 15.10 We have already found that ordering the Ship away from St Petersburg was a rational, commercially expedient and legitimate means by which the Owners could retain their lien for GA security over the Cargo whilst continuing to care properly for the Cargo and minimising costs. We further find that, in the face of MMO’s continuing failure to provide acceptable GA security, the unloading into secure storage at Hamina was a proper, logical and natural extension of this action and is wholly consistent with the Owners’ duties and obligations towards MMO and the deck cargo interests and with protecting their own legitimate interests… 15.12 We find all three of the Owners’ bases for their claim for reimbursement of the storage costs to be persuasive: 1) MMO is deriving a benefit from the Owners’ abiding by their continuing duty as bailees to look after the cargo and on The Winson principles MMO should reimburse Owners for the costs incurred. 2) By failing to discharge the lien for GA security, MMO is in breach of its contractual obligation to take delivery of the Cargo and is liable to the Owners for the storage costs as damages arising from the breach. 3) The Hamina costs are a substitute expense for detention to which the Owners would have been entitled if the Ship had remained at St Petersburg waiting for MMO to discharge the lien… 15.16 As we have already found that the Owners were under no obligation to identify and release the 98 coils under B/L 4 for which insurers provided a GA guarantee…there is no basis for apportioning or adjusting the Hamina costs and we do not do so.”
“[75] Under those provisions, the Vessel would not become an arrived ship until she arrived in berth, and only at that time would the charterer’s obligation arise under clause 25 to “discharge free of risk and expense to the vessel on customary quick despatch”
“The average bonds, to give them their common though legally inaccurate description, were in the usual Lloyd’s forms which appear to have been in use in substantially the same terms for well over a century: Svendsen v. Wallace (1885) 10 App. Cas. 406, 410. There are two varieties one of which provides for security in the form of a cash deposit on joint account in a bank, the other does not call for any cash deposit but it is stated on its face that it is: “To be used in conjunction with underwriters’ guarantee.” …it is convenient to set out their terms omitting only those relating to the cash deposit in the bonds which were not accompanied by an insurer’s guarantee: “An agreement made…between owner of ship…and the several persons…being respectively consignees of cargo…now therefore…the said owner…hereby agrees…that he will deliver to them respectively or to their order respectively their respective consignments…and the said parties…hereby agree with the said owner that they will pay to the said owner of the said ship the proper and respective proportion of any salvage and/or general average…which may be chargeable upon their respective consignments…”
“The letters of guarantee given by the various insurers were not in identical terms….Although the expression “we hereby guarantee” appears in each of the forms the verb “guarantee” is used loosely, as meaning “agree” or “undertake” and not in its strict legal sense of agreeing to answer for the debt, default or miscarriage of another. By each of the forms of letters of guarantee the insurers assume a primary liability to pay a sum of money on the happening of a defined event.”
“Whether a lien is waived or not by taking a security depends upon the intention expressed or to be inferred from the position of the parties and all the circumstances of the case. In this particular instance we are dealing with a solicitor and his client. It strikes me that if a solicitor takes from his client such a security as this solicitor took the prima facie inference is that he waives the lien. That appears to me the right and proper conclusion to come to, bearing in mind that it is the solicitor’s duty to explain to his client the effect of what he is about to do. In the case of a banker, I should not draw the same inference, since a banker has not a similar duty towards his customer. Bearing in mind the position of the parties, and having regard to the decision of Sir John Leachin Robarts v. Jefferys, we are justified in saying that in the absence of evidence to the contrary, the true inference from the circumstances is that the lien was waived.”
“A defendant deals with others’ goods at his peril: unless he can invoke some specific defence he is potentially liable, however reasonable or well-intentioned his action”; and at para 17-72 states: “On principle a defendant is liable in conversion whether or not he knew, or had reason to know, that what he was doing infringed the claimant’s rights”
“[64] I conclude that the principle to be derived from these authorities is that where a gratuitous bailee incurs expenses in carrying out his duties in preserving and caring for the goods, he has a correlative right to recover such expenses from the owner of the goods, provided that he is not denying possession of the goods to the owner solely on the grounds that he is exercising the lien. Where, however, he is exercising a lien adversely to the goods owner, who is seeking possession, and that is his sole ground for denying possession to the owner who would otherwise be entitled to possession but for the lien, he has no such right. In the latter circumstance the exercise of the lien and the retention of possession adversely to the goods owner are treated as being solely for the benefit of the lienee, for which he is not entitled to be reimbursed, even if his costs include those of preserving the goods. Lien is an exercise in self help...The detention is solely for the benefit of the lienee, not the goods owner who is seeking possession, and therefore preserving and caring for the cargo during such detention is also to be treated as solely for the benefit of the lienee. This is so notwithstanding that the goods owner will derive a benefit if and when the detention ceases… [65] The textbook writers are unanimously of the same view… d. Absent express agreement to the contrary, “it is a general rule that costs of retaining possession of goods in the exercise of a lien are not recoverable from their owner”: Cooke et al, Voyage Charters (3rd Ed. 2007, paragraph 17.37, p. 439. 56. [66] This is the rule established in Somes, however beneficial it might be (in the words of Cockburn CJ In Somes in the Exchequer Chamber, (1859) El Bl & El 367, cited at para [46] of Popplewell J’s judgment ) for the opposite to be true. The value to the lienee of a lien over the goods which are expensive to preserve, and over which his rights of sale are circumscribed, may be emasculated by the costs of preservation. Since the lienee exercising his right to adverse possession nevertheless retains as bailee, and would be liable to the goods owner for loss or damage caused to the goods owner caused by failure to take steps to fulfil those duties, there is one sense in which the costs involved in preservation accrue to the benefit of the goods owner as well as the lienee. But however that may be, to allow the Owners to recover their storage costs as the costs of exercising the lien in this case would involve abandoning the principle in Somesaltogether. It is of course always possible for a party on whom a lien is conferred by contract to stipulate in the contract that he should be entitled to recover the costs of exercising the lien. In the absence of such contractual stipulation, the law does not confer such an entitlement… 57. [75] Under these [voyage charter] provisions the Vessel would not become an arrived ship until she arrived in berth, and only at that time would the charterer’s obligation arise under clause 25 to “discharge free of risk and expense to the vessel on customary quick despatch”
“Nor does any custom or usage appear to authorize such a claim for compensation, even supposing that a wharfinger with whom goods had been deposited, he being entitled to warehouse rent for them from the time of the deposit, might claim a continuation of the payment during the time he detains them in the exercise of right of lien till the arrears of warehouse rent due for them is paid (see Rex v. Humphery (M’Cl. & Y. 173); there is no ground for a similar claim here, as there was to be no separate payment for the use of the dock while the ship was under repair, and the only claim commences from the refusal to deliver her up. The onus therefore is cast upon the defendants to shew that, by the general law of England, an artificer who, by exercising his right of lien, detains a chattel, in making or repairing which he has expended his labour and materials, has a claim against the owner for taking care of the chattel while it is detained. But the claim appears to be quite novel; and, on principle, there is great difficulty in supporting it either ex contractu or ex delicto. The owner of the chattel can hardly be supposed to have promised to pay for the keeping of it while, against his will, he is deprived of the use of it; and there seems no consideration for such a promise. Then the chattel owner can hardly be supposed to be wrongfully left in the possession of the artificer, when the owner has been prevented by the artificer from taking possession of it himself.”
“It is a special charge for the use of an expensive tool, not a rent for a place of deposit”
“It is not for us, sitting here judicially, to annex an incident to the law without authority and without precedent, however beneficial it might be. Such a right as is here claimed might be annexed as an incident to a bailment by a usage of trade to that effect, but not otherwise.”
“I am of the same opinion. I cannot assent to Mr Smith’s contention that there is any evidence in this case of a contract to give such a right as is claimed. Such a contract may in some cases be inferred from usage of trade; but in the present case there is no more reason for inferring such a contract than in the analogous case of a distress.”
“There would be no difficulty in making a contract to give it: but here is no such contract.”
“If it had been part of the original agreement that a charge in the nature of stannage or warehouse rent should be paid for the custody of the ship, it might have been an element from which an agreement to continue that payment during the detention might have been inferred.”
“If a tailor makes a suit of clothes, the customer is to pay for them; but suppose he does not pay, and the tailor keeps them in the shop, is the customer to pay for their being kept there?”
“It was admitted, that…the person doing those repairs has a lien upon the goods for the amount of the sum charged; but that is confined to a lien for the amount of that sum, and the party doing the repairs cannot add to that lien a charge for the use of his premises while keeping the goods, (in this case the ship), not for the benefit of the shipowner, but for his own. It must be taken to be now decided, that at common law there is no right to such a demand; and the question therefore to be considered here is this: Do the letters which are in evidence, and which constitute part of the case, show that there was a special contract to give such a lien?”
“If, after that, the shipowners had not taken it away, but had left it an unreasonable time, namely 27 days, occupying the dock, neither the Court of Queen’s Bench nor the Court of Exchequer Chamber has expressed an opinion as to whether there might not have been, by natural inference, an obligation on the part of the ship to pay a reasonable sum for the use of the dock for the time it was improperly left there. But the short question is only this, whether Messrs Somes retaining the ship, not for the benefit of the owners of the ship, but for their own benefit, in order the better to enforce the payment of their demand, could then say, “We will add our demand for the use of the dock during that time to our lien for the repairs.”
“The second point which has been made, is, that from the circumstances of this case there is a contract to pay, not merely for the repairs of the ship, but a contract to pay for the hire of the dock for so long a time as the vessel should be there. Now, we are at liberty to draw such inferences as we think ought to be drawn from the facts, and I am clearly of opinion that no such inference can be drawn in this case.”
“It would be wrong to treat that decision, which was a decision on the facts of one case, [as] decisive of a similar question in the present case where the facts are not in all respect the same. On the other hand, one is entitled to look at the case and see whether there are any significant differences…”
“A person who has a lien upon a chattel for a debt cannot, if he keeps it to enforce payment, add to the amount for which the lien exists a charge for keeping the chattel until the debt is paid." He continued with his own explanation: “I know of no authority, and none has been cited to me, for the proposition that a possessory lien can extend to a claim for damages for breach of the contract of repair by the party whose chattel is being repaired. I think the reason why I know of no authority, and why no authority has been cited to me in support of that proposition, is because the proposition is thoroughly bad in law. In my judgment, there is no possessory lein and there never has been a possessory lien, at common law for damages for breach of contract. It is, of course, open to the parties to make any contract they please…”
“because it was to the eventual benefit of the lienor, the expenditure of£105 was justified as a way of preserving the asset”
“[62] A lienee has no right to recover expenses incurred by him in maintaining his security: Somes…The Winson…Morris v Beaconsfield Motors…So there could be no right to recover storage charges. But I do consider that EMT would have had a right to exercise a lien for its charges for preparing the goods for delivery to Next…”
“He says that after a certain date the African Associated Agency were holding these goods under a lien and a claim. He says that a person who has a lien cannot claim for expenses of keeping the goods when he is maintaining a lien. Now, I am not at all clear that it is necessary to decide that point, because I am not at all clear that they ever did claim a lien…but even if they did claim a lien, the case that Mr Alchin relies upon is Somes...It was not a case of warehouse keepers who are asserting a lien for charges for warehousing, and though I do not think the point arises, I cannot believe that the principle would apply in a case where the charges in respect of which the lien arises are charges for storage. A charge for storage subject to the assertion of a lien is not the expenses of the claimant for exercising his lien in keeping the goods; it is the contractual cost of storing the goods which he is still performing…”
“In the absence of contractual provision to the contrary the shipowner must enforce the lien at his own expense; if he were to land and store the goods, or deposit them with a wharfinger, the cost cannot be recovered from the consignee” citing Somes as the sole authority at footnote 107. However, the passage continues: “A shipowner need not land cargo on which he has a lien in order to stop demurrage accruing, provided that the exercise of the lien by retaining the goods on board is reasonable” citing Lyle & Co v. Cardiff (1899) 5 Com Cas 87 and Smailes v. Hans Dessen & Co (1906) 12 Com Cas 117 at footnote 108. I would observe that Lyle Shipping involved damages for detention rather than demurrage (see below). The footnote continues: “It would seem that in some cases, if the consignee refuses to take delivery of the goods or to satisfy the lien on them, a master might be justified in carrying the goods back to the port of shipment, and there enforcing his lien against the shipper, on the principle that one who has a lien on goods may do what is reasonable to enforce it, and, if he cannot do so on the spot without incurring expense, may carry the goods to some place where he can: Edwards v. Southgate (1862) 10 W.R. 528.”
“In the absence of specific provision in the contract between the shipowner and the owner of the goods, it is a general rule that the costs of retaining possession of goods in the exercise of a lien are not recoverable from their owner and, a fortiori, the lien cannot be exercised in respect of those costs. Again, citing Somes as the sole authority. However, the general rule is riddled with exceptions, the following of which are of importance in the charterparty context: (1) The costs may be recoverable for breach of the charterparty. The most common example of this is where the laydays are exceeded as a result of the exercise of the lien, and the owner becomes entitled to demurrage or damages for detention. In such a case it is no answer to the claim that the cause of the delay was the exercise of a lien, unless the exercise of the lien was unreasonable. (2) As a variant of (1) above, the costs may be recoverable as the costs of reasonable mitigation. Again the commonest example is where, in order to mitigate a claim for demurrage or damages for detention, the owner discharges and warehouses the goods in such a way as to maintain his lien. In principle the costs of so doing, if reasonably incurred, are recoverable. This or (4) below is probably the most satisfactory explanation of Anglo-Polish Line v. Vickers. (3) It could be said that (1) and (2) above should extend to the case where the only relevant breach is the failure to pay the sum for which the lien is being exercised; for example, that an owner exercising his lien for freight should recover the cost as damages (or the cost of mitigating damages) for breach of the obligation to pay the freight punctually. However, such an argument would effectively destroy all vestiges of the general rule, and there is no authority which encourages the view that it would succeed. (4) As a bailee of the cargo the owner has a right to recover expense incurred by him in safeguarding cargo, provided that the expense is extraordinary in nature, or is incurred after the termination of the adventure by frustration or in consequence of a repudiation by the cargo owner. This right may enable him to recover the costs of landing and storing goods over which he has a lien. (5) The local law may permit the recovery of certain expenses.”
“The case appears to have been decided on the footing that the contract of carriage was at an end when the Argos left Le Havre for London, either because the contractual service had been completed or because the contract was frustrated at Le Havre.”
“Therefore they did what it was their duty to do. Then comes the question, Can they recover any expenses thus incurred against the owner of the horse? As far as I am aware, there is no decided case in English law in which an ordinary carrier of goods by land has been held entitled to recover this sort of charge against the consignee or consignor of goods. But in my opinion he is so entitled. It had long been debated whether a shipowner has such a right, and gradually, partly by custom and partly by opinions of authority in this country, the right has come to be established…That seems to me to be a sound rule of law. That the duty is imposed upon the carrier, I do not think any one has doubted; but if there was that duty without the correlative right, it would be a manifest injustice” citing Notara v. Henderson (1872) LR 7 QB 225 at 230-235 and Cargo ex Argos. The jurisprudence can be seen developing, and the rationale is justice. The delay was caused by the owner’s unwillingness to take delivery on payment of the expense to which the carriage had given rise. But he was not permitted to take delivery save on such payment. No one seems to have asked if the livery stable’s expense had been contracted for. There were of course no laytime or demurrage provisions. But it was obvious that if something untoward occurred which created an expense, and that expense had been caused by the chattel owner’s failure to take delivery, if necessary by discharging a lien, then under the contract or in bailment the responsibility rested on the chattel owner, not on the carrier. In ENE Kos (see footnote 7) Lord Sumption said at para [22] that “As in Cargo ex Argos, the case was decided on the footing that the contract had come to an end, in this case on the day after the arrival of the horse at Sandy, when the performance required of them was completed.”
“…and the lay days were to count from the time when she was berthed, and notice was given to the charterer. Undoubtedly that would impose by implication upon the charterer the duty of doing any act that was necessary on his part, according to the custom of the port, to enable him to get a berth.” “I do not for a moment deny that he is bound to do whatever is reasonable on his part, with the view of getting the ship berthed at the earliest period that is reasonably possible…”
“There was every likelihood of the dispute being settled in a few days, and it would have been unreasonable, under the circumstances, to have landed the cargo and incurred warehouse rent. The plaintiffs are, therefore, entitled to damages for four days’ detention.”
“It was argued first of all that none of those expenses at Nobel’s could be charged because they were expenses of maintaining the lien; and no doubt these goods were landed at Nobel’s for the double purpose: (1) because they must be got out of the ship; and (2) they were held there subject to plaintiffs’ lien. And it was said that the general law is that when a man is claiming a lien and holding goods because he has a lien upon them, he cannot charge the cost of holding these goods in order to maintain his lien. No doubt there is authority to that effect. My own view is that the general rule of law is rather more the other way round, and that what is stated as a general rule is rather the exception. As I understand it, if the goods were held in a place for the hire of which under the contract between the parties payment would have to be made, as for instance in a ship or warehouse, then the person who is exercising the lien is entitled to claim payment for the detention of his ship if he holds the goods in the ship or, if less expensive, he clears them out of the ship and puts them into a warehouse and in my opinion the expenses of keeping them in the warehouse. That was done in this case. The goods were reasonably put on this ground of Messrs Nobel’s; and in my opinion the consignees are liable for these expenses notwithstanding that the object of putting them on Nobel’s land was the two-fold one of getting them out of the ship and maintaining the lien.”
“Their Lordships, in coming to this conclusion, may well quote the language of that great judge, Story J., in United States v. Wilder (1838) 3 Sumn. 308). That was a case of general average. He quoted observations of Lord Stowell in The Waterloo (1820) 2 Dods. 433 on the question of salvage, which Lord Stowell described as “a right otherwise universally allowed, and highly favoured in the law, for the protection of those who are subjected to it; for it is for their benefit that it exists under that favour of the law. It is what the law calls jus liquidissimum, the clearest general right that they who have saved lives and property at sea should be rewarded for such salutary exertions (2 Dods. 435-6).”
“If there ever was a case which ought to be settled by a court of justice, upon principles of right and liberality, this is precisely that case. No court of justice ought to decline to enforce it, unless there be clear, definite and uncontrovertible prohibition against the exercise of it.””
“My Lords, the extent to which any possessory lien that a salvor would be entitled to exercise at common law is capable of surviving, or is modified by, the provisions of clauses 4 and 5 of the Lloyd’s open form raises difficult and hitherto undecided questions of law into which, in my view, it is not necessary for this House to enter in the instant case – and it would be unwise for your Lordships to attempt to do so. The only reason why the cargo owner upon the failure of its main propositions sought by this subsidiary proposition, to reach some tabula in naufragio juridiciabile was in order to avail itself of the principle which it contended was laid down by this House in Somes v. Directors of British Empire Shipping Co. (1860) 8 H.L.Cas. 338, to the effect that, where a person entitled to a possessory lien over goods incurs expenses in maintaining possession of them in the exercise of his right of lien and preserving in the meantime their value as security for the owner’s indebtedness to him, he cannot recover such expenses from the owner. That case is, in my view, authority for the proposition that, where a lienee remains in possession of goods in the exercise of his right of lien only (i.e., one who has refused a demand by the lienor for redelivery of the goods with which, in the absence of the lien, the lienee would be under a legal obligation to comply), he cannot recover from the lienor loss or expenses incurred by him exclusively for his own benefit in maintaining his security as lienee and from which the lienor derives no benefit as owner of the goods. I would not seek to suggest that this authority has become outdated for the proposition that was then laid down; but I would deny that it is authority for anything more and, in particular, for the further proposition that expenditure necessary for the preservation from deterioration from which the owner does derive benefit is irrecoverable, where such expenditure is made by a bailee at a time before possession of the goods has been demanded of him by the owner and his only right to retain lawful possession of them rests upon his own election to continue in possession, after such demand, in the exercise of the rights of lienee. However that may be, the short answer to the lien point in the instant case is that on the facts it never arose…”
“The charterers’ submission predicates that there has been a refusal by the shipowners to discharge in accordance with the charter-party. The right to exercise a lien is given expressly by the charter-party itself. It can only operate as a qualification of the undertaking to give discharge. By exercising the right, the shipowners in my judgment do not refuse to give discharge in accordance with their undertaking. Rather, they rely, as they are entitled to do when freight or demurrage is due and unpaid, upon the qualification in their favour of what would otherwise be their obligation, which in the circumstances frees them from it. Therefore, in my judgment, the case is not one where the shipowners have refused to perform their undertaking to give discharge, because the obligation itself is qualified, nor where they have done anything equivalent to removing the vessel from the discharging berth. For these reasons, by reference to Scrutton and the authorities there cited, I hold that demurrage does not cease to accrue merely be reason of the shipowners’ reasonable and lawful exercise of their lien.”
“[18] Strictly speaking, this [the decision on clause 13] makes it unnecessary to address any of the other legal bases put forward by the owners in support of their claim. But I propose to deal with the question whether the owners were also entitled to succeed at common law as non-contractual bailees of the cargo after the withdrawal of the vessel…On the whole, one would expect a coherent system of law to produce a consistent answer under both heads, and in my judgment it does. [19] Unlike many civil law systems, English law does not allow a general right of recovery for benefits conferred on others or expenses incurred in the course of conferring them. In the pejorative phrase which has become habitual, there is no recovery for benefits “officiously” conferred. In Falcke v Scottish Imperial Insurance Co(1886) 34 Ch D 234 , 248 Bowen LJ said: “The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.” [20] While this remains the general principle, the exceptions have over the years become more important than the rule. The particular feature of the present case which makes it difficult to apply the general rule is that the original bailment of the cargo occurred under a previous contractual relationship. The bailment was therefore consensual, albeit that after the withdrawal of the MT Kos from the time charter, it was no longer contractual. It is common ground, and clear on the authorities that in these circumstances, the owners had a continuing duty to take reasonable care of the cargo, which they could not escape except by retaining it until arrangements were made to discharge it. But the owners had in no sense officiously put themselves in this position, nor had they (as the charterers put it in argument) “voluntarily assumed” possession of the goods.” “The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.”