BP Oil International Ltd v Target Shipping Ltd [2012] EWHC 1590 (Comm)

[2012] EWHC 1590 (Comm)Case No 2010-728
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 14/06/2012
Before
Mr Justice Andrew Smith
Between
BP Oil International LimitedClaimantTarget Shipping LimitedDefendant
John Russell and Paul Toms (instructed by Clyde & Co) for ClaimantSteven Berry QC and Thomas Raphael (instructed by Lax & Co) for DefendantHearing Hearing dates: 12, 13, 16 and 19 December 2011 and 12, 13 and 16 January 2012
Judgment

Introduction

[1]This case arises from a difference about how much was payable by the charterers under a charterparty by which BP Oil International Limited (“BP”) hired the oil tanker “Target” from her owners, Target Shipping Limited (the “Owners”), and in particular about whether BP are entitled to recover some $1 million that the Owners charged them by way of overage freight and that, as BP claim, they paid by mistake.[2]The vessel loaded a cargo of fuel oil in Odessa and Marmara Ereglisi (“Marmara”) in March 2010 and discharged it at Galveston and Houston. On 5 May 2010 BP paid against the Owners’ invoice hire of US$3,651,215.32, a sum calculated on the basis that freight was payable in respect of all the oil carried, that is to say on 86,821.957 mt of oil loaded at Odessa and on 26,021.543 mt loaded Marmara. BP contend: i) That they were liable to pay the Owners only $2,635,862.37, a sum calculated on the basis that freight was payable on 80,000 mt, the minimum quantity to be loaded under the terms of the charterparty, and that $1,015,352 is recoverable; or alternatively: ii) That they were liable to pay only $2,846,582.43, a sum calculated on the basis that freight was payable only on the oil loaded at Odessa and not on that loaded at Marmara, and that $804,632.89is recoverable; or in the further alternative iii) That the Owners were entitled to only $3,440,495.26, a sum calculated on the basis that freight was payable on 80,000 mt loaded at Odessa and all the oil loaded at Marmara, and that $210,720.06 is recoverable. (There is a minor difference between the parties about these calculations reflecting a disagreement about the proper treatment of brokers’ commission that emerged in the course of closing submissions. I deferred consideration of this question on the basis that, if necessary, I would hear submissions about it after delivering this judgment.)[3]The Owners contend that their invoice for $3,651,215.23 was for the sum properly due under the terms of the charterparty agreed in February 2010. They have alternative contentions: i) That, even if under the original terms of the charterparty freight was not payable on the oil loaded in Marmara, nevertheless, because of exchanges between the parties (in particular, exchanges on and shortly after 11 March 2010 about the vessel loading at Marmara and/or exchanges on 16 March 2010 when the vessel was at Marmara and/or subsequent exchanges before discharge of the cargo was completed at Houston), BP were liable for freight in that sum or at least they are estopped from disputing their liability for it. ii) That the parties agreed that BP should pay $3,651,215.23 by a compromise agreement in the course of exchanges about the Owners’ invoice. iii) That in any case any overpayment by BP is not recoverable on the grounds that it was paid under a mistake or on any other basis.[4]Thus, the broad issues between the parties are: i) Whether under the original terms of the charterparty the Owners were entitled to freight calculated at the agreed rate on all the cargo carried (as they contend) or to freight calculated on the minimum cargo specified in the charterparty (as is BP’s primary case) or to freight calculated only on cargo loaded at Odessa (as is BP’s secondary case) or on some other basis; ii) Whether the exchanges between the parties during the voyage affect how much freight BP are liable to pay or give rise to an estoppel against BP with regard to their liability for freight (and, in the context of this issue, there is a question whether BP were entitled to instruct the vessel to load at Marmara); iii) Whether the parties made a compromise agreement about the amount payable by BP; and iv) Whether BP are entitled to recover any overpayment as money paid under a mistake. (BP also pleaded cases(i) that any overpayment was recoverable because of implied terms in the charterparty that the Owners would render invoices only for sums properly due and would reimburse any overpayment if the Owners invoiced them for more, and(ii) that the overpayment was the result of the Owners’ negligent misrepresentation in their invoice of the sum for which BP were liable; but both those contentions were abandoned.)

The parties

[5]The “Target” is a modern aframax tanker with a capacity of some 112,000 mt. She was hired to BP by the Owners under a voyage charterparty agreed on 26 February 2010 between BP’s brokers, Sovereign Shipbrokers (“Sovereign”), and her commercial managers, Geden Operations Limited (“Geden”).[6]Geden are a subsidiary of Geden Lines, who are based in Istanbul. In early 2010 Geden managed some fifteen tankers (although they now manage more vessels), and their Tanker Chartering Manager was and is Mr Alexander Cooper. He has been employed by Geden since October 2009, having worked in the shipping industry since 1983, and he worked in London. He was responsible for the hire of tankers both on time charters and on the spot market, and he dealt with the hire of the “Target” to BP. Geden’s managing director was and is Mr John Uttley.[7]The important negotiations and exchanges relating to the fixture were conducted for Sovereign by Mr John Savage, who had worked for them as a broker for some seven years. Mr Simon Glanville, another broker, and Mr James Wackett, who was training to be a broker, were involved relatively peripherally. Ms Shirin Jenkins was responsible at Sovereign for operational matters relating to the vessel.[8]The charter of the vessel was handled within the BP group by Mr Andrew Finlinson, who worked for BP Shipping Ltd (“BP Shipping”) until October 2010, having joined the group on their graduate scheme in 2000. In October 2010 he joined BP as a trader. Before then he was working in BP Shipping’s Chartering Department, dealing with crude and fuel oil business and both chartering vessels out and hiring in tonnage on the spot market for BP. Mr Finlinson was not responsible for operational matters: they were handled by BP Shipping’s Operations Department, and within the department Ms Mariska Bassie and Mr Sam Megwa shared the ship operator’s role for the “Target”. BP had sold none of the fuel oil when it was shipped on the “Target”, and its sale was handled by Mr Daniel Rathbone, who has worked as a Crude and Fuel Oil Trader for BP since 1999. The payment of the Owners’ freight invoice was authorised by BP’s Demurrage Department, and specifically by Ms Rebecca Myers, who was then employed by BP as a Demurrage Negotiator, and her superior, Mr Simon Rickwood, a Senior Demurrage Negotiator, who has worked for BP for some 21 years and in their Demurrage Department for about six years. The payment processes were dealt with by Mr Jason Matthews, then an Ancillaries Financial Operator, and by Mr George Witsey of BP’s Global Data Management Team.

The charterparty

[9]The terms of the charterparty were set out in a “recap” email (the “Recap”) sent on 26 February 2010 at 11.14am by Sovereign to Mr Cooper and Mr Finlinson, which was introduced with the words, “Pleased to confirm following fixture with all subs [subjects] in order”. It was made between the Owners and BP Shipping “for and on behalf of” BP. The terms were not reduced to any more formal document, and the Recap records the contract that, subject to any later variation arising from exchanges or the parties’ conduct in the course of the voyage, governed the hire of the vessel.[10]The Recap provided that the hire was on the terms of the amended BPVoy 4 form. This standard form, after stating the agreement between owners and charterers for hire of a vessel, includes a Part 1 comprising sections A to M to be completed for the specific charter, a Part 2 comprising standard clauses numbered 1 to 49 (which may, of course, be adapted and amended by the parties), and a “BP Shipping Questionnaire” (which in this case was a Q88 form sent on 25 February 2010: see para 39below). The Recap set out agreed terms by reference to the sections of Part 1 of the BPVoy 4 form, including additional clauses or “rider clauses” under section L of Part 1; amendments to the standard wording of Part 2 of the form that the parties had agreed; and additional clauses, by way of “Mandatory Additional Clauses” and “Voyage Specific Additional Clauses” (or “SACs”).[11]Part 2 of the BPVoy 4 form includes at clause 31 a provision headed “Freight Rate”. Amendments to the standard wording of the clause were agreed and recorded in the Recap and, as amended, clause 31 of the charterparty was (as far as is material for present purposes) in these terms: “31.1 The Freight Rate shall be that stated in Section H of PART 1. If the cargo quantity stated in Section C of PART 1 is a minimum quantity, then the freight payable for any cargo loaded in excess of the said minimum quantity shall, notwithstanding this Clause 31, be at the Overage rate stated in Section H of PART 1, unless a lump sum freight has been agreed in which case no Overage shall be payable. Where the Freight Rate stated in Section H of PART 1 is expressed as a percentage of Worldscale the Worldscale rate shall be the rate in force at the date of this Charter. 31.3 If a lumpsum freight is agreed for the voyage this shall be in respect of the overall voyage of the Vessel from the first loading port to the final discharge port… 31.4 Freight shall be payable immediately after completion of discharge, on the gross quantity of cargo loaded by the Vessel as evidenced in the bills of lading ... ”. (Sub-clause 31.2 was deleted by the Recap, the rest of sub-clause 31.4 is irrelevant and so is sub-clause 31.5.)[12]Section C of Part 1 was about “Cargo Quantity”, and the Recap dealt with section C and section D (“Cargo Description”) under the heading “Cargo Quantity, Description” as follows:
“Minimum 80,000 mts CHOPT [sc. charterers’ option] up to full cargo of fuel oil. … Owners warrant vessel loads 87,000 metric tonnes basis 12.5m Odessa, 112,000 metric tonnes basis no restrictions.”
[13]Clause 31.1 also referred to Section H of Part 1. The standard form of this section reads:
“H Freight Rate _____ (“Freight Rate”) Increase in Freight Rate applicable to increased speed per knot, or per rata, between Charter Speed and Maximum Speed: ______ Overage (if any) at 50% of Freight Rate”. 14. The Recap provided in relation to this section under the heading “(H) Freight Rate/Overage/Commission” as follows: “Basis load Odessa/Singapore : USD3,000,000 lumpsum 1 to 1 Euromed : WS [Worldscale] 120 basis mfr [minimum flat rate] Augusta USG [US Gulf] WS 135 USAC [US Atlantic Coast] /CARIBS [Caribbean Sea] WS 140 If discharge east of Singapore charterers to pay lumpsum rate agreed for Singapore minus USD 20,000 plus additional freight coming out of following formula: 80.000 mt x flat rate Spore [Singapore] to actual discharge port(s) x WS 110 with no overage Suez Canal transit costs to be for Owners account All lumpsum freight rates basis 1st load to last discharge port, Worldscale 2010 to apply Overage: Overage 50pct applicable for Euromed discharge only Address Commission: 1.25 pct address on F/DF/D [freight, dead freight, demurrage] Brokerage Commission: 1.25 pct Sovereign Shipbrokers on F/DF/D.”
Euromed : WS [Worldscale] 120 basis mfr [minimum flat rate] Augusta USG [US Gulf] WS 135 USAC [US Atlantic Coast] /CARIBS [Caribbean Sea] WS 140 Suez Canal transit costs to be for Owners account Worldscale 2010 to apply Overage: Overage 50pct applicable for Euromed discharge only Address Commission: 1.25 pct address on F/DF/D [freight, dead freight, demurrage] Brokerage Commission: 1.25 pct Sovereign Shipbrokers on F/DF/D.” In this judgment, I shall refer to the words “Overage 50pct applicable for Euromed discharge only” as the “Euromed overage freight term”.

Address Commission: 1.25 pct address on F/DF/D [freight, dead freight, demurrage]

[14]The reference to Worldscale was to the New Worldwide Tanker Nominal Rate Scale, which is annually issued jointly by Worldscale Association (London) Limited and the Worldscale Association (NYC) Inc. The Preamble to the relevant (2010) version of the Worldscale rates explains (at Part A, para 4) that, “All rate calculations, which are made in USD, are per tonne for a full cargo for the standard vessel based upon a round voyage from loading port or ports to discharge port or ports and return to the first loading port” on the basis of various specified suppositions, such as that the vessel has a total capacity of 75,000 tonnes. The rates are not designed to indicate a fair or reasonable rate of hire and they contemplate that, as in this case, agreed market rates will be expressed in terms of a percentage (here 120%, 135% and 140%) of the nominal rate for the relevant voyage.[15]BP contend that they were entitled to require the Owners, having initially loaded oil at Odessa, to proceed to Marmara and to load more cargo there. Their case is that they were so entitled under a Voyage Specific Additional Clause, SAC6, which the Recap stated was included in the Charterparty and which was headed “BP Backload Cargoes Clause”. The Owners dispute this, and I set SAC6 out in full at paragraph 167below, where I consider this issue.[16]I should also refer to BP’s entitlement to issue revised voyage orders under clause 22 of Part 2. Clause 22.1 (as amended by the Recap) provided that: “If at any time after the date of this Charter, Charterers, notwithstanding that they may have nominated a loading or discharge port, wish to issue revised Charterers’ Voyage Orders [an expression defined in clause 3.1 as “any written instruction issued by the Charterers in respect of the Vessel at any time during the period of this Charter, including any amendments, corrections or revisions thereto”] and instruct Owners to stop and/or divert the Vessel to an alternative within any Ranges stated in Section E or F of PART 1, or cause her to await orders at one or more locations at Master’s discretion, Owners shall issue such revised Charterers’ Voyage Orders and the Master shall comply with such revised instructions as soon as the Vessel is free of any previous charter commitments”.[17]Clause 3.1 provided that: “Subject to the provision of this Charter the Vessel shall proceed to the loading port (the term “port” shall include any port, berth, dock, loading or discharging anchorage or offshore location, submarine line, single point or single buoy mooring facility, alongside vessels or lighters, or any other place whatsoever as the context requires) stated in Section E of PART 1, or to such other port (always within the Ranges stated in Section E of PART 1) as is separately or subsequently identified in Charterers’ Voyage Orders … ”.[18]The Recap included these provisions about section E of Part 1 (“Loading Port(s)/Range(s) at Charterers’ Option”) and section F (“Discharge Port(s)/Range(s) at Charterers’ Option”) under the heading “Load/Discharge Ranges”:
“LOADING RANGE: 1/2 Port(s) Ukraine Black Sea excl Yuzni … DISCHARGING RANGE: 1/2 Port(s) Euromed not east of but incl Greece excl. Albania, Yugo, former Yugo, but incl Croatia. AND/OR IN CHOPT: 1/2 Port(s) STS Spore/Japan range, excl Chinese river ports, …. OR IN CHOPT: 1/2 Port(s) USG excl Florida/Mississippi. OR IN CHOPT 1/2 Port(s) USAC if NYK NNGWB [sc. New York, not north of George Washington Bridge]. OR IN CHOPT 1/2 Port(s) Caribs excl…. East and West options non-combineable.”
East and West options non-combineable.”[19]The charterparty also included the following interim ports clause (in the rider clauses in section (L) of part 1):
“Where freight is payable by lumpsum, following clause to apply: base freight is payable basis 1st loadport to last discharge port. Charterers to pay for additional interim load or discharge port(s) at cost, i.e. the difference between actual steaming time performed and a theoretical direct passage (at stipulated c/p speed) from first load port to final discharge port …”
.

The trial

[20]The documentation was unnecessarily voluminous: no use was made of the majority of the 22 bundles. At the pre-trial review I made a direction under CPR 32PD 27.2 that the documents in the 14 files in the “C” series should not be admissible in evidence (unless a party applied at trial to adduce a particular document: no application was made). The documentary evidence was therefore confined to documents in the “A” file (the Recap, versions of the BPVoy 4 terms and the New Worldwide Tanker Nominal Freight Scale (2010)), the “Core Bundle” of four files in the “E” series, and (formally) two files of miscellaneous documents in the “D” series, which were referred to only in incidental footnotes in the Owners’ submissions.[21]BP called as witnesses Mr Savage, Mr Finlinson, Mr Rickwood, Ms Myers and Mr Rathbone. They adduced a witness statement of Ms Bassie as hearsay evidence under the Civil Evidence Act 1995, but in the event BP did not rely upon her evidence. The Owners did not wish to cross-examine Ms Matthews or Mr Witsey, and their witness statements were received in evidence.[22]The Owners’ only witness was Mr Cooper.[23]Most of the evidence in chief was given by thewitnesses confirming their statements, but I required Mr Finlinson, Mr Savage and Mr Cooper to give orally all their evidence about important and controversial telephone conversations on 11 and 16 March 2010.[24]Sovereign and Geden conducted some of their exchanges by email, and print-outs of them were in evidence. Occasionally they communicated by Yahoo messaging and a record of those communications was kept and disclosed by the Owners. There were also important communications between Mr Savage and Mr Cooper orally by telephone and there is no recording of those telephone conversations: the evidence of them was the (often significantly different) accounts of Mr Savage and Mr Cooper.[25]Mr Savage communicated with BP by telephone and by email. Many of the calls were recorded (as I understand it, by BP) and the recordings were available: for the most part I received the evidence of these conversations by way of transcripts, but I listened to parts of some of them. On occasions calls were made to or from Mr Finlinson’s mobile, rather than BP’s landline, and there was no recording of those conversations.[26]My impression of BP’s witnesses is as follows: i) Mr. Finlinson was a clever witness and had, I think, thought a great deal about his evidence before giving it. He was confident and articulate and sometimes argumentative. I am left with the impression that often he could not distinguish between his contemporaneous views about the meaning of the charterparty and arguments which have since come to him or of which he has heard and convinced himself. He made some assertions in his evidence that I cannot accept. I shall refer to examples later in my judgment, but I give two illustrations here: his refusal to accept that at the time of the fixture BP were in a weaker negotiating position than the Owners was, in my judgment, unrealistic (see para 46below); and I reject his evidence that he spoke to Mr Rathbone on 26 February 2010 about BP not being liable under the charterparty for any overage freight on transatlantic voyages (see para 43below). I do not think that he was dishonest in his evidence, but in my judgment his overconfidence and his enthusiasm for BP’s arguments sometimes compromised its accuracy and reliability. ii) I consider Mr. Savage was honest in his evidence. He was vulnerable to criticism for carelessness in relation to the “Target” fixture: for example, as I shall explain (at para 60below), he gave firm advice to Mr. Finlinson on 11 March 2010 about BP being entitled under SAC 6 to order the vessel to Marmara to load, but had not given any proper consideration to the terms of the charterparty before doing so. Further, when it became apparent that BP and the Owners contended for different interpretations of the charterparty, Mr. Savage was less than candid with his principal’s representative, Mr. Finlinson: in particular, he mis-stated the prospects of the Owners agreeing to compromise the difference by accepting that BP should pay transatlantic overage freight at the rate of 50%, and he wrongly said that Mr Cooper had suggested this. I attribute this to his anxiety to broke a compromise agreement to resolve the problem. iii) Ms Myers was undoubtedly honest in her evidence, and was seeking as best she could to assist the court. However she had no real recollection of dealing with the Owners’ invoice, which for her must have been an absolutely routine task. She readily accepted that she did not remember “too much” about the circumstances in which she considered the Owners’ invoice. She had some vague memory of what she thought when dealing with this matter in April 2010 and early May 2010, but she could not distinguish what she knew or thought when checking the invoice and authorising payment from what she learned and thought after payment. iv) The evidence of Mr Rickwood and of BP’s other (less important) witnesses (Mr. Rathbone, who gave oral evidence, and Ms Bassie, Mr. Matthews and Mr. Witsey, who did not do so) appeared to me reliable.[27]I find it difficult to rely upon Mr. Cooper’s evidence, in particular when it was in conflict with that of Mr. Savage. I consider that his credibility was much damaged by his evidence about an email about the “Target” fixture and the dispute concerning it that he sent Mr. Uttley on 9 May 2010. In it he said that he set out an “Approx time line to best of my recall”. According to Mr. Cooper, its purpose was to meet BP’s arguments about their rights under SAC6: he said in cross-examination, “When I was writing this memo, I had in mind SAC6, not overage”. I cannot accept that: the email rehearsed arguments about overage freight and did not refer to SAC6, merely alluding to “loading the vessel in the Sea of Marmara” as something that BP “did not have the option to do under the c/p”.[28]At the start of the email Mr. Cooper referred to “notes written up May 4th – 6th 2010”. Mr. Cooper kept some notes of telephone calls in a notebook, and they referred to conversations with Mr Savage on 5 and 6 May 2010 about the overage freight on the “Target” fixture. (There is no recognisable pattern to Mr Cooper’s notes: for example, there is nothing about his conversations with Mr Savage on 16 March 2010, to which I refer at paras 76ffbelow.)[29]Mr Cooper did not refer to his notes or his notebook in his first witness statement dated 9 September 2011: indeed, he said in it that “following his discussions that with Mr Savage on 16 March … it was never suggested to [him] that full freight would not be payable, until out of the blue we received BP’s message of 7 May” (in which BP advanced an argument that the position with regard to freight on the Marmara cargo was governed by SAC6: see para 141below). The notes were disclosed only by way of the Owners’ supplementary disclosure, having initially been omitted.[30]In his second witness statement, dated 18 November 2011, Mr Cooper referred to the notes (which by then had been disclosed). He said that since making his first statement he had “found a notebook which contains some of the conversations that I had in respect of the fixture”; and that he had originally thought that it did not contain relevant material about the “Target” and “had not reviewed it until recently”. However, his evidence in cross-examination was that he had reviewed the notebook before signing his first witness statement, but, finding no relevant entries in it before about the middle of April 2010 (or, as he later said, 27 April 2010), he had assumed that it contained nothing relevant.[31]The position is unsatisfactory and Mr Cooper’s explanations are inconsistent. I cannot accept that he reviewed the notebook before making his first witness statement, and I reject his evidence in cross-examination about that. (The position is the more curious because the email refers to notes written up on 4-6th May 2010. On Mr. Cooper’s account he would have had no reason to have written notes before BP questioned the payment that they made on 5th May 2010. However, as far as that specific point is concerned, I accept that Mr. Cooper probably made an error about the dates when he was composing his email.) Mr Cooper had entirely forgotten when he made his first witness statement about his conversations with Mr Savage in May 2010, and I consider that this casts some doubt upon how much he could really remember about his earlier conversations with Mr Savage.[32]Moreover, the email to Mr. Uttley of 9 May 2010 itself indicates that, even when he wrote it, Mr. Cooper did not remember clearly the fixture and other arrangements for the “Target”. He stated that the vessel had already been fixed on subjects when the option for discharge in the European Mediterranean was agreed, but he was wrong about when the option was agreed. Further, he said in the email itself that he could not remember exactly when he told Mr. Savage that the Owners “would not agree 50% overage at any other destination”. Neither point is important in itself and they do not go to the honesty of Mr. Cooper’s evidence, but they reflect on the quality of his recollection.

The fixture

[33]The parties presented evidence about the negotiations leading to the Recap and the parties’ intentions during them. Little if any of it was relevant and admissible with regard to the issues about the proper interpretation of the charterparty. No doubt much of it was included in the witness statements because, when they were exchanged, the Owners had a claim for rectification of the original charterparty, which they abandoned before trial. However, the parties referred to this evidence as background to their later exchanges (which, on the Owners’ case resulted in an agreement to vary the charterparty, and would allow them, if necessary, to rectify that later variation or collateral contract or to set up an estoppel against BP), and the evidence gives some information about the circumstances known to both parties in which the charterparty was agreed.[34]In late 2009 and early 2010 BP had a term contract under which they lifted fuel oil cargoes from Odessa on the Black Sea. The most usual destination for the oil was Singapore, but some was shipped to the United States and rather less to Mediterranean destinations, such as the Greek Islands. When arranging carriage for these cargoes Mr Finlinson’s practice was not to request at the outset all the discharge options that BP might require because, he thought, this might create uncertainty and make a fixture less attractive to owners. Instead he would initially express interest in vessels to load at Odessa and discharge at Singapore, for which he would seek to agree a lump sum freight, and then, when owners had “bitten”, he would request further discharge options.[35]On about 22 February 2010, Mr Finlinson asked Sovereign to find out what vessels were available for these operations. Sovereign identified two apparently appropriate vessels, the “Target” and the “Black Sea”, and after preliminary discussions with the owners Mr Glanville reported to Mr Finlinson about them on 24 February 2010. BP chartered both vessels. I mention the fixture of the “Black Sea”, hired from Tanker Pacific Management, only by way of background.[36]As far as the “Target” is concerned, the first enquiry of Geden was about a vessel for discharge at Singapore, and Geden put forward an offer for hire at a lump sum for this voyage, with different terms of hire for discharge east of Singapore. On the morning of 24 February 2010 Mr Savage sent Mr Cooper a Yahoo message at 11.40 asking whether BP could have a “Med discharge option”. Within two minutes, Mr Cooper responded, “Yes, ws 120 mfr Augusta”, that is to say he offered a Mediterranean discharge option on the basis of freight at 120% of the applicable Worldscale rate, with a minimum of the rate for a voyage from the load port to Augusta, Sicily. At 11.59 Mr Savage passed on to Geden BP’s further request that the charterparty include an option for discharge by ship to ship transfer at Malta or Cyprus, but Geden refused this. Mr Cooper thought that such an operation might delay the vessel and compromise her next fixture.[37]At 12.23 on 24 February 2010 Mr Glanville wrote to Mr Finlinson setting out summaries of Sovereign’s discussions with owners about both vessels. He stated rates for the “Target” for discharge at Singapore and east of Singapore and also for a voyage from Odessa with Mediterranean discharge. These were the rates later included in the Recap. (In his evidence, Mr Savage thought that the option for Mediterranean discharge was granted only in the afternoon of 24 February 2010, but it must have been discussed earlier in the day. Nothing turns on this.)[38]In his email to Mr. Uttley on 9 May 2010 Mr Cooper stated that Geden were “very reluctant” to grant this option. BP submitted that Mr Cooper was not reluctant, that his account to Mr Uttley was misleading, and that this reflects badly upon Mr Cooper’s credibility as a witness. I reject that submission (although, as I have said, for other reasons I regard Mr Cooper as an unreliable witness). I agree that no reluctance to grant the option on Geden’s part is apparent from the exchanges between the parties nor from Mr Cooper’s report to the Owners at 15.39 on 24 February 2010, in which he provided preliminary voyage estimates and mentioned that it would be attractive to have the vessel available at Augusta for her next trip: it would appear from these documents that the option was readily granted. I also recognise that Mr Cooper said in cross-examination that he agreed to the option because he was confident that market rates for hire of vessels in the Mediterranean were rising, although he also said that he was “not particularly keen” to grant it. However, Mr Finlinson’s evidence was that Mr Savage advised him that “there was some resistance from Owners to the possibility of a Mediterranean discharge option at a market rate”. In view of that, I reject this criticism of Mr Cooper’s account to Mr Uttley.[39]When the Mediterranean discharge option was first discussed, neither Mr Cooper nor Mr Savage referred to what overage freight (if any) should be payable if it was exercised, that is to say what BP should pay if the vessel loaded “overage” or cargo in excess of the minimum amount to be stipulated in the charterparty. (I use the term “overage” in this sense in this judgment, the expression “overage freight” for sums that charterers are liable to pay in respect of overage, and the expression “transatlantic overage freight” for sums that charterers are liable to pay in respect of overage on a voyage to a port or ports in the United States Gulf (“USG”) and United States Atlantic Coast (“USAC”) and Caribbean ranges. I shall also adopt, as convenient labels and without prejudice to the parties’ arguments about whether they are accurate and appropriate, the expressions “full overage freight” and “full transatlantic overage freight” to mean (transatlantic) overage freight payable at the same rate as freight for the minimum cargo.) Nothing about overage freight was mentioned in Mr Glanville’s report to Mr Finlinson, except that there would be no overage freight in the event of discharge east of Singapore. However, as I conclude, later on 24 February 2010 Mr Savage and Mr Cooper discussed overage freight in the event of Mediterranean discharge: BP proposed through Mr Savage and Mr Cooper agreed that in those circumstances overage freight should be at the rate of 50% of full overage freight. On 24 February 2010 at 17.57 Mr Wackett sent to Mr Finlinson an email by way of a draft recap of a fixture for the “Target” subject to the approval of BP’s management by 17.00 on 25 February 2010 or, if later, within an hour after they received the vessel’s “Q88” information. (A “Q88” is a standard questionnaire used for fixtures such as this: the completed Q88 form was in fact sent on 25 February 2010 at 16.32.) By this time Mr Savage and Mr Cooper had spoken about overage freight in the event of a Mediterranean discharge, and Mr Wackett’s draft recap included the Euromed overage freight term.[40]There was a difference between the witness statements of Mr Savage and Mr Cooper about how the wording of the Euromed overage freight term came to be agreed, and in particular why the word “only” was introduced into it. According to Mr Savage, he believed that the wording was provided to Mr Watchett by Mr Glanville and the purpose was to make clear that the 50% overage freight did not apply if the cargo was discharged in Singapore or elsewhere in the Far East. In his statement Mr Cooper said that he emphasised to Mr Savage that the agreement to 50% overage freight was limited to discharge at ports in the European Mediterranean, and his purpose was to “[signal] up that additional cargo for any destination that [BP] might later ask for (other than Far East or Euromed) would be at full freight”. As I have said at paragraph 32, in his report to Mr Uttley of 9 May 2010 Mr Cooper said that, although he could not “remember exactly” when he did so, he believed that he instructed Mr Savage about the wording because Geden would not agree to overage freight at 50% in the event of discharge at any other destination. The difference is not important, but I would prefer Mr Savage’s evidence. I accept that Mr Cooper said something to Sovereign that led to the Euromed overage freight term being included in the draft recap, but it is probable, in my judgment, that the exact wording was composed within Sovereign. Mr Cooper never intended to make any agreement for less than full overage freight except in the event of discharge in the European Mediterranean, but I do not accept that he told Sovereign this before the draft recap was sent.[41]On 25 February 2010 at 9.13 Mr Finlinson wrote in an email to Mr Rathbone about the terms for hire of the two vessels that he was waiting for the results of an inspection of the “Target”, and he observed that, if she did not clear vetting, no alternative aframax vessel was available and BP would have to look into using smaller, “handysize”, tankers. In fact, BP inspectors had approved the “Target” by 13.40. In the email Mr Finlinson reported to Mr Rathbone about the Euromed overage freight term, writing “50% overage on the Med option only”.[42]The draft recap of 24 February 2010 had not included any transatlantic discharge options. On 25 February 2010 Mr Rathbone indicated to Mr Finlinson that BP might need to discharge the cargo in the United States or the Caribbean. In the afternoon of 25 February 2010, when Geden’s deadline for holding the “Target” “on subjects” was about to expire, Mr Finlinson instructed Mr Savage to ask for options to discharge at USG and USAC and Caribbean ports. Geden quoted rates of Worldscale 135 for USG ports and Worldscale 140 for USAC and Caribbean ports, and Mr Cooper agreed to hold the vessel “on subjects” until 11.00 on 26 February 2010.[43]Mr Finlinson said nothing to Mr Savage about BP paying overage freight on these options, and Mr Savage did not mention overage to Mr Finlinson in this context. Mr Finlinson did not send Mr Rathbone an email when the transatlantic discharge options were agreed, but his evidence was that he was “pretty sure” that he told Mr Rathbone that “there was zero overage on the US option”, and that he believed that this was so because the Euromed overage freight term stipulated overage freight only if the Mediterranean discharge option was exercised. In his witness statement, Mr Rathbone said that he knew from his conversations with Mr Finlinson that “zero percent overage” had been agreed for “the States” (as well as for discharge east of Singapore). However, in cross-examination he said that he had no recollection of being told this before 11 March 2010, and I consider this evidence to be more readily reconciled with the exchanges between Mr Finlinson and Mr Rathbone on 11 March 2010 (to which I refer at paras 54ffbelow) and to be more reliable. I reject the evidence that Mr Finlinson spoke to Mr Rathbone about transatlantic overage freight in February 2010.[44]During the afternoon on 25 February 2010 Mr Finlinson also requested that the terms of the fixture include certain clauses of the standard BPVoy 4 form, in particular the “backloading clause”, SAC6. The Owners agreed to this.[45]On 26 February 2010 at 10.56 Mr Finlinson telephoned Sovereign and instructed them to lift the subjects on both the “Target” and the “Black Sea”, but almost immediately after he had done so Mr Rathbone asked Mr Finlinson if he could improve the rates for the transatlantic discharge options on the “Target” fixture. At 10.57Mr Finlinson passed the request to Sovereign, describing these rates as “ridiculous”. Mr Savage approached Mr Cooper, but Geden would not accept a reduction and the rates were agreed accordingly. At 11.09 Mr Cooper reported to the Owners in Istanbul that the vessel was fully fixed and commented that they had had “a lucky break on this one” and that “Now we have the exciting wait to see where they will discharge. Singapore or States will give us the best daily return”.[46]The Owners submitted that throughout the negotiations they were in a strong negotiating position and BP were (as they put it) “over a barrel”. When he was cross-examined Mr Finlinson denied that the Owners had the stronger negotiating position, and said that market conditions were “actually quite weak” for owners. Even if market conditions generally were softening for owners, I cannot accept that BP were not in the weaker bargaining position when negotiating the fixture: the Owners were, as Mr Cooper said in cross-examination, “very much in the driving seat”, and Mr Finlinson, as I conclude, must have realised this. BP needed to move oil from Odessa, and, as Mr Finlinson told Mr Rickwood, the only alternative was to use less convenient handysize tankers. BP’s difficult negotiating position to secure the hire of the vessel was reflected in the high lumpsum freight for a voyage to Singapore.[47]However, there is no evidence that BP were under great commercial or other pressure to secure the transatlantic discharge options, and I reject that part of the Owners’ submission. The freight agreed for these options was on the high side, and Mr Cooper’s message on 26 February 2010 at 11.09 reflects this, but (in the absence of significant evidence to the contrary) I accept his evidence in cross-examination that, while transatlantic discharge was better for the Owners than Mediterranean discharge, a voyage to the Far East would have been the most profitable outcome for them.

The voyage

[48]On 26 February 2010 BP told Sovereign to give instructions that the vessel proceed to Odessa for orders, and Sovereign passed the instructions to the Owners at 13.08. On 2 March 2010, they gave further voyage orders, including orders to load at Odessa and to proceed through the Bosporus, the Dardanelles and the Suez Canal: the instructions were, “Operation: For Orders, Port: Singapore”. Geden passed the orders to the Owners with the comment, “Singapore for orders which is good, they could of course change but it looks good for now!” On 7 March 2010 the “Target” berthed at Odessa, and began loading a cargo of high sulphur fuel oil. Although the vessel had capacity for 112,000 mt of fuel oil,draught restrictions at Odessa limited the cargo that she could load there to some 87,000 mt. The “Target” completed loading 86,821 mt on 11 March 2010, and she sailed from Odessa that evening at 19.42. At 18.13 on 12 March 2010 Sovereign passed to Geden further instructions for the “Target”: that she was to proceed to Marmara for loading a further cargo. The orders also stated, “Operation: For orders. Port USA”.[49]The “Target” proceeded to Marmara, a port on the northern shore of the Marmara Sea, at which there is a storage facility for oil coming out of Odessa. (It is not within the range “Ukraine Black Sea”, and so not within the loading range specified in the Recap under section “C”). The vessel served notice of readiness on 14 March 2010. She came into berth at Marmara after 10.00 on 16 March 2010. She weighed anchor at 10.12, took a pilot on board at 10.30, connected a cargo hose at 11.18 and began loading the further 26,049.589 mt of fuel oil at 13.12. Loading having been completed at 16.42 on 17 March 2010, she sailed from Marmara at 23.54 that night. At 8.31 on 26 March 2010 BP, through Sovereign, gave orders for discharge at Galveston and Houston. Cargo was discharged at Galveston on 13 and 14 April 2010, and the remaining cargo discharged at Houston between 21 and 23 April 2010. (The times that I have given here and elsewhere in this judgment are Greenwich Mean Time.)

Exchanges between 11 and 16 March 2010

[50]The Owners contend that on 11 March 2010 Mr Finlinson, knowing BP might want to load additional cargo at Marmara and then to exercise an option to discharge the whole cargo in the United States, conceived the idea that BP would not have to pay any transatlantic overage freight, including on additional cargo loaded at Marmara, and shared his idea with Mr Rathbone and Mr Savage; and that then Mr Finlinson and Mr Savage decided not to alert Mr Cooper or the Owners to this, although (at least) Mr Finlinson realised that Mr Cooper understood and expected that the Owners were entitled to full transatlantic overage freight (or at least to some transatlantic overage freight). The purpose, it is alleged, was to exploit the Owners’ mistake and (as it was put) to “trick” Mr Cooper into allowing the vessel to go to Marmara to load more oil for transatlantic discharge because Mr Finlinson and Mr Savage recognised that BP could not require under the terms of the charterparty that the “Target” load at Marmara.[51]The Owners also say that on 16 March 2010 in further conversations with Mr Savage Mr Cooper made it clear that, unless BP were willing to pay full transatlantic overage freight, they should not load at Marmara, and the matter was left on the basis that BP would revert to the Owners if they dissented from this; and that then they proceeded to load the additional cargo without indicating dissent.[52]Against this, it is BP’s case that on and after 11 March 2010 Mr Finlinson believed that no transatlantic overage freight was payable (either on cargo loaded at Odessa or at Marmara), that he understood that Mr Savage shared this view, but that, believing that BP were entitled to have the vessel to load at Marmara, he did not think about what Mr Cooper or the Owners might understand about the charterparty’s terms about overage freight. They say that Mr Savage thought that Mr Finlinson was probably right in his interpretation of what the charterparty although he came to have some unexpressed misgivings about it, and until about 16 March 2010 he too thought that BP were entitled to give orders for loading at Marmara. Before 16 March 2010 he did not believe or suspect that Mr Cooper or the Owners expected that full transatlantic overage freight would be payable, and he did not believe that the Owners would have refused to load at Marmara had they been told how Mr Finlinson understood the charterparty’s provisions about overage freight (although he did not think about why the charterparty entitled BP to load at Marmara). BP contend that on 16 March 2010, when Mr Cooper told Mr Savage that he thought the Owners entitled to full transatlantic overage freight, Mr Savage responded that BP thought that no transatlantic overage freight was payable, and in any case deny that Mr Cooper indicated that the Marmara cargo should not be loaded unless BP accepted the Owners’ position.[53]These issues require consideration in some detail of the exchanges on and after 11 March 2010 between Sovereign and Mr Cooper and between Sovereign and Mr Finlinson. At about 10.52 on 11 March 2010 Mr Rathbone asked Mr Finlinson in a Yahoo message whether BP could discharge the cargo at two ports, specifically Marmara and Agio (near Corinth). At 10.54 Mr Finlinson replied that they could do so. At 10.58 he telephoned Mr Savage and told him that BP were considering discharging the cargo at Marmara and then Agio “just because the rate to Singapore is ridiculous”. He told Mr Savage that, as he interpreted the Recap, BP were entitled to do this because they were entitled to discharge in Greece “with Marmara under the interim top up load discharge clause”. He asked whether, if BP discharged the cargo at Marmara and Agio, the Owners would agree to a “slightly sharper rate” than that based on a minimum voyage to Augusta. Mr Savage was not optimistic that the Owners would do so, but said that he would see what he could do. Apparently both Mr Finlinson and Mr Savage thought that discharge at Marmara was permitted under the interim ports clause, but Mr Finlinson wanted to achieve a better rate by having Marmara treated as a discharge port.[54]At 11.10 Mr Rathbone asked Mr Finlinson by Yahoo messaging about the rates for transatlantic voyages for both the “Black Sea” and the “Target”: whether they both had a minimum quantity of 80,000 mt and whether there was 50% overage freight for additional cargo. At 11.19 Mr Finlinson responded that both charters were on the basis of minimum cargoes of 80,000 mt, and that “I got you no overage”, adding that “On the “Target” overage only applies if Med discharge”. Mr Rathbone reverted to check that there was not transatlantic overage freight at 50% at 11.28 and again at 11.53 when his message was “so free frt [freight] on the top up”, and Mr Finlinson twice confirmed in response that the “Target” charterparty so provided.[55]Between Mr Rathbone’s first inquiry about rates at 11.10 and Mr Finlinson’s response at 11.19, Mr Finlinson spoke to Mr Savage at 11.12. He asked about the rates under the charterparties of the “Target” and the “Black Sea” for transatlantic voyages and suggested in relation to the “Target”, “… so we got min [cargo of] 80 [thousand mt] US Gulf 135, overage 50% applicable for Euromed discharge only, so in theory we have got free overage to go in TA [transatlantic], yeah?” Mr Savage’s response was “Yeah”. After some exchanges about the “Black Sea”, Mr Finlinson returned to the “Target” and Mr Savage said “Overage zero per cent”.[56]Mr Finlinson spoke with Mr Glanville at Sovereign at 11.31 and referred in their conversation to the terms on which the “Target” was chartered. The exchange between them was: AF:
“… on the “Target” we just have 0% overage, yeah?”
. SG: “Yeah”. AF: “There is no additional freight cost?” SG: “That’s what was agreed, yeah. Well, that’s how it read; there was 0% overage and when we agreed at the last minute the Med rates – sorry, the TA rates - he [Mr Cooper] didn’t ask for any charge.” AF “No, but I’m just making sure there is no – just having a look; there is the interim load port clause … it’s just standard interim port clause so it covers costs. It says where the freight is payable by a lump sum” Mr Savage then took over the conversation from Mr Glanville. He said that he was waiting for Mr Cooper’s response about the request made by Mr Finlinson at 10.58 for a lower rate if there was discharge at Marmara and Agio, and the conversation continued: AF: “…So just to clarify on the “Target” on the TA rate. So we fixed min 80, it says overage 0% unless in the Med and the interim ports clause just talks about - it deals with costs, the freight payable by a lump sum. So if we clearly did – well effectively I’m assuming it’s going to be Odessa, Houston flat rate, times 80, times the Worldscale rate with Marmara as a top-up port, but there’s no adjustment to the actual freight”. JS: “Well, you just do it purely as an interim, that was all.” AF: “Yeah, so effectively I’m paying him the cost but I’m not paying him any freight over the extra -”. JS: “No.”[57]Mr Savage and Mr Finlinson spoke again at 11.56 about discharging cargo at Marmara and Agio, and Mr Finlinson observed that BP were not entitled to discharge at Marmara under the terms of the charterparty if they were paying a Worldscale freight (as they would be for a transatlantic voyage). Mr Savage said that he would be able to make arrangements with the Owners for BP to do so, and Mr Finlinson agreed that this would be preferable to BP depending on the interim ports clause.[58]Mr Savage then spoke to Mr Cooper, and they discussed the position about the vessel calling at Marmara. Although neither Mr Savage nor Mr Cooper recalled the conversation, I infer that they had spoken about the vessel calling at Marmara to discharge cargo rather than to load. This is confirmed by Mr Savage’s telephone conversation with Mr Finlinson at 12.32, in which he reported upon his conversation with Mr Cooper: he described Mr Cooper as being “awkward” because he hoped for a voyage to the Far East, and Mr Savage observed that without the Owners’ agreement BP were not entitled to discharge at Marmara either under SAC6, unless some cargo was back-loaded, or under the interim ports clause, which applied only if they were paying a lump sum freight.[59]Shortly after thisBP explored the possibility of discharging in the Bahamas, and, through Sovereign, asked the Owners about how much cargo the “Target” could carry without her draught at the Vopak terminal (in the Bahamas) becoming unsafe.[60]At 13.35 Mr Finlinson told Mr Savage that BP would need to load additional cargo (to “top-up”) at Marmara if BP decided upon transatlantic discharge. Mr Savage said that this was “definitely covered in your SAC”, that is to say permitted by the charterparty under clause SAC6. By the afternoon on 11 March 2010 (if not before) the Owners had learned that BP might want to load at Marmara: at 16.11 Mr Cooper received an internal email asking him to check whether BP had “any intention with respect to loading further in Marmara”, and this enquiry was sent, through Sovereign, to BP.[61]At 15.20 Mr Rathbone sought by Yahoo messaging further confirmation from Mr Finlinson that BP had “free overage on the “Target” above 80kt”, and Mr Finlinson responded that they “definitely” had it. When Mr Rathbone sent his message, Mr Finlinson happened to be on the telephone to Mr Savage about another fixture, and towards the end of the call Mr Finlinson spoke of the “Target”, saying, “Target, we’ve definitely got overage above 80kt, yes?”. Mr Savage responded, “Definitely got free overage … recap says, “overage” yes, “zero”. Only for Med it’s 50%”.[62]Later that afternoon at 17.14 Mr Rathbone yet again sought confirmation about overage freight payable under the “Target” charterparty, and asked Mr Finlinson whether it would be due on cargo loaded at Odessa over the minimum quantity of 80,000mt. Mr Finlinson replied that it was not, but before doing so he again telephoned to Mr Savage at 17.17 and asked what the freight would be on a cargo of 87,000mt loaded at Odessa for transatlantic carriage. Mr Savage replied that it was the Worldscale rate (which he wrongly referred to as being at 120%, not 135% or 140%) multiplied by 80,000. The exchange continued as follows: AF:
“…The trader’s constantly checking and I’m just making sure that I am not missing a trick and checking it’s right.”
JS:
“Well if I say to the owner –”
AF:
“I know, I know, I know, but that’s fine –”
JS:
“He’s going to go, ‘We can’t do this’, and I’m just saying on paper –”
AF: (inaudible) JS:
“- which was agreed in the recap which we talked about, it does say, ‘The overage for 0% was for Med only’.”
AF: “Yes.” JS: “Overage at 50% sorry for Med only.” AF: “Yes, okay.” Later in the conversation Mr Savage said that Mr Cooper would “really kick up a fuss” about what was happening “on the Target”, and that he (Mr Savage) would then respond, “Well, you know, as per the charterparty, basically that’s the way I’ve interpreted it”. Mr Finlinson replied that he was not suggesting that Mr Savage “ask him [Mr Cooper] because he’ll just moan”. They referred to the term of the Recap about the overage for Mediterranean discharge “only”, and Mr Savage said, “…if he kicks up a fuss, we’ll just say ‘Look, Alex you know, he’s done the deal on that basis and that’s what it says in the recap’”. He commented that Mr Cooper would “never speak to [him] again but never mind”.[63]Mr Finlinson and Mr Savage spoke again at 17.38. Mr Cooper had called Mr Savage and said that, although BP were enquiring about draughts for discharging at the Bahamas, they were not entitled under the charterparty to discharge there. He had said that he would discuss granting an option for this the following morning. Mr Finlinson wanted the matter resolved that evening. Mr Savage spoke again to Mr Cooper, who said that, if the option was agreed, he would want help with operational matters, and there were exchanges about how much cargo the vessel might safely carry to various discharge ports. At 17.57 Mr Savage told Mr Finlinson that Geden would grant an option to discharge in the Bahamas. Nothing was said to Mr Cooper about transatlantic overage freight.[64]On 12 March 2010 Mr Savage sent a Yahoo message to Mr Finlinson at 9.19 confirming that Geden had agreed to a Bahamas discharge option at the same rate as for USAC and Caribbean discharge, that is to say at a 140 Worldscale rate. Shortly afterwards Mr Finlinson and Mr Savage had a long telephone conversation that was mostly about other fixtures, but Mr Finlinson referred in passing to the “Target” and being “relieved to get that nil rate”. I interpret this as meaning that he was relieved that the vessel was going to Marmara to load and to carry the additional cargo without incurring transatlantic overage freight. This remark suggests to my mind that Mr Finlinson did not think it certain throughout 11 March 2010 that the charterparty, properly interpreted, meant that no transatlantic overage freight was payable and that BP were entitled to load additional cargo at Marmara. Mr Finlinson was, I think, initially less confident about his interpretation of the charterparty than he now believes.[65]In a telephone conversation at 15.49 between Mr Finlinson and Mr Savage, which was mostly about the vessel’s draughts and how much cargo could be loaded, Mr Savage again confirmed BP’s Bahamas discharge option and Mr Finlinson asked for a written addendum to the charterparty covering it. On 15 March 2010 at 10.08 Mr Cooper sent Mr Savage such an addendum (addendum no 1).[66]At 15.37 on 12 March 2010 Sovereign had sent to Geden a further request of BP, that the “Target” should conduct open sampling at Marmara. In response, Geden requested instructions from BP about their intentions for the vessel “as all that we have received so far is ‘Singapore for orders’”. BP provided further orders, which Sovereign sent on to Geden at 18.13. They included these:
“Port: Marmara Ereglisi, ETA March 14 2010 (00.00), Operation(s): Load”, and “Operation: For Orders, Port USA”
. They also mentioned the quantity of cargo to be loaded at Marmara, approximately 26,021.543mt. Mr Savage’s evidence was that he did not see these orders until 16 March 2010 after the “Target” had started loading, and I accept that. It was only in the afternoon of 16 March 2010 that he knew that BP had actually directed her to the United States for orders, although Mr Finlinson had told him in their conversation at 11.08 that morning that the cargo was “going to the States”. (I conclude that it was only then that he knew that the “Target” would pretty certainly be going to America: as I interpret it, the exchange at 10.25 demonstrates this: see para 74 below. Clearly Mr Savage knew earlier that it was a possibility, but a voyage to the Far East seemed more likely. Mr Savage was not fully aware of operational matters: for example, in his conversation with Mr Finlinson at 10.25 he said that the vessel was already loading, and at 11.08 he said that she had already sailed from Marmara.) Mr Cooper too did not see the orders until 16 March 2010, but he accepted in cross-examination that he realised that BP might want to load some such quantity, that they “might want to fill the ship up”.[67]On 13 March 2010 the vessel passed through the Bosporus straits. That day Mr Cem As, who worked in Geden’s chartering department in Istanbul, sent an email to Mr Cooper that BP had appointed agents to load cargo at Marmara. Mr Cooper responded that Geden should check the terms of the Recap because he thought that BP might be relying upon the interim port clause, although, as he recalled, “they can only do this if discharge East”. (He presumably had it in mind that the interim ports clause dealt with voyages “Where freight is payable by lumpsum”.) Later, at 14.51 he confirmed that he thought this to be the position and added, “If they go to States (which was their intention so far) it will be as per WS (which should be better for us)”.[68]At 18.52 on 13 March 2010, in response to enquiries from BP about cargo being transferred within the vessel and oil loaded at Marmara being separated from the Odessa cargo, Mr Cooper wrote about arrangements for managing cargo operations at Marmara:
“Please also point out to [BP] that the vessel is about to arrive at Marmara so all time lost waiting for instructions is for charterers’ account…. Lastly … we would remind [BP] that the internal transfer operations will take approx 12-14 hours … and that all time and costs for this operations are for charterers’ account”
. The “Target” arrived at Marmara roads early on 14 March 2010 and at 2.13 she tendered notice of readiness, stating that the vessel was ready to load cargo “in all respect accordance … with all terms, conditions and exceptions of the governing C/P”. At 21.05 BP, via Sovereign, gave orders that that the vessel should commence the internal transfer of cargo in preparation for loading more oil, and she did so the next morning.[69]Mr Savage telephoned Mr Finlinson at 10.25 on 16 March 2010, saying that they needed to “kind of iron some stuff out” about the vessel loading at Marmara. He said that the operation was not covered by the interim ports clause unless the freight was a lump sum (sc. the vessel went to the Far East) and the “backload clause”, that is to say SAC6, did not permit it “because it’s in the load region, not the discharge region”. Whatever precisely Mr Savage meant by this, he clearly no longer believed that, as he had said on 11 March 2010, the operation was “definitely covered” by SAC6. He continued “well, it’s not a problem getting you the option to load there, but I’m going to have to straighten this out”. Mr Finlinson, apparently unconcerned, simply responded “Right”.[70]Mr Savage also told Mr Finlinson that Mr Cooper had “still overlooked the overage at zero”. He did not claim to have a detailed recollection of a conversation with Mr Cooper that led to this remark, but he described the circumstances as follows. On 14 or 15 March 2010 Mr Cooper had first suggested to him that the charterparty should be amended to include Marmara as a load port, but initially Mr Finlinson had not thought that an addendum was required because he believed that BP were already entitled to load cargo there under the charterparty. However, when it became apparent that the voyage might not be to the Far East and the freight might therefore not be for a lump sum, it “made sense” to Mr Savage (as he put it) that, because the loading operation would not then be covered by the interim ports clause, the charterparty should, as Mr Cooper suggested, be amended to provide for it. Early on 16 March 2010, or possibly late on 15 March 2010, Mr Cooper again spoke to Mr Savage by telephone about the vessel loading at Marmara and the need for an appropriate addendum to the charterparty if there was a transatlantic voyage. According to Mr Savage, however, nothing was said about BP paying overage freight, although a question was raised about whether BP should pay one “flat rate” for the voyage from Odessa to the US Gulf and another for a voyage from Marmara to the US Gulf.[71]Mr Finlinson did not remember telling Mr Savage that he did not think an addendum necessary, but this would have been consistent with his understanding of the charterparty. His evidence was that he was confident that the charterparty already entitled BP to load at Marmara, although he accepted that he “may not have looked at [SAC6] in great detail”, he “knew it was there and [BP] could depend on it”. While he might not have been as sure of the position as he suggested in his evidence, I accept that he supposed that the charterparty allowed BP to load at Marmara.[72]Mr Cooper agreed with Mr Savage that he had suggested that there should be an addendum to deal with the loading operation, and Mr Savage questioned whether it was necessary. He thought that this exchange was “later in the day” on 16 March 2010 (as he put it in cross-examination) or “after loading at Marmara had taken place” (as he put it in his witness statement), but agreed that he was not sure when he first spoke of an addendum. I do not consider that Mr Cooper’s evidence significantly contradicted this part of Mr Savage’s evidence and in any case I accept Mr Savage’s account and his explanation of the background to his remark about Mr Cooper “still overlook[ing] the overage at zero”.[73]After Mr Savage had spoken to Mr Finlinson at 10.25 on 16 March 2010, he had at least one further telephone conversation with Mr Cooper before telephoning Mr Finlinson again. There is dispute about what was said in it, and I shall revert to that. When Mr Savage telephoned Mr Finlinson at 11.08 he told him that Mr Cooper had “just cottoned on about the overage”. Mr Savage’s account to Mr Finlinson about his conversation with Mr Cooper is set out in the agreed transcript as follows:
“He [Mr Cooper] said, ‘As there’s actually no overage stated at all for the States, then isn’t it we pay on Worldscale on, amount of cargo loaded?’ So I said, ‘Where does it say that in the charterparty?’, and he said ‘Well’, he said, ‘As per Worldscale’ and I have looked through Worldscale and I can’t see anything which says that. …. But that is their opinion. I said, ‘Well, you know’. He said, ‘if he wants to do 50% [note: I have here amended the transcript from “if he won’t do 50%” to reflect what I heard when listening to the recording], you know, I’m willing to be reasonable, I’ll need to check it with Greece but I don’t think so’, because I said to him, ‘We want to pay for oil on actual voyage the oil pays”. [note: these were Mr Savage’s words, but his intended meaning is less than clear]. He said, ‘Well’, he said, ‘no, I want to do it as per Worldscale and then we’ll get paid the overage, and then the overage came up and he starts saying, ‘Oh’, and he said, ‘According to me BP are going to be paying 100% overage for this’. So I said, ‘Well, where do you get that from?’ So he said, ‘Well’ … he said, ‘It says only overage 50% only for Med only’. That is the wording specifically says on the recap, it’s for Med only, 50%, and he’s saying, ‘Well, as it doesn’t specify for TA [Transatlantic] … he’s saying that there’s no overage for this, which means it’s on actual cargo loaded. Which is different from my interpretation of it. …. I mean, he’s just said, ‘Look, I’ll do one, two, ports, Marmara Ereglisi, 50% overage, and then that’s, you know, I’m happy to do that’.”
[74]Mr Finlinson’s reaction can be heard on the recording. He sounds dispirited by Mr Savage’s news that Mr Cooper said that the Recap did not “specify for TA”, but he did not express surprise about Mr Cooper’s understanding of the charterparty or that his own interpretation was not shared by the Owners. He said “we” (which I understand to refer to BP) had “all along” considered that “0% overage” had been agreed, and that, if the matter went to arbitration, “this could go down to what we have agreed”. Mr Savage pointed out that transatlantic overage freight had not been discussed in negotiations (“It was never negotiated down to 0%”), and suggested that an arbitration might decide that the transatlantic overage freight was at the rate of 50% in view of trade custom and the default provision in the BPVoy 4 form, although he had agreed with Mr Finlinson’s opinion about the proper interpretation of the charterparty. Mr Finlinson sought to confirm that Mr Cooper had agreed to an option to load at Marmara “on condition that it’s 50% overage”, but Mr Savage responded that Mr Cooper had said that he needed “to speak to Greece” about that. The conversation continued: AF:
“So the condition is that he will only give Marmara on the basis that it is 50%?”
JS:
“Well, if doesn’t really matter now anyway because you have sailed from there.” [Note: the vessel had not in fact sailed from Marmara: loading began only at 13.12.] AF: “Sorry? It is decided already, yes?”
JS:
“Yes. To some degree, this is just – I mean it’s not holding up anything operationally.”
AF:
“No, but hang on. Why have they given permission for something that they didn’t actually …?”
JS:
“Well, this could also be used as your, to some degree they can say, you – you could go east now which makes this all go away. Because if it goes to the east – “ AF: “Yes, it is not sold – it’s going to the States.”
JS:
“I know. I mean it could be argued either way because I said to him, ‘Well then, why did they do this before’, I said, ‘Well, you know, as per the Worldscale east option?’ As it is going TA [transatlantic] now, this comes into play. I mean, he didn’t notice this until now either, so …”
AF: “Yes...”[75]The account that Mr Savage gave to Mr Finlinson of his discussions with Mr Cooper does not fit comfortably with either his own evidence or with that of Mr Cooper about them. However, both witnesses agreed that some reference was made to the possibility of BP paying transatlantic overage freight at 50%, at least upon additional cargo loaded at Marmara. Moreover, at 10.55 Mr Savage sent Mr Cooper a Yahoo message about an agreement for transatlantic carriage that BP had made with another owner, Heidmar: that BP should pay overage freight at 50% of the applicable Worldscale rate on cargo loaded at an interim port in excess of 92,000 mt, but no overage freight was to be charged for other cargo. (I infer that 92,000 mt was chosen as the cut-off point because that is the draught restriction at some US ports.) Mr Savage then wrote to Mr Cooper at 10.56, “I presume that you aren’t going to give any free overage above 80K, if any”. These messages to my mind provide some confirmation that, before they were sent, Mr Cooper and Mr Savage had spoken at least once by telephone, that Mr Savage had suggested to Mr Cooper transatlantic overage freight at 50% and that Mr Cooper had neither agreed to the suggestion nor rejected it outright. The reference to “free overage” also suggests, I think, that Mr. Savage said something about cargo being carried without incurring liability for extra freight, and so is at least consistent with his evidence that he referred to BP’s contention that no overage freight was payable. In his second witness statement Mr. Cooper disputed this, saying that, when Mr Savage referred to “free overage” he had understood that he meant “free overage (as opposed to zero overage”) … was anything below 100%”. He resiled from that evidence in cross-examination. What he said in his witness statement could not have been true.[76]Mr Savage’s evidence was that between his two conversations with Mr Finlinson at 10.25 and 11.08 he spoke again with Mr Cooper, and they discussed agreeing upon an addendum about loading at Marmara, as Mr Cooper had previously suggested. In this context he told Mr Cooper that BP thought that no overage freight was payable on “the transatlantic rates”, explaining that BP inferred this from the Euromed overage freight term. He recalled that Mr Cooper read through the BPVoy 4 form while they were on the telephone, and explained that he thought that the Euromed overage freight term displaced the standard provision for 50% overage in the BPVoy 4, with the result that BP were liable for full transatlantic overage freight. He described Mr Cooper as “thinking on his feet, so to speak, reasoning it out”, and said that Mr Cooper’s response that full freight was payable was not “an immediate retort when I said zero per cent”. He denied that Mr Cooper ever said that the Owners would not accept orders to go to Marmara or to load cargo there unless BP agreed to pay transatlantic overage freight on any additional cargo, but Mr Cooper simply asserted his, or the Owners’, understanding of what the charterparty terms meant. Mr Savage said that he told Mr Cooper that he “had taken [his points] and would pass them on to BP”, but not that he agreed with them.[77]According to Mr Savage, they also discussed whether Mr Cooper would accept a compromise about transatlantic overage freight. He agreed that he had probably asked for a compromise “as a favour”. He said that his recollection, albeit vague, was that Mr Cooper had indicated that he would “speak to Greece” about whether the Owners would accept transatlantic overage freight of 50%, but explained in cross-examination that the reference to Greece, which was echoed in his later conversation with Mr Finlinson, was a “slip of the tongue”: Geden were, of course, based in Istanbul and not in Greece.[78]Mr Cooper’s evidence in chief was that he recalled his discussions with Mr Savage on 16 March 2010, “not the precise words, but certainly the whole of the discussions”. It became clear in cross-examination that his recollection was not as good as this would suggest: he could not recall how many conversations they had had, and was confused about what was said in different conversations.[79]Mr Cooper described his first conversation with Mr Savage as “very brief”: he recounted that Mr Savage telephoned him, introduced the subject of overage freight, and observed that the charterers were to pay overage freight at 50% only in the event of Mediterranean discharge. Mr Cooper said that his reaction was to laugh with Mr Savage, and to remark that that was “a jolly good job, because it looks like we may be going to the States now and full freight would apply”; and Mr Savage responded that he would speak to BP. He accepted that Mr Savage might have said that “it could be interpreted as zero” (sc. that the charterparty might be interpreted as providing that no transatlantic overage freight was payable), although he did not recall him doing so.[80]He gave evidence of further discussions with Mr Savage about the position. I found his answers about them in cross-examination difficult to follow, but I understood him to say that Mr Savage telephoned him again (for either a second or a third conversation that day), and they discussed transatlantic overage freight when they both had a copy of the Recap to hand. He said that Mr Savage was “effectively asking us for a favour”, and put him under “enormous pressure” to accept a reduced transatlantic overage freight, telling him that Mr Finlinson would be in trouble with his “bosses”.[81]According to Mr Cooper, in one of their conversations (he could not recall in which) he told Mr Savage that “he should be very clear to BP that if they were intending to take the cargo to the United States they have to be very clear that full freight was to apply and if they weren’t clear about that, they should not load the cargo”. This evidence echoed what he had stated in his e-mail of 9 May 2010 to Mr Uttley (“I told them not to load the additional cargo if they were not prepared to pay overage 100% in the event of the vessel discharging States.”). Mr Cooper said that this was not stated by way of an ultimatum, or in an argumentative manner, but by way of discussion. Mr Savage had no recollection of this. It is possible that Mr Cooper observed that, if BP loaded the cargo at Marmara, the consequence would be that they would be liable for full overage freight on a transatlantic voyage and that BP should be prepared for this: Mr Savage might well not have remembered those words, because Mr Cooper would only have been stating what was implicit, as Mr Savage understood, in Mr Cooper’s interpretation of the charterparty. I reject any suggestion that by this observation Mr Cooper meant (or would reasonably have been taken to mean) that BP should agree to pay full transatlantic overage freight, still less that, unless they so agreed, the Owners would not load the Marmara cargo. Mr Savage would not only have recalled such a conversation: he would have warned BP that loading might not be permitted unless they agreed to full transatlantic overage freight.[82]Importantly, Mr Cooper agreed that Mr Savage might have told him that BP were not happy to pay “full freight”, and that, as BP interpreted the charterparty, they were not liable for transatlantic overage freight, although, he said, Mr Savage was not “pushing the point that hard”. According to Mr Cooper, Mr Savage spoke of an argument that the Owners would not be entitled to any transatlantic overage freight and, whatever the precise words used, he took it that Mr Savage, as BP’s broker, was conveying BP’s interpretation of the charterparty. Mr Cooper said that he responded that “full freight” had been agreed, and insisted that they should abide by the agreement.[83]Mr Cooper’s evidence in cross-examination was that Mr Savage later telephoned him again, apparently having spoken to BP, and told him, “They are aware, it is fine”. (Initially Mr Cooper’s evidence was, as I understood it, that Mr Savage said this when they first discussed transatlantic overage freight, but that could not be correct: Mr Savage must have spoken to Mr Finlinson or someone else at BP before telling Mr Cooper that BP were “aware”.) I accept that Mr Savage probably confirmed that BP were aware that the Owners contended that “full overage freight” would be payable, but not that he said more than this. Whatever his precise words, I do not accept that he said anything that could reasonably have conveyed to Mr Cooper that BP agreed that the charterparty provided for full transatlantic overage freight or that they agreed to pay it. Mr Savage’s evidence was that he “could see merits in [Mr Cooper’s] argument but I knew BP were going to disagree as much with his 100 per cent as he did with the 0 per cent”. That was obviously so, and I accept Mr Savage’s evidence. In my judgment, in these circumstances Mr Savage, as an experienced broker, would not have indicated BP’s consent to, or even acquiescence in, the Owners’ position. He clearly understood the difficulty that had arisen and would not have aggravated it in this way.[84]At 16.25 Mr Cooper sent an email to Mr Savage that the Owners had no orders about where they were to proceed, saying that their only instructions from BP were that the “Target” should go to Singapore for orders; and he asked for updated orders at BP’s earliest convenience. As I have said, he had overlooked the orders given on 12 March 2010 at 18.13: see para 66above. At 16.30 Ms Bassie, through Sovereign, confirmed the order to proceed for the USA for orders.[85]Mr. Cooper’s evidence was that, had BP responded to what he had said on 16 March 2010 by refuting his interpretation of the charterparty, or had they said that they would not pay full overage freight for the Marmara cargo, the Owners “would have refused to load”, but not without taking legal advice. As I understood his evidence, he meant that the Owners would have prevented the loading operation if they had advice that they were entitled to do so. Certainly I do not accept that they would have done so without such legal advice. Nor do I accept that a lawyer properly appraised of the facts would have advised that the Owners were entitled to refuse to load, given that the vessel had already proceeded to Marmara as directed by BP and given that until after 16 March 2010 BP were entitled to give such orders under the interim ports clause (because they had not given orders that precluded them from directing the vessel to the Far East). Moreover, there is a further reason to conclude that the Owners would not have prevented the loading operation. Mr Cooper must have contemplated that BP might need some time to consider what he had said, and possibly to take legal advice, before responding to it. Only then would the Owners, on Mr Cooper’s account, have taken legal advice. By then, the loading operation at Marmara would probably have been completed. I cannot accept that, had BP, having taken a reasonable time to consider their position, responded to the Owners rejecting their interpretation of the charterparty, matters would have so developed that the Marmara cargo was not loaded; nor can I accept that on 16 March 2010 it occurred to Mr Cooper that this might happen.[86]I add that Mr. Cooper accepted that, once the vessel had loaded the Marmara cargo, the Owners would not have refused to discharge in the United States on the grounds that, by loading at Marmara (which they were entitled to do only if they would be liable for lump sum freight), BP had made an election not to exercise their options for discharge in the United States or the Caribbean.

Conclusions about the exchanges between 11 and 16 March 2010

[87]These being the exchanges between the parties, I make the following findings, first about what Mr Cooper, Mr Finlinson and Mr Savage thought in the period between 11 and 15 March 2010, and then about the exchanges on 16 March 2010.[88]Mr Cooper: Mr Cooper never supposed that BP were entitled to direct the “Target” to Marmara to load unless she were going to the Far East. However, it did not occur to him that the Owners should prevent BP from loading cargo there, and I consider that probably he did not think about whether they were entitled to do so when the matter was first raised on 11 March 2010. By about 14 March 2010 he had come to realise that, while under the interim ports clause BP were entitled to load at Marmara for a Far East voyage, they were not if she went to America. He therefore wanted the position covered in an addendum, but he regarded this as a simple administrative matter to amend an omission and not as a concession that BP needed to negotiate or about which the Owners were minded to be difficult. As Mr Cooper said in cross-examination, the Owners were co-operating with BP and not trying to create problems. I agree with the submission of Mr John Russell (who represented BP) that the voyage orders to load at Marmara were accepted before Mr Cooper thought about whether and if so why BP were entitled to order this. I also accept that the Owners would have co-operated in this way regardless of what they thought was the contractual position about paying transatlantic overage freight on Marmara cargo. (In coming to this conclusion, I do not overlook that the Owners had not been amenable when BP approached them about discharging cargo at Marmara: there were obvious commercial reasons that they should resist that plan in that they were expecting and hoping for a much longer voyage.)[89]I accept that Mr Cooper’s impression throughout this period was that full transatlantic overage freight would be payable in respect of all the cargo that the “Target” carried, but he did not think about this in any detail before 16 March 2010: I do not believe that Mr Cooper was sufficiently attentive to detail carefully to have considered the terms of the Recap or analysed their application to the voyage that BP proposed. For example, as he eventually admitted in cross-examination and as I conclude, when fixing the vessel he overlooked that the Recap included SAC6. (His initial reluctance to accept this was not to his credit.) He also overlooked BP’s voyage orders sent to the vessel on 12 March 2010.[90]I conclude that, much as Mr Savage described, it was only when he was speaking to Mr Savage on 16 March 2010 that Mr Cooper examined the terms of the Recap to justify what he had previously assumed to be the position about transatlantic overage freight. Mr Cooper’s evidence was that he had had no reason “to address his mind to any question of overage” after the fixture was concluded in February 2010 until 16 March 2010 when he discussed it with Mr Savage, particularly since he had initially thought that BP were unlikely to opt for a transatlantic voyage.[91]I therefore reject Mr Russell’s submission that before 16 March 2010 Mr Cooper had no view at all about whether BP would be liable to pay transatlantic overage freight. Mr Russell pointed out that, when the Euromed overage freight term was negotiated, nothing was said about overage freight for other discharge ranges, and indeed Mr Cooper accepted that nothing was said about transatlantic overage freight before 16 March 2010. But that does not belie Mr Cooper’s evidence that he thought that BP were liable for full transatlantic overage freight under the charterparty.[92]Mr Russell sought to make something of voyage estimates prepared by Mr Cooper because none were made on the basis of full (or any) transatlantic overage freight before 18 March 2010.Mr Cooper’s previous estimates had been made on the basis of cargo of 80,000 mt, the minimum quantity under the charterparty, including one made on 11 March 2010 (for a voyage discharging at Freetown, Bahamas, and returning to Gibraltar) although by then Mr Cooper knew that in fact the “Target” had loaded some 87,000 mt at Odessa. The voyage estimates are consistent with my conclusions that Mr Cooper was not careful about the detailed arrangements for the voyage and that he was not thinking about overage freight when Mr Savage spoke to him on 11 March 2010 about the vessel going to Marmara, and they do not persuade me that Mr Cooper understood that the Owners would not be entitled to transatlantic overage freight.[93]Mr Russell also referred to Mr Cooper’s evidence that, when the fixture was negotiated, he had been reluctant to agree to the transatlantic discharge options, and submitted that he would not have been if he had thought that it provided for full transatlantic overage freight. I am not convinced by this argument: Mr Cooper could not have been confident that BP would load significantly more than the minimum cargo, and in any event he was concerned about the positioning of the vessel after a transatlantic voyage. I can readily understand that Mr Cooper would have much preferred the certainty of a lump sum freight for a voyage to the Far East.[94]Both BP and the Owners sought to rely upon Mr Cooper’s email of 13 March 2010, in which he wrote that a voyage “to States … should be better for us” (see para 67above). I do not consider that Mr Cooper’s email supports the contention of either party or provides any evidence about what he thought about BP’s liability for transatlantic overage freight. The Owners argued that the email reflects that Mr Cooper expected that transatlantic overage freight would be paid upon additional cargo loaded at Marmara. Mr Cooper said in cross-examination, “I think I am telling them if they load more cargo, we earn a lot more money”. But his comment was made in the context of observing that freight for a transatlantic voyage was based on Worldscale rates, and I agree with BP’s submission that it is explicable on the simple basis that the Worldscale rate for a voyage via Marmara would be higher than for a voyage direct from Odessa to the United States. Mr Cooper’s evidence was that, when account is taken of additional bunkers and port costs, the Owners would not profit from going to Marmara and this would be to their disadvantage. However, Mr Cooper’s message on 13 March 2010 did not, I infer, reflect such detailed calculations: his phraseology (“which should be better for us”, emphasis added) to my mind indicates otherwise.[95]On the other hand BP argued that, if Mr Cooper had really thought that the Marmara cargo would attract full freight, he would have written more enthusiastically about taking on additional cargo for a transatlantic voyage: he would have appreciated that the Owners would earn much more freight, and would have said so. Mr Russell observed that in his email to the Owners on 13 April 2010 (to which I refer at para 119below) Mr Cooper specifically referred to the Owners earning full transatlantic overage freight on the entire cargo: that was after his discussions with Mr Savage on 16 March 2010. Mr Russell argued that the distinctly more tentative phraseology of the email of 13 March 2010 reflects Mr Cooper’s recognition that the Owners would not be paid for the additional cargo, and the only benefit to them was the increased flat rate freight due to the additional distance. In my judgment, this places unrealistic weight upon the precise wording of the email.[96]Mr Finlinson: the Owners’ case that BP believed that they were mistaken about the freight payable under the charterparty and Mr Finlinson decided to exploit the mistake depends largely, if not entirely, upon the conversation at 17.17 on 11 March 2010. Mr Finlinson did not, as he told me and I accept, have a specific recollection of the conversation.[97]The background to the conversation is that, having agreed the fixture on 26 February 2010, Mr Finlinson had little if any involvement with the “Target” for nearly two weeks, and he had no reason to think about the fixture until 11 March 2010 when Mr Rathbone asked him about whether BP would be charged transatlantic overage freight at 50%. Mr Finlinson was busy with other matters, and on 11 March 2010 he and Mr Savage were not only concerned with the “Target” but also with the fixture for the “Black Sea” because the recap for that fixture had been drawn up incorrectly. Moreover, on 11 March 2010 BP had not decided where the cargo on the “Target” should be sold, nor decided to direct her to the United States. Although the trial focused on what transatlantic overage freight was payable for the “Target”, at the time this was not Mr Finlinson’s main concern.[98]According to Mr Finlinson, he had always believed that no transatlantic overage freight was payable. I accept that evidence, although, as with Mr Cooper, I conclude that this belief was not the product of careful consideration of what the Recap said. Until 11 March 2010, it depended simply upon his impression of the effect of the freight arrangements and he was not certain about the position, but on 11 March 2010 his belief was confirmed by his conversations with Sovereign.[99]It did not, as I conclude, occur to Mr Finlinson around this time that, as he put it, “there [was] going to be an issue calling at Marmara, the owner [was] going to refuse to call at Marmara”. He had been encouraged in this view by Mr Savage in the conversation at 13.35 on 11 March 2010, in which Mr Savage said that because “your SAC is unamended” there was no problem about a “top-up”. However, I do not believe that Mr Finlinson had by then come to a considered view that BP were entitled under SAC6 to load at Marmara: as I explain below (at para 113) I conclude that he later conceived this argument. Initially Mr Finlinson considered that the interim ports clause might be applicable whatever the vessel’s destination, and (as he told me and I accept) he appreciated that it would not be only on 16 March 2010. Mr Finlinson said in his evidence that, “At this stage [sc. on 11 March 2010] I knew that the charterparty contained SAC6 but it also contained an interim port clause, so without looking at either clause in great detail I knew that by having those clauses in there, then performing a top up operation would be something I would be able to do”. Mr Finlinson supposed (rightly) that, whatever BP’s legal rights under the charterparty, the Owners would not be minded to cause BP problems and would co-operate with their plans; and so he was not really concerned about whether BP could have insisted upon the diversion to Marmara if the Owners refused. This, I think, is why, when in the 10.25 call on 16 March 2010 Mr Savage explained that BP were not entitled to load at Marmara either under the interim ports clause or under SAC6, he readily accepted Mr Savage’s assurance that “it’s not a problem getting you the option to load there”: Mr Finlinson had never supposed that there would be a problem, whatever the legal position.[100]I also accept Mr Finlinson’s evidence that he did not have it “at the forefront of his mind” how the Owners might have interpreted the charterparty (with regard to transatlantic overage freight or anything else) when he was discussing the possibility of loading additional cargo at Marmara. He did not see himself as engaged in negotiations about the fixture but as involved with operational decisions. As he put it in cross-examination: “there was no negotiation around that time. And so to me, it was more an operational point of the charterparty”.[101]There is no evidence that I accept that Mr Finlinson thought at any time before 16 March 2010 that Mr Cooper or the Owners considered that full transatlantic overage freight on any cargo loaded at Marmara was or even might be payable. In their conversation at 17.17 on 11 March 2010 Mr Finlinson and Mr Savage recognised that Mr Cooper did not appreciate that, as Mr Finlinson thought, the Owners would not earn any transatlantic overage freight, and expected that Mr Cooper would be disappointed and cross when he learned this. But nothing in the conversation indicates that Mr Finlinson had had this in mind earlier, still less that it influenced BP’s exchanges with the Owners or their decision to load at Marmara or their decision to direct the vessel to America. Indeed the conversation at 17.17 was not about the freight that would be payable on a Marmara cargo but the freight payable on the Odessa cargo of 87,000 mt.[102]With regard to what Mr Finlinson thought on 11 March 2010, therefore, I conclude: i) That he believed that according to the terms of the Recap no transatlantic overage freight would be payable, and he thought that Mr Savage shared this view. However, Mr Finlinson had not given the matter much thought, and was not sure about the position before speaking to Mr Savage about it. He did not think about how Mr Cooper or the Owners might understand the contractual position, but expected that they would be unhappy about a transatlantic voyage, mainly because they would be unhappy about not earning any overage freight. (Mr Finlinson said in cross-examination that he expected that this would be Mr Cooper’s reaction partly because he hoped for a voyage to the Far East, but he anticipated, in my judgment, that the disappointment would be mainly because of the transatlantic overage freight.) ii) That he did not expect that there would be any difficulty in having the vessel load additional cargo at Marmara, supposing (again without giving the matter thought and without considering what the Owners might believe the contractual position to be) that they were entitled to require this under the charterparty and expecting that in any case the Owners would co-operate with BP about this.[103]Mr Finlinson did not consider that on 11 March 2010 he was making any arrangements that were improper or unconscionable or dishonest. He considered that he was simply discussing with BP’s broker the chartering arrangements in response to Mr Rathbone’s enquiries.[104]Mr Savage: when the fixture was concluded, in so far as Mr Savage considered what transatlantic overage freight would be payable, he had in mind that usually overage freight was paid at 50% of full freight and rather assumed that BP would being paying at that rate. He did not voice this to either BP or Mr Cooper. When on 11 March 2010 Mr Finlinson expressed the view that on the proper interpretation of the Recap no transatlantic overage freight was payable, he subscribed to it. I accept his evidence that he instinctively had misgivings about this interpretation, but, as I conclude, being unable to pinpoint any flaw in Mr Finlinson’s argument, he accepted it and did not express his misgivings to Mr Finlinson. He did not think that Mr Cooper would readily accept that BP should not be liable for any transatlantic overage freight, but it did not occur to him before 16 March 2010 that Mr Cooper might believe that the charterparty provided for, or the Owners expected to be paid, full transatlantic overage freight.[105]When Mr Savage made his witness statement, he said he did not think “at the time” that BP were entitled under SAC6 to divert to load at Marmara. He had apparently forgotten about what he had said on 11 March 2010 in the conversation at 13.35. It was not suggested to him in cross-examination that he was deliberately misleading Mr Finlinson on 11 March 2010, and I conclude that, when he said that the loading operation at Marmara for transatlantic discharge was “definitely covered” by SAC6, he genuinely believed this, although he had not considered the position carefully. When the “Target” fixture was made, Mr Savage had thought that she “was always going to go east” and this was still what he expected; and then the operation would have been permitted by the interim ports clause. It did not occur to Mr Savage, as he told me and I accept, that the Owners might refuse orders for a transatlantic voyage because the vessel had loaded at Marmara.[106]The “trick” allegation: it is clear from the conversation at 17.17 on 11 March 2011 that Mr Finlinson and Mr Savage realised that Mr Cooper did not appreciate that, as at least Mr Finlinson supposed, the Owners would not earn transatlantic overage freight, and they thought that he would be disappointed and displeased when he realised the position. However, I reject the Owners’ suggestion that Mr Finlinson and Mr Savage were engaged in a strategy to “trick” them into allowing the Marmara loading. They decided not to raise the matter with Mr Cooper on 11 March 2010: Mr Finlinson thought that there was no reason to do so because, as he saw it, he was engaged in essentially operational matters and not in negotiations, and Mr Savage saw no reason to cause ill-feeling unnecessarily given that the voyage would probably be to the Far East. (Mr Steven Berry QC, who represented the Owners, did not submit that Mr Savage knew on 11 March 2010 that the “Target” was to be ordered to America.) BP and Sovereign simply thought that Mr Cooper had misunderstood the agreed terms of the charterparty. They had done nothing to create his perceived misunderstanding.[107]16 March 2010: I make these findings about the exchanges on 16 March 2010: i) At the time of their first exchanges in the morning of 16 March 2010 neither Mr Savage nor Mr Cooper knew that the vessel had been instructed to go to the United States for orders. They knew that she might be ordered there, but both thought it more likely that her voyage would be to the Far East. ii) Mr Savage and Mr Cooper had a conversation before 10.25 on 16 March 2010 and discussed the arrangements for loading at Marmara and whether there should be an addendum to the charterparty to record them. Nothing was said about overage freight. I cannot accept that Mr Savage would have told Mr Finlinson that Mr Cooper had overlooked “the overage point” if it had been discussed. iii) After 10.25 Mr Savage and Mr Cooper spoke again. In exchanges initiated by Mr Cooper about the arrangements for loading at Marmara, transatlantic overage freight was discussed for the first time. In my judgment, it is more likely that the question first arose in this context, as Mr Savage said, than that Mr Savage, having decided with Mr Finlinson not to discuss overage freight with Mr Cooper, should start a conversation about the overage freight payable in the event of the cargo being discharged in the Mediterranean. iv) Before those discussions, Mr Cooper had supposed that the charterparty provided for full transatlantic overage freight, although he had not examined the relevant provisions of the Recap and the BPVoy 4 form. In the conversation after 10.25 on 16 March 2010, he made his view clear to Mr Savage. v) Mr Savage responded that the charterparty was open to another interpretation, that no transatlantic overage freight was payable, and he made Mr Cooper aware that BP maintained this interpretation. vi) In that conversation or another conversation later that day, Mr Savage and Mr Cooper went through the Recap together, and Mr Cooper sought to justify his interpretation by reference to it. vii) Mr Savage did not become embroiled in debate about the proper interpretation of the contract, but he did not say anything or indicate that he agreed with Mr Cooper’s interpretation, nor that BP accepted it, nor that he thought that BP would do so. viii) Mr Savage tried to engage Mr Cooper in discussions of a compromise (and for this purpose send the Yahoo message about BP’s arrangement with Heidmar). Mr Cooper showed little interest, although he did, as I conclude, say that he would discuss the position with the Owners. (Mr Cooper could not have referred to speaking to Greece, as Mr Savage reported to Mr Finlinson: he probably referred to speaking to the Owners, and Mr Savage reported this to Mr Finlinson in terms of speaking to Greece, an understandable and inconsequential mistake.) ix) However, when Mr Savage spoke to Mr Finlinson at 11.08, Mr Savage gave a false picture of Geden being willing to compromise about transatlantic overage freight. I infer that he was trying to bring the parties into discussions to resolve the problem, and to encourage BP to put forward a proposal in order to achieve this. x) Mr Cooper never suggested to Mr Savage that BP should enter into a new agreement about transatlantic overage freight: the discussion was only about what the existing agreement meant. xi) Mr Cooper never indicated that the Owners would prevent or hamper the loading at Marmara, or that they would do so unless BP accepted his interpretation of the charterparty. He never supposed that they would do so. xii) Mr Cooper expected that Mr Savage would report to BP their discussions and his interpretation of the charterparty, and Mr Savage confirmed to him that he had done so. They both expected a response from BP.

Mr Finlinson’s response to his conversations with Mr Savage on 16 March 2010

[108]At the end of their conversation at 1025 on 16 March 2010, Mr Savage and Mr Finlinson agreed that lawyers should be consulted. But Mr Finlinson did not consult BP’s lawyers: he said that he looked for a BP in-house lawyer but, not finding him in his office, Mr Finlinson simply reviewed the Recap himself. Although he appreciated that there had been two interpretations of the charterparty (that it “could be argued both ways”), he became all the more convinced of his interpretation of it and that no transatlantic overage freight was payable. He did not take further steps to obtain legal advice.[109]BP’s Demurrage Department were responsible for scrutinising freight invoices. The Owners’ pleaded case is that, when in due course they passed the Owners’ claim for full overage freight for payment, they had “either been informed of the arguments by Mr Finlinson or, if not, had analysed and formed their own view as to the meaning and application of the relevant charterparty terms, recognising that there was scope for dispute with regard thereto, while in possession of all the relevant facts”. I shall come later to what examination of the invoice was conducted, but I conclude that Mr Finlinson did not inform the Demurrage Department of the exchanges or arguments about what overage freight was payable. I accept his evidence that he did not do so: there is no contrary evidence.[110]Mr Finlinson was cross-examined about why he did not warn the Demurrage Department of the difference between himself and Mr Cooper that had emerged about whether BP were liable for transatlantic overage freight. He explained that there were no procedures for the Chartering Department to pass information to the Demurrage Department. (Ms Myers too knew of no practice of the Chartering Department putting notes on files or sending emails for the attention of those checking invoices.) But, as Mr Finlinson acknowledged and Ms Myers and Mr Rickwood confirmed, this would not have prevented him from contacting the Demurrage Department about such matters as an ambiguous or unclear charterparty term had he wished to do so. He said at one point in cross-examination that in March and April 2010 he wrongly understood that BP had a system to check freight invoices against the amount of freight that the trader expected to be incurred: his evidence about this was not entirely clear, but in any case he knew that there was no “official or standard” way within BP’s systems of the Demurrage Department making such checks. However, this might be, it did not occur to him on 16 March 2010 that an excessive invoice would be passed for payment. Accordingly, he did not speak to anyone about the difference over interpretation of the charterparty or about BP’s liability for overage freight because he saw no need to do so. He knew that the invoice would be checked before payment, and assumed that the Demurrage Department, on checking the Owners’ invoice, would share his view about BP’s liability.[111]When Mr Finlinson was being cross-examined, I was rather sceptical about this explanation for him not contacting the Demurrage Department, but on reflection I accept it. I conclude that he was so confident (or overconfident) in his own opinion about what the Recap provided that he discounted any other interpretation of what had been agreed. He satisfied himself that he was right, and, as he put it, “obviously my focus had moved on to other parts of my job”. I accept Mr Finlinson’s evidence and his explanation about why he did not make any real efforts to contact others about the matter rather than, as the Owners suggested to him, it was “to avoid the potential embarrassment to [him] that would ensue”.[112]When he studied the Recap on 16 March 2010, he convinced himself that the Owners’ interpretation was obviously wrong, and put aside the doubts that he had had while speaking to Mr Savage. This was not a sensible view, but my impression from his evidence is that he is self-assured and overconfident, and perhaps even arrogant; and I conclude that he was blinded to arguments that his opinions were wrong, or might be wrong. He therefore thought that, in all likelihood, that the Owners would not seek overage freight and the problem would go away, but, if it did not, it could be dealt with when BP rejected their invoice. In the meanwhile, he got on with his other work, and thought no more about the question of overage freight. What did not occur to him was what happened: that BP would pay the Owners’ invoice, including full transatlantic overage freight. I cannot accept that, as the Owners suggested, he recognised that the conflicting arguments about the meaning of charterparty and decided to keep quiet about them, or that he resigned himself to BP being charged full transatlantic overage freight by the Owners. He was not a man to give in so quietly, nor would he have thought that it would go unnoticed if BP made an unexpected payment of $1 million by way of freight.[113]According to Mr Finlinson’s evidence, when he reviewed the Recap, he also “focused” on SAC6 and thought that this entitled BP to load at Marmara and then to direct the vessel to America: he “was happy with the SAC6 being in there, that everything seemed to be in order”. The reasoning was that SAC6 entitled BP to load additional cargo at any port (whether or not within the agreed ranges) en route to the discharge port, and under SAC6 freight was to be calculated (at the Worldscale rate for the voyage actually performed, including the distance attributable to the call at Marmara, the extra loading port) on the quantity of cargo originally loaded (and disregarding the Marmara cargo). Under clause SAC6(c)(i) (see para 167 below) it would follow that freight should be charged upon the cargo loaded at Odessa, including the overage of 6,821 mt.[114]The Owners invited me to reject Mr Finlinson’s evidence that he conceived that SAC6 might apply to the Marmara operation on 16 March 2010 and to conclude that he did so only in May 2010 after BP had paid the Owners full transatlantic overage freight. Certainly Mr Finlinson did not share the argument with Mr Savage before 7 May 2010 (see para 141below), but I reject the Owners’ submission that it is apparent from his conversations with Sovereign that day that the idea had only just occurred to him. As I have said, I accept that Mr Finlinson read SAC6 when he reviewed the Recap, and that he thought that it covered the Marmara loading and so might assist if the dispute with the Owners continued. I cannot accept, however, that Mr Finlinson immediately appreciated that under clause SAC6 BP would be liable to pay full transatlantic overage freight on the Odessa overage cargo. That is inconsistent with “everything seem[ing] to be in order”: his assurance to Mr Rathbone would have been wrong and BP’s freight on a transatlantic voyage would be some $210,000 more than had been expected. In March 2010 his mind was on the Marmara cargo and, as I conclude, the implication of his interpretation of SAC6 for the Odessa overage occurred to Mr Finlinson only after the Owners’ invoice had been paid. I do not think that Mr Finlinson was being dishonest in his evidence about this, but he has convinced himself that he thought about how SAC6 applied to the voyage more clearly and in more detail on 16 March 2010 than he did.

Exchanges after the Marmara loading

[115]Mr. Savage’s evidence was that after 16 March 2010 Mr. Cooper asked him “numerous times” about “what [was] going on” (which I take to mean what was going on with regard to whether BP accepted that full transatlantic overage freight was payable on the Marmara cargo), and that he responded only that BP were aware of the Owners’ interpretation of the charter party. I accept that evidence. I conclude that he never indicated that BP accepted that the Owners’ interpretation was correct, or even that he himself agreed with it. Although he was expecting BP to contact him, he did not chase them for a response when they did not do so. The very fact that Mr Cooper asked so often about the position demonstrates, to my mind, that he did not understand that BP had accepted his interpretation of the charterparty about overage freight or that the difference of interpretation was resolved in the Owners’ favour.[116]According to Mr Cooper, he suggested that the position about transatlantic overage freight be recorded in an addendum, but this was never done. On 18 March 2010, Mr Cooper sent by Yahoo messaging suggested wording for an addendum to cover the Marmara loading:
“1/2 port(s) Ukraine Black Sea Excl Yuzni but including Marmara (Max load port expenses for owners account in Ukraine $250,000 basis single loading port)”
. Mr Savage sent the proposal to Mr Finlinson, but Mr Finlinson did not respond to it: his evidence was that he does not recall seeing it, and in the absence of any evidence for the contrary and any reason that Mr Finlinson should dissemble about this, I accept that evidence. If Mr Finlinson ever saw the draft, he overlooked it.[117]The draft did not refer to overage freight. Mr Savage said that he would not have expected it to do so. The difference about transatlantic overage freight was not a matter for an addendum to the charterparty because, as he saw it, the difficulty was not about what the terms of the charterparty were or should be, but about what they meant. The Owners never suggested, he said, that there should be “an addendum with a 100%”, and he knew that BP would not have agreed to such an addendum in such terms.[118]Mr Cooper explained that the draft did not refer to overage freight for this reason: he spoke to Mr Savage about an addendum to the charterparty to cover loading the Marmara cargo for carriage to America, and he “restate[d]” that BP should be liable for full overage freight; and Mr. Savage responded that it was not necessary for this to be mentioned in the addendum because “everything is fine” and “BP was aware”, and he thought that BP had accepted his interpretation of the charterparty.[119]On 10 April 2010 the vessel gave notice of readiness to discharge part of the cargo at Galveston. On 12 April 2010 BP indicated that, after discharging some cargo at Galveston, they wished to discharge oil at IMTT St Rose, Louisiana, before going to Houston to complete discharge. Mr Cooper responded that IMTT St Rose was on the Mississippi and outside the agreed USG discharge range, but in an internal email of 13 April 2010 he wrote to the Owners that he did not think this was “bad news” because the freight was Worldscale 135 on 112,000 mt of cargo: “as we are getting WS 135 on 112 kt, so the increase in the flat rate should more than cover it”.[120]According to Mr Cooper, when it was suggested that BP might want the option to discharge at IMTT St Rose, he was reminded of his previous exchanges and he again asked Mr Savage by telephone whether they should confirm the position about transatlantic overage freight in an addendum; and Mr Savage told him that Mr Finlinson had not questioned the Owners’ position and that no addendum was required. BP’s case, based on Mr Savage’s evidence, is that, when at around this time Mr Cooper again asked about whether BP had responded about transatlantic overage freight, he said that they had not: he did not say that Mr Finlinson had not questioned the Owners’ contention about full transatlantic overage freight or therefore no addendum was necessary.[121]In the event the “Target” did not go to IMTT St Rose, but after leaving Galveston, she went direct to Houston and discharged the remaining oil there. She completed discharge at Galveston on 13 April 2010, gave notice of readiness to discharge at Houston on 14 April 2010 and completed discharge there between 21 and 23 April 2010.[122]I reject the evidence of Mr Cooper that before he sent that draft addendum on 18 March 2010 and that around 12 or 13 April 2010 Mr Savage indicated that BP (or Mr Finlinson) had accepted BP’s interpretation of the charterparty. If Mr Cooper had thought on 18 March 2010 that this difference had been resolved, he would have had every reason to refer to it in the addendum, or at least in his messages to Mr Savage about the addendum. I do not believe that Mr Savage said in this context that “everything is fine”: this was not put to Mr Savage when he was cross-examined or suggested before Mr Cooper was being cross-examined. Mr Savage probably had told Mr Cooper by 18 March 2010 that BP were aware of his interpretation of the charterparty, but that did not suggest that they had accepted it. Indeed, to my mind, the expression “BP are aware”, if anything, suggests otherwise, and in any event I consider that the wording of Mr Cooper’s draft lends support for BP’s contention that he did not then believe that the difference about transatlantic overage freight was resolved.[123]With regard to the discussions when BP spoke of discharging at IMTT St Rose, again I prefer Mr. Savage’s evidence. He knew that Mr. Finlinson disputed the interpretation of the charterparty: I reject the suggestion that he indicated otherwise to Mr Cooper.[124]I accept that, when BP did not respond to the interpretation that he had advanced, Mr Cooper became increasingly optimistic that they had resigned themselves to it and would pay full transatlantic overage freight, but I do not accept that he was ever certain of this, still less that Mr Savage had misled him to think that BP had agreed to this.

Payment of the invoice

[125]Freight was due for payment when discharge was complete, but on 16 April 2010 the Owners, at Sovereign’s request, sent a “Preliminary Freight Invoice” (the “Preliminary Invoice”) for “net freight” of $3,652,662.19, which represented a “grand total” of $3,696,843.87 less BP’s address commission of $44,181.68. It was based on Worldscale 135 for 112,871.546 mt, and requested that BP “kindly confirm all in order”.[126]In BP’s Demurrage Department, Ms Myers dealt with the invoice for freight on the “Target” fixture, but she did not have authority to pass invoices for more than $2 million, and Mr Rickwood, as a Senior Demurrage Negotiator, also approved the payment. I infer that Ms Myers received the Preliminary Invoice on about 22 April 2010: that is when BP’s “Openbooks” computer system records her first dealing with it. She learned from the Recap that freight was calculated on a Worldscale basis for the transatlantic voyage, and confirmed that the invoice properly reflected the voyage by consulting BPOS (the BP Operational System), into which BP entered vessel movements and communications. She also used BPOS to check the cargo quantity and the Worldscale rate and that discharge was complete. She raised and resolved a number of questions about the Owners’ invoice. Most concerned administrative matters and are inconsequential: for example, she required that the invoice should not be described as a “preliminary” invoice and that it should be made out to BP Oil International (whereas the Preliminary Invoice referred to BP), and on 23 April 2010 Geden sent an amended invoice accordingly. On 26 April 2010 BP noticed that the bank details for payment shown on the invoice did not match details in the Recap, and as a result on 27 April 2010 an addendum to the charterparty (addendum no 2) was made to the charterparty so that it corresponded with the invoice.[127]Ms Myers also noticed that the Preliminary Invoice included sums ($115,750 for waiting time and $44,559.59 for bunkers) relating to the vessel passing through the Turkish Straits, but the Owners had not credited BP with corresponding address commission. On 26 April 2010 she asked through Sovereign that the Owners should adjust the invoice to allow for this, writing to Sovereign, “Could you please have owners deduct this commission and re-issue. If owners are in dispute of this deduction, please have them revise the freight invoice removing the Turkish Straits and Bunker charges, and forward freight for immediate processing…Reissuing the Turkish Straits separately”. Mr Cooper accepted Ms Myer’s point, giving instructions in these terms:
“[BP] have a fair point, it’s not wrong that they should have an address comm. on the time for Turkish straits. Please re-issue accordingly …”
. The Owners sent a revised invoice for a net sum of $3,651,215.32, giving BP credit for this address commission.[128]In her evidence, Ms Myers accepted that, as she understood it, in 2010 it was, and it remains, an open question in the shipping trade whether charterers are entitled to address commission in respect of such charges, the contrary argument being that they are akin to demurrage. The Owners contend that, although the amount involved was something less than $2,000, the agreement about this address commission entailed a “material concession” on their part, and that therefore, when BP later paid the amount of the revised invoice, they concluded a binding agreement with the Owners that the sum charged, including the overage freight, was payable.[129]Ms Myers was satisfied with the invoice for $3,651,215.32, and she presented it to Mr Rickwood for approval together with other documents including the Recap. He checked only what he called “higher level items”, working on the assumption that Ms Myers would already have checked the details of the invoice. He therefore looked whether the invoice was addressed to the correct entity within BP, whether the discharge was complete and whether the correct Worldscale rate had been used to calculate freight. He approved payment of the invoice for $3,696,843.87 by signing a copy of it, and he returned it to Ms Myers. He did not recall having any discussions with Ms Myers about the invoice before doing so. At 14.29 Ms Myers entered in BP’s Openbooks system that the invoice was agreed (the entry in the system showing the gross amount of $3,696,843,87, rather than the amount net of address commission).[130]Thereafter BP’s procedures for making payment started, but they were delayed, apparently for technical reasons. In the end, in order to avoid further delay because of the requirements of BP’s electronic systems, Mr Matthews processed the invoice manually, and on 4 May 2010 he passed it to the “cash team”. According to Mr Matthews, it was paid by Ms Anna Zagorska at 10.00 on 5 May 2010. Mr Witsey assisted in the process, in particular by ensuring that bank account details were properly recorded in BP’s systems.[131]When he approved the invoice for payment, Mr. Rickwood appreciated that the Recap specified 50% overage freight for some discharge options but said nothing about transatlantic overage freight. His evidence was that, although he thought full overage freight unusual, he “must have presumed” that this had been agreed because he did not think that an owner would carry additional cargo without charging any overage freight. He had not, he said, come across a fixture recap that did not specify an overage rate for each range of discharge ports, and it did not cross his mind that the Owners would not be entitled to some overage freight. I accept his evidence about that.[132]Further, it did not occur to Mr Rickwood that the invoice might have been inconsistent with the Recap in that the Recap did not provide for additional cargo to be loaded at Marmara. He was not aware of SAC6, BP’s back-loading clause, which he had not previously needed to consider.[133]When she processed the invoice, Ms Myers thought that SAC6 took effect only if some cargo was backloaded, and she said that before passing the invoice for payment, she gave no consideration to clause SAC6 or to whether it entitled BP to require the Owners to divert to Marmara to load additional cargo. In her evidence she said that she believed that she noticed a “mismatch” between the Recap and the invoice in that the vessel had loaded at Marmara, and that she had spoken about this to a “senior” (a more senior member of the Demurrage Department, either Mr Rickwood or a Mr SeanMahon); and she said that she and her “senior” must have been satisfied about this because the invoice was paid, but she could not recall how they resolved this matter. Ms Myers had only a hazy memory about this: I conclude that she probably did speak to Mr Mahon about this (not Mr Rickwood, as I conclude in view of his evidence), but whatever their discussions it did not occur to them that this might affect BP’s liability for overage freight.[134]In her witness statement, Ms Myers said that her usual practice when she examined freight invoices was to consider any charge for overage freight; and that, when she dealt with the invoice for the “Target”, she noticed that the invoice included overage freight at 100%, whereas the Recap said that overage freight for “Euromed discharge only” was 50% and there was no overage freight for discharge east of Singapore. She nevertheless authorised payment of the invoice of 27 April 2010, “because I assumed it was correct and relied on the invoice as being honest and accurate”. She said that she does not know why she assumed that the overage freight charge was “fine on the basis of the documents, and can only put my mistake down to human error in the sense that I incorrectly relied on the invoice”. She also said that she might have “assumed that there must have been a subsequent agreement about the overage rate applicable to the additional cargo”.[135]It became clear in cross-examination, while Ms Myers recalled noticing a discrepancy between the overage rate charged on the invoice and the provisions of the Recap and of speaking to a “senior” about it, she could not remember whether this was before or after the invoice had been paid by BP. Ms Myers was an honest and straightforward witness, but she had no real memory about these events, which were, after all, a routine part of her work in 2010. Any answers elicited from her when pressed about what she noticed before payment and what she noticed afterwards are not, to my mind, reliable. She simply did not know.[136]Despite what she said in her witness statement, I conclude that Ms Myers did not notice the discrepancy or discuss the overage freight charged by the Owners before payment. I think it more likely that she realised this only later, after the invoice had been paid. This conclusion has some small support from her evidence that after payment she spoke with Mr Mahon about the overage freight and he said that it should have been “charged at 50%”. More importantly, if before authorising payment Ms Myers had perceived that there was a discrepancy of over $1 million between the Recap and the invoice with regard to overage freight, she would have spoken to a “senior” about it, and taken steps to resolve the position before the invoice was passed for payment: the amount involved was too much to have been ignored. In any case. her clear evidence, which I accept, was that when she authorised the payment she thought the invoice correct. If Ms Myers noticed the discrepancy at all, she did so, I conclude, after the invoice was paid. (At one point in cross-examination, she used language that might suggest that the discrepancy was noticed only after the freight had been paid:
“we just thought, we’ve paid the freight…”
. I do not rely upon this, as Mr Russell invited me to do, as evidence that the “mismatch” was noticed only after payment: the language of Ms Myers’ answers was too imprecise to bear that detailed analysis. I disregard this answer in reaching my conclusion about when (if at all) the discrepancy was noticed. In re-examination, Ms Myers confirmed what had become obvious: that she did not recall whether any discussions with her “senior” were before or after she had authorised payment of the invoice and the invoice had been paid.)[137]Mr Berry elicited further answers from Ms Myers in cross-examination about the decision to pay the invoice: she accepted that she might have concluded that it was arguable that overage freight was payable on cargo in excess of the minimum quantity since the charterparty said nothing about transatlantic overage freight. At one point in cross-examination she agreed with Mr Berry that she and her “senior” concluded that the invoice should be paid although they realised that there were “arguments going either way” about whether BP were liable for overage freight, and if so whether they were liable for full overage freight. When asked why, nevertheless, the invoice was passed for payment, she said that they had relied upon Sovereign, as brokers, “trusting that they would have checked the invoice”, although she also said that she did not recall communicating with them about this. Her answers about this were confusing, and it was obvious from her manner, in my judgment, that Ms Myers was confused when she gave them. They are not reliable.[138]I shall draw together my findings about the state of mind of Mr Finlinson, Ms Myers and Mr Rickwood over the period leading to the payment of the Owners’ invoice: i) Mr Finlinson was confident that BP were not liable for any transatlantic overage freight, and believed that BP would not pay any demand for overage freight. He dismissed from his mind (unreasonably) any possibility that those responsible in BP for making payments to the Owners would not interpret the charterparty as he did, or that they might authorise payment if the Owners made (what he would consider) unwarranted demands for freight ii) Ms Myers did not realise or suspect that there was or might be a discrepancy between the Owners’ invoice which she passed for payment and the terms of the Recap about overage freight (and therefore she had no discussions about this with a “senior”); any concerns that she had about the Recap not providing for the vessel loading at Marmara were resolved (probably following some conversation with Mr Mahon) by the time that she authorised payment but in any case this did not cause her to question whether BP were liable for the overage freight; she authorised the payment because she thought that the invoice was correct, that is to say it reflected the freight that the Owners were entitled to charge under the terms of the Recap; and if she had doubted this or thought that there was room for argument about it, she would not have passed the invoice for payment. iii) Mr Rickwood knew that the Recap said nothing about transatlantic overage freight but it did not occur to him that no transatlantic overage freight was payable or that the invoice was or might be inaccurate in that regard or in any other respect.

After payment of the invoice

[139]BP’s Management Information team checked estimates made by traders of freight charges, and on 4 May 2010 a member of the team left on Mr Rathbone’s desk a copy of the Owners’ invoice, and queried it. Mr Rathbone was understandably unhappy about this, and on 5 May 2010 at 9.38 he sent a Yahoo message to Mr Finlinson that “Got a freight bill in front of me for the “Target”. Sure it’s wrong. They have charged us the full freight off the full volume, 112 kt. This was the one that was basis 80 with free overage on the last 32kt.” Mr Finlinson acknowledged it at 9.41. This exchange was shortly before BP actually paid the invoice. Mr Finlinson asked Mr Savage to speak to Mr Cooper about the invoice.[140]On 5 May 2010 Mr Savage spoke to Mr Cooper in at least three conversations, which Mr Cooper recorded briefly in his notebook. In at least one of them, Mr Savage asked that the Owners accept overage freight at the rate of 50%. Mr Cooper refused to contemplate this, repeating his position that the Owners were entitled to full overage freight. On 6 May 2010 Mr Cooper telephoned Mr Savage and offered, if it would help Mr Finlinson, to telephone Mr Lars Dencker, the Global Head of Chartering at BP Shipping Ltd, and to explain that the rate for transatlantic overage freight had not been negotiable as far as the Owners were concerned and that, while Mr Finlinson had done their best “to push us to accept a lower rate”, the Owners were not prepared to agree to this. Mr Cooper believed that he made this offer because Mr Savage had told him that Mr Finlinson could lose his job if the Owners made no concession: on 5 May 2010 Mr Finlinson had told Mr Savage that he had been left “in an extremely difficult situation internally” and that he “could be out of a job”. He told Mr Rathbone that he was “having a [night]mare”. (Apparently Mr Cooper’s offer was declined: Mr Cooper did not telephone Mr Dencker.)[141]On 7 May 2010, Mr Finlinson had exchanges with Sovereign about his argument that SAC6 entitled BP to load at Marmara. He discussed it in a telephone conversation at 8.34, and then set it out in an email that he requested be passed to the Owners, which concluded “…Charterers reject Owners claim for freight basis 112,871kt. Under SAC6 freight must be charged against the volume lifted at Odessa against flat rate of Odessa + Marmara … to Offshore Galveston … + Houston”. By this time, therefore, Mr Finlinson had come to appreciate that, if his interpretation of SAC6 was correct and it applied to the diversion to Marmara, BP had been liable for full overage freight on the Odessa overage. Mr Finlinson said in cross-examination that he was “effectively conceding freight from min 80,000 to min 87,000” as “a way of moving on the discussion, to move on the negotiation, to try to reach a conclusion”. He was undoubtedly under pressure internally at BP to resolve the difficulty and was looking to achieve a settlement of the difference, but, if his answer in cross-examination meant that he still thought that BP had not been liable for any overage freight, I do not accept it. He had convinced himself of the SAC6 argument, and he now recognised the inevitable consequence of it.[142]On 7 May 2010 Sovereign invoiced the Owners for commission of $45,628.55, which was calculated on the basis of freight for the full cargo of 112,871.546 mt. Mr Savage explained that this was not because he considered the Owners entitled to the freight that they charged but because Sovereign’s commission was calculated according to what the Owners in fact received. I accept that explanation: this invoice does not indicate what Mr Savage believed had been agreed between BP and the Owners or assist to resolve any other issue between the parties.[143]On 13 May 2010 BP’s in-house lawyer wrote to the Owners asserting the argument based on SAC6 and calling for them to repay the overage freight on the Marmara cargo (some $911,482). Apparently BP did not assert in that communication or at any time before bringing these proceedings that no overage transatlantic freight was payable under the terms of the charterparty. Mr Berry submitted that this supports the Owners’ submission that after the conversations on 16 March 2010 Mr Finlinson was not convinced about his interpretation of the charterparty that BP were not liable for any overage freight. I am not persuaded by that: as I have said, the implications of the SAC6 argument were appreciated only later. Others in BP who examined the dispute after payment had been made might not have been convinced of Mr Finlinson’s interpretation of the Recap provisions about overage freight apart from the SAC6 argument, but that is different (and irrelevant).

The meaning of the original charterparty: overage freight

[144]There are two issues between the parties about the proper construction of the terms of the charterparty: i) Whether (subject to the SAC6 argument) BP were liable for overage freight upon cargo in excess of the minimum quantity of 80,000 mt, and if so at what rate; and ii) Whether BP were entitled to require the vessel to call at Marmara to load cargo, and if so how this affected their liability for overage freight.[145]With regard to overage freight and leaving aside SAC6: i) The Owners contend that upon the proper interpretation of the original terms of the charterparty they are entitled to full transatlantic overage freight on all the cargo carried in excess of the minimum quantity of 80,000 tonnes. ii) BP contend that upon the proper interpretation of the terms they were not liable for any overage freight. iii) During the hearing I suggested a third possibility, that the Owners might be entitled to reasonable overage freight upon all the cargo carried in excess of the minimum quantity. Neither party supported that suggestion, but the Owners submitted that, if that approach were adopted, BP’s claim should be dismissed because a reasonable rate for overage would be full overage freight, or at least that BP had not discharged the burden upon them of proving otherwise and so of proving that they had overpaid the Owners; and that in any case BP are estopped from making a claim on this basis because both parties understood or assumed that the charterparty stipulated a transatlantic overage freight rate (although they had different understanding about what rate was stipulated). Mr Russell submitted that, if I conclude that overage at a reasonable rate was payable and that, in principle, BP are entitled to recover any overpayment, there should be a further hearing to determine what that rate was.[146]The starting point of the Owners’ primary contention is that freight for a transatlantic voyage was to be calculated on a Worldscale rate. The Owners submit that an agreement for freight at Worldscale rates contemplates freight calculated by reference to tonnes of cargo, and that, unless the parties agree otherwise, by reference to the tonnes of cargo actually carried under the charterparty. A stipulation for a minimum cargo does not in itself imply otherwise. The Owners recognise that in the tanker trade parties commonly agree to overage freight at less than the full rate, but they do not always do so. Any such agreement is for a discount below what would otherwise be payable, and in the absence of such agreement charterers are liable for full overage freight. Here there was no agreement: the standard BPVoy 4 form would have provided that “Overage (if any) at 50% of Freight Rate”, but this was displaced by the Euromed overage freight term.[147]BP’s response to this argument is based upon clause 31 of the BPVoy 4 form. Mr Russell submitted that this contemplates that freight might be agreed on one of two main bases: lump sum freight, when, in essence, the charterers will pay an agreed sum regardless of how much cargo is actually carried; and freight based on a rate per tonne, which in practice is usually based on an agreed multiple of the Worldscale rate for the voyage undertaken. In the latter case, clause 31 (unless materially amended) provides that, where the cargo quantity stated in Section C of Part 1 is a minimum quantity and more cargo is in fact carried, there are to be two components to the freight: freight calculated at the agreed rate on the minimum quantity, and overage freight calculated at the rate stated in Section H of Part 1 on cargo in excess of the minimum quantity. The default overage freight rate in the printed form is 50% of the freight rate, unless the parties agree otherwise.[148]In this case, the charterparty terms provided for a minimum quantity. However, as BP submit, the parties agreed that the default overage rate of 50% should not be charged except if the vessel discharged at a port in the European Mediterranean, and they did not agree upon any other rate for overage freight. BP contend that therefore the parties did not reach any agreement about a rate for transatlantic overage freight, and so did not agree that BP should pay the second component of the freight under clause 31 if BP exercised the option for a transatlantic voyage. In other words, there was no relevant “Overage rate stated in Section H of Part 1”, and accordingly no overage freight is payable. On the contrary, as BP interpret the Recap, the parties agreed that the only overage freight that BP should pay was 50% overage freight in the event of discharge in the European Mediterranean; and they were to pay no overage freight unless the Recap so provided and so they were to pay no transatlantic overage freight.[149]Generally where two or more interpretations of a charterparty (or other business contract) are possible, an interpretation that has improbable commercial consequences is avoided. As explained in the judgment of Lord Clarke in Rainy Sky v Kookmin, [2011] UKSC 50, there are two aspects to this enquiry:(i) what meaning would be given to the agreement by businessmen in the ordinary course of their dealings (see para 27 of Lord Clarke’s judgment, where he cited Lord Halsbury’s rule in Glynn v Margetson & Co, [1893] AC 351, 359, and Lord Bingham’s endorsement of it in Homburg Houtimport BV v Agrosin Privaet Ltd, The “Starsin”, [2004] 1 AC 725 para 10); and(ii) which interpretation appears to the court to be the more, rather than the less, commercial construction. The latter is a proper consideration even through neither or none of the rival constructions flouts common sense: see paras 29 and 30 of Lord Clarke’s judgment, where he cited and endorsed the approach of Longmore LJ in Barclays Bank plc v HHY Luxembourg SARL, [2010] EWCA Civ 1248, at paras 25 and 26.[150]In this case, however, it is not to my mind of much help in deciding between the parties’ rival interpretations either to examine what would be expected in ordinary business dealings or which interpretation gives more commercial purpose to the agreement. Neither the Owners’ nor BP’s interpretation flouts common sense in as much as it would be a perfectly workable arrangement for BP to pay either full transatlantic overage freight or no transatlantic overage freight, but, in my judgment, both interpretations produce a result that businessmen would consider unusual and would be commercially surprising. In what might be tacit recognition of this, both Mr Russell and Mr Berry submitted that their clients’ preferred interpretation gives the only possible meaning to the charterparty, and that it is unnecessary and inappropriate to depart from the clear meaning of the language of the charterparty terms in order to find an interpretation that the market would expect or that the court considers more commercially sensible.[151]I should expand upon these points. I reject the suggestion that, if full overage freight were payable, it would make it pointless for the parties to have agreed upon a minimum quantity of cargo. First, the Euromed overage freight term required that the parties specify on what cargo 50% overage freight was to be charged if the vessel discharged in the European Mediterranean. More generally, unless the charterparty provided for lump sum freight for all voyages, a purpose and effect of a minimum cargo provision is to protect owners by committing the charterers to dead freight if they underload.[152]Nor does it assist BP that owners often calculate their earnings on the assumption that only the minimum cargo will be loaded (as indeed did Mr Cooper in his voyage estimates up to and including that made on 11 March 2010). This makes it no more likely that they would not negotiate the best deal that they could, and would be unlikely to carry extra freight without charge. On the other hand, I am not persuaded by the argument that no owner would have agreed to incur costs involved in carrying extra cargo without charging more freight. The vessel could not safely load more than about 87,000 mt at Odessa, and, if she was to carry more than that, the probability was that, as happened, she would earn a higher Worldscale rate through calling at another loading port. Mr Cooper sought to demonstrate that the Owners did not profit from calling at Marmara, but the extra costs involved in carrying extra cargo were too small for this to be a significant consideration in construing the charterparty. Certainly this consideration does not persuade me that, at the time of the fixture, it would have flouted common sense for the parties to have made the agreement for which BP contend.[153]I conclude from the evidence that it would be unusual either for the parties to agree upon full overage freight for a voyage under a charterparty of this kind, or for them to agree that no overage freight should be charged. Mr Savage described overage freight at a rate of 50% as a “custom of the trade”. It is not suggested that there was such a trade custom or usage of any technical legal kind, but I accept his evidence that this is what is most usually agreed in the tanker industry. This was confirmed by the evidence of Mr Rathbone, who thought that 50% overage freight was “an industry standard”. According to Mr Cooper, in his 27 years in the shipping industry he had seen charters in which it was provided that there should be no overage freight only “occasionally”, and in these cases it had always been explicitly stated. I accept that evidence, which was not challenged. It was corroborated by Mr Savage, who said that “an owner would not normally expect to do 0% overage without it being explicitly agreed”. It would, as I conclude, have been very unusual for the parties, if they intended that no overage freight should be payable, to have provided for this in the Recap as obliquely as, on BP’s interpretation, they did. Of course, as BP observe, no overage freight would have been paid had the Target been ordered to the Far East, but BP would then have paid a high lump sum. On the other hand, Mr Cooper also accepted in cross-examination that it would “certainly not [be] common occurrence” for charterers to pay full overage freight on as much as 32,000mt; Mr Rickwood, who had worked at BP for some 20 years, told Mr Finlinson on 6 May 2010 that he had “never seen 100% overage on any fixture”; and Mr Finlinson said that full overage freight would have “stood out dramatically”.[154]It is convenient next to say something about the background (or factual matrix) upon which the Owners rely. First, they had, they submit, a strong hand in negotiating the fixture and therefore it is the less likely that they would have foregone overage freight altogether and the more likely that BP would have agreed to full overage freight. I am not persuaded by that argument: as I have said, I accept that BP needed the fixture to avoid having to use handysize vessels to lift oil from Odessa, but there is no evidence that in February 2010 they particularly needed the transatlantic discharge options.[155]Secondly, Mr Berry observed that the bills of lading issued at Odessa by the Master, which were drawn “to order” of either BP or ING bank, all stated “freight payable as per charterparty”. They recorded that some 86,841mt had been loaded, and it would have been impossible to distinguish which bills recorded that part of the minimum cargo was loaded (so as to attract freight at the agreed Worldscale rate for that cargo) and which recorded that overage cargo had been loaded (so as to attract overage freight, if any). This, he submitted, suggests that the parties considered that it made no difference as far as freight was concerned whether a bill referred to part of the minimum cargo or to overage cargo, that is to say that all cargo incurred freight at the same Worldscale rate (unless the charterer was paying a lump sum freight). However, the bills were dated between 7 and 11 March 2010 (inclusive): they were issued after the charterparty was agreed and are not a legitimate tool for interpreting it.[156]Against this background, I turn to interpreting the wording of the charterparty. The first question, as it seems to me, is about the interpretation of the Euromed overage freight term, “Overage: Overage 50 pct applicable for Euromed discharge only”. Does the word “only” qualify simply “overage” or does it qualify “overage 50 pct”? In other words, does “only” mean that the only overage freight payable under the charterparty is freight at 50% rate of the applicable Worldscale rate in the event of discharge in the European Mediterranean, or that overage of 50% is to be paid only in these circumstances? Either interpretation, of course, means that the “fall-back” provision in the standard BPVoy 4 form is limited in its application to when the cargo is discharged in the European Mediterranean. (To my mind, the word “applicable” in the Euromed overage freight term puts this beyond doubt.) But BP had two main arguments that the Euromed overage freight term means more that this, and its effect is that no overage freight at all is payable except in the event of European Mediterranean discharge.[157]First, there is no other default provision in the standard form or in the Recap. Mr Russell argued that the parties are not to be taken to have left a lacuna in their agreement, and the Euromed overage freight term is to be given a meaning that avoids this consequence. Against this, Mr Berry submitted that no lacuna would result if the Euromed overage freight term applies only when cargo was discharged in the European Mediterranean because, he argued, the effect of the first sentence of clause 31 is that the freight rate specified in the Recap applies to all cargo unless an overage freight rate is specified so as to “trigger” the application of the second sentence. I reject that argument. The natural meaning of clause 31, in my judgment, is that the second sentence applies whenever the cargo quantity stated in section C is a minimum quantity, and not only if an overage freight rate for overage cargo is specified.[158]Secondly, as it seems to me, BP can rely on the heading to section (H) of the Recap and its structure. The heading, “Freight rate/overage/commission”, was not reproduced from the standard BPVoy 4 form, but was bespoke for this fixture: indeed, in the BPVoy 4 standard form, it is not contemplated that section H will deal with commission. The provisions under this heading in the Recap mostly deal with freight rate, overage freight and commission in that same order, although this observation must be qualified: they state that there is no overage freight in the event of discharge east of Singapore in the provision dealing with freight rate; and they include wording about Suez Canal transit costs, which are not reflected in the heading (and not contemplated by the standard BPVoy 4 form). Within this structure the only provision providing for the payment of overage freight is that dealing with discharge in the European Mediterranean. The inference is, BP argue, that the provisions were designed to provide a complete code for overage freight under the charterparty, and the word “only” is used to make this clear.[159]Both BP’s arguments are undeniably logical, but in the end, to my mind, they place a weight upon the precise and literal words of section (H) generally and the Euromed overage freight term in particular that they simply will not bear in a document of this kind. The question is whether the Euromed overage freight term in the context of section (H) of the Recap more naturally bears one or other of the possible meanings to which I have referred. I do not think that it does more naturally mean that BP are liable for no overage freight except in the event that cargo is discharged in the European Mediterranean: as I read it, it naturally means that the parties have agreed upon overage freight at the rate of 50% in that event and that the agreement for a 50% rate does not apply in other circumstances. It follows that the literal wording of this term does not support either BP’s contention or the Owners’ contention as to what, if any, transatlantic overage freight was payable.[160]BP’s interpretation rests four-square, therefore, upon the meaning of clause 31 and its effect when the parties have not made an agreement about overage freight applicable in the relevant circumstances. I cannot accept that the parties are to be taken to have agreed that no overage freight should be payable in circumstances where they have not agreed upon an applicable rate for it. As Mr Berry put it in his final submissions, that “confuses the absence of specification with the specification of zero”. (Mr Berry does not need to rely upon his observation that clause 31 includes the words, “unless a lump sum freight has been agreed in which case no Overage shall be payable”; but they are consistent with the submission that the parties apparently did not contemplate that in other circumstances no overage freight would be paid.)[161]I am driven to conclude, both by examination of the wording of the relevant contractual provisions and upon consideration of the natural commercial expectations of the parties, that they are not to be taken to have agreed either that BP should be liable for full transatlantic overage freight or that they should not be liable for any transatlantic overage freight. They did not evince either intention in the Recap. The structure of their contract called for agreement about this, and the parties did not make any relevant agreement.[162]I consider that in these circumstances the Owners are entitled to reasonable overage freight. The general rule is that, “Where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge”, and “What is a reasonable charge is a question of fact”: see section 15 of the Supply of Goods and Services Act, 1982, codifying the common law. This rule applies to charterparties: see Scrutton on Charterparties (21st Ed., 2008, art 169 p.301, “If no rate of freight is expressly agreed, the shipowner will be entitled to a reasonable sum.”) and Voyage Charters (3rd Ed, 2007) para 13.17. The principle applies not only when the contract makes no provision about any part of the price, but also when one party does extra work under a contract for which no price has been agreed (such as extra work under a building contract) or when one element of consideration contemplated by the parties has been agreed but another has not (such as when an employer and an employee have agreed upon the amount of a basic wage but not of a bonus that the employee was to receive): see Chitty on Contracts (30th Ed, 2008) Vol 1 at para 29-072. In Tropwood AG of Zug v Jade Enterprises Ltd, (The Tropwind”) (No 2), [1981] 1 Lloyd’s Rep 45, 57 Robert Goff J enunciated the general principle that, when services are rendered at the express or implied request of the charterers, they will ordinarily be liable to pay a reasonable remuneration for the services rendered by way of a contractual liability. Although in the Court of Appeal [1982] 1 Lloyd’s Rep 232, 237 Lord Denning MR said that it does not apply after owners have withdrawn the vessel from service (a view with which Dunn LJ and Fox LJ did not associate themselves), I do not understand that he disagreed with Robert Goff J’s statement of principle.[163]I therefore conclude, subject to BP’s argument based on SAC6, which I next consider, that this principle applies to the transatlantic overage freight in this case. The parties’ agreement, objectively construed, contemplated in clause 31 that they should state in section H a transatlantic overage freight rate, but they did not do so. The implication is that BP were liable for overage freight in a reasonable sum.

The meaning of the original charterparty: SAC6

[164]The second issue about the interpretation of the charterparty concerns SAC6. BP contend that they were entitled under SAC6 to require the “Target” to call and load cargo at Marmara, that they exercised that right when they gave orders to the vessel at 18.13 on 12 March 2010 and that the Owners were obliged to accept and comply with those orders. They say that therefore freight should have been calculated (under the provisions of SAC6) on the basis of the freight originally loaded, that is to say on the basis of the Odessa cargo, although at the Worldscale rate applicable for a voyage via Marmara.[165]The Owners submit: i) That BP were not entitled under SAC 6 to require the vessel to load at Marmara. ii) That, even if they were, BP only exercised the right if they purported to do so, if not expressly at least by necessary implication; and BP did not purport to exercise rights under SAC6 when they gave orders on 12 March 2010, and cannot now invoke it. iii) That, even if BP were entitled under SAC6 to order the “Target” to load at Marmara and have effectively exercised their right to do so, freight was not to be calculated as BP contend.[166]I shall consider these issues in turn. Here both parties accept, indeed contend, that, if SAC6 is uncertain or ambiguous, it should be given the interpretation which produces the more businesslike or commercially probable result.

Were BP entitled under SAC6 to order the “Target” to Marmara to load?

[167]SAC6 reads as follows:
“(a) Charterers shall have the option of instructing Owners to:- (i) divert the vessel to any port(s)/place(s) en route, even where such port(s)/place(s) is/are not within the Ranges stated in Section E or F of PART 1, but provided that such port/place is within the rotation of discharge port(s)/place(s) previously nominated, and there load additional cargo or discharge cargo carried under this Charter, or any part thereof, and backload a cargo, as described in the Charter Party, or as otherwise agreed, for final discharge at a port(s)/place(s) within the Ranges stated in Section F of PART 1; or (ii) backload a cargo as described in the Charter Party, or as otherwise agreed, after the vessel has discharged the cargo described in Section C and D of PART 1, or any part thereof, at a port(s)/place(s) within the Ranges stated in Section F of PART 1, for final discharge at a port(s)/place(s) within the Ranges stated in Section F of PART 1. (b) If Charterers exercise either option under paragraph (a) above, the port(s)/place(s) at which the Vessel calls for backloading a cargo shall constitute either an additional loadport (under (a)(i) above) or an additional discharge port (under (a)(ii) above) and any additional time used in loading or discharging a backload cargo, including without limitation, time used performing any shifting or tank cleaning required, shall count as laytime or, if the Vessel is on demurrage, as demurrage. (c) If freight in respect of the voyage is:- (i) on a Worldscale basis, freight shall be calculated on the cargo quantity originally loaded but in respect of the voyage ultimately performed; (ii) on a lump sum basis the call at the additional port shall be compensated in accordance with Clause 31.3 of this Charter, together with any port costs incurred at the additional port.”
[168]It is common ground that Marmara was not in the loading range stipulated in the charterparty: it is on the Sea of Marmara, and so it is not in the “Black Sea” loading range. It is also common ground that Marmara is a port that was en route for all possible destinations for the “Target” after she had sailed from Odessa. It is not, however, between any discharge ports that BP could have nominated: the Sea of Marmara is not part of the Mediterranean sea but a separate sea, and in any case it is not in the “Euromed” discharge range, which is limited to “NEOBIG” ports (ports that are “not east of but including Greece”).[169]BP say that they were entitled to order the vessel to Marmara because, on the proper interpretation of the charterparty, clause SAC6(a)(i) allows the charterers to instruct owners to divert(i) to any port or place provided only that it is “en route”, and(ii) for the purpose of loading additional cargo (as well as for the purpose of a combined discharging and backloading operation). These submissions were said to raise questions about the “geographical scope” and the “operational scope” of SAC6 respectively, and I shall adopt that terminology.[170]The issue about the geographical scope of SAC6 is essentially this: does it, as BP contend, allow charterers to divert a vessel load at any port or place if it is en route to any of the ports or places at which she might, under the terms of the charterparty, be discharged; or does it, as the Owners contend, only allow the charterers to order the vessel to an additional port that is en route between ports or places that they have previously nominated for discharge. The Owners’ interpretation, as I read SAC6, gives an ordinary and natural meaning to the words, “but provided that such port/place is within the rotation of discharge port(s)/place(s) previously nominated” (the “rotation proviso”): it means that charterers are entitled to exercise the right conferred by SAC6 only if they have made nominations for discharge and so gives effect to the words “previously nominated”; and it gives a natural meaning to the word “rotation”.[171]BP, however, advance two main arguments in support of their interpretation. First, they argue that the rotation proviso does not impose an additional restriction upon the charterers’ right under SAC6 where, as here, no discharge port has been nominated when it is exercised. The rotation proviso, it is said, applies only when there has been a nomination of a discharge port or place (or discharge ports or places), and then it bolsters the requirement that the diversion must be “en route”, making it clear that rights under SAC6 may not be used by the charterers to require the vessel to “back-track” or to divert from her route. Accordingly, if a discharge nomination has (or discharge nominations have) been made, the port to which the vessel is diverted under SAC6 must lie on the route dictated by the nominated port(s) or place(s).[172]This interpretation, it is said, gives the clause a businesslike and commercially sensible interpretation because it would be pointless to limit the operation of the clause to circumstances in which the charterers had nominated a discharge port or ports. BP say that this would be particularly anomalous because(i) it would mean that SAC6 has no application if the charterparty itself specifies the discharge port(s) and for this reason no nomination was made or required, and(ii) under clause 22 of Part 2 charterers’ orders can be revised, and so no nomination irrevocably determines where the vessel will discharge. On the other hand, there would no commercial purpose in confining the application of SAC6 to diversions between discharge ports, not least because this would mean that the clause has no application if a single discharge port or place is nominated. Further, BP say that their interpretation would mean that SAC6 works consistently with the interim ports clause, which applies where a lump sum freight is payable: charterers can invoke the interim ports clause without having nominated where the vessel is to discharge.[173]I am unable to accept this interpretation. It is inconsistent with the language of the rotation proviso, and nothing in the wording of SAC6 justifies disregarding the rotation proviso where discharge ports have not been nominated: it gives SAC6 a wide application that I cannot accept was intended by the parties. It would, as Mr Berry submitted, allow charterers to evade the charterparty loading range and (if BP’s contentions on other points were accepted) allow them to carry large quantities of extra cargo without paying extra freight.[174]I add that Mr Russell also advanced an ingenious argument that the wording of SAC6 is inconsistent with the Owners’ interpretation allowing diversion only to ports between nominated discharge ports or places. He pointed out that the wording at the end of sub-clause (a)(i) refers to discharge at a single port or place (as well as ports and places), and submitted that, since it is contemplated the final discharge might be at one port or place, SAC6 cannot be intended to apply only where the vessel is to travel between discharge ports or places. I accept Mr Berry’s response that this places excessive weight upon the literal wording of the clause, “a port(s)/place(s)” being standard terminology of no particular significance. Further, even within the limits of a linguistic exercise Mr Russell’s submission is not convincing: the phraseology would accommodate the case where the vessel went between a discharge port and a discharge place.[175]BP’s alternative argument is that, if, as a matter of construction, the charterers are entitled to invoke SAC6 only where they have made a discharge nomination, then this requirement was met by the time that they directed the “Target” to Marmara because there was a sufficient nomination when the charterparty was concluded. Their argument is that, in order to give sensible effect to SAC6, it must be supposed that charterers can invoke it when the charterparty itself nominates a specific discharge port (or specific discharge ports). If this is so, as BP submitted, there is also a nomination for the purposes of SAC6 where, as here, the charterparty provides for an option of different discharge ranges and the vessel would be en route to any of them that is still available having regard to any directions that the charterers have given.[176]BP submit that this not only gives SAC6 a businesslike meaning but is supported by the language of the clause. It allows to charterers to instruct the vessel to a “port” or a “place”, and the term “port” is given a wide meaning in clause 3.1 of the BPVoy 4 form: see para 17 above. BP argued in view of this that it would be surplusage in SAC6 to refer to “place(s)” unless it covers discharge ranges that are specified before the nomination of a particular port within a range; and therefore the charterparty itself sufficiently nominated “places” for the purposes of SAC6.[177]I do not find this argument persuasive. To my mind it would mean that the language in clause SAC6 is unnatural in two respects: it seems to me that the word “nominated” contemplates, in the context of a charterparty specifying various discharge ranges, an act (or acts) of nomination separate from the charterparty itself (even though because of clause 22 any nomination(s) would be revocable); and I consider it strained to describe a range as a place. BP’s contention depends upon an argument of surplusage, and such arguments are often little help in construing charterparties, whose draftsmen tend to use “linguistic overkill” (no less than the draftsmen of leases about whom Hoffmann J coined the expression in Tea Trade Properties Ltd v CIN Properties Ltd, [1990] 1 EGLR 155).[178]BP have another argument. They submit that, even if the specification of discharge ranges in the charterparty does not amount to previous nomination, by 12 March 2010 discharge ports or places had been nominated because on 2 March 2010 BP directed the “Target” to Singapore “for orders”, and on 12 March 2010 they directed her to the USA “for orders”. I reject this argument: a specification to proceed for orders is not a discharge nomination, and in any case the direction to the USA was not, in my judgment, a direction to a “place” within the meaning of SAC6.[179]In any case both these arguments of BP would only answer the objection to their interpretation that the rotation proviso requires previous nomination. They do not engage with the difficulty that the word “rotation” presents.[180]I come to SAC6’s operational scope. The question here is whether, as BP submit, it permits charterers to load additional cargo where none has been discharged, or whether, as the Owners submit, it permits loading only where cargo has been discharged.[181]SAC6 is headed “BP Backload Cargoes Clause”, and nothing in the charterparty precludes reference to headings to assist interpretation. It is common ground that in this context “backloading” does not refer to loading cargo for a return voyage, but to loading after cargo has been discharged. I do not need here to consider whether the expression covers only loading replacement cargo or whether it also covers loading cargo in excess of what has been discharged. On any view BP’s interpretation would mean that, despite the heading, SAC6 permits operations other than backloading. Moreover, BP’s interpretation strains the language of sub-clause (b), which refers to the vessel calling at a port or place (or ports or places) “for backloading” when the charterer exercises an option under the clause.[182]However, BP submit that their interpretation is justified by sub-clause (a) because it confers two options:(i) to “load additional cargo”, and(ii) “to discharge cargo … or any part thereof, and backload a cargo ...”. Thus, BP argue, the clause states that charterers may simply load additional cargo. This argument, in my judgment, loses its force once the geographical scope of SAC6 is recognised, and indeed it corroborates the Owners’ interpretation of its geographical scope. SAC6 has application only once the vessel has been to a discharge port or place and discharged some of her cargo. Then charterers may divert her to backload, either by way simply of loading cargo (“additional cargo”) at the port to which she has been diverted or by way of discharging more cargo there before backloading. In either case, the operation is by way of backloading.[183]I conclude that BP’s direction that the vessel proceed to Marmara was not within the geographical scope of SAC6, and the loading there, without discharging any of the Odessa cargo, was not within its operational scope.[184]SAC6, both in form and in substance, confers an option (or options) upon charterers. BP do not contend that they expressly invoked clause SAC6 or communicated to the Owners an intention to rely on the clause when they gave orders on 12 March or at any time during the voyage or before 5 May 2010 when the Owners’ invoice was paid. The Owners submit that they cannot retrospectively invoke the clause. BP dispute this.[185]Generally where a contract includes an option of this kind, what Lord Devlin called a “business option” in Reardon Smith Line Ltd v Ministry of Agriculture Fisheries and Food, [1963] AC 691,731, it is subject to some provision, implied if not express, that the option holder is to communicate to the other party that he is electing to use it. Lord Devlin said this:
“The essence of what I have called a business option is that the character of the obligation is altered to suit the option holder. There must, therefore, be some provision, express or implied, for its exercise within a reasonable time and for the communication of the election to the other party. It would be wholly unreasonable for the principal obligation in a contract to be altered without the other party being informed.”
[186]I consider that this general principle applies here: there is every reason that it should do so, and this case illustrates in at least two ways the commercial inconvenience that would result if the charterers did not have to communicate an election to exercise an option under SAC6. They confirm, I think, that it is to be inferred that the parties intended that BP should have to communicate it to the Owners if they exercised an option under SAC6.[187]First, when BP directed the vessel to Marmara, they had not made a nomination for discharge. They could still have given orders for the vessel to discharge in the Far East, and in those circumstances the freight would have been by way of a lump sum. It is BP’s case (although disputed by the Owners) that, when they directed vessel to Marmara, they were entitled to give those directions either under the interim ports clause or by invoking SAC6. The implication of BP’s submission is that they could have relied on SAC6 without communicating an election to do so, and leave the Owners uncertain whether the operation had the financial consequences stated in the interim ports clause or those of the SAC6 regime. This strikes me as commercially improbable.[188]Secondly, the Owners are entitled to freight immediately upon discharge. They needed to know by then (at the latest) whether BP had elected to divert the vessel under SAC6 if they were to invoice the charterers for the freight properly due. Indeed, BP’s argument would, I think, have this curious consequence. They do not claim to have elected to exercise the option when the Owners invoiced them and payment was made on 5 May 2010. Unless and until it was exercised, SAC6 did not affect the proper calculation of the freight. When BP paid freight which was calculated without regard to SAC6 and without taking account of the possibility that BP might later invoke SAC6, they cannot, as I see it, be said to be paying because of any mistake. But since this last point was not argued before me, I say no more about it.[189]I conclude that, since BP did not communicate an election to invoke SAC6 when they directed the vessel to load at Marmara, they could not now rely upon it.[190]If I am right in these conclusions, the question how a valid election under SAC6 would affect the calculation of freight does not arise, but I shall briefly state my conclusions about it. If charterers exercise an option under SAC6 and freight is on a Worldscale basis, SAC6(c)(i) provides that it is to be calculated on the basis of the “cargo quantity originally loaded”. The issue between the parties is whether, as BP submit, this refers to the quantity of cargo loaded before the charterers elected to have the vessel divert or, as the Owners submit, the quantity of cargo that had been loaded before any was discharged. Accordingly, BP argue that, if they validly diverted the “Target” to load at Marmara under SAC6, the freight is to be calculated on the basis of the cargo quantity of 86,812 mt loaded at Odessa. The Owners argue that in any event it is to be calculated on the basis of the total cargo loaded at both Odessa and Marmara.[191]BP submit that only their interpretation gives effect to the word “originally”. Although I am inclined to agree that, in isolation, the word would most naturally refer to the Odessa cargo only, it is not unambiguous, and BP’s interpretation would bring such commercially improbable consequences that I would reject it, at least if BP’s interpretation of either the geographical scope or the operational scope of SAC6 were correct. In many cases it would allow charterers to avoid freight charges by loading much of the cargo at a port to which they had diverted the vessel under SAC6. I therefore reject BP’s interpretation of SAC6(c)(i), and prefer the Owners’. (I recognise that if, following discharge of some cargo, the charterers loaded replacement cargo and some further additional cargo, there might be scope for debate whether freight would be payable on the excess, but I need not determine that.)

The legal significance of the exchanges in connection with the vessel going to Marmara

[192]I come to the Owners’ arguments that, because of their exchanges with BP and BP’s conduct before payment of the freight on 5 May 2010, BP cannot dispute their liability for full transatlantic overage freight. The Owners rely upon: i) Their exchanges and BP’s conduct around 12 to 14 March 2010 in connection with the “Target” going to Marmara. ii) Their exchanges and BP’s conduct on 16 March 2010 when the vessel was at Marmara; iii) Their exchanges and BP’s conduct after the vessel left Marmara and before discharge at Houston; and iv) Their exchanges and BP’s conduct around 27 April 2010.[193]The Owners submit that the context of the exchanges between 12 and 14 March 2010 was this. Since SAC6 did not cover the vessel diverting to Marmara to load, BP were not entitled to order the vessel there. As a matter of legal analysis, therefore, their direction that the vessel go to Marmara to load was an offer to the Owners that Marmara should be treated as a loadport under the charterparty. The Owners accepted that offer when on 14 March 2010 they gave notice of readiness that the vessel was ready to load in according with the charterparty. Accordingly, as the Owners contend, the parties agreed that the “Target” should go to Marmara and load there on the terms of the charterparty as to freight (and other matters).[194]Assuming that BP were not entitled under SAC6 to order the vessel to load at Marmara, this analysis is essentially uncontroversial and I accept it. There is room for debate about some inconsequential details: for example, the notice of readiness expressly referred to the terms of the charterparty and it might therefore be regarded as a counter-offer rather than an acceptance of BP’s offer, but in my judgment BP’s offer was always implicitly on the basis the charterparty terms should apply to the diversion to Marmara and therefore I prefer the Owners’ analysis on this point. (“… if the new term merely makes express what would otherwise be implied, it does not destroy the effectiveness of the acceptance”: Lark v Outhwaite, [1991] 2 Lloyd’s Rep. 132, 139 and Chitty on Contracts (30th Ed, 2008) Vol 1 para 2-032.) BP’s primary contention is that the agreement that the vessel should go to Marmara was concluded at the latest on 13 March 2010 when in his email at 18.52 Mr Cooper clearly conveyed that the Owners would proceed to Marmara. On that detail I prefer BP’s analysis to the Owners’: I do not think that after Mr Cooper’s email the Owners could have refused to go to Marmara without being in breach of contract. But nothing turns upon that, nor upon BP’s further argument that the variation was agreed even earlier when on 12 March 2010 the Owners received without demur and apparently passed on to the vessel BP’s directions to load at Marmara. Further, at the relevant time BP were still entitled to order the vessel to Marmara under the interim ports clause, BP not having made a nomination for discharge, and therefore the agreed variation was not, I think, that the vessel should go to Marmara, but that, notwithstanding the Owners accepted directions to Marmara, BP preserved their right to order American, Caribbean or Euromed discharge. But again this difference of analysis does not matter.[195]This being so, it is common ground that the effect of the parties’ agreement that the Target should load at Marmara (or should do so without BP foregoing their right to make a discharge nomination – or nominations - that would attract freight on a Worldscale basis) was that, if the terms of the charterparty on their true construction meant that full transatlantic overage freight was payable on cargo carried from Odessa, it was also payable on the Marmara cargo. I have however rejected the Owners’ argument that the charterparty is so to be construed. The Owners pursue two further arguments that nevertheless because of the exchanges about the vessel going to Marmara they are entitled to full transatlantic overage freight. (They advanced them to meet BP’s argument that as a matter of interpretation of the charterparty the Owners were not entitled to any transatlantic overage freight, but I must also consider them in relation to my conclusion that under it the Owners were entitled to a reasonable sum by way of overage freight.) They are that the agreement made in relation to the vessel going to Marmara should be rectified and that BP are precluded by an estoppel by silence or acquiescence from disputing their entitlement to full transatlantic overage freight. (At the start of the trial the Owners also submitted that the parties’ exchanges gave rise to an agreement that BP should pay full transatlantic overage freight on any cargo loaded at Marmara. The argument was that, when the parties agreed that the vessel should load at Marmara, BP knew that the Owners were so agreeing on the basis that full transatlantic overage freight would be payable if the vessel discharged in America, and in these circumstances the parties’ intentions are not to be ascertained by an objective interpretation of their exchanges. This argument was, in my view rightly, abandoned in the Owners’ closing submissions.)

Rectification

[196]The Owners contend that a contract will be rectified for unilateral mistake where one party knows that the other is acting under a mistake and it would in the circumstances be unconscionable for the party who is not mistaken to insist on the written words of the contract. In support of this general submission they cite the judgments of Buckley LJ in Thomas Bates v Wyndhams, [1981] 1 WLR 505, 516A-B and Jacobs LJ (with whom May LJ expressed cautious agreement) in Littman v Aspen Oil (Broking) Ltd, [2005] EWCA Civ 1579 at para 24 (although both Buckley LJ and Jacobs LJ expressed themselves in terms of whether it would be inequitable to rely upon the mistake, rather than whether it would be unconscionable).[197]The issue about rectification is unusual in this case in four respects: first, there is not really a claim for rectification. The issue arises because the Owners say that, had BP not paid the invoiced overage freight, they could have brought a claim for rectification in order to support a claim for payment of the freight.[198]Secondly, rectification is about correcting documents to record what was or is taken to have been the parties’ contractual intention. It is not, I think, easy to identify what document is, on the Owners’ case, to be corrected: that is to say, to identify a document that the Owners believed expressed their bargain but did so inaccurately. This is because the Owners’ complaint does not really arise because of what was said (or not said) in the exchanges around the time that they agreed that the “Target” should go to Marmara. The effect of those exchanges was that any cargo loaded at Marmara should be carried on the terms of the charterparty with regard to freight. The Owners’ mistake was about what those terms meant or how they applied to the Marmara cargo.[199]Thirdly, there is no evidence that either Mr Finlinson or Mr Savage thought that Mr Cooper or the Owners believed that they would be entitled to full transatlantic overage freight. At its highest, the Owners’ case, I think, must be that Mr Finlinson or Mr Savage or both knew (or suspected) that the Owners thought that BP would be liable for some overage freight and that the Owners would be displeased (or furious) when they learned that (as at least Mr Finlinson thought) BP were liable for none at all. The general rule is that rectification is available in cases of unilateral mistake only if A was mistaken and B knew what his mistake was; and it is generally not enough if B knew that A was mistaken but not what the mistake was: Chitty on Contracts (30th Ed, 2008) Vol 1 para 5-121. (See too Chitty on Contracts at para 5-086 who suggest that in these circumstances where a contract is “formed simply by an exchange of correspondence, it is void”. Neither party so argued in this case, but this discussion in Chitty underlines the difficulties facing the Owners on the rectification issue.) The Owners seek nevertheless to show that they were entitled to have the agreement rectified so as to provide for full transatlantic overage freight. This would introduce more favourable terms than on any view BP knew or thought or suspected the Owners intended should apply to the Marmara cargo. I know of no precedent for rectifying a contract on the grounds of unilateral mistake so as to make for more favourable provision for the mistaken party than the other party realised he had in mind, and I should be reluctant so to expand the remedy. As Blackburne J observed in George Wimpey UK Ltd v V.I. Construction Ltd, [2005] EWCA Civ 77 at para 75, in these circumstances rectification is a drastic remedy because it imposes on one party a contract that he did not and did not intend to make, and relieves the other of a contract that he made, albeit without intending to do so.[200]Fourthly, in order to meet this difficulty, Mr Berry submitted that both Mr Finlinson and Mr Savage knew that the Owners were mistaken in that they did not realising that (on BP’s case) the charterparty provided for no transatlantic overage freight and sought to profit from that mistake, and therefore BP are precluded from arguing that no freight is payable on the Marmara cargo. That argument does not assist the Owners if I am correct that under the charterparty the Owners are entitled to reasonable freight.[201]Leaving these points aside, however, I am in any event not persuaded that rectification would have been justified. The essential features of the case are these: i) On around 11 March 2010, and until 16 March 2010, while Mr Cooper’s impression was that the Owners would earn under the charterparty full transatlantic overage freight, BP and Sovereign had not caused or encouraged this belief on Mr Cooper’s part. ii) Neither Mr Finlinson nor Mr Savage thought that Mr Cooper expected that the Owners would be entitled to full transatlantic overage freight. They recognised that he would be unhappy and disappointed and cross if BP ordered the vessel to America or the Caribbean and the Owners earned no overage freight, but that was not in the forefront of their minds. iii) It did not occur to either Mr Finlinson or Mr Savage that the Owners might refuse directions from BP to go to Marmara and load more cargo there. Mr Finlinson’s impression was that BP were entitled to give such orders and Mr Savage shared this view at least on 11 March 2010, but neither really considered the legal position because they expected that the Owners would agree to the diversion in any event. iv) There is no evidence that I accept that, had the Owners known that they would not be entitled to full transatlantic overage freight, they would have refused to load at Marmara or would have refused to do so unless BP abandoned their option to discharge in America and the Caribbean.[202]In order for the Owners to succeed on the rectification issue, they would have to show that BP (or possibly Sovereign) knew their mistake, or at least that they wilfully and recklessly shut their eyes to it, or intended the Owners to labour under a mistake and suspected that they were mistaken, so that, if BP were not guilty of sharp practice, it would affect their (corporate) conscience to take advantage of the mistake: Snell’s Equity (32nd Ed., 2010) p.461. I do not consider that BP (or Sovereign) were guilty of sharp practice, or acted unconscionably or inequitably in connection with the “Target” diverting to Marmara or the exchanges with the Owners about the diversion. Nor do I think that it was unconscionable (or inequitable) for them to dispute the Owners’ claim for full transatlantic overage freight. In my judgment neither Mr Finlinson nor Mr Savage (or more generally neither BP nor Sovereign) acted dishonourably or improperly or unconscionably in giving instructions for the diversion to Marmara to load without first advising Mr Cooper of Mr Finlinson’s interpretation of the charterparty. They were not seeking to “trick” Mr Cooper or the Owners into a course of conduct to which they would not otherwise have agreed, and they did not do so. The Owners accepted orders for the diversion and they expected to be paid freight in accordance with the charterparty terms. They would not have expected BP when giving instructions for the diversion to explain to them how they interpreted the charterparty terms any more that it would have occurred to them to explain their interpretation when they accepted the orders.[203]The law recognises that in arms’ length negotiations a party is generally entitled to achieve the best deal that he can. As Sedley LJ observed in the George Wimpey case (loc cit at para 60) “honesty alone is too pure a standard for business dealings because it omits legitimate self-interest”. This is why I reject Mr Berry’s submission that Mr Finlinson had “no real answer to the criticism that his conduct was unethical” because, when it was suggested to him as a closing question in his cross-examination that it had been, he replied that it was “a difficult one to answer” but that he would not say that it was unethical. Not only did Mr Berry omit any mention of the second part of Mr Finlinson’s answer, but Mr Finlinson was quite right to recognise the difficulties inherent in the question and I consider it to his credit that he did so. The law does not consider that it is necessarily unconscionable or otherwise improper for one commercial party to benefit from another commercial party’s misunderstanding of the meaning or implications of a contract, and he is under no general duty to draw attention to mistakes or misunderstandings that he knows or suspect that the other has or might have made. Mr Russell illustrated this by decisions at first instance: in Oceanic Village v Shirayama Shokusan, [1999] EGCS 83, Neuberger J refused rectification to a “foreigner without the benefit of independent advice”, commenting that rectification is not available because a party “has missed a point or has failed to appreciate the possible or likely effect of a particular provision”; and in The “Ypatia Halcoussi”, [1985] 2 Lloyd’s Rep 364 Bingham J refused rectification of a settlement agreement although one party made a mistake in calculations about the claim and the other might have been “amazed at his own good fortune” and thought that the other party had overlooked a claim, without actually knowing it.[204]The court will seldom, if ever, order rectification on the basis of a unilateral mistake in a case such as this, where two substantial parties, both experienced in the trade and in negotiations of the kind in question, make a commercial agreement, unless the mistake has influenced the party seeking rectification to enter into an agreement. And the court will seldom, if ever, order rectification for unilateral mistake unless the other party is responsible for the mistake: see, for example, the George Wimpey case (loc cit) at para 70 per Blackburne J. Neither BP nor Sovereign were responsible for Mr Cooper’s mistaken belief that BP would be liable for full transatlantic overage freight; and the Owners did not agree to divert to Marmara because of his mistake.

Estoppel arising from the exchanges before the vessel arrived at Marmara

[205]I therefore reject the rectification claim and come to the Owners’ argument that because of an estoppel by silence or acquiescence BP are precluded from disputing their liability for the freight that they paid. I can deal with this briefly because I reject it for largely the same reasons as I reject the rectification argument. Indeed, in Chartbrook Ltd v Persimmon Homes Ltd, [2008] EWCA Civ at para 137, Lawrence Collins LJ characterised rectification for unilateral mistake as “a species of equitable estoppel that precludes the party who knows of the other party’s mistake from resisting rectification”.[206]The argument that BP are subject to an estoppel depends upon them showing that BP (or possibly Sovereign) were under a duty to tell the Owners that BP did not accept that they would be liable for full transatlantic overage freight. I do not consider that they were under any such duty. I find it difficult to see how such a duty could arise given that BP and Sovereign did nothing, as I conclude, to induce or encourage any misunderstanding on Mr Cooper’s part: see The “Stolt Loyalty”, [1993] 2 Lloyd’s Rep 281, 291. In any case, Mr Cooper and the Owners did not rely to their detriment upon their misunderstanding: the Owners would in any case have agreed to load at Marmara without requiring BP to abandon the options for transatlantic discharge. I reject this argument of the Owners based on estoppel.[207]The Owners also contend that the exchanges on 16 March 2010 and BP’s response (or failure to respond) to them prevent BP from disputing that they were liable for full transatlantic overage freight on the Marmara cargo. The legal bases for this contention are(i) that the exchanges gave rise to a contract between the parties that such freight should be payable, and(ii) that BP are estopped from disputing their liability because of the exchanges.

Contract resulting from exchanges on 16 March 2010

[208]The Owners’ primary argument that the parties’ exchanges on 16 March 2010 give rise to a contract that BP should be liable for full transatlantic overage freight is this: that the Owners made clear to Mr Savage their interpretation of the charterparty and, as Mr Berry submitted, that BP should not load oil at Marmara unless they accepted the Owners’ interpretation, and thereby offered to load the Marmara cargo on those terms; and that BP accepted that offer by loading the Marmara cargo without dissenting from the Owners’ interpretation. The Owners plead that “the parties thereby agreed to vary the charterparty on 16 March to provide for Marmara … as an additional loadport, and it was an express, alternatively an implied, term of that variation agreement that, in respect of destinations to which Worldscale rates applied, the charterparty provided that full freight would be paid on additional cargo there loaded (apart from Euromed discharge in respect of which 50% overage would apply)…”.[209]It is convenient first to make these observations about how the Owners formulate this argument: i) First, they present their case in conventional terms of a contract formed by offer and acceptance. Although the law does not inflexibly require that the formation of a contract can be so analysed (see The “Zephyr”, [1984] 1 Lloyd’s Rep 58, 72 per Hobhouse J and Trentham v Archital Luxfer, [1993] 1 Lloyd’s Rep 25, 27 per Steyn LJ) and I would not reject the Owners’ argument simply because the contract that they allege could not bear such analysis, in this case the analysis makes clear the difficulties facing the argument. ii) The agreement is pleaded in terms of a variation of the charterparty. It might equally, I think, have been put in terms of a collateral contract. But nothing to my mind turns upon this distinction. iii) The agreement is said to apply only to the Marmara cargo, and not to the overage loaded at Odessa. iv) The Owners, by an amendment of their defence, pleaded a secondary case, that “If … there was no agreement express or implied as to the freight payable for the carriage of cargo from Marmara … and/or the charterparty provision for [Worldscale] 135 does not apply to the carriage of such cargo to the US Gulf, Owners were entitled to a reasonable freight and/or a quantum meruit on the Marmara … cargo, which in the circumstances will be the charterparty freight for carriage to the US Gulf, alternatively a Worldscale freight of at least [Worldscale] 135”. This argument was not pursued at trial and the Owners did not adduce evidence or present argument as to how much reasonable freight would be or what would constitute quantum meruit. (In their reply BP pleaded that it would be nothing.)[210]I do not accept that the parties made any agreement on 16 March 2010 that affects BP’s liability for freight. I reject the argument because(i) the evidence does not support their contention that Mr Cooper made the offer that they assert, and I conclude that he did not do so; and(ii) BP did nothing that would have constituted acceptance of the alleged or any offer about freight.[211]Mr. Cooper did not, as I conclude, offer to allow the vessel to load at Marmara upon the basis that BP would agree to pay for full transatlantic overage freight on the cargo loaded. By 16 March 2010 the Owners and BP had already agreed that the vessel should load at Marmara, and Mr Cooper recognised that. When he and Mr Savage had their conversation in which Mr Savage learned that he had “cottoned on about overage” (as Mr Savage reported to Mr Finlinson), he did not offer terms on which the Owners would carry Marmara cargo, but asserted an interpretation of the charterparty. Nothing justifies the Owners’ contention that he offered to carry the Marmara overage on different terms as to freight from those applicable to the Odessa overage.[212]An offer can, of course, be accepted by conduct but conduct amounts to acceptance of an offer only if it is clear that the offeree did the act of alleged acceptance with the intention (objectively evinced) of accepting it: Chitty on Contracts (30th ed, 2008) Vol 1 para 2-030. I cannot accept that BP evinced such an intention when on 16 March 2010 they proceeded to have the Marmara cargo loaded. I so conclude notwithstanding Mr. Savage told Mr. Cooper (as was the case) that BP were aware of how Mr Cooper interpreted the charterparty with regard to transatlantic overage freight. After all, the vessel had already reached Marmara and weighed anchor by the time that Mr Cooper first spoke to Mr Savage about this. It occurred to nobody that the loading operation should be halted and the “Target” resume her voyage without taking on more cargo if BP disputed Mr Cooper’s interpretation. The loading operation was not an unequivocal act of the sort that would (objectively) indicate an intention to enter into a contract. Nor does the fact that BP did not respond to the information that Mr. Savage passed to them about his conversation with Mr. Cooper unequivocally evince such an intention. In a case like this it would be inconsistent with the principle in Felthouse v Bindley, (1862) CBNS 869 to regard BP’s silence or inactivity as their acceptance of, or agreement to, any contractual arrangement.[213]I therefore conclude that the Owners and BP made no agreement about freight when the vessel was at Marmara. In any case, I do not accept that in their conversations on 16 March 2010 Mr. Savage and Mr. Cooper spoke with the intention of varying the contractual relationship between the Owners and BP (or, more exactly, that objectively they evinced contractual intent).[214]I add for good measure that in my judgment, even if BP were to be taken to have made a promise or have entered into a commitment, the Owners did not provide BP with consideration for it. On 16 March 2010 the Owners were obliged to load at Marmara if so instructed by BP. They had agreed to do so by 13 March 2010, if not earlier (see para 194 above), and in any case they were so obliged under the interim ports clause unless and until BP exercised a discharge option that attracted Worldscale freight. The circumstances of this case are not such that the Owners provided consideration for any undertaking on the part of BP by performing an existing contractual commitment: see Chitty on Contracts (30th Ed), 2008 at para 3-068. This was not a case like Williams v Roffey Bros and Nicholls (Contractors) Ltd, [1991] 1 QB 1: BP did nothing to initiate any collateral agreement or variation, and I have rejected any suggestion that the Owners provided a “factual benefit” as consideration: sc. that they fulfilled their obligation to allow the loading operation in consideration of a commitment or undertaking given by BP. In any case, whether or not the Owners were contractually obliged to load at Marmara, I do not accept that they did so or cooperated in loading the vessel in exchange for or in consideration of any undertaking or commitment on the part of BP about overage freight.

Estoppel arising from the exchanges while the vessel was at Marmara

[215]The Owners’ alternative contention is that BP are not entitled to dispute that full freight is payable on the Marmara cargo because their exchanges with Sovereign give rise to an estoppel by representation or an estoppel by convention or both. I can deal with this contention shortly. Even on Mr. Cooper’s account about what he and Mr. Savage said on 16 March 2010, BP did not, through Mr. Savage or otherwise, represent unequivocally that they would pay full transatlantic overage freight on the Marmara cargo. What he said was met, if not with silence, with the response that “BP is aware”, which cannot on any view be described as an unequivocal statement that supports the Owners’ contention. It would not have been such a statement even if Mr. Cooper had not been told (as he accepted that he might have been and I conclude that he was) that BP did not accept his interpretation of the charter party and considered that they were not liable for transatlantic overage freight. Nor can I accept that BP made an unequivocal representation of any relevant kind by going ahead with the loading operations. Similarly the exchanges cannot found an argument that BP and the Owners established a shared interpretation of the charterparty so as to give rise to estoppel by convention.[216]Moreover, for reasons that I have already given, I do not accept that the Owners’ conduct was affected by anything that BP said or did not say or by anything that BP did or did not do. The Owners have not established reliance upon any representation or anything that might make it inequitable for BP to dispute the Owners’ interpretation of the charterparty terms.

Estoppel through events after 16 March 2010

[217]The Owners have further arguments that BP accepted that they should pay full transatlantic overage freight on the Marmara cargo or acquiesced in the Owners’ contention that they should do so or are estopped from denying that they were so liable. These, as pleaded by the Owners, are based upon(i) what Mr Savage is alleged to have said on 17 March 2010 and 13 April 2010, and(ii) the fact that, after receiving the preliminary invoice dated 16 April 2010, BP had the cargo discharged at Houston. Mr Savage, as I have concluded, said nothing to Mr Cooper around 17 March 2010 or 13 April 2010 that might justify these contentions; nor is there any evidence that anything that Mr Savage said (or did not say) at those times influenced the Owners to act to their detriment.[218]Mr Berry did not, I think, pursue any argument based upon the fact that the cargo was discharged at Houston after the preliminary invoice had been submitted. I do not understand this part of the Owners’ pleaded case. At one time it was apparently suggested that the Owners acted to their detriment in reliance on BP’s conduct or representations by “invoicing BP for full freight”. They would have so invoiced BP in any case, and they did not rely upon anything that BP said or did when they so presented their invoice; and the Owners suffered no detriment by presenting the invoice as they did. Nor was there any possibility that the Owners might have prevented discharge at Houston, but for some representation or other conduct on the part of BP or Sovereign.

The authority of Sovereign and Mr Savage

[219]I have thus far considered (and rejected) the Owners’ various arguments based upon the events between 11 March 2010 and the completion of discharge at Houston on the assumption that Mr Savage and Sovereign had all relevant authority to act for BP and that all their knowledge is to be attributed to BP. There was no issue on the pleadings or in the list of issues about this: BP pleaded in relation to the conclusion of the original fixture in February 2010 that Mr Savage had no actual or ostensible authority to agree any term about freight or overage without their specific agreement, but I have not needed to decide issues about how the original fixture was concluded.[220]The factual basis upon which the Owners relied in support of their case that Mr Savage had authority to commit BP to the arrangements and to create the estoppels that they allege is this: i) Mr Savage, as the Owners submitted, was the broker through whom the charterparty and its addenda were concluded, and he was the exclusive broking channel. ii) Mr Cooper understood, reasonably, that messages to and from Mr Savage were, in effect, to and from BP, and Mr Finlinson and Mr Savage indicated nothing otherwise. iii) As Mr Savage acknowledged, he had told Mr Cooper that he would convey to BP what Mr Cooper said, in particular about the interpretation of the charterparty. He never indicated that what he said to Mr Cooper represented his own position, rather than BP’s. I accept all this, except the first proposition is, I think, strictly true of Sovereign rather than Mr Savage. The more difficult question is that what it establishes about Mr Savage’s, or Sovereign’s, authority.[221]There is authority that a shipping broker does not have customary authority to commit his principal to a charterparty: “A broker, even an exclusive broker, is not in the shipping trade regarded as having authority to commit his principal without reference back to them. In other words there is no usual authority vesting in a broker to commit his principals to a contract”: Polish SS Co v A J Williams Fuels (Overseas Sales) Ltd., [1989] 1 Lloyd’s Rep 511, 514, and see Bowstead and Reynolds on Agency (19th Ed, 2010) para 3-037. If that is so, this would be another reason to reject the arguments of rectification and an agreement to vary the charterparty (or a collateral agreement). However, I do not find this view easily reconciled with Woodstock Shipping Co v Kyma Compania Naviera SA, (The “Wave”), [1981] 1 Lloyd’s Rep 521, in which Mustill J emphatically rejected the argument that a shipbroker “as the chosen method of communication of negotiation in behalf of the owners” did not have ostensible, if not actual, authority to agree terms of a time charter on behalf of his principal.[222]Mr Berry submitted that, although Mr Savage was not authorised to agree to terms, he had authority to tell the Owners that BP agreed terms and so to commit them to the position that he stated. He cited the statement in Time Charters (6th Ed, 2008) at para 2.35 that, “Where a broker has been appointed to act, and is acting, as a channel of communication, it is suggested that he has apparent authority to report that his principal has agreed …. In such cases, the communication of the principal’s intentions is the essence of the role a broker is engaged to perform, accordingly, the way in which the broker performs that role ought to bind his principal.” I am not attracted by a distinction between authority to agree and authority to report agreement: it seems to me inconsistent with the decision of Mance J in Hanjin Shipping Co Ltd v Zenith Chartering Corp (The “Mercedes Envoy”), [1995] 2 Lloyd’s Rep 559, 560 to infer from an appointment to convey messages or pass on communications authority (whether actual or ostensible) to bind the principal to misstatements of the principal’s messages and communications: authority to state something does not generally import authority to mis-state it (see British Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd, [1983] 2 Lloyd’s Rep 9, 12 per Ackner LJ, whose judgment was upheld in the House of Lords); and, most importantly, it would be artificial and to my mind unsatisfactory to draw such a distinction in the context of the typical conversational style of brokers.[223]Because these issues were not clearly before the court, I did not receive full submissions about them. I consider that they raise real difficulties for all the Owners’ arguments based upon the exchanges in March 2010 and in April before discharge at Houston, but I need not resolve them and in the circumstances do not do so.

Agreement through exchanges about the Owners’ invoice

[224]The Owners have one more argument that BP became liable for the full amount of their final invoice: that, in consideration of the Owners agreeing to make the small deduction from their invoice in respect of address commission, they and BP agree that otherwise BP were liable for the freight for which they had been invoiced. I reject that submission. These exchanges about the invoice were no more than administrative procedures to correct a technical invoicing error. The suggestion that the parties evinced an intention to resolve all differences between them about overage freight is farfetched. I have set out at paragraph 127 aboveMs Myers’ request for the deduction. It was not an offer to resolve any dispute, even the limited question of the address commission. It was an invitation either to correct an error or to defer the question for later and separate consideration so as to avoid delaying payment of all the freight. Mr Cooper understood it for what it was, as his message to the Owners made clear. He accepted that an invoicing error had been made, and the Owners issued an amended invoice accordingly. This exchange was not contractual. (This conclusion makes it unnecessary to consider BP’s alternative argument that any agreement of the kind that the Owners allege would be vitiated for mistake.)

Conclusion on BP’s liability for freight

[225]In my judgment, therefore, under the terms of the charterparty BP were liable for transatlantic overage freight in a reasonable amount. Nothing that occurred before they paid the Owners’ invoice on 5 May 2010 increased their liability or precluded them from disputing a greater liability.

Mistake

[226]This leads to the question whether, if the amount that BP paid by way of overage freight is more than a reasonable amount, they can recover the excess. English law has no general principle that a party is entitled to recover money that he paid when he was not obliged to do so. He must establish that his case is within a recognised category for recovery on the grounds of restitution or unjust enrichment: Deutsche Morgan Grenfell Group plc v IRC, [2006] UKHL 49 at para 21 per Lord Hoffmann. A payment made by mistake is one such category, and BP seek to prove a mistake (of law or fact) and that the mistake caused them to pay the Owners’ invoice: Kleinwort Benson v Lincoln City Council, [1999] 2 AC 349, 407H per Lord Hope. They are entitled in some circumstances to rely upon the mistake of an employee or other agent who made or caused the payment, an “activating agent” to adopt the convenient label from Goff & Jones, The Law of Unjust Enrichment (8th Ed, 2011) para 9-55.[227]BP submit that: i) Their activating agents in this case were Mr Rickwood and Ms Myers; ii) Both of them authorised payment of the Owners’ invoice because they believed that it was correct and the invoiced sum was properly due to the Owners; iii) They both were mistaken in their beliefs; and iv) But for their mistaken beliefs neither of them would have authorised payment, and BP would not have made it.[228]I accept the first of these submissions. Mr Berry distinguished Mr Rickwood and Ms Myers from Mr Witsey and Mr Matthews, whose states of mind were, he submitted, irrelevant because “The state of mind of persons in clerical functions who merely execute the decisions of those responsible is irrelevant”. I agree with Mr Berry that in this case the states of mind of Mr Witsey and Mr Matthews are irrelevant, but this is not because a mistake by a person with a clerical position whose job is to execute the decisions of others is never relevant to whether a payment by his employer is made by mistake or because the state of mind of such an employee can never justify a claim for money paid under a mistake, but because here Mr Witsey and Mr Matthews made no mistake in carrying out their roles in relation to the payment to the Owners. Their jobs were to arrange for BP to pay sums that the Demurrage Department had authorised, and they duly did so. Had BP overpaid because Mr Witsey and Mr Matthews (or one of them) had arranged for more to be paid than was authorised by the Demurrage Department, their states of mind would have been relevant. The question who is regarded as an activating agent depends upon the nature of the mistake that caused the payment. Here the mistake, on BP’s case, was that payment of the invoice was authorised when it should not have been, and so their case depends on the states of mind of those who authorised it. I add that, although the exchange between Mr Rathbone and Mr Finlinson on 5 May 2010 (see para 139 above) shows that they were both aware of the amount of the invoice some 20 minutes before it was actually paid, the Owners do not suggest that anything turns on that happenchance of timing, and the argument before me proceeded on the basis that for practical purposes payment was made when Mr Matthews completed processing it on 4 May 2010. Nor did the Owners suggest that it makes any difference that apparently someone in the Management Information team queried the invoice on 4 May 2010.[229]However, Mr Berry also submitted that Ms Myers alone was BP’s activating agent, and that Mr Rickwood was not a relevant agent. My conclusions about Ms Myers’ state of mind at the relevant time mean that this submission does not assist the Owners, but in any case I reject it. Mr Berry’s starting point is that Mr Rickwood “did not think about it because it was not his job to think about it”: that is to say, Mr Rickwood checked the so-called “higher level items” and left it to Ms Myers to examine the invoice in more detail, and there is no suggestion that he was in dereliction of his duties in this. Therefore, Mr Berry argues, any misunderstanding that he had in that he supposed that the invoiced amount represented BP’s liability was not a mistake about anything that it was his job to check or consider, and, even if he can be regarded as mistaken at all given that he was not tasked with considering the important question, any mistake in that regard was not BP’s mistake. The flaw in Mr Berry’s argument is, to my mind, that it conflates what Mr Rickwood’s job, or authority, was and the processes by which he properly carried out his job. Although he could properly do his duty to BP by carrying out only limited checks, nevertheless he was one of BP’s agents to ensure that BP did not make payments for which they were not liable, and he made a mistake as BP’s agent when he authorised the payment of the Owners’ invoice in the mistaken belief that it was for an amount for which BP were liable.[230]I have already stated my findings about the states of mind of Mr Rickwood and Ms Myers at the relevant time (see para 138above), and it follows from them that I uphold BP’s second submission. Their third submission is in accordance with my conclusions about the proper interpretation of the charterparty and my rejection of the Owners’ other arguments about what BP agreed to pay and about estoppels. I accept the fourth submission on the basis of the evidence of Mr Rickwood and Ms Myers.[231]I should deal with two arguments about these conclusions. First, BP argued that, if any relevant distinction is to be made between what Mr Rickwood and Ms Myers thought, Mr Rickwood’s position “is the more important because he was ultimately responsible for payment”. I accept that it would have sufficed for BP to have proved that Mr Rickwood was mistaken as they allege: I would, if necessary, have concluded that but for his mistake alone the payment would not have been authorised and so not made. BP did not argue that it would have sufficed that only Ms Myers had been so mistaken and but for her mistake the payment would not have been made. I therefore express no view about that, except to observe that her mistake alone might have been regarded as a sufficient cause of the payment: as Lord Hope said in Deutsche Morgan Grenfell Group plc v IRC, loc cit at para 59, “A wrong turning half way along the journey is just as capable of being treated as a relevant mistake as one that is made on the doorstep at the point of arrival”.[232]Secondly, Mr Berry submitted that a paying party cannot recover his payment as being made under a mistake if he was uncertain whether or not he is liable to pay. The cases and academic discussions variously refer to a person who pays in such circumstances as having waived inquiry into the true facts (as it was put in Kelly v Solari, (1841) 9 M & W 54) or having paid by way of “settlement of an honest claim” (see the Kleinwort Benson case, loc cit at p.382G/H per Lord Goff), or having accepted the risk (see the Kleinwort Benson case at p.401H per Lord Hoffmann), or having assumed it (see Goff & Jones, cit sup, at para 9-27). Clearly, a payor does not pay because of a mistake whenever he makes a payment for which he is not liable: he might pay voluntarily, either by way of a gift or simply out of goodwill or (more probably in business relationships) because he considers it in his commercial interest to do so or in order “to close the transaction” (as Lord Reading CJ put it in Maskell v Horner, [1915] 3 KB 106,118). And often there is no mistake if the payor does not know whether the payment is one for which he was liable or is voluntary, but decides to pay: if he decides or intends, as Robert Goff J said in Barclays Bank v W J Simms, [1980] 1 QB 677, 695C/D, “that the payee should have the money at all events, whether the fact be true or false, or is deemed in law so to have intended”. These various answers to a claim all amount to a defence on the basis that there is not the requisite causative link between any mistake about liability and the payment (as Mr Russell submitted and the editors of Goff & Jones suggest to be the case).[233]In my judgment, these circumstances do not arise here on the facts. Particularly where the mistake in question is one of law (and I think that Mr Rickwood’s mistake is, and Ms Myers’ mistake probably is, to be so regarded), difficult questions can arise about whether (and if so when) a payor has a claim if he (or his activating agent) had doubts about his liability. The law has not worked out an answer: the position was considered in Marine Trade SA v Pioneer Freight Futures Co, [2009] EWCA 2656 (Comm)by Flaux J, who said (at para 76) that “… the furthest that a court of first instance could or should go as to the current state of the law is that there may be cases in which a payor can still be said to be under a mistake, even if he has doubts, provided that he paid concluding that it was more likely than not that he was liable to pay”. This does not mean, of course, that the converse is true: that a payor will necessarily be regarded as mistaken if he pays because he is uncertain about whether he is liable but thinks it more likely than not that he is. Businessmen do not make decisions upon the basis of an assessment on the basis of probabilities and the payor might well have decided to take the risk of making an unnecessary payment even if he thought that he was probably not liable. All that matters in this case, on the basis of my findings, is that mere passing uncertainty about whether there is liability in the mind of the payor or his activating agent when considering what to do does not amount to doubt of the kind that might preclude recovery, and these difficult questions arise when the payor has persisting doubt when the decision to pay was taken and acted upon (a point emphasised by Lord Brown made in the Deutsche Morgan Grenfell case, loc cit at para 175, when answering Lord Hoffmann’s example of the quiz contestant uncertain about the musical composer). I have concluded that neither Mr Rickwood nor Mrs Myers had doubts of that or any relevant kind. Any uncertainty that Mr Rickwood had about overage freight was transient, and he had set it aside by the time that he signed the invoice to record his approval that it should be paid. As for Ms Myers, I find that she never had any relevant doubts about BP being liable for the invoiced amount once the Owners had given credit for the address commission. Had they had doubts, they would not have authorised the payment.[234]I therefore cannot accept Mr Berry’s submission that, once a payor (or his activating agent) thinks that there are grounds for disputing liability which he considers might possibly be right, there is no question of the payment being made under a relevant mistake. On this basis, he argued that it is fatal to BP’s claim that Ms Myers at one point thought that there might be an argument upon the basis of which BP could dispute liability for overage freight. I have concluded that in fact Ms Myers had no such thoughts before the payment was authorised and made, but in any case I cannot accept that it would defeat BP’s claim if at some time before authorising the payment Ms Myers had thought that the invoice might be disputed but then wrongly decided that there were no grounds for doing so. Equally I would reject any argument that BP are not entitled to recover the overpayment because Mr Rickwood realised that the Recap said nothing about transatlantic overage freight and regarded full overage freight as unusual, but still thought that BP were liable for it. In these circumstances I reject the Owners’ submissions that by making the payments after they had been authorised by Ms Myers and Mr Rickwood and possibly Mr Mahon BP “assumed the risk of error”, or that through their employees in the Demurrage Department they “waived inquiry” and so are precluded from claiming that the payment resulted from a mistake.[235]I conclude, therefore, that BP’s claim should succeed, subject to the Owners’ arguments based on Mr Finlinson’s conduct, state of mind and role. Mr Berry submitted that this defeats the claim, because, if those who authorise payment on behalf of a claimant are mistaken but there is another employee of the payor “who has the relevant responsibilities in respect of the transaction and the ability to object to payment, and who is not mistaken in the relevant sense, and knows that unless he objects to payment there is a risk that it will be made, but decides not to object, then it is his decision not to object which is the cause of the payment, not the mistake of those who authorise payment”. He cited in support of this proposition the judgments of Atkinson J in Anglo-Scottish Beef Sugar Corp v Spalding, [1937] 2 KB 607 and Pilcher J in Turvey v Dentons, [1953] 1 QB 218. Pilcher J put it as follows (loc cit at p.224):
“It is, however, clear upon authority that where, as in the present case, a limited liability company is concerned and payments are made under a bona fide mistake of fact by an authorized agent of the company, the fact that some other agent of the company may have had full knowledge of all the facts does not disentitle the company to recover the money so paid, provided that the agent with the full knowledge does not know that the payments are being made on an erroneous basis.”
In support of this proposition, Pilcher J cited the Anglo-Scottish Beef Sugar case, but the judgment of Atkinson J provides no real support for it and in particular for Pilcher J’s broad qualification to the general position. Atkinson J considered a claim to recover money that a company had paid for water on the instructions of a factory manager who had been unaware that his employer’s managing director had concluded an agreement (the “second agreement”) with the supplier that reduced their liability. In response to the argument that the company could not recover the overpayment because of the managing director’s knowledge, Atkinson J responded that, “… the mere fact that some agent of the company knew of the second agreement is immaterial so long as he had no idea that it was being acted on”.[236]The editors of Goff & Jones, cit sup at para 9-61, describe Pilcher J’s statement of principle as “not obviously correct”, because there is no good reason that “relief should automatically be denied where another agent knows the true facts, and that another agent will or may pay under a mistaken belief, but fails to take steps to ensure that that agent is informed of the truth before he acts”. They observe that Pilcher J’s principle would deny the payor a remedy where there has been a failure of internal communication in the payor entity, a result inconsistent with the doctrine of Kelly v Solari, loc cit, that carelessness or lack of due diligence on the part of the payor is no bar to relief.[237]Thus far I agree with the observation in Goff & Jones, and for this reason I reject the Owners’ submission that BP “assumed the risk of error” because they did not have procedures to ensure that the Demurrage Department were aware of the views of BP Shipping’s Chartering Department about such matters as what the charterparty provided with regard to overage freight and the application of SAC6. But their observation leads to the question whether and if so when a principal (P) will be denied relief by reason of knowledge of an agent (A1) other than the person actually making or authorising payment (A2). Goff & Jones suggests that this question might be answered by recognising that the basis upon which relief might be denied (consistently with the general law governing restitutionary claims) is that P is taken to have intended that the payments should be made “regardless of the true facts”; and therefore (apparently) relief is denied only if A1 so intended and his intention is to be attributed to P. In these circumstances, it is said, the cause of the payment by P would not be the mistake of A2 but the intention of A1, attributed to P. Thus, the statement of mind of A1 justifies relief being denied, on Goff & Jones’ analysis, only if an intention of A1 that payment be made regardless of the true facts is to be attributed to P. This seems an unlikely state of affairs in a structured entity, such as BP would appear to be (and I infer is). As Goff & Jones observes (loc cit), it would, at least typically, arise only if A1 is superior to A2 in the structure of employees.[238]If this view is correct, Mr Finlinson’s state of mind would not defeat BP’s claim. He was not Mr Rickwood’s or Ms Myers’ superior: there is no evidence of their relative grades within the BP group structure, but he was employed by a different company and not BP. More importantly, nothing suggests that he had authority to have BP pay money (over $1 million) regardless of the true facts, and that, if he so intended, his intention is to be attributed to BP. Indeed, it is difficult to conceive that he intended that BP should make a payment regardless of the true facts unless to avoid his employers learning about how he had (mis)managed the transaction (a purpose that would almost inevitably fail, since such expenditure could hardly have gone unnoticed, and that I do not accept that he had), and then his intention would not be attributed to BP.[239]I think that Goff & Jones restrict rather too far the circumstances in which a principal’s claim can be defeated by the state of mind of an employee who is not their paying agent, and I accept Mr Berry’s submission that in some circumstances Mr Finlinson’s state of mind would have defeated BP’s claim if he, knowing or suspecting that BP would or might pay more to the Owners than they were liable to pay, did not object to it and decided not to prevent it. Mr Finlinson was, as Mr Berry said, “responsible for the transaction”, and more specifically responsible for deciding how much freight (including transatlantic overage freight) should be paid by BP. If he had accepted that the freight should include full transatlantic overage freight, it could not, to my mind, be said that BP made a mistake. It might be that Mr Rickwood and Ms Myers were mistaken in that they supposed that the payment that they authorised reflected the freight that BP, through Mr Finlinson, had accepted by agreeing to the terms of the Recap; but if, in fact Mr Finlinson had agreed or decided that additional freight should be paid, BP could not be said to be mistaken in making the payment, or, to put it another way, BP cannot have the mistake of Mr Rickwood or that of Ms Myers attributed to them. This would clearly be so if Mr Finlinson had contracted in the exchanges in March 2010 that full transatlantic overage freight should be paid, and it would then have been beside the point if the Demurrage Department, knowing nothing of these exchanges, authorised the payment of the Owners’ invoice wrongly assuming that it reflected what had been agreed in the Recap. It would make no difference, in my judgment, if Mr Finlinson had so agreed in March 2010 but the agreement was not contractual (say, because it was not supported by consideration): in those circumstances, any payment for overage freight would not have been in respect of a liability and so, in one sense, would have been voluntary, but it would have been a freight payment that Mr Finlinson was authorised to decide that BP should make. Nor would I consider the position materially different if, by the time that the Owners delivered their invoice, Mr Finlinson, although he had not agreed with them that BP would pay full transatlantic overage freight, had decided or accepted that in all the circumstances BP should pay it (or that they should not refuse to pay if the Owners demanded it), because, for example, BP’s chances of resisting a claim did not justify the time and expense of disputing the matter.[240]As I have said, Mr Berry’s argument was presented as one of causation, and I can see that a decision by Mr Finlinson not to object to payment of full transatlantic overage freight would have broken the chain of causation resulting from the mistaken decisions of Ms Myers and Mr Rickwood. In the Franked Investment Group litigation, the Court of Appeal at [2010] EWCA Civ 103 said (at para 182) that the test of causation for unjust enrichment is a “but for” test (as has been widely accepted since the decision of Robert Goff J in Barclays Bank v W J Simms, loc cit at p.695C), but: “In applying the ‘but for’ test, it is important to identify the operative mistake and to limit recoverable loss to what is directly caused by it”. (I do not understand the judgments in the case of the Supreme Court, [2012] UKSC 19, to state otherwise.) However, whether it is seen in terms of whether there was a mistake on the part of BP or in terms of causation, I accept that BP’s claim should not succeed if Mr Finlinson, their relevant agent for deciding what freight should be paid, had decided that BP should pay full overage freight or had resigned himself to paying BP paying it if the Owners so demanded and for this reason did not intervene to prevent the payment.[241]BP’s answer to this contention is not that, when Mr Finlinson did not intervene, he thought that BP were or might be liable for overage freight or had decided that they should pay it. Their case is that he was confident (as I conclude, wrongly confident) that BP were not so liable and that BP would not be paying it. (If he had recognised the implication of his interpretation of SAC6, he would, like Mr Rickwood and Ms Myers albeit for a different reason, have mistakenly believed that BP were liable for full freight on the Odessa overage, but I have concluded that he did not appreciate this until after BP had paid the Owners.) BP’s answer is that Mr Finlinson did not think that overage freight would be paid, or that it might be. I have accepted Mr Finlinson’s evidence about that, and concluded that it did not occur to Mr Finlinson that those responsible for checking the Owners’ invoice might not interpret the Recap as he had done or that they might authorise payment. The position is like that in the Anglo-Scottish Beet Sugar case, in which the managing director had no idea that the second agreement was not being acted on.[242]This leaves the Owners with one remaining argument. They submit that the mistake in this case would be characterised as a mistake of law, albeit as to the construction of a private contract, and, as I have said, I accept this: see the Kleinwort Benson case, loc cit at p.407E per Lord Hope. They say that relief in respect of monies paid under a mistake of law is refused where it is paid in settlement of an honest claim, at least if one (or both) of two conditions are satisfied.[243]I have alluded to the first suggested condition, or to a closely related submission of Mr Berry, at paragraph 234 above: that the question of law was considered by “appropriate persons” who were in a position to assess whether payment should be made, and they authorised payment. Mr Berry cited no authority that, in my judgment, provides any support for the proposition that this would answer a claim, I can see no basis for it in principle and I reject it.[244]With regard to their argument based on the second suggested condition, the Owners say that BP’s claim should be refused because, in view of the exchanges about the interpretation of the Recap with regard to transatlantic overage freight, a reasonable recipient of BP’s payment would have concluded that the payment was made in order to close the transaction, BP having accepted the Owners’ interpretation. Again, Mr Berry cited no case in which a claim has been rejected on this basis and I am aware of none. He sought, however, to support this argument by reference to two authorities. One was the decision of the Court of Appeal in Maskell v Horner, [1915] 3 KB 106, the source, I think, of the use in this context of the expression “close the transaction”; but that case was not one of mistake and does not, to my mind, lend any support to the Owners’ argument.[245]Mr Berry also referred to the remarks of Lord Hoffmann in his speech in the Deutsche Morgan Grenfell case (cit sup) at paras 26 and 27. Lord Hoffmann floated the suggestion that, in cases where a payor was in doubt whether he was liable, the law might adopt an objective test to determine whether he should be regarded as having made the payment by mistake: that the question whether the payor should be treated as having taken the risk of paying when not liable should depend upon “the objective circumstances surrounding the payment as they could reasonably have been known to both parties”. The Owners’ argument does not exactly reflect the thinking of Lord Hoffmann, who was contemplating a test depending on the view of an objective observer rather than what a reasonable recipient might think. More importantly, Lord Hoffmann (whose observations, as far as I am aware, remain isolated as judicial remarks) was digressing in his speech to introduce thinking about how the law might engage with the problem encapsulated in Lord Hope’s now famous remark in the Kleinwort Benson case (loc cit at p.410B/C) that a state of doubt and mistake are different and a payor who has doubts assumes the risk that he might be wrong. Lord Hoffmann pointed to a possible path for the development of the law (the attractions of which might be thought the greater in a case such as this where the liability was for a reasonable sum), but his thinking does not represent the present law and Lord Hoffmann did not suggest otherwise. In any case, these questions arise where a paying party, or some relevant agent of the paying party, has material doubts about whether there is liability, and that is not the position in this case.[246]This is not a case in which the payor’s claim is defeated because it was by way of payment of an honest claim. BP are entitled to recover the amount of any overage freight for which they were not liable.

Conclusion

[247]I therefore conclude that BP were liable not for full overage freight but for overage freight in a reasonable sum; that they paid any part of the overage freight that was more than that under a mistake; and that they are entitled to recover any excess.[248]This leads to the procedural question to which I referred at paragraph 145above. The case that on its true interpretation the charterparty provided for BP to pay transatlantic overage freight at a reasonable rate was not pleaded or opened by either party, and it is understandable that BP did not prepare for trial with a view to meeting it. It was not identified in an agreed revised list of issues presented at the start of the trial. This does not prevent the court from construing the charterparty as it thinks right: the court is not restricted to choosing between two interpretations both of which it considers wrong. The Owners contend, however, that BP have failed to prove that the full overage freight that BP paid was more than a reasonable rate, and that therefore they have not proved their claim and it should be dismissed. That would not be a just or fair disposal of the claim. It is understandable that BP conducted the case as they did. Indeed, when the Owners pleaded in their defence that under an agreed variation of the charterparty BP were to be liable for full transatlantic overage freight in respect of the Marmara cargo (an argument that was not pursued), they did so in terms that appeared to accept that they assumed the burden of proving what amount was reasonable. I conclude that the just order is that there should be an inquiry as to the proper amount (if any) that BP should recover. On such an inquiry the Owners can (if they see fit) raise the argument of estoppel to which I referred at paragraph 145.[249]I invite submissions about the issue about commissions to which I have referred at the end of paragraph 2 above, unless the parties can reach agreement about it; and also about the terms of the order (including directions for any inquiry).[250]I am grateful to all counsel for their detailed submissions and considerable help.

Cited in 2 later judgments