Castleton Commodities Shipping Co Pte Ltd v Silver Rock Investments [2015] EWHC 2584 (Comm)

Case No 2013 Folio 663[2015] EWHC 2584 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of JusticeDate Tuesday, 30 June 2015
Strand
Before
His Honour Judge Waksman QC sitting as a Judge of the High Court
Between
CASTLETON COMMODITIES SHIPPINGRespondentCOMPANY PTE LIMITEDRespondent- v -
Between
SILVER ROCK INVESTMENTSAppellant
Digital Transcript of WordWave International Ltd trading as DTI8 th Floor, 165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 704 1424Web: www.DTIGlobal.com Email: TTP@dtiglobal.eu(Official Shorthand Writers to the Court)
ANDREW W BAKER QC and ALEX CARLESS (instructed by Holman Fenwick Willan) appeared for Claimant for The Defendant did not appear and was not represented
Judgment ApprovedHHJ WAKSMAN QC:
[1]I have before me an application made by the Claimants in this arbitration claim, Castleton Commodities Shipping Company Pte Limited (“CCS”), for the withdrawal of proceeds of sale of a cargo of iron ore presently held by solicitors, pursuant to an Order for Sale made by Popplewell J in this court on 16 May 2013 (“the Order”) under this action number 2013 Folio 663. For reasons which I shall give below, I order that this judgment and today’s hearing shall be heard in public, pursuant to CPR 62.10.[2]The Order contained, among other things, the following provisions:
“2. The gross proceeds of sale shall be held by Holman Fenwick Willan LLP to the order of the Court pending further order and without prejudice to the rights of any parties. 3. The Claimant shall be entitled to make an application to recover its reasonable expenses of sale from the sum referred to in paragraph 2 above... 8. Any party claiming an entitlement to the proceeds of sale may at any time apply to the Court for the determination of priorities and/or for the payment out of the proceeds of sale; save that: (1) The sale proceeds held by Holman Fenwick Willan LLP pursuant to paragraph 2 above and any interest thereon shall be treated as if subject to the same rights (if any) as the Claimant had in respect of the goods prior to their sale.” (1) The sale proceeds held by Holman Fenwick Willan LLP pursuant to paragraph 2 above and any interest thereon shall be treated as if subject to the same rights (if any) as the Claimant had in respect of the goods prior to their sale.”
[3]The application for that order was made pursuant to CPR 25.1(c). The present application for payment out is, effectively, made pursuant to paragraphs 2, 3 and 8 of the Order, which obviously contemplated that in the fullness of time, the court would need to determine who was entitled to the proceeds. Today’s application has been supported by a very full skeleton argument together with a number of witness statements which have been made principally by Brian Perrott, the solicitor from Holman Fenwick who has been dealing with this matter, and dated 13 May and 31 October 2013 and then 3 March 2015, the last dealing particularly with this application.[4]The cargo had been carried on the vessel, The Monarch, from a port in Mexico to China between 29 March and late April 2013. CCS and the Defendant/Respondent Silver Rock Investments, the immediate purchaser of the cargo, had entered into a voyage charterparty in respect of the carriage of the goods by this vessel and CCS, in turn, had entered into a time charter with Clipper Bunker for these purposes. Clipper Bunker, in turn, having the benefit of a long term charter party with the ship’s owner a company to which I shall refer simply as “the carrier” as it was in CCS’s skeleton argument.[5]The seller to Silver Rock was a company called Grupo Minero. Silver Rock failed to pay freight, dead freight, demurrage and other charges to CCS which, therefore, caused the ship to wait just outside of Chinese waters in order that it could give effect to the rights that it had. The position, broadly speaking, remained the same until CCS sought and obtained the Order for Sale to which I have referred and when a purchaser was found, as it was, that then enabled the ship to proceed to dock and unload the cargo for the new purchaser. The original purchaser from Silver Rock and the original consignee had been a company called Max Coal. CCS obtained an arbitration award against both Silver Rock and Grupo Minero. As against Silver Rock, that was on the simple basis of monies owed by way of debt by Silver Rock, being the other party to the voyage charter and as against Grupo Minero, that was on the basis of an assignment to CCS from the carrier of its right to claim an almost identical amount as shipper under the Bill of Lading. Both arbitration awards then became the subject of separate applications to enforce them under a separate action number and judgments on those awards were given on 13 November 2014. As a result, CCS is now a judgment creditor for the relevant amounts as against Silver Rock and Grupo Minero subject, obviously, only to the principle of avoiding double recovery.[6]In relation to the present application, Max Coal and Silver Rock both indicated at an early stage that they had no objection to CCS now applying to remove the proceeds of sale pursuant to the Order. The proceeds of sale are now around US$2.113 million. The monies owed are slightly more at US$2.130 million, or perhaps a little more with interest. The carrier and Clipper Bulk both positively supported the application. Grupo Minero, in its Acknowledgement of Service, had stated it would contest an application to withdraw the monies but, apart from that, there has been no engagement with this application, at all. The last active part that it played was when it participated by a lawyer in setting up a conference call in the arbitration then proceeding against it. However, it did not in fact participate and has played no other part in the arbitration. It at one time had Mexican lawyers. It also at one time had the firm Mayer Brown as its solicitors against who alternative service was provided for by the court but those solicitors came off the record some time ago. Nonetheless, all the salient parties for this application were served on 3 March 2015. I should record that no other parties, save for CCS, either appears or is represented today in the hearing before me.[7]That brings me to the reasons why I order that this hearing and this judgment should be made public. The first point is the arbitration proceedings, such as they were, have, effectively, become exhausted. The awards have been made. The judgments on them have been given and what one is left with is, effectively, an entirely separate matter which is now the disposal of the proceeds of the sale made pursuant to the Order in circumstances where there is, in truth, no opposition to that at all. Nonetheless, the proceedings are of importance and some significance, of course, to the solicitors who are presently holding them pursuant to the Order and who need a further order before they can properly release them. I am also told by Mr Baker that although in one sense it may be considered a straightforward matter, given that there is no effective opposition to the claim to remove the proceeds, some of the legal arguments, and particularly those advanced in relation to the question of lien, are of some interest beyond this case, to the market, generally. I cannot see any countervailing reason why I should not make this hearing and judgment public and I so order.[8]That then brings me to the claims, themselves. They are set out in very helpful detail in a logical order in the skeleton argument which runs to some 28 pages and I am not going to repeat the points that are made there. I simply say this. There are two bases of entitlement set out by CCS. The first is that CCS has been, since 13 November 2014, a judgment creditor of both Grupo Minero and Silver Rock in virtually identical amounts and the proceeds which represent the cargo the subject of those claims, clearly belong to one or other of them (“the Judgment Creditor Ground”). Which one is the owner depends on whether title, under the contract of sale between them, passed prior to or after the making of the Order. On the evidence and the submissions made in the skeleton argument, Grupo Minero is probably the owner but, in fact, it matters not since this application is made against both and both parties were parties to the application for the order for sale and to this application. In my judgment, the Judgment Creditor Ground is clearly made out. Insofar as there is any question as to the jurisdiction of the court to enable the proceeds of sale to be paid out to the judgment creditor, I am quite satisfied that, as a result of the case of CMA-CGM Marseille v Petro Broker International [2011] EWCA Civ 461, the court has ample jurisdiction to so direct. This follows as a matter of common sense. As Tomlinson LJ said in paragraph 4 of the lead judgment in CMA-CGMat paragraph 4, thereof, it would be odd if the circumstances could be otherwise. In this case, it is not suggested by anyone that there is any other party that had a better claim to the monies. On that ground alone, CCS would be entitled to the monies as judgment creditor against whichever of Grupo Minero and Silver Rock was the appropriate owner.[9]However, a second and alternative basis is also advanced. way. It is said that CCS is the beneficiary of a lien conferred by the voyage charterparty as against Silver Rock, although in practice, it is well established that that lien would not entitle it to take possession of the cargo as such as it is a mere time charterer. Instead, it would have a similar but not identical right, which is to direct the vessel, effectively, not to unload the cargo. In truth this is what happened here. CCS is also the beneficiary by way of assignment of a true lien in favour of the carrier and as against the shipper, Grupo Minero, pursuant to the Bill of Lading. In paragraphs 58 through to paragraph 89 of the skeleton argument, Mr Baker sets out, convincingly, a route by which the holder of a lien acquires the rights in proceeds of sale which are the subject, effectively, of the exercise of the rights of lien. I am satisfied that in circumstance such as this, the rights of lien, which pre-existed the sale, can be said to have been transformed into a right to the proceeds of sale of the cargo concerned in the hands of CCS, or, as it were, are followed into those proceeds (“the Lien Ground”). In one sense, of course, this is reflected by the Order which refers to the proceeds of sale as, effectively, representing the cargo immediately prior to the sale. I do not propose to say anything more about those matters.[10]So, on the Judgment Creditor and/or the Lien Grounds, I am quite satisfied that the CCS is entitled to the proceeds of sale. That is in addition to its right, in any event, under paragraph 3 of the Order to claim a little over £100,000 by way of its costs incurred in relation to obtaining and complying with the Order for Sale.