Trans-Tec International, SRL (1) World Fuel Services (Singapore) PTE LTD (2) -v- The owners and/or demise charterers of the vessel “COLUMBUS” [2020] EWHC 3443 (Admlty)

This was an application for default judgment in in rem proceedings against the vessels “COLUMBUS” and “VASCO DA GAMA” which were sold on 22 October and 16 October 2020 respectively and the actions continued against the proceeds of sale. Those proceeds would be insufficient to satisfy the many claims against the funds. Hence, each individual claimant had an interest in ensuring that only claims that were genuinely in rem claims were admitted and that those claims were properly scrutinised and quantified.

Factual background

The claimants were bunker suppliers, subsidiaries of a company based in Florida, USA. The claims were for six stems of bunkers supplied in the first quarter of 2020 to both vessels. The claimed sums comprised the principal amounts for the supplies of bunker oil and (i) contractual interest on overdue amounts at 2% per month, (ii) an administrative fee of 5% of the principal amount on all amounts more than 15 days overdue, and (iii) a contractual indemnity in respect of the claimants’ costs. These claims derived from the claimants’ standard terms and conditions, which were in each case incorporated into the contract of sale by the claimants’ order confirmation and invoice.

It was not in dispute that the principal amounts were in rem claims. But two of the other in rem claimants, Carnival Plc and P&O Princess Cruises International Ltd (POPCIL) disputed that items (i) – (iii) could be so characterised. Their position was that these claims could only rank as in personam claims and should be re-directed against the operators of the vessels. Admitting them as in rem claims, would improperly deplete the funds available for distribution.

Legal analysis

The point turned on whether the claims fell within the wording of section 20 of the Senior Courts Act 1981 headed ‘Admiralty Jurisdiction of the High Court’, specifically section 20(2)(m) regarding ‘any claim in respect of goods or materials supplied to a ship for her operation or maintenance’.

The bunkers themselves were obviously supplied to the vessels for their operation. But counsel for POPCIL and Carnival, submitted that the interest, the administrative fee and the costs indemnity were to be regarded separately and were not ‘in respect of’ the supply of the oil. Counsel for the claimants, submitted that these items were ‘part and parcel’ of the bargain and that it was not permissible to ‘unpick’ or ‘slice and dice’ the package of contractual terms upon which the bunkers were supplied.

The judge did not think it appropriate to gloss the statutory words ‘in respect of’ or to attempt to define them further. They were ordinary words in the English language. To date, and notwithstanding the involvement of numerous very distinguished admiralty practitioners and judges, no court had found it necessary to do that. It was enough to note that they were ‘wide words which should not be unduly restricted’.

Adopting counsel’s for POPCIL and Carnival suggested approach would be giving the words a narrow and restricted interpretation. The provisions for interest, administration fee (obviously meant to cover the administrative costs of chasing the debt) and costs were integral parts of a package of contractual terms. They were incidents of the contract which followed from non-payment of the price. In the case of the interest and the administration fee, they were calculated as a percentage of the price and therefore closely and directly related to it. There was nothing unusual about them.

The judge acknowledged that the costs were further removed from the price of the bunkers than the interest and the administration fee. But they were no less a part of the contractual bargain and he saw no reason in principle to treat them differently.

In the circumstances, the judge held that all four elements of the claims fell within section 20(2)(m).

Comment

This case offers useful confirmation that interest, administration fees and indemnity costs regarding bunker supply debts fall within the jurisdiction of the Admiralty Court.

It is interesting to note that the judge found that the Hong Kong case of The Oriental Dragon HCAJ 162/2012 offered no support to POPCIL and Carnival’s submissions. That case concerned a contract for the supply of a wide variety of goods and services and the judge noted that in such a case it would be correct to examine each one or at least each broad category. The present case though concerned the supply of a single commodity, oil bunkers, which was, and was accepted to be, for the operation of the ship. This finding leaves open the proposition that in appropriate circumstances the court could unpick the contractual consequences of non-payment or treat those consequences as separate and distinct claims for the purpose of section 20(2)(m).