Cargill Ocean Transportation (Singapore) Pte Ltd v TPT Shipping Ltd
[2020] NZHC 2713
•15 October 2020
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2020-470-94
[2020] NZHC 2713
BETWEEN CARGILL OCEAN TRANSPORTATION (SINGAPORE) PTE LTD
Applicant
AND
TPT SHIPPING LTD
Respondent
Judgment:
(On the papers)
15 October 2020
JUDGMENT OF BREWER J
This judgment was delivered by me on 15 October 2020 at 2:30 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Wilson Harle (Auckland) for Applicant Hesketh Henry (Auckland) for Respondent
CARGILL OCEAN TRANSPORTATION (SINGAPORE) PTE LTD v TPT SHIPPING LTD [2020] NZHC 2713
[15 October 2020]
Introduction
[1] The applicant (“Cargill Ocean”) applies for an interim injunction to enforce a letter of indemnity (“LOI”). The respondent (“TPT”) has taken no steps to oppose the application. Its solicitors confirmed they are instructed to accept service of documents but that TPT would not appear at the telephone conference I convened on 13 October 2020. Accordingly, Cargill Ocean seeks orders on the papers.
Background1
[2] Cargill Ocean has a time charter for each of the bulk carriers “ES Neptune” and “ES Pluto”.
[3] TPT was the voyage charterer of the ES Neptune for a voyage from New Zealand to the port of Kandla in India. Bills of lading for the voyage were issued on 28 November 2019 and 2 December 2019 in respect of a cargo of New Zealand pine logs.
[4] On 26 December 2019, TPT requested Cargill Ocean to discharge and deliver the cargo without production of the original bills of lading. Cargill Ocean required TPT to produce a letter of indemnity to Cargill Ocean’s benefit before discharging the cargo. TPT produced the LOI.
[5]The LOI is in a standard form and contains these obligations:
1.To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.
2.In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3.If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any
1 I draw the background from the affidavit of John Mark Evans filed in support of the application and sworn on 13 October 2020.
interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference , whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
[6]There is a jurisdiction clause in the following form:
7. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.
[7]The LOI is dated 2 January 2019 (a typographical error, the year was 2020).
[8] A third party, Excel Exports Co (S) Pte Ltd (“Excel”), claims to be the legal holder of the bills of lading relating to the cargo. Excel contends the cargo was not delivered to it as required and filed in this court applications for warrants of arrest of ES Neptune and ES Pluto. The applications were filed on 25 September 2020 and 28 September 2020 respectively. Cargill Ocean became aware of this on or about 29 September 2020.
[9] Cargill Ocean, through its solicitors, immediately wrote to TPT demanding that TPT comply with the LOI by providing security. No security was provided. TPT did not aver that it is not bound by the LOI.
[10] Cargill Ocean, to mitigate its losses, arranged for security to be provided to Excel in relation to claims against the vessels. Following receipt of the security, Excel withdrew the applications for the warrants of arrest in relation to the two vessels.
Discussion
[11] I recently delivered judgments in very similar cases involving TPT (“the Berge proceeding” and “the China Navigation proceeding”).2 The principal issue in the
2 Berge Bulk Shipping Pte Ltd v TPT Shipping Ltd [2020] NZHC 2627; The China Navigation Company Pte Ltd v TPT Shipping Ltd [2020] NZHC 2675.
Berge proceeding was whether this court had jurisdiction given the wording of the jurisdiction clause in the particular letter of indemnity. I held that this court does have jurisdiction. The LOI contains an identical jurisdiction clause and so I find that no point as to jurisdiction arises in this case.
[12] I granted the applicants in the Berge proceeding and in the China Navigation proceeding mandatory interim injunctions requiring TPT to provide a substitute security and to supply, on demand, sufficient funds to defend any related proceeding.
[13] I set out my view of the law applicable in the Berge proceeding judgment. I will not repeat the discussion here.
[14] The only real factual differences between this case and the other two proceedings are:
(a)Cargill Ocean gave security after it had made demand on TPT but before any demand for security had been made on Cargill Ocean.
(b)The ES Neptune and the ES Pluto were never actually arrested.
[15] In my view, these factual differences do not bear upon the principle that if a court does not order immediate compliance with an LOI then the very purpose of the LOI is undermined. Nor does the fact that Cargill Ocean mitigated its liability by itself providing security prior to issuing proceedings reduce its right to rely upon the LOI.
[16] The substantive proceeding claims an order requiring TPT to provide substitute security to replace the security put up by Cargill Ocean. The ground is breach of the LOI.
[17] Clause 3 of the LOI extends the indemnity to “any other ship … in the same or associated ownership, management or control”. The indemnity is triggered not only if a ship is arrested or detained but if “the arrest or detention thereof be threatened”. The clause clearly applies to the current situation.
[18] Cargill Ocean relies on clause 2 of the LOI in support of its application for an interim order that TPT provide “sufficient funds” to defend claims.
[19]It is ineluctable there is a serious question to be tried.
[20] TPT has taken no step in opposition (and took no step in opposition in the China Navigation proceeding).
[21] For the reasons I gave in the Berge proceeding, I find the balance of convenience clearly favours the granting of the mandatory interim injunction sought. Damages would be an inadequate remedy in these circumstances. In the commercial context of the LOI, overall justice will be served by granting the interim injunction.
Decision
[22]The application for an interim injunction is granted. I order:
(a)TPT forthwith provide substitute security, or bail, to replace the security provided by Cargill Ocean to prevent the arrest of the vessels “ES Pluto” and “ES Neptune”.
(b)Upon a demand to do so from Cargill Ocean, TPT shall supply, or procure the supply directly to Cargill Ocean of, sufficient funds to defend any proceedings brought against Cargill Ocean in connection with the delivery of cargo by the “ES Neptune”.
(c)The parties have permission to apply to vary or discharge this order.
(d)Any application by TPT to set aside or vary this order shall be made only after at least 48 hours’ notice has been given to Cargill Ocean’s solicitors.
(e)Cargill Ocean be awarded costs on a 2B basis.
Brewer J
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