Port of Sheerness Limited v Swire Shipping Pte Ltd (decided on 3.1.2025)
Express terms of contract
Unilateral Power to charge
Supplemental Agreement
Quantum Meruit
Estoppel by representation
Reasonableness of Period Toll (within Section 60 of the Medway Ports Authority Act 1973 or is it a penalty?
Statutory tripling
Master Richard Davison held : –
– Commercially viable in enforcing the period toll which is being claimed from the Defendant.
– Estoppel can be established against claimants in these types of circumstances where the port claims have exceeded the initial estimates.
– No decision was made on the reasonableness of the period toll when there is amendment made to charges.
– No decision was made on whether the period toll was a penalty
– The statutory avenue to claim triple claim is not allowed when there would be no proper justification for a commercial organisation to claim a commercial debt under circumstances of this nature.
Factual Background
The MV KIATING is a Singapore registered bulk carrier which was sub-chartered to and operated by the Defendant (“Swire”). In November and December 2021 the vessel loaded a cargo of plywood and hardwood in China and Malaysia. The plywood was stowed in all five holds with the hardwood placed in holds 2,3 and 4. The intention was to discharge at the port of Tilbury. But Tilbury was unable to accept the hardwood because of storage limitations. The hardwood was instead discharged at Port of Sheerness owned and operated by a limited company of that name and which is part of the Peels Port Group. KIATING came alongside at berth 6/7 at the port at 2155 on Sunday 23.1.2022. On Mondy 24.1.2022 the hatches were opened and discharge commenced at 0830. There were problems with the stow. This was especially in Hold No.3 where the cargo had shifted. But in all holds there were problems in that some packs of hardwood were not pre-slung and / or the slings had not been tied off and had slipped down into the stow making the loops inaccessible. Some packs were in their sides. There were gaps and voids. There was insufficient dunnage under the packs. Elsewhere the damage was inadequate or had moved. A Notice of Protest in respect of these matters was lodged with the Master at 1130 on 25.1.2022. The port had internally estimated that discharge would take 3 ½ days i.e until Thursday 27.1.2022. But the state of the stow prolonged the operation. At around 1500 in 28.1.2022 discharge was suspended by order of health and safety officers of the Port.
By now berth 6/7 was required for another vessel. So KIATING moved twice to vacant berths at the port, where she remained until the morning of Friday 4.2.2022when she moved to Tongue anchorage in the greater Thames Estuary. She re-berthed at berth 6/7 at the port in the early hours of the morning of 11.2.2022 an resumed discharge at 0600 hours. By this time, additional measures were available. These included steel plates (which Swire had obtained from Tilbury) to form a safe working platform on top of the cargo, and a telehandler. Discharge was completed at 1140 on Saturday 12.2.2022.
The total time taken to discharge (including setting up time) was 56.16 hours. This substantially exceeded the Port’s estimate of 3 ½ days or 42 hours. Further the vessel was alongside, though not discharging, for 8 days (2 of them not full days) at berth 1 or 3. The Port levied additional stevedoring, shifting and equipment charges which Swire paid. The port also sought to impose a 10 day period for toll calculated at a rate of £137.80 per linear meter and amounting to £248,096.22 (i.e £24,802 per day x 10). This invoice Swire had refused to pay. Swire says that such a charge only applies to vessels that outstay their welcome i.e. remain alongside the once loading or discharging has completed. The port says that the period toll was payable from that point in time where loading or discharging ought to have completed but did not complete. This is a basic (by though not by any means the only).issue between the parties. It is a relatively short point of construction of the relevant contractual provision.
The port’s quote dated 18.1.2022 was given by the Sales Delivery Manager for the Port to Sopac who were Swire’s commercial and operational agents in the UK. Materially in provided as follows:-
“ Commodity : Hardwood Timber
Pre-slung cargo, double packed
RH & D from Ship’s hold in to covered warehousing – £17.50 per Tonne
7 days warehouse free time from date of completed vessel discharge. Thereafter £1.75 per m3 per week or part thereof
Costs for any required Re-Banding to be agreed on a case by case basis”
The quote was stated to be “subject to company Port of Sheerness- Terms and Conditions of Trading” and the charges “shall be raised in accordance with the applicable terms and conditions and published charges, or as otherwise described in this quotation”.
On 27.1.2022, a day before the discharging was suspended, there was a TEAMS meeting attended by representatives of the Port and of Swire. What was discussed was set out in an internal email of that date drafted and sent out by the Port representative, Mr, Daniel Edwards.
As appears from the email, it was obvious, even before suspension of discharging on health and safety grounds, that discharging was not going to be completed by the end of the next day and that KIATING would have to move in order to allow another pre-booked vessel to dock.
During the TEAMS meeting there was a mention of using a free berth by the Port Planning Manager. Whether this meant a vacant berth or it was to be used free of charge was never clarified. Nor was a period toll mentioned when the Port Planning Manager provided the estimate of the shifting costs from berth 6/7 to a
Issues
Whether the 4 avenues raised by the Claimants are correctly invoked to claim the period toll?
Can estoppel by representation be invoked as a defence by the Defendant?
Was the period toll reasonable within the meaning of Section 60 of the Medway Port Authority Act 1973 and or is it a penalty?
Is statutory tripling allowed?
Discussion and Analysis
The Claimant relied on 4 avenues to establishing the Port’s contractual or quasi-contractual entitlement to period toll.
Master Richard Davison on the avenue of Express terms – Section 5(4) of the Port charges – there is a need of expert evidence to evaluate and examine the records pf precisely what was happening at any given time and on any given day of loading or discharging. This would be complex, uncertain and all-to-readily productive of disagreements. Further the contractual terms do not oblige the Port to complete a discharge within any particular time period or in any particular manner both of which would make the process of evaluation uncertain and controversial. Such a broad discretion on the Port’s part would sit uneasily with a corresponding power to impose a period toll for slow loading or discharging. It would be open to misuse, or, at least, the suspicion of that. Finally clause 5(4) is not balanced by any obligation on the Port to agree or even provide its time estimate. In these circumstances a vessel could be facing very significant extra charges without any clear idea of the point in time in which they start to be incurred.
Master Richard Davison on the avenue of Unilateral Power to charge – there is no intention in the language of the quote within the terms and conditions to have a parallel, freestanding right to impose additional charges. Secondly the provisions to the Terms and Conditions setting out the circumstances in which additional charges may be levied require that costs and expenses have actually been incurred by the Port. These are the closing words of clause 4.2. As such this wont be applicable for the period toll charged by the Claimant.
Master Richard Davison on the avenue of Supplemental Agreement – this avenue does not arise as the period toll is contained in the Port charges which formed part of the contract as seen in the exchange of emails. But it is held that the period toll did not apply to the situation that had arisen.
Master Richard Davison on the avenue of Quantum Meruit – The Court adopted the decision of Lord Hoffman in Attorney General of Belize v Belize Telecom Ltd (2009) UKPC 10, (2009) 1 WLR 1988 and held that the contract in this case did not provide for a period toll in the circumstances which arose. The parties stipulated the circumstances in which additional charges were payable and they did not cover the situation rising in the present case. As such there is no reasonable value of the service provided as reflected in the contention of the Claimant through quantum meruit. The court also noted that the Defendant has paid every additional charge demanded save for the period toll. They have paid a total of £146,707.72 which was in excess of the port’s initial quote.
Based on these above principle points raised by the Claimants, the Court finds for the Defendant.
The following points were considered and findings were made by
Master Richard Davison held that there was estoppel against the Claimant as they were the source of information on the cost which was discussed by the parties during the meeting via TEAMS on 27.1.2022. The information not shared was need by the Defendant to make a cost comparison on whether to shift to another berth or move the vessel to a sea anchorage point.
No decision was made by Master Richard Davison on the reasonableness of the period toll as it would be obiter and the points raised by the parties on reasonableness be addressed better in a case where they would be decisive as the Port has amended its Port charges so as to clarify the circumstances in which it is to be paid.
No decision was made by Master Richard Davison on whether the period toll was a penalty as the period toll was a secondary obligation under the contract and that the penalty rule was therefore engaged. It also, based on the court’s finding, designed to protect a legitimate interest and that the fact that other provisions of the contract might also have the same effect does not detract from that proposition.
Master Richard Davison also held that the avenue to a triple statutory claim should not be allowed as there would be no proper justification for a commercial organisation to claim a commercial debt being entitled to triple it.
Decision
There will be judgment for the Defendant.
This case summary was prepared by Chakaravarthi Thillainathan, Principal Associate at Low & Partners, Malaysia. We thank Dr. Arun Kasi, Barrister at the 4-5 Gray’s Inn Square, London, for his insightful input on the case.