President of India v. Metcalfe Shipping Co Ltd
[1969] 3 All ER 1549[1970] 1 QB 289
[1969] 3 WLR 1120
(Judgment by: Edmund Davies)
President of India v
Metcalfe Shipping Co Ltd
Judges:
Lord Denning MR
Edmund DaviesFenton Atkinson LJJ
Judgment date: 8 October 1969
Judgment by:
Edmund Davies
EDMUND DAVIES LJ . I agree and desire to add but few observations. The charterparty being a contract, on fundamental principles its terms cannot be altered without the express or implied assent of both charterer and shipowner. The bill of lading also is, in general, a contract (this time between shipper and owner) and it is common to find in it a provision, as in the present case, that, "All conditions and exceptions as per charterparty ... " But where the charterer himself ships the goods, the bill of lading has, not surprisingly, been held to operate as a mere receipt for, and document of title to, the goods, and not to operate either as a new contract between charterer and shipowner ( Rodocanachi v Milburn ) or as in any way modifying the charterparty contract ( Temperley Steam Shipping Co v Smyth & Co )
But it is submitted for the shipowners that the position is quite different where the goods are not shipped by the charterer or his agent but the shipper later indorses over to the charterer the bill of lading issued to him. In such circumstances, so it is submitted, the bill of lading becomes the governing document should any claim arise between charterer and shipowner for damage to the goods. The cases commonly cited in the textbooks for this proposition are Calcutta Steamship Co, Ltd v Andrew Weir & Co and Hogarth Shipping Co, Ltd v Blyth, Greene, Jourdain & Co . The essence of the shipowners' case is that the judgment of Megaw J, runs counter to the first of these two decisions, which is said to have remained unchallenged and governed commercial practice ever since. They contend that it was rightly decided, but they also claim that in any event it has been followed for years, that it has been cited without criticism by distinguished authors and editors of legal textbooks, and that it has governed commercial practice ever since it was decided. They appear to be submitting, in effect, that, in these circumstances, even were it wrongly decided, it should now be followed, since "communis error facit jus". But I have yet to learn that our law must or should conform to the mistaken views of textbook authors or editors, however eminent, simply because their mistake has persisted over a long period.
As in every case, Calcutta v Weir is a decision turning on its own facts, and, Hamilton J, having held that the charterers had failed to prove both: (a) that the goods shipped were damaged on the voyage; and (b) that the vessel was unseaworthy, his observations as to the legal position arising where a charterer (not being the shipper) later became the indorsee of the bill of lading were unnecessary to his decision and are largely obiter, although, of course, they command the greatest respect. Be that as it may, as in that case Hamilton J, found as a fact that the goods were shipped under the bill of lading and not under the charterparty, I do not regard it as any authority (and still less a binding authority) for the proposition advanced by the shipowners, which is one to which I am not prepared to assent.
Although Calcutta v Weir is said to have been followed for many years, it is pertinent to enquire whether the proposition which it is said to support has ever been challenged and thereupon received approval. The short answer is that it never has been. The shipowners invite this court to regard the absence of any challenge as pointing to the manifest unassailability of the proposition for which Calcutta v Weir is commonly cited. But the position is really quite otherwise. Although cited in Love and Stewart, Ltd v Rowtor Steamship Co, Ltd , which was also a case where the charter, while not being the shipper, became indorsee of the bill of lading, Lord Sumner (who as Hamilton J, had decided Calcutta v Weir , said ([1916] 2 AC at p 540):
"... in presenting the bill of lading the [charterers] merely did what they must needs do in order to get delivery of their cargo. They received it from Grankull [the seller] under the contract of sale as the symbol of the delivery of goods while afloat. Nothing had occurred by which any contract for the carriage of the goods arose between them and the shipowners other than the charter itself. No new bargain had been made, under which the [shipowners] carried for the [charterers] under a bill of lading instead of a charter."
Those words seem to me to be wholly irreconcilable with the proposition which Calcutta v Weir is said to support, and (if the shipowners are right) it is nothing short of remarkable that Lord Sumner appeared to be conscious of no inconsistency between what he was then saying and his decision of but six years earlier which had been cited to their Lordships.
In the following year, Scrutton LJ, who had unsuccessfully argued the charterers' case as counsel in Calcutta v Weir , said in Hogarth Shipping Co, Ltd v Blyth, Greene, Jourdain & Co ([1917] 2 KB at pp 550, 551):
"... on consideration I agree with the view expressed by Bray, J., in Den of Airlie Steamship Co., Ltd. v. Mitsui & Co., Ltd., and British Oil and Cake Mills, Ltd . ((1912), 17 Com Cas 116 at p 121) that the issuing of bills of lading to a charterer, even though he has assigned them, does not necessarily terminate his rights under the charter. And I think it is, to say the least, very arguable that the charterer here might sue on the charter for failure to deliver, alleging that the clause in the bill of lading, 'weight, & c., unknown', was not a 'condition', and, therefore, not incorporated in the charter."
A little later he added ([1917] 2 KB at p 551):
"I approach the matter, therefore, as a claim under the bill of lading. This bill, though now presented by the charterer, was given to a vendor, who made the goods deliverable to his order. He therefore reserved the jus disponendi and was an independent contractor, and not merely an agent of the charterer. Under these circumstances I agree with the reasoning of Hamilton, J. in Calcutta Steamship Co., Ltd. v. Andrew Weir & Co . that the indorsement of the bill to the charterer, when the latter claims on the bill of lading, does not alter or affect his rights, which are founded on and limited by the bill of lading."
He is, therefore, limiting his agreement with Hamilton J's reasoning to cases where the charterer is claiming on the bill of lading, which was what was being done in Calcutta v Weir . That, of course, is totally unlike the present case where it is the charterparty and nothing else that is being relied on by the charterer.
It follows from what I have said that (despite the assertions over many years in the textbooks) I hold that the law has never been as contended for by the shipowners, and that if Calcutta v Weir (an ex tempore decision at first instance turning essentially on its own facts) did indeed afford support for their contention (which in my judgment it does not), I for myself would not be prepared to follow it. The charterparty in the present case expressly provided that-
"The master or his agent shall sign Bills of Lading at any rate of freight required by the charterers or their agents, without prejudice to this charterparty that at not less than the chartered rate"
And I find nothing which thereafter affected the rights of the parties under that charterparty. In particular, it appears to me that the indorsement over of the bill of lading to the charterers was an incident which, while forming part of the narrative, had no impact on the charterparty. That contract contained an arbitration clause, and nothing has affected its binding force. I would accordingly concur in dismissing this appeal.