Mobil Oil NZ Ltd v The Ship "Rangiora" [Bunkers]

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
AD 877

BETWEEN MOBIL OIL NZ LTD
Plaintiff

AND THE SHIP "RANGIORA" & OTHERS
Defendant/Intervenors

AND AD 881
BETWEEN CANTERBURY STEVEDORING SERVICES LTD
Plaintiff

AND THE SHIP "RANGINUI" & OTHERS
Defendant/Intervenors

AND AD 882
BETWEEN PARTENREEDEREI MS TAKITIMU
Plaintiff

AND THE SHIP "TAKITIMU" & OTHERS
Defendants/Intervenors

AND AD 937
BETWEEN LÖWER HOLDING GmbH
Plaintiff

AND THE PROCEEDS OF THE SHIP "RANGIORA"
Defendant

AND AD 938
BETWEEN LÖWER HOLDING GmbH
Plaintiff

AND THE PROCEEDS OF THE SHIP "TAKITIMU"
Defendant

AND AD1/99
BETWEEN LÖWER HOLDING GmbH
Plaintiff

AND THE PROCEEDS OF THE SHIP "RANGINUI"
Defendant

Hearing: 21, 22, 23, 24, 28, 29 June 1999

Counsel: A.N. Tetley & A.S. Olney for Mobil Oil
J.R. Gresson for Owners & Plaintiff in AD 822
P.A.D. Davies for Löwer Holding GmbH
J.E. Sutton for Mortgagee Banks
M.S. Ryan for Masters & Officers
J. Haigh QC & K.M. Beck for Crew Members
T.J. Broadmore & W.J. McIntosh for Canterbury Stevedoring Services Ltd

Judgment: 10 August 1999

RESERVED JUDGMENT OF FISHER J: BUNKERS

Solicitors:
Russell McVeagh McKenzie Bartleet & Co., DX CX 10085, Auckland for Mobil
Simpson Grierson, DX CX 10092, Auckland for Owners and Plaintiff in AD 822
Jordan Smith & Davies, DX CP 20525, Auckland for Löwer Holding GmbH
Rudd Watts & Stone, DX SP 20009, Wellington for Mortgagee Banks
Garry Pollak, P.O. Box 91288, Auckland for Masters & Officers
Haigh Lyon, DX CP 19014, Auckland for Crew Members
Chapman Tripp Sheffield Young, DX CP 24029, Auckland for Canterbury Stevedoring Services Ltd

Introduction

1. These proceedings involve competing claims upon the proceeds of the sale of the ships "Rangiora", "Ranginui" and "Takitimu" and their bunkers. For resolution at this point is the question whether Mobil takes priority with respect to the bunkers on the vessels at the time of their sale.

Factual background

2. South Pacific Shipping Limited ("SPS") held the three vessels on demise charter through a series of charters and sub-charters from the German owners. From 1992 it had an arrangement with Mobil for the supply of bunker fuel and lubricants. Supplies consisted of a series of individual orders made against the background of a standing supply contract.

3. The first standing supply contract of 27 July 1992 committed SPS to purchasing exclusively from Mobil and contained the terms which would apply to purchases in general. Among other things it provided that "title and risk shall pass on delivery" (cl 1(3)). The agreement was structured in a way which required it to be supplemented by a series of individual orders at which point the parties would expressly or by implication agree upon the specifics of place, time, quantity and delivery. There is no suggestion in the agreement that there would be any other source of standard contract terms.

4. Mobil's invoices, bunker order forms, and delivery receipt forms had various standard printed terms on them. These included some fine print on the back of the invoices. These "terms and conditions" contained a provision:

"Risk: the risk in the goods supplied shall pass to the customer on delivery but ownership in them shall not pass until the customer has made payment in full for them and for all other amounts owing to Mobil by the customer. If any goods are damaged or destroyed prior to risk passing to the customer, Mobil may promptly replace the goods or cancel this contract in respect of such goods without penalty or compensation to the customer other than refunding to the customer the amount of the price paid to Mobil for such goods."

5. It will be observed that insofar as this statement provided that "ownership in them shall not pass until the customer has made payment" there was a direct conflict with the standing supply agreement provision that "title and risk shall pass on delivery."

6. The standing supply contract was reviewed by the parties each year. In the following year, by letter of 22 October 1993, Mobil Oil said it was "making the following offer to you to supply bunker fuel and lubricants on the terms and conditions set out in schedule A and schedule B attached. Please note that this offer is a total offer to be accepted in its entirety." From the parties' point of view the significant change was a renegotiation of prices. The schedules included the provision "documentation: a bunker fuel supply contract will be prepared by vendor and entered into by the parties incorporating the above terms and conditions but otherwise on vendor's standard terms and conditions." All the indications are that no such further contract was in fact prepared. Supplies thereafter continued and Mobil's standard printed forms for bunker orders, delivery receipts and invoices continued to be used.

7. There is no evidence as to the further annual reviews of the standing supply contract until 1995. By letter of 24 October 1995 Mobil wrote to SPS "making the following offer to you to supply bunker fuel and lubricants on the terms and conditions set out in schedule A and schedule B attached. These terms and conditions will supersede our existing contract. Please note that this offer is a total offer to be accepted in its entirety." The detailed terms of supply, including price, then follow. The contract is silent as to when title to the fuel passes. On its face it is comprehensive except that for each order the parties would still need to identify the specifics of place, time, quantity and delivery. The Mobil offer was accepted by SPS in February 1996.

8. It seems that that was the standing supply agreement which was still in operation at the date of the relevant supplies. Despite searches of both Mobil's and SPS's records, no other subsequent document could be found. Although that contract provided for an initial term of only one year from 1 November 1995, it also contained "two options of renewal of one year each by mutual consent". Given the practice of the parties in operating under a standing supply contract of this kind, it seems reasonable to assume that the contract had in fact been renewed to embrace the period in question. That, then, was the standing supply agreement in force at the time that the bunkers now in dispute were supplied by Mobil to the Rangiora, Ranginui and the Takitimu. The relevant supplies were made over a period from 1 December 1997 to 12 February 1999.

9. SPS having fallen into arrears on its charter payments, it was sent a notice of withdrawal of charter on 18 February 1998. It went into voluntary liquidation on the following day. On the next day, 20 February 1998, it accepted that its charters were terminated. Over the next three weeks all three vessels were arrested. The vessels and their bunkers were sold by the Registrar in October and November 1998. Mr Tetley advised that the liquidator of SPS agreed to the inclusion of the bunkers in the sale only on the basis that SPS ownership thereof was reserved.

10. Mobil's claim against SPS is for $1,177,655 but the issue at this point concerns its claim to $230,000 representing the net proceeds of those bunkers still on the vessels at the time of sale. Initially ownership of the bunkers' proceeds attracted a three-way contest between Mobil, SPS and the owners/mortgagees. Then Mobil took from SPS an assignment of all such rights as SPS had to the bunkers. The result is now the current contest between Mobil on the one hand and the owners and mortgagees on the other.

Issues

11. Some background matters are common ground. Mobil sold SPS the bunkers in question under a series of legally valid contracts. The terms of the contracts were drawn from sources which are controversial, but at least included the standing supply contract plus the communications surrounding each individual order. In the absence of any specific term or legal principle to the contrary, title to personal property the subject of a sale by description passes to the purchaser upon delivery or other appropriation to the contract. The passing of title in that way is not dependent upon payment by the purchaser. As a purchaser who had taken delivery, SPS was therefore presumptively the owner of these bunkers. Mobil having taken an assignment from SPS, it is presumptively entitled to the bunker proceeds.

12. The question is whether there was any reason for departing from that prima facie position. Three were argued before me. The first was Mobil's argument that title to the bunkers never left Mobil, given the retention of title clause in the printed conditions on the back of their invoices. The question there is whether the clause in question formed part of the relevant supply contracts. Secondly, the owners/mortgagees argue that for present purposes the bunkers effectively merged into, and became part of, the ship and its proceeds for present purposes. As I understand it that is said to have occurred at the time of arrest or by virtue of the sale by the Registrar. Thirdly the owners/mortgagees argue that such interest as SPS had in the bunkers passed to the owners upon termination of the demise charter pursuant to cl 8 of the charter party. The last argument involves both a legal issue as to the interpretation of the charter party and a factual issue as to whether, in the circumstances of the present case, redelivery of the ships to the owners preceded the liquidation of SPS. If that factual question is reached, counsel ask to defer its resolution. It would apparently involve further evidence, a related question as to whether the parties are bound by an issue estoppel arising from an earlier judgment of Giles J, and a further question relating to the Court's discretion over priorities having regard to the alleged use of some of the bunkers for the benefit of all creditors.

Did a retention of title clause become part of the sale contracts?

13. Written terms become part of a contract only where drawn to the attention of the offeree in circumstances where the offeree ought to have appreciated that they were intended to form part of the contract: Parker v South Eastern Railway Co (1877) 2 CPD 416, 422-423; Harvey v Ascot Drycleaning Co Ltd [1953] NZLR 549. The question is whether notice of the term was reasonable in all the circumstances. The facts in a particular case may show that from a previous course of dealing the offeree must have realised that standard documents issued in the context of previous transactions were intended to apply to current ones: e.g. Spurling v Bradshaw [1956] 2 All ER 121. In the end, however, the question whether the offeree ought to have appreciated that the terms were intended to form part of the contract in question is a question of fact to be resolved in each case.

14. In the present case the standing supply agreement of February 1996 appeared on its face to be a comprehensive scheme for the supply of bunkers but for the specifics of place, time, quantity and delivery. There was no suggestion on the face of the standing supply agreement that SPS would also have to turn their mind to another set of standing supply terms. Indeed the Mobil offer of the last standing supply contract included the statement "Please note that this offer is a total offer to be accepted in its entirety."

15. After executing the 1996 standing supply agreement SPS continued to receive the invoices with standard printed terms in fine print on the back. The invoice was manifestly a standard printed form sent to all customers. In my view SPS was entitled to assume that the standard fine print was intended only for those customers who had not negotiated their own standing supply contracts. There was little point in negotiating a seemingly comprehensive standing supply contract specific to the particular parties if the standard terms and conditions for general customers continued to apply.

16. I do not see anything in the history to change that view. If anything, the conflict between the 1992 standing supply agreement and the terms of the subsequent invoices would have reinforced the impression that the printed terms on the back of the invoices did not apply to SPS. The 1992 standing supply agreement expressly provided for title to pass on delivery whereas the invoices contained a retention of title provision. The two could not stand together. The 1993 standing supply agreement signalled an intention that the parties enter into a further "bunker fuel supply contract" which would incorporate "vendors standard terms and conditions" but this was not pursued. At most, the expressed intention could have alerted SPS to the fact that Mobil did have standard terms and conditions, applicable to customers in general but SPS must be taken to have known that anyway in the light of the invoices they were receiving.

17. Mr Tetley raised a number of arguments to the contrary. One was that it ought to have been obvious to SPS that the standing supply agreement as negotiated was not comprehensive, and that this ought to have alerted them to the realisation that there could be a comprehensive contract only when the printed terms on the back of the invoice were incorporated. I am unable to accept that argument. It must have been clear to all concerned that the standing supply agreement would need to be supplemented by specifics as to date, place, quantity and delivery on an ad hoc basis for each specific supply. But beyond those requirements nothing further seemed to be needed. There was nothing in the printed terms on the back of the invoices which had to be added to the terms of the standing supply agreement before the contract could be considered sufficient and effective from a business viewpoint.

18. Mr Tetley referred to the opinions of two deponents, Mr Traveller and Mr Cameron, as to the application of the printed terms on the invoices. Their conclusions are irrelevant.

19. Mr Tetley also pointed out that the price per unit changed from time to time during the currency of the standing supply agreement. That was said to be another indication that the standing supply contract was patently not comprehensive. However, I note that in the 1996 standard supply agreement the provision as to price was supplemented by a term that "price may be reviewed from time to time as per the mutual option" and "parties may, in the future, agree to vary the contract by including as a pricing option a formula to determine price of bunkers." I do not see anything in that arrangement to warn SPS that there existed another set of standard terms and conditions which were incorporated into the contract.

20. My conclusion is that the retention of title clause contained in the printed conditions on the back of the invoices was never incorporated into the contracts pursuant to which Mobil supplied the bunkers to SPS. It follows that although SPS did not pay for the relevant bunkers, it acquired title to the bunkers as from the date of the respective deliveries.

Merger of bunkers into the ship and its proceeds

21. Given the absence of any relevant retention of title provision, title to the bunkers passed to SPS as the purchaser. It is not disputed that unless there was some event or principle which divested SPS of its interest in the bunkers and their proceeds, the benefit ultimately passed to Mobil by assignment. However, the owners and mortgagees argue that SPS lost its interest in the bunkers by one of two means. The first was merger in the ship and its proceeds.

22. I was referred to no principle or authority to the effect that upon reception into a ship bunkers legally merge with the ship for proprietary purposes. That there is no such principle is I think clear from decisions such as The "St Anna" [1980] 1 Lloyd's Law Rep 180, 182 which proceed on the basis that charterers who have purchased bunkers lose their interest in the bunkers only pursuant to some contractual provision to that effect. Thus at p 182 in that case Sheen J said "It seems to me that if the charterers purchase fuel, that fuel is their property unless the parties clearly and unequivocally agree that the property shall vest in the owners." Miss Sutton sought to distinguish such cases on the basis that SPS had not paid Mobil for the bunkers. However, that overlooks the basis upon which a purchaser acquires title to goods under a conventional agreement for the sale of goods. Even on a sale by description, title passes on delivery or other appropriation to the contract in the absence of positive agreement to the contrary. It is not contingent upon payment.

23. I do not think that anything changes in that respect simply because the ships and bunkers were arrested and sold. Of no help in that regard was the line of cases cited (The "St Anna", supra, and The "Palaquin" (unreported, Federal Court of Canada, Trial Division, Vancouver, Hargrave Prothonotary, 14 June 1996 being examples) concerning the scope of the "ship" for arrest purposes in circumstances where all the relevant property is admittedly that of the ship owner. In those cases it is clear that for arrest and sale purposes the "ship" must be taken to include its permanent structure, components and accessories. But those cases have no bearing upon a contest between the owner of the ship and a third party who has left personal property on it. Nor do bunkers form part of a ship's permanent structure, components or accessories.

24. More helpful is the dictum of Justice Sheen in The "Silia" [1981] 2 Lloyd's Law Rep 534 at 537 that "in the context of an action in rem the word 'ship' includes all property aboard the ship other than that which is owned by someone other than the owner of the ship". That principle seems entirely appropriate to a situation in which a charterer has purchased bunkers. Nor does anything change in that respect merely because the ship has been arrested and sold. Thus in The "Eurostar" [1993] 1 Lloyd's Law Rep 106, where a chartered ship was arrested and sold along with the bunkers, the charterers were held entitled to that portion of the proceeds represented by their bunkers. An incidental aspect touched upon by Sheen J in that case (p 110) was that for the purpose of a mortgage taken over the ship the ship did not include the fuel oil, Sheehan J commenting at p 111 "The word 'ship' does not in its ordinary meaning include fuel. It is common practice for the fuel to be the property of charterers."

25. There is no obvious reason for forfeiting the property of innocent third parties in circumstances where their bunkers and other personal property happen to be on a ship which is the target of claims by creditors of the ship owners. Where it is the charterer which has incurred the relevant debts it might well seem anomalous that the party which incurred the debts should have its property exempted, while the owners carry the burden of claims against the vessel itself. But to extend the "ship" to the charterer's property would require either legislation or the judicial invention of anovel principle. In the international field of admiralty law one should be slow to embark upon novel journeys of that kind. Nor would there seem to be anything to prevent creditors from obtaining charging orders over bunkers without resorting to special principles peculiar to admiralty.

26. Returning, therefore, to fundamental property principles, I conclude that the bunkers remained the separate personal property of SPS after they were stored in the ship. SPS, and now its assignee Mobil, is entitled to trace that ownership through to the proceeds of sale subject to any intervening rights under the terms of the charter party.

Did the contract provide for SPS to lose its interest in the bunkers upon redelivery?

27. SPS held the vessels pursuant to a Barecon standard 89 bare-boat charter. In addition to the 26 standard printed Barecon clauses, clauses 27 to 44 were drafted for the occasion. Although there were other charters in the chain between SPS and the ultimate owners, counsel were content to treat the SPS charter as definitive of the contractual rights affecting SPS and, indirectly, its relationship with the owners. I have proceeded on the same basis. It will be convenient to refer to rights owed to "owners" although strictly speaking there was a chain of intermediate relationships. The argument was conducted by reference to the charter relating to the Rangiora. I will assume that there were no material differences in the case of the other two vessels.

28. SPS's charter of the Rangiora ran for a period of 36 months from 10 May 1995 plus 12 months at the charterer's option. It provided for a number of rights and obligations associated with redelivery of the vessel by the charterer to the owners. The critical one for present purposes is cl 8 which provided:

"A complete inventory of the Vessel's entire equipment, outfit, appliances and of all consumable stores on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Charterers and the Owners, respectively, shall at the time of delivery and redelivery take over and pay for all bunkers, lubricating oil, water and unbroached provisions, paints, oils, ropes and other consumable stores in the said vessel at the then current market prices at the ports of delivery and redelivery, respectively."

29. As to the meaning of "redelivery", cl 14 provided:

"14. Redelivery

The Charterers shall at the expiration of the Charter period redeliver the Vessel at a safe and ice-free port or place as indicated in Box 16. The Charterers shall give the Owners not less than 30 running days' preliminary and not less than 14 days' definite notice of expected date, range of ports of redelivery or port or place of redelivery. Any changes thereafter in Vessel's position shall be notified immediately to the Owners.

Should the Vessel be ordered on a voyage by which the Charter period may be exceeded the Charterers to have the use of the Vessel to enable them to complete the voyage, provided it could be reasonably calculated that the voyage would allow redelivery about the time fixed for the termination of the Charter.

The Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted.

The Vessel upon redelivery shall have her survey cycles up to date and class certificates valid for at least the number of months agreed in Box 12."

30. Clause 32 also materially provided:

"Delivery/Redelivery

The delivery place shall be wherever the vessel is positioned in the Austral-Range. The place of redelivery shall be wherever the vessel is positioned in the North-Sea-Range."

31. Redelivery attracted a number of stipulated rights and obligations. These included obligations on the part of the charterer to pay for an off-survey (cl 6), to prepare an inventory of equipment, outfit, appliances and consumable stores (first limb of cl 8), to take over and pay for bunkers and other items (second limb of cl 8), to ensure that the vessel was in the same or as good structure, state, condition and class (cl 14), to have survey cycles up to date and class certificates valid (cl 14), to pay for dry dock charges, tugboats and pilots (cl 32), and to return substantially the same equipment outfit and appliances and quality and quantity of consumable stores (cl 33). For the most part these provisions appear to have been inserted for the benefit of the owners although provisions such as cl 8 also imposed obligations on the owners.

32. The facts concerning the termination of the charter and return of possession to the owners in the present case have yet to be fully traversed but I understood the following to be common ground:

(a) SPS had been in arrears on its charter payments for a substantial period.

(b) On 18 February 1998 the owner (in all these references to other parties I ignore the sub-charters involved) gave notice of withdrawal of the charter pursuant to cl 10(e) which provided: "Time shall be of the essence in relation to payment of hire hereunder. In default of payment beyond a period of 7 running days, the owners shall have the right to withdraw the vessel from the service of the charterers without noting any protest and without interference by any court or any other formality whatsoever...". These were sent by facsimile to SPS.

(c) On 19 February 1998 SPS was placed into voluntary liquidation.

(d) On 20 February 1998 Canterbury Stevedoring and Mobil commenced in rem proceedings against Ranginui and Rangiora respectively, Rangiora being arrested on this day.

(e) At 1700 hours on 20 February 1998 the liquidator of SPS sent Deil (the party from whom it had sub-chartered) a letter acknowledging receipt of the letters of termination and stating that SPS "accepts the termination in respect of those charter parties is of immediate effect. In all other respects the liquidators reserve their position."

(f) Thereafter possession of the vessel was returned to agents for the owners on a co-operative basis.

33. The precise timing and legal basis for termination is yet to be determined. On one view the charter was terminated by Deil for non-payment, the termination being effected by the facsimile transmissions of 18 February 1998. The other possibility is that because Deil had permitted arrears to remain outstanding for a substantial period, reasonable notice was required before the charter could be terminated for non-payment. If that contention prevails, the charter would have been brought to an end by mutual agreement at 1700 hours on 20 February 1998.

34. The question is whether a premature termination of the charter due to non-payment, or by mutual agreement, triggers the mechanism for owners to "take over and pay for all bunkers" in terms of cl 8 of the charter. And if cl 8 can apply to premature terminations of that nature, the further question would be whether the events which occurred involved a "redelivery" for that purpose.

35. Unguided by authority there might have been more room for argument over the scope of the "take over and pay" provisions of cl 8. However, SPS and Deil must be taken to have entered into this charter in the knowledge that the scope of a similar clause in the context of a time charter had already been determined in the leading House of Lords decision of The "Span Terza" [1984] 1 Lloyd's Law Rep 119. On the wording of the charter party in that case, it was held that a "take over and pay" provision was confined to redelivery at the expiration of the contract term, and even then seemingly only if the return of possession took place in accordance with the prescribed formula for redelivery. Because of the importance of the "Span Terza" for the present case I set out the two key clauses it involved:

"3. That the Charterers, at the port of delivery, and the owners, at the port of redelivery, shall take over and pay for all fuel remaining on board the vessel, the vessel to be delivered with not less than 125 tons and not more than 175 tons IFO plus 30 tons min/50 tons max DO and to be redelivered with not less than 350 and not more than 400 tons IFO and 50 tons min/70 tons max DO. Prices: current price at port of delivery, on redelivery same prices for the quantity as on delivery market price for balance.

4. That the Charterers shall pay for the use and hire of the said vessel at the rate of U.S. $5,200 (five thousand and two hundred) per day first year U.S. $5,400 (five thousand and four hundred) per day second year United States currency commencing on and from the day of her delivery, as aforesaid and at and after the same rate for any part of a day; hire to continue until the hour of the day of her redelivery in like good order and condition, ordinary wear and tear expected, to the owners (unless lost) at dropping outward sea pilot one port Gib./Skaw range including U.K. ... Charterers are to give owners not less than 20 days approximate notice of vessels expected date and range of redelivery 7 days notice of expected port, and 4 days notice of final port."

36. In that case the charter was for a term of two years but cl 71 gave the charterer the option of earlier cancellation "if the vessel remains off hire continuously for longer than 25 days". In the event the vessel was arrested on the strength of proceedings issued against the owner. After the expiration of 25 days the charterer cancelled in exercise of its rights under cl 71. Delivering the principal judgment Lord Diplock said (p 122):

"Cancellation either under cl. 71 or cl. 58 might take place at any time during the period of the charter-party and might do so while the vessel was at sea in the course of a laden voyage, or was stranded, or was at a port within the World Wide Trade range that was not a port of redelivery; and in any of these events the quantity of bunkers on board at the time the right to give notice of cancellation arose would be a matter of chance and would be unlikely to be within the low limits for which cl. 3 provides. If, as a matter of construction, the express terms of cl. 3 are apt to deal with termination of the charter-party by a valid notice of cancellation as well as redelivery at the termination of the charter by effluxion of time, that clause must be applicable to each of these eventualities.

My Lords, I agree with Lord Justice Kerr that cl. 3 and the latter half of cl. 4 deal with the same subject-matter and are confined to it. The latter half of cl. 4 deals with the redelivery of the vessel (i.e., its being put once more at the disposal of the shipowners by the charterers) on dropping outward sea pilot at a port within the redelivery range at the end of the contract period; in casu, about two years, 45 days more/less, from the date of delivery. Clause 3 deals with what is to happen to the bunkers aboard the vessel at the time of that redelivery. I share the view of Lord Justice Kerr that as a matter of construction its express provisions are wholly inapt to apply to termination otherwise pursuant to cl. 4."

37. At least on the wording of that charter party, the view taken was that the "take over and pay" provision in cl 3 was confined to redeliveries at the expiration of the charter term, and moreover apparently only redeliveries taking the particular form provided for in cl 4. As it happened, in that case the arrest had taken place at one of the ports nominated for a redelivery but that was fortuitous. There was no process of redelivery "at dropping outward sea pilot" at the required port. Even more importantly, the redelivery did not take place at expiration of the charter term. Consequently the provision for taking over bunkers did not come into operation.

38. If the "take over and pay" provision in cl 8 of the present case were tied to redelivery under cl 14 in the same fashion as the "Span Terza" charter, the owners/mortgagees in the present case must fail. Three conditions for redelivery in terms of cl 14, and therefore the passing of title under cl 8, would be lacking. Possession was retransferred at a time other than the expiration of the charter period. The charterers had not given the necessary periods of notice. Redelivery did not occur at one of the ports specified for redelivery (somewhat inconsistently, the charter required redelivery in the "North Europe-range" under box 16, and "North-Sea-range" under cl 32, but nothing seems to turn on this).

39. One must, of course, be cautious about transposing judicial interpretations of one document to another. However "Span Terza" is a decision of the highest authority in an area of international commercial routines. The parties must be taken to have had knowledge of it. The question is whether there are grounds for distinguishing it.

40. The interpretation adopted in "Span Terza" appears to have turned at least principally upon the consequences of termination of the charter at a time other than the expiration of the charter term. Lord Diplock pointed out that the vessel could be at sea in the course of a laden voyage, or be stranded, or be at a port other than one specified for redelivery. The quantity of bunkers might fall outside the range specified in the "take over and pay" provisions of cl 3.

41. The quantity of bunkers point does not seem applicable to the present charter. Unlike cl 3 of the "Span Terza" charter, the "take and pay for" provisions of cl 8 did not specify a range within which the quantity of bunkers had to fall at the time of redelivery. Clause 33 required substantially the same amount of "consumeable stores" (sic) as on delivery, but the indications from cl 8 are that this expression does not extend to bunkers. Consequently there appears to be no equivalent in the present case to the "Span Terza" anomaly that upon a premature termination of the charter the ship might be carrying the wrong quantity of bunkers.

42. However the other points made in "Span Terza" do seem applicable. Upon a premature termination of the charter the location of the ship would be fortuitous and it might be on a laden voyage or stranded. In circumstances of that nature it might be difficult or impossible to give full effect to the contemplated consequences of a "redelivery" as that term is used elsewhere in the charter party. It is far from clear that the owners would want to be committed to taking over the bunkers in circumstances where the timing, and the location and circumstances of the vessel, would be impossible to predict.

43. I do not think that other differences between the "Span Terza" charter and the present one are material. The "Span Terza" involved a time charter as distinct from a demise one but nothing seems to turn on that. There are obviously differences between the precise wording of clauses 3 and 4 in "Span Terza" and clauses 8 and 14 in the present case but for present purposes their effect seems the same. If anything, the heading "redelivery" for cl 14 in the present case might be taken to reinforce the notion that that clause was intended to define the scope of the expression "redelivery" for the rest of the document.

44. My conclusion is that the present charter should be interpreted in the same fashion as the "Span Terza" one. That makes it unnecessary to go on to consider further arguments advanced concerning the inherent meaning of the word "redelivery" and whether elements of voluntariness and affirmative action might have been lacking.

45. I conclude that the termination of the charter parties for these three vessels did not result in a transfer of title in the bunkers from SPS to Deil or the owners. Title to the bunkers having remained with SPS, Mobil subsequently acquired it by assignment.

Result

46. In respect of all three vessels the Registrar is to pay to Mobil at the expiration of seven days that portion of the sale proceeds derived from the bunkers together with such interest as may have been earned in respect thereof. Leave is reserved to apply for directions as to the precise sums if required. Costs are reserved.