Newocean Petroleum Co Ltd v. O.W.Bunker China Ltd (in Provisional Liquidation) and Another

HCA 381/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 381 of 2015

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D E C I S I O N
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1.This was an application by Cosco Petroleum Pte Limited (“D2”) by summons dated 9 September 2015 to set aside the order of Master S Lo dated 27 April 2015 granting leave to NewOcean Petroleum Company Ltd (“P”) to issue and serve the concurrent writ of summons on D2 out of the jurisdiction. At the conclusion of the hearing, judgment was reserved which I now give.

2.P was the physical supplier of bunkers on board Motor Vessel (“MV”) Cosco Felixstowe and MV Navios Fulvia on about 22 October and 25 October 2014 respectively but has not been paid.  The underlying action was brought to recover the price of the bunkers supplied.

3.Set out below is an account of the relevant contracts and events relating to the supply of bunkers on board the Felixstowe.  I do not propose to deal with the background facts of the Navios Fulvia as I am given to understand by the parties that the supply of bunkers to the Navios Fulvia follows a similar pattern and the decision in relation to the Felixstowe matter would be applicable to both matters.

BACKGROUND FACTS

4.P (the physical supplier) entered into a contract on 8 October 2014 with the 1^st defendant, OW Bunker China Ltd (“OWBC”), for delivery of 1,900 metric tons (“MT”) of bunker fuel on or about 19 October 2014 to the vessel Felixstowe in Hong Kong at US$528 per MT.  For convenience, that contract will hereafter be referred to as “the P–OWBC contract”.

5.For present purposes, I will proceed on the basis that the plaintiff’s General Terms and Conditions of Sale (“GT&C”) applied to the P–OWBC contract.

6.On the same day Cosco Container Lines Co Ltd (“the owner”) placed an order with D2, which is a bunker trader, for 1900 MT of bunker fuel at US$598 per MT for delivery to its vessel Felixstowe in Hong Kong, expected time of arrival on 20 October 2014.  It is unclear whether this contract had been concluded prior to the making of the P–OWBC contract which would be logical.

7.A chain of contracts ensued.  On the same day (8 October) D2 entered into a contract with OW Bunker Far East (S) Pte Ltd East (“OWBS”) who agreed to supply the bunkers required.  The supply contract between D2 and OWBS will be referred to as “the D2–OWBS contract”.  The price stated was US$597 per MT.

8.In the Sales Order Confirmation dated 9 October 2014 (“the October confirmation”) issued by OWBS to D2, there was a reference to OWBC as “supplier”.

9.D2 did not know until much later (in fact only on 19 November 2014) that on 9 October 2014 OWBS entered into a back‑to‑back contract with its associated company OWBC to purchase from OWBC the bunkers required for delivery to the Felixstowe at US$595 per MT.

10.On 22 October 2014, the plaintiff supplied the bunkers on board the Felixstowe as per the P–OWBC contract and issued a commercial invoice to OWBC the following day for US$998,912.64 as per the P–OWBC contract.

11.On 22 October 2014, OWBS issued an invoice to D2 for US$1,129,452.36 (at US$597 per MT).

12.On 29 October 2014, D2 issued an invoice to the owner for US$1,131,344.24 (at US$598 per MT).

13.On about 5 November 2014, the parent company of the OW Bunker Group (“the OWB Group”), the world’s largest seller and supplier of bunkers, uncovered a major fraud in its Singaporean subsidiary.  On 6 November 2014, the parent company announced that it expected the OWB Group to be insolvent.  On 12 November 2014, D1 was put into receivership and on 25 February 2015, a winding up order was made in respect of OWBC.

14.Since the commencement of these proceedings, D2 has made payment to the ING Bank, the assignee of OWBS’s receivables in respect of the D2–OWBS contract.

15.P issued a generally endorsed writ on 18 February 2015 against OWBC and D2.  On 27 April 2015, on P’s ex parte application, the Master granted leave for a concurrent writ to be issued out of Hong Kong on D2 which is resident in Singapore.  The concurrent writ was issued on 2 June 2015.

THIS APPLICATION

16.This summons to set aside the Master’s order was taken out on 9 September 2015 on one or more of the following grounds:

(i) P failed to establish a good arguable case that its claims against D2 fall within the Rules of the High Court, Cap 4A (“RHC”) Order 11, rule 1(1)(d) or rule 1(1)(f);

(ii) P failed to establish that there is a serious issue to be tried on the merits of its claims; and/or

(iii) P failed to make a full and frank disclosure.

17.In the supporting affidavit of Mr Fung Chi Man (“Mr Fung”) for the service out application, Mr Fong stated that:

(i) D2 was “the ultimate buyer and/or end user of the said bunkers and/or Time Charterers of the said vessel(s)” (§9).

(ii) D1 and/or D2 contracted for the bunkers (through agent or otherwise) with P for the two vessels (§13).

(iii) P’s GT&C formed part of the agreement between the parties (§19(a)).

(iv) P had a good arguable case under contract (pursuant to Order 11, rule 1(1)(d) of the RHC), while OWBC was the party which directly placed bunkers orders with P, “the relationship between [OWBC and D2] is not entirely clear and [D2] does not dispute that it was the ultimate buyer and/or end user of the said bunkers and/or Time Charterers of the said vessel(s), and that it has not paid for the price of the bunkers” and “pending clarification/further evidence as regards the relationship between [OWBC and D2], [P] has reasons to believe that the Contracts were entered into by [OWBC] either on its own behalf, or as agent on behalf of [D2] …” (§§20 – 21).

(v) Alternatively, P had a good arguable case for conversion and for bailment against D2.

(vi) The claim for conversion stems from the retention of title or is to be found in clause 11(a) of the GT&C.

18.At the hearing, the plaintiff dropped its bailment argument.

19.It would be convenient to deal with the conversion claim first since that became the main focus of the submissions of Mr Sussex SC, who appeared for P.

I.  THE CLAIM IN CONVERSION

20.Central to P’s submissions on the subject is the effect of its retention of title clause.  Clause 11 of the GT&C reads:

“11. PASSING OF RISK AND RETENTION OF TITLE

Subject to any provision to the contract in the Sales Contract and/or the Bunker Requisition Form:

(a) The Seller shall retain the legal and equitable title to the Marine Fuel which shall only pass to the Buyer when the seller has received in full the price and all amounts due in connection with the respective delivery.

(b) Prior to the Seller receiving the price and all amounts due referred to in sub‑paragraph (a) hereof, the Buyer shall hold the Marine Fuel and/or the price and/or any proceeds of sale as bailee and/or trustee for the Seller without prejudice to the Seller’s right to assert a maritime lien, attachment or claim against the Vessel more particularly set out in Clause 5 hereof.”

21.Clause 5(a) was a provision conferring on P the right to assert a maritime lien against the vessel and was expressed to be binding upon the buyer as well as the owner.  Sub‑clause (b) reads:

“(b) Without affecting the generality of item (a) above, the Buyer and the owner of the Vessel (if not being the Buyer) warrants that the Marine Fuel to which the Vessel supplied shall:

(i) be for the operation of the Vessel and the Vessel only; and

(ii) before payment of the price of the Marine Fuel has been made in full, and Marine Fuel shall be clearly identified as products supplied by the Seller and shall not be mixed with any other fuel or lubricant from any third party …”

P maintains that it had an effective retention of title provision by virtue of those clauses.

22.In (1) PST Energy 7 Shipping LLC (2) Product Shipping and Trading SA v (1) OW Bunker Malta Ltd (2) ING Bank NV, “Res Cogitans” [2015] EWHC 2022 (Comm), 14 July 2015, Males J had to consider the nature of a typical contract for the supply of bunkers.  His judgment featured prominently in the parties’ submissions.

23.In that case, the Owners placed an order with OW Bunker Malta Ltd (“OWBM”) for the supply of bunkers to a vessel subject to the OWB Group’s 2013 Terms and Conditions of sale for Marine Bunkers (“the OWB terms”). OWBM did not supply the bunkers itself but placed the order with its parent OW Bunker & Trading AS (“OWBAS”) who in turn placed an order with Rosneft Marine (UK) Ltd (“Rosneft”) while Rosneft placed the order with its Russian subsidiary RN‑Bunker Ltd (“RN‑B”), the physical supplier.

24.The Owners refused to pay ING Bank NV (“ING”), the assignee of OWBM’s rights under the contract, and began arbitration proceedings against OWBM and ING seeking a declaration that they were not bound to pay either of them.  The arbitrators made an interim award.  The parties appealed by agreement on a number of questions of law.  The central issue concerned the nature of the contract.

25.The OWB terms provided, inter alia, that:

“H. TITLE

H.1 Title in and to the Bunkers delivered and/or property rights in and to such Bunkers shall remain vested in the Seller until full payment has been received by the Seller of all amounts due in connection with the respective delivery. The provisions in this section are without prejudice such other rights as the Seller may have under the laws of the governing jurisdiction against the Buyer or the Vessel in the event of non‑payment.

H.2 Until full payment of the full amount due to the Seller has been made … the Buyer agreed that it is in possession of the Bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel, nor mix, blend, sell, encumber, pledge, alienate, or surrender the Bunkers to any third party or other Vessel.” (emphasis added)

26.The judge in dismissing the Owners’ appeal held that the contract was not within the Sale of Goods Act 1979 and that the true nature of the parties’ bargain was that OWBM would deliver or arrange for delivery of the bunkers, which the Owners would be immediately entitled to use for the propulsion of the vessel.  He went on to explain (at §46) that:

“… the permission or licence to use the bunkers conferred by clause H.2 necessarily meant, not only that OWBM itself gave such permission but that OWBM was or would be in a position to give such permission to the Owners on behalf of whichever entity in the supply chain was or would become the owner of the bunkers.”

27.The appeal from Males J was restricted to the question whether the contract between the Owners and OWBM was a contract for the sale of goods within the Sale of Goods Act 1979 and whether OWBM could sue for the price.  The Court of Appeal dismissed the Owners’ appeal.

28.Mr Sussex SC, who appeared for P, adopted Males J’s analysis in Res Cogitans, focusing on the twin obligations of D2/OWBC in the present case not only to arrange a supply of bunkers but also to procure permission from the owner for immediate consumption of the bunkers upon delivery for the purpose of propulsion of the vessel.  He submitted that there is a material difference between the OWB terms and P’s GT&C.  The latter do not give any permission or licence for the bunkers to be consumed for the purpose of propulsion, express or implied.  He submitted that by virtue of clause 11 of the GT&C (see §20 above), P has an effective retention of title clause and has every right to sue in the tort of conversion if the bunkers have been consumed without payment.

29.In summary, P submitted that while it is a fact that P delivered the bunkers to the vessel, the GT&C provide that the bunkers must be kept separate.  It would not be legitimate to draw a blanket inference that a physical supplier, who hands over bunkers to a vessel but on specific terms, necessarily is consenting to the bunkers being consumed.  A valid title retention clause in those circumstances could give rise to the possibility of a claim in conversion.  It is an issue of fact as to whether P gave the necessary consent to render it impossible to sue in the tort of conversion.

30.Mr Sussex SC submitted that P has a good arguable case in relation to Order 11, rule 1(1)(f) of the RHC in that the claim is founded on the tort of conversion, and the damage was sustained or resulted from an act committed within the jurisdiction.  The bunkers went on board within the jurisdiction and such permission as was given by D2 to immediate consumption was effective within the jurisdiction.  It was said that conversion is not just about burning the bunkers; it can also be represented by the intermediate bunker supplier giving consent to the purchaser/owner to consume the bunkers immediately when it had not obtained the necessary permission up the chain.

31.The court was informed that the United Kingdom Supreme Court granted the Owners leave to appeal shortly prior to the present hearing on 19 February 2016.

32.In response, Mr Coleman SC (who appeared for D2) made the following submissions, the principal ones being the first two that relate to the issue of consent.

(1)  P’s consent to the use of the bunkers

33.It was submitted that P’s own evidence shows that it consented to the consumption of the bunkers.  In §25 of the affirmation dated 30 November 2015 of Ms Lu Bi Qi (“Ms Lu”), P’s marketing director, explained the industry practice where (as here) there is a chain of contracts for the supply of bunkers comprising a physical supplier, a bunker trader and a physical user.  In pertinent part it reads:

“[o]rdinarily, the physical supplier delivers the bunkers on board the vessel, and it is expected that the physical user would immediately consume the bunkers. …” (emphasis added)

In those circumstances, it was submitted that P clearly gave effective consent to the use of the bunkers.

(2)  No material difference between the OWB terms and P’s GT&C

34.Clause 5(b) of the GT&C is set out again for ease of reference:

“(b) … the Buyer and the owner of the Vessel (if not being the Buyer) warrants that the Marine Fuel to which the Vessel is supplied shall:

(i) be for the operation of the Vessel and the Vessel only; and

(ii) before payment of the price of the Marine Fuel has been made in full, the Marine Fuel shall be clearly identified as product supplied by the seller and shall not be mixed with any other fuel or lubricant from any third party …”

It was submitted that sub‑paragraph (i) specifically authorised consumption before payment, that substantial similarity exists between that provision (GT&C clause 5(b)) and clause H.2 of the OWB terms and there is no meaningful distinction between them.

(3)  D2 was not involved in the act of conversion

35.The allegation of P is that D2 gave permission to the owner to consume and that was effective within the jurisdiction.  It was submitted that as D2 (being a Singaporean company) was not involved in the bunker supply process at all and could not have told the owner to go ahead and consume the bunkers.  Rather it was P that supplied the bunkers to the vessels and authorized and expected the owner to consume the bunkers immediately “for the operation of the vessel”.

(4)  Damage not sustained nor resulted from act committed within the jurisdiction

36.As to P’s submission that any loss was obviously suffered by P within the jurisdiction because the bunkers were consumed, Mr Coleman SC drew attention to the fact that ordinarily, the vessel having bunkered up would leave Hong Kong and go on a voyage.  It cannot be demonstrated that the loss (the consumption of the bunkers) occurred in Hong Kong.

37.Having considered the parties’ submissions, I set out my conclusions below.

(A)  Whether there was consent

38.On the question whether there is a material difference in the terms of the two contracts, I consider it arguable that there is.  Unlike clause H.2, arguably the two sub‑paragraphs in clause 5(b) do not collectively or individually expressly authorize consumption before payment and that sub‑paragraph (ii) arguably militates against consumption before payment.  Nothing in clause 5(b) appears to confine or limit the warranty as to user contained in sub‑paragraph (i) to the period prior to payment: the warranty operates and takes effect before as well as after payment.  Further, payment does not feature at all in sub‑paragraph (i).

39.Clause H.2 of the OWB terms on the other hand is clearly dealing with the question of consumption during the period prior to payment, specifying what could or could not be done to the bunkers.  It is an unambiguous authorization to consume the bunkers for propulsion purposes prior to payment but such authorization cannot be found in the GT&C.

40.I consider it arguable that there is a ‘material’ difference.  Significantly, the two provisions are also differently structured: in the GT&C clause 5(b)(i) takes the form of a warranty as to user with no time limit; in the OWB terms clause H.2 is expressed as an exception to the restriction on the right of user before payment.

41.Mr Coleman SC then cited one sentence from §25 of Ms Lu’s affirmation to show the giving or conferring of consent.  That part of §25 has already been described in §33 above.  Ms Lu then went on to say this:

“The physical supplier is then paid by the bunker trader, who would in turn be paid by the physical user. So long as the bunker trader paid the physical supplier (and before the demise of the [OWB Group] this inevitably took place), the physical supplier was not concerned about what rights it had against the physical users. In other words, the question of whether the physical user was under any direct liability to the physical supplier was an academic question that was never considered properly by anyone within the industry. There was no customary understanding within the industry that the physical user could consume the bunkers without incurring any direct liability in tort or bailment to the physical supplier.” (emphasis added)

42.Ms Lu was acknowledging a state of affairs that is of common occurrence to explain the ‘expectation’ of immediate consumption, remarking that no one had addressed the legal consequences that would arise upon an insolvency arising in the chain.  It would appear that Ms Lu was not purporting to grant anyone any ‘consent’ to immediate consumption of the bunkers before payment but was merely recounting the normal practice and course of events.  In the circumstances, I consider it arguable that the ‘expectation’ could not be transmogrified into authorization or consent.

43.In my view, it is arguable that, as a matter of construction, clause 5(b) does not support any inference of consent.

44.In Res Cogitans, Males J (at §51) inferred such consent from the mere fact of delivery of the bunkers to the vessel knowing that they would or might be consumed straight away.  However, the Court of Appeal (at §38) was critical of that approach and considered that the matter should have been left to the arbitrators to make the appropriate finding of fact.

45.For those reasons, I do not agree that it is not arguable that there are material differences between clause H.2 of the OWB terms and clause 5(b) of the GT&C and/or that there was no consent (express or implied) on the part of P to immediate consumption before payment.  Should P ultimately prevail, it would mean that D2 has paid ING/OWBS for a consideration that has failed.

(B) Other issues

(a) Involvement in the act of conversion

46.The nub of D2’s submission appears to be that for there to be an act of conversion, physical participation of the tortfeasor in the act of conversion must be shown.  Hence the emphasis made of D2 being a Singaporean entity, located in Singapore and not being involved in the actual supply process.

47.In the present case, as OWBS was contractually obligated to procure a certain state of affairs (ie that consent to consumption be obtained from the physical supplier) under the D2–OWBS contract.  It is a fair inference that the twin obligations mirrored D2’s own obligations under its contract with the owner — to supply the owner with bunkers that they could consume immediately before payment.  Mr Sussex SC contended that in those circumstances conversion could also be represented by D2 saying to the owner “Go ahead, consume the bunkers”, that being the effect of the contractual obligations it had undertaken.

48.I consider it arguable on the facts that there was an act of conversion in the sense of D2’s involvement in an act that is inconsistent with the rights of the person with the possessory or proprietary rights to the bunkers by causing their delivery for immediate consumption.

(b) Whether damage sustained or resulted from an act committed within the jurisdiction

49.The loss to P is realised upon consumption of the bunkers.  Although Mr Coleman SC submitted that having bunkered up, the vessel would depart on a voyage it does not follow that no part of the loss would have occurred within the jurisdiction.  Whether the loss or what part of it was realised within the jurisdiction raises an issue of fact.

50.As regards the appeal of Res Cogitans to the Supreme Court, Mr Sussex SC and Mr Coleman SC had different views as to the scope of the appeal and what issues would be addressed by the Supreme Court other than the central issue which is whether the contract was one within the Sale of Goods Act.  It is to be noted that the question of agency did not arise in Res Cogitans and consent to consumption was not an issue in the courts below.  But at this point it is impossible to predict whether and, if so, how relevant the Supreme Court decision is likely to be to the issues in the present case.  It is not a factor that I have taken into consideration in reaching my conclusions.

Conclusion on the claim in tort

51.In my view, P has shown that it has a good arguable case against D2 for the tort of conversion within RHC Order 11, rule 1(1)(f) and that there is a serious issue to be tried.

II.  THE CLAIM IN CONTRACT

52.The contractual claim P advanced at the hearing was linked to its submissions on conversion, which was not the case at the application stage.  The link is Males J’s analysis of the OWB terms in Res Cogitans that the contracts in question are not a series of sale and sub‑sale contracts but are supply contracts.

53.A supply contract involves not only the supply of the bunkers but also the obtaining of consent from the physical supplier to immediate consumption so that the owner has a lawful right to use the bunkers and not an under lawful possession which exposes them to liability to the true owner.  An intermediate bunker trader implicitly takes on the obligation of securing the necessary permission.

54.As I understand the argument, if the intermediate bunker supplier (D2) is not contracting with the supplier but with another intermediate bunker supplier, the latter must obtain the bunkers from someone else.  Given the contractual obligations of OWBS to D2 under the D2–OWBS contract, as OWBS itself was not the supplier, by necessary implication, D2 would have authorised OWBS to do what was necessary in order to discharge its twin obligations to D2.

55.The chain of contracts in the present case is represented by the following diagram:

Owner (of vessel)―D2―OWBS―OWBC―P (physical supplier)

All the contracts were made on 8 October except the OWBS–OWBC contract that was made the following day but at the time of the D2–OWBS contract, OWBS knew that OWBC would be the “supplier”. Because of the requirement to secure permission or consent for immediate consumption, there has to be a relationship all the way through the chain of supply contracts ending with the contract with the physical supplier from whom the permission or consent is to be obtained.  On that basis, it was submitted that it must be arguable that the relationship is an agency relationship through the chain of supply contracts because, in part, the consideration for the supply contract takes the form of securing consent to consumption up the chain to the physical supplier.

56.Order 11, rule 1(1)(d) of the RHC deals with the gateway through contract.  It reads:

“(d) the claim is brought to enforce, rescind, dissolve, annul or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of a contract, being (in either case) a contract which‑

(i) was made within the jurisdiction, or

(ii) was made by or through an agent trading or residing within the jurisdiction on behalf of a principal trading or residing out of the jurisdiction …”

57.In Seaconsar (Far East) Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438 at 454H–455A, Lord Goff addressed the question of what is required for the purpose of establishing jurisdiction under paragraph (d):

“… what has to be sufficiently shown by the plaintiff for the purpose of establishing jurisdiction is, in the case of, for example, sub‑paragraph (i), not merely that (1) there was a contract, and (2) such contract was made within the jurisdiction. Likewise, under sub‑paragraphs (ii), (iii) and (iv), the existence of the relevant contract has to be sufficiently proved.”

While the passage makes clear what has to be sufficiently shown for the purpose of establishing jurisdiction under sub‑paragraph (i), it is less illuminating as regards sub‑paragraph (ii) relating to agency that is relevant for present purposes.

58.Mr Coleman SC submitted that as P’s case is that D2 is bound by the acts of D1 in respect of the P–OWBC contract, the relevant contract that has to be sufficiently shown must be the contract of agency between D2 and D1.  He highlighted the following matters:

(i) There is no evidence of any contact at all between persons at P and D2 by which D2 can have given any representation that OWBC was authorized to act for it.

(ii) Even if D2 was aware of some involvement of OWBC, its name having been mentioned as “supplier” on the invoice from OWBS to D2 (see §8 above), there is no evidence that D2 was aware of P’s involvement at the time.

(iii) The fact that D2 entered into a separate contract with OWBS for the supply of the same bunkers could hardly create or evidence an agency relationship between D2 and OWBS (let alone D2 and OWBC).

(iv) The contracts between OWBC and OWBS and between OWBS and D2 were not made within this jurisdiction (ie Hong Kong).

(v) At the ex parte stage, P did not positively assert that D2 entered into a contract with P “through an agent trading within the jurisdiction”.  Rather, all P said was that “pending further clarification/further evidence”, the relationship between the two was “not entirely clear” and P “has reasons to believe that the Contracts were entered into by [OWBC] either on its own behalf, or as agent on behalf of [D2]”.

(vi) There was no elaboration of the agency argument to explain the role of OWBS.

59.P was also criticised for shifting its case in that it was never premised on OWBC’s role in obtaining permission to consume the bunkers.

60.The key question is what P needs to show in order to satisfy the requirements of Order 11, rule 1(1)(d)(ii) of the RHC.

61.Agency relationships can arise in a variety of situations, what may be required is fact sensitive and would depend on the facts of the particular case.

62.As noted in §§54 – 55 above, what one has here (proceeding on the Res Cogitans analysis) is a supply contract involving unusual obligations.  D2 itself did not contract with the physical supplier.  It entered into the D2–OWBS contract (a supply contract) under which OWBS, an intermediate bunker trader, undertook obligations that included obtaining the necessary consent from the physical supplier.

63.The October confirmation issued by OWBS for that contract mentioned OWBC as “supplier”.  That disclosed the fact of OWBC’s involvement in the supply chain, viz that the bunkers were to be obtained from or through OWBC such that OWBC would be involved in discharging the obligations under the D2–OWBS contract.  OWBC was not the physical supplier but entered into a supply contract with OWBS, undertaking to discharge obligations similar to those under the D2–OWBS contract.  OWBC in turn contracted with P the physical supplier but, arguably, under the terms of that contract, OWBC failed to procure the requisite consent.

64.On those facts, I do not consider it wholly unarguable that an agency relationship did arise.  From D2’s perspective, the identity of the physical supplier could not have been material since it contracted with an intermediate bunker trader without stipulating the identity of the supplier.  In other words, how OWBS chose to discharge its obligations under the D2–OWBS contract would not appear to have been material or of concern to D2.  It could be said that D2 implicitly authorized OWBS to employ such means as would enable the latter to discharge its obligations to D2.  Arguably, on the present state of the case law, there was an agency chain running from D2 and ending with OWBC who contracted with the physical supplier.

Conclusion on the contract claim

65.In my view, while accepting that the case before the Master was put on a different basis, given the evidence before the court and having regard to the fact that the judgment in Res Cogitans was only available in mid‑July 2015, over two months after the date of ex parte application, P should be given leave pursuant to Order 11, rule 1(1)(d)(ii) of the RHC.

III. MATERIAL NON‑DISCLOSURE

66.In §56 of D2’s skeleton argument, D2 identified six matters P was said to have failed to disclose.  Further evidence subsequently filed and the ‘new’ argument and approach derived from the Res Cogitans analysis of the supply contract have largely addressed those matters.  As noted above, that analysis only emerged in mid‑July 2015 and could not have been presented at the time of the ex parte application.

67.Of the remaining matters, it was said that P misrepresented that D2 was the end user or owner.  Mr Fung even asserted (at §20 of his affirmation) that D2 “does not dispute that it was the ultimate buyer and/or end user of the said bunkers and/or Time Charterers of the said vessel(s) …” when it would appear that there was no basis for the assertion.

68.I fully accept that P’s case as now presented is different from that at the ex parte stage.  But if the misrepresentation or misleading statement is a matter that is not material to the court’s determination whether or not to grant leave, it should not have the effect of causing the court to make a different determination.  In so stating, I should not be taken as condoning or encouraging any party to act irresponsibly by making assertions or representations that have no proper foundation.

Conclusion as to material non‑disclosure

69.In the present case, regrettable though the assertions are, they do not impinge on the court’s decision relating to P’s claims in contract and in tort.

CONCLUSION

70.Accordingly, I do not propose to disturb the order made granting leave to serve the concurrent writ out of the jurisdiction granted pursuant to Order 11, rule 1(1)(d) and rule 1(1)(f) and, if necessary, I would exercise my discretion to re‑grant such leave.

71.There is to be an order nisi that the costs of this application be paid by D2.

Mr Charles Sussex SC, instructed by Holman Fenwick Willan,for the plaintiff

Mr Russell Coleman SC, instructed by Reed Smith Richards Butler,for the 2^nd defendant