80. O/y Wasa Steamship Company Ltd and N V Stoomschip Hannah (The “Elle”) v Newspaper Pulp and Wood Export Ltd [1948/49] Vol. 82 Lloyd’s l. Rep 936

Extrinsic evidence allowed to prove that disponent owners acted as agent for owners

The facts

On 20 April 1940, a voyage charterparty was entered into between disponent owners and charterers. In terms of the voyage charterparty, the vessel was to load a cargo of peeled pulpwood at a port in Canada and proceed from there to deliver the cargo at Rouen, France.

The vessel arrived at the loading port, South Nelson, Canada on 14 May 1940. Notice of Readiness was duly given the following day on 15 May 1940. The shippers in Canada, however, refused to release the cargo without a letter of credit from the purchasers, a French company. The letter of credit was never produced. On 21 May 1940, charterers repudiated the charter.

The owners accepted the repudiation and claimed against charterers for damages.

One of the many disputes raised in the case was whether owners were entitled to sue as party to the contract.

Owners were Finnish and disponent owners were Dutch. Disponent owners were majority shareholders of owners and also the managing agents of the vessel.

On 14 May 1940, the day the vessel arrived at South Nelson, Canada, Germany invaded Holland and by 21 May 1940, the date of the purported cancellation by charterers, Holland had acquired enemy status and disponent owners could not sue.

Findings

The court (Morris J) found that extrinsic evidence could be lead to clarify the phrase “disponent owners”. The court referred to the leading cases Humble v Hunter and Fred Drughorn, amongst others. Because the expression “owner” had been used in the body of the contract, the court found ambiguity to exist which justified the admission of evidence outside the document to prove the true state of affairs, i.e. that disponent owners were agents for owners.

The court examined the particular circumstances of the shipment of the pulpwood and concluded that the mere fact of the majority shareholding did not make the contract contrary to public policy.

The status of disponent owners as an enemy corporation was in any event not established because the Dutch Government in exile in England had appropriated the shares of all Dutch companies to itself.

The charterer raised other defences, including technical objections to the Notice of Readiness, restraint of princes and frustration of the contract, all of which were dismissed.

In the event, owners were held to be entitled to sue as a party to contract.

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