86. Seatrade Groningen BV v Geest Industries Ltd (The “Frost Express”) [1996] 2 Lloyd’s Rep 375

Identity of parties – agency – parol evidence

The facts

Seatrade Groningen BV, manager of a pool of refrigerated vessels entered into a chartering agreement (“the main agreement”) with Geest Industries Ltd, a banana importer in terms of which Seatrade was to provide two vessels to Geest for the 1988 season. The vessels were to be chartered to Geest in terms of pro-forma time charters annexed to the main agreement (the “sub-agreements”) in respect of each of the vessels.

The Frost Express sub-agreement qualified Seatrade’s signature that of “agents to Owners” or as “Disponent Owners”. A cargo of bananas from the West Indies to England was damaged. Geest instituted arbitration proceedings against Seatrade who applied to court asking for rectification of the sub-agreement, a declaration that it was not party to the contract and finally that the arbitrators appointed, had no jurisdiction.

There was no evidence of a common continuing intention between the parties to support rectification and the point of focus was the liability of Seatrade upon a proper construction of the contract.

Extrinsic evidence was led that, in terms of the pool agreement between Seatrade and the respective owners of the vessels in the pool, Seatrade would act as agents only.

Further evidence was that Seatrade, where the occasion demanded, chartered in vessels in which case it would act as disponent owner.

Findings

The court of first instance considered that the description of Seatrade was ambiguous and allowed extrinsic evidence to prove the intention of the parties. As the pool agreement indicated the role of Seatrade as agent for the vessel owners in the pool, Seatrade was held not liable.

The Court of Appeal found that on a proper construction of the sub-agreement read with the main agreement, Seatrade intended to incur liability as principal.

Commentary

There is a presumption that an agent for an unnamed principal incurs personal liability. This presumption was strengthened by reference in the sub-agreement to “owners” which, in the context, could only refer to Seatrade. This fact did not make the description of Seatrade any less ambiguous, however.