Golden Ocean Group Case

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Neutral Citation Number: [2011] EWHC 56 (Comm)

Case No: 2010 FOLIO 272

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of JusticeStrand, London, WC2A 2LL

Date: 21/01/2011

Before :

MR JUSTICE CHRISTOPHER CLARKE

- - - - - - - - - - - - - - - - - - - - -Between :

GOLDEN OCEAN GROUP LIMITED Claimant

- and -(1) SALGAOCAR MINING INDUSTRIES PVT

LTD

(2) MR ANIL V. SALGAOCAR

Defendant

- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -

Timothy Young QC and Daniel Bovensiepen (instructed by Ince & Co) for the ClaimantDominic Kendrick QC and Peter MacDonald-Eggers (instructed by MFB) for the 1st

Defendant

Charles Kimmins QC and Luke Pearce (instructed by Bentleys, Stokes and Lowless) for the2nd Defendant

Hearing dates: 4th and 5th November 2010- - - - - - - - - - - - - - - - - - - - -

JudgmentMR JUSTICE CHRISTOPHER CLARKE:

1. These are applications by the defendants Salgaocar Mining Industries PVT Ltd

(SMI) and Mr Anil V. Salgaocar (Mr Salgaocar) - to set aside an order made byme on 11th March 2010 giving the claimant Golden Ocean Group Limited (GoldenOcean) permission to issue a claim form for service, and to serve it, on thedefendants in Goa.

The dispute

2. Golden Ocean claims (i) that Trustworth Shipping Pte Ltd (Trustworth) repudiateda 10 year charterparty dated 2nd February 2008: (ii) that Trustworth had beennominated by SMI as charterers; and (iii) that that the charter was guaranteed by SMI.Golden Ocean claims to have suffered losses of around US $ 54 million by reason of

that repudiation and claims that sum against SMI under the guarantee. SMI andTrustworth say that Mr Salgaocar did not have authority to bind them to any contracteither of charter or of guarantee, and it is on that account that Mr Salgaocar is sued for


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breach of warranty of authority to enter into both contracts on behalf of SMI andTrustworth.

3. Until very shortly before the hearing of the application the defendants claimed thatthere was no serious issue to be tried that Mr Salgaocar had authority, whether actualor ostensible, to contract on behalf of SMI. However, in late October, followingdisclosure ordered by Walker J of a number of previous fixtures, the defendants (firstMr Salgaocar, and then SMI) indicated that they would not be making that claim on

the present application. There is, accordingly, and as I find, an arguable case that hedid have such authority. I am also satisfied that there is, as the defendants also accept,an arguable case that he had authority to act on behalf of Trustworth. I shall,therefore, proceed, for the purposes of this judgment upon the assumption (withoutdeciding) that Mr Salgaocar had authority to act on behalf of those two companies.

The background

4. SMI is a private family company. As at February 2008 Mr Salgaocars shareholdingsgave him ultimate control of about 82.5% of its shares. Members of his immediatefamily held a further 6.5% of the shares directly. Under the Articles of Association

Mr Salgaocar had power to appoint and remove one third of the Board of Directors.Throughout 2008 SMIs website described SMI as a leading conglomerate ofindustries led by Mr Salgaocar. It featured a formal photograph of Mr Salgaocar withhis two sons, Sameer and Arjun Salgaocar, who were described as directors of thecompany. Under the photograph were the words Anil V. Salgaocar Chairman &

Managing Director, Salgaocar Mining Industries Pvt. Ltd (Center). Mr Salgaocarhad, according to Mr Gautam Radia, his son-in law who is an authorised signatory ofSMI, ...guided the fortunes of SMI for approximately 30 years...

5. In fact Mr Salgaocar resigned as a director of SMI on 31st March 2006. Thereafter histwo sons appear to have been the only directors even though Article 113 (b) of SMIs

Articles of Association requires there to be a multiple of 3 directors.

6. The website described SMI as being in the business of mining and exporting iron oreworldwide. Mr Salgaocar and SMI had extensive dealings with shipbrokers, HoweRobinson & Co Ltd (Howe Robinson). The main contact at Howe Robinson wasMr Guy Hindley (Mr Hindley) who was based in London. Mr Hindley generallyacted on the oral instructions of Mr Salgaocar which Mr Hindley confirmed by emailto him.

The history

7. On 3rd January 2008 Mr Hindley e-mailed Mr Salgaocar to tell him of the availability,from the 4th quarter of 2009, of a number of new buildings for purchase from theJinhaiwan yard, including 176,000 dwt Capesize bulkers. In the event negotiations

began in early January 2008 between Golden Ocean and SMI for a 10 year charter ofa Capesize new building expected to be delivered in October 2009.

8. Golden Ocean were the Owners of the subject vessel. The individuals concerned ontheir behalf were Mr Anders Zorn, Mr Jens Martin Jensen and Mr Jon Flaaten. HoweRobinson were their brokers as well. The individuals at Howe Robinson who actedfor Golden Ocean were Mr Bernd Hintz and Mr Daniel Hall.

9. On 8th January 2008 Golden Ocean offered to charter to SMI or an account to beguaranteed by SMI1, a vessel described as Golden Ocean Newbuilding Capesize

1 Mr Hindleys e-mail to Mr Salgaocar of 8th January 2008 [C/1-2] refers to account to be

guaranteed by [SMI]. Mr Hintzs e-mail of 9th January to Golden Ocean [C/3-4] refers to


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Bulk Carrier Newbuilding ex Jinhaiwan, China, at $ 42,500 daily for 10 year 2months more or less at charterers option with an option to purchase at the end of thecharter period at US$ 93 million. SMI countered at $ 40,000 per day and $ 85 millionfor the purchase price a/c Trustworth Pte Limited Singapore fully guaranteed bySalgaocar Mining Industries Goa. That offer was - subject all further terms +details - subject owners board approval - subject charts reconfirmation to be lifted

latest 5 working days after owners board approval lifted.

10. The disclosure ordered by Walker J herein has revealed that since 2005 HoweRobinson has fixed around 125 vessels on Mr Salgaocars instructions withTrustworth as charterers. In 43 of those fixtures Trustworth was guaranteed by SMI.Four of those fixtures post dated the fixture in issue in the present case. Of those 43fixtures 36 involved guarantees in the same form as in the present case namely by asingle line in the charterparty. In January and February 2008 Howe Robinsonconcluded 15 other fixtures on Mr Salgaocars instructions, three of which wereguaranteed by SMI.

11. Trustworth is a Singaporean company which, Golden Ocean claims, was used for taxreasons and because Indian foreign exchange regulations make it difficult to remitforeign currency abroad. The evidence indicates that it was, in effect, the charteringarm of SMI. Its use appears to have been in order to distance the charter from India.

12. The negotiations proceeded on the basis of the charterers being Trustworth fullyguaranteed by SMI. They were conducted by e-mail, by which Messrs Hintz andHall of Howe Robinson communicated with Messrs Zorn, Flaaten and Jensen ofGolden Ocean; Mr Hindley of Howe Robinson communicated with Mr Salgaocar, andthe Howe Robinson brokers communicated with each other.

13. On 10th January 2008 Mr Hindley e-mailed Mr Salgaocar to tell him that he hadmanaged to get Owners to confirm the last offer he had made so we are agreed oneverything except subjects. Mr Hintz e-mailed to Mr Zorn of Golden Ocean to thesame effect the next day.

14. At 17.56 on 11th January 2008 Mr Hindley e-mailed to Mr Salgaocar, and at 19.40 MrHintz e-mailed to Mr Zorn recaps of the fixture in the same terms which included -

subject all further terms Owners nype/moa - subject Owners board approval to be

lifted latest 1700 hours London on Monday 14 th January 2008 - subject to Charterers

approval to be lifted latest 1700 hours on Tuesday 15 th January 2008. The recapwas, as before, A/c Trustworth Pte Limited Singapore fully guaranteed by Salgaocar

Mining Industries Goa. These recaps followed agreement on the charterparty termsin e-mails passing between Mr Hintz and Mr Hindley.

15. The approval subjects were lifted on 14th and 15th January, leaving for negotiationthe details of the NYPE charter and of the MOA for the purchase, if the option wasexercised.

16. On 2nd February Mr Flaaten of Golden Ocean replied to an e-mail of Mr Hintz settingout charterers proposal on the last outstanding points: Agreed to the below andtherefore fully fixed.

17. On 4th February Mr Hindley e-mailed to Mr Salgaocar Pleased to confirm we havefixed subject to agreeing mutually acceptable terms on the MOA as follows... and

his having offered to chars account to be guaranteed by [SMI]. The e-mail to Mr

Hindley does not appear to be in the papers.


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then set out a recap including the agreed charterparty terms. Mr Hintz e-mailed in thesame terms to Mr Flaaten. The recaps were dated 2nd February 2008.

21st February The alleged making of the contracts

18. On 21st February at 12.30 am Mr Hall e-mailed to Mr Jensen of Golden Ocean thecharterers proposed MOA terms. These included the following additional clause:

Throughout this Charter Charterers are to be given access to all Drydock,damage, Port State Control reports and Charterers authorised representatives

are to be granted access to visit vessel whether in the yard, drydock or in

port

19. At 09.00 Mr Jensen e-mailed to Mr Hall All ok except re deposit-say 5 days (areference to the time for provision of the deposit after declaration of the purchaseoption) and suggested that the additional clause suggested by the charterers belongedin the charterparty.

20. Mr Hall forwarded that 09.00 e-mail to Mr Hindley in the following terms:

Following back from Golden Ocean on the MOAIn the end I did not mention anything about pulling the tail shaft to them, as

on reviewing the VLCC we did with them it was in there anyway they agree

to all Salgaocars changes except deposit which I think quite right do you

know if it is already drawn up. If not suggest we put it in or otherwise do an

addendum. Deposit seems very fair especially considering Salgaocar has the

option on when to exercise.

Can I confirm this?

That e-mail crossed the line between Mr Hall as broker for Golden Ocean and MrHindley as broker for SMI/Mr Salgaocar.

21. To that e-mail Mr Hall received a reply from Mr Hindley:

YES. CONFIRM THE 5 DAYS THATS FINE.

CD U SEND ME RECAP WITH TODAYS DATE?

SUGGEST TO GOLDEN OCEAN WE AGREE THE SAME DATE FOR C/P

CAN YOU GET ADDITIONAL CLAUSE PUT IN C/P AS DONT THINK

SAME HAS BEEN DRAWN UP YET THOUGH HAPPY FOR IT TO BE AN

ADDENDUM

IM RATHER HOPING WE CAN AGREE THAT VESSEL IS GOLDENBEIJING AS SALGAOCAR LIKED THE NAME!

THANKS V. MUCH

22. Mr Hall then e-mailed Mr Jensen in response (on the e-mail thread) to his 09.00 e-mail (see para 19 above):

Many thanks yours - we are all done!

Charterers confirm ok to change deposit to within 5 days. Also will put the

inspection clause in the C/P (or as an addendum).

Can we make the C/P and MOA todays date? (Or have you already

announced this deal?)Also can we tell/confirm to Salgaocar that the Vessel will be the M.V. Golden

Beijing?


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23. On 21st February 2008 Mr Hall e-mailed to Golden Ocean a recap of the MOA.

24. At some date after 17th July 2008 Howe Robinson drew up a charterparty betweenGolden Ocean and TRUSTWORTH SHIPPING PTE LIMITED .Charterers ofSINGAPORE fully guaranteed by SALGAOCAR MINING INDUSTRIES,GOA. The

pages of the amended NYPE form (but not the attached riders) have HoweRobinsons stamp on them. At the end of the NYPE form appears the following:

Owners CharterersFor the Owners

GOLDEN OCEAN GROUP LIMITED, BERMUDA

By e-mail authority received from

GOLDEN OCEAN MANAGEMENT AS

Dated 17th July 2008

For and on behalf of

HOWE ROBINSON SHIPBROKERS, LONDON

Director

As Broker Only.

25. There is no reference to the guarantee or the guarantors in the e-mail correspondenceand the working copy of the charter other than in the description of the Charterers.The copy of the charter referred to in para 24 was never signed.

Subsequent events

26. On 16th September 2009 Mr Salgaocars secretary e-mailed to Mr Hindley a note fromMr Salgaocar in which he asked Mr Hindley to specify to Owners that the quantity of

bunkers required on delivery should be sufficient for the vessel to arrive in Hong

Kong where further bunkering would take place up to Singapore and thereafter atSingapore for a voyage Singapore Goa Singapore. He asked Owners to calculatethe bunkers required and for them to arrange to paint SALGAOCAR on both sidesof the hull and to mark S on the funnel in accordance with a logo which wasenclosed.

27. On 30th September Golden Ocean declared to Charterers that the vessel namedGolden Future would be delivered to Charterers pursuant to the 2 nd February 2008charter and that she would be delivered on/about mid November, say 17 November.Mr Hindley passed this declaration on to Mr Salgaocar together with notification thatOwners had agreed to the painting requests at Charterers cost and that Owners had

asked technical staff about bunkers to Goa.

28. On 28th October 2009 Mr Hintz passed on a message he had received from MrHindley that with changes in the group etc .. the one thing they do not rpt do notwant is any Salgaocar markings on the vessel and that Golden Ocean should goahead and put their own markings on the hull and funnel.

29. On 4th December Owners gave Charterers 30 days approximate notice of delivery ofthe Golden Future for 5 th January 2010. On 15th December Owners gave 20 daysapproximate notice of delivery for that date.

30. On 8th December 2009 Mr Rohit Mathrani, a director of Trustworth wrote to MrHindley stating once again that there was no guarantee made available by SMI andthat Trustworth was unable to proceed further with the Charter Party.


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31. On 16th December 2009 Mr Mathrani e-mailed to Mr Kerr-Dineen, the joint chairmanof Howe Robinson to say that there was no Charter Party between [Trustworth] and[Golden Ocean]. Mr Hintz forwarded that e-mail to Mr Zorn that day and expressedour total surprise at the denial of the existence of a charterparty. Mr Hintz referredto the large number of fixtures which Howe Robinson had concluded for Trustworthand another company linked to SMI, saying that our authority for fixing all these

ships (numbering in total close to some 250 fixtures) came directly and solely from

Mr A V Salgaocar and the negotiation and handling of the present fixture was

handled in the same manner. He referred to a number of changes in the Salgaocargroup, the division of Mr Salgaocars time between his business and his duties as amember of the Goan assembly and to his declining health, and to the fact that controlof the business appeared to be being passed to his family and in particular his twosons, daughter and son-in-law. He also set out a message that had been sent by MrKerr-Dineen to Mr Mathrani which included the statement that:

this charter was concluded on behalf of trustworth in accordance withauthority we received from mr Salgaocar. Mr Salgaocar also confirmed that

the charter was fully guaranteed by Salgaocar Mining Industries, GOA. This

is the basis on which the vessel was fixed.

32. Trustworth reiterated its denial of a charter and a guarantee in an e-mail of 23 rd

December 2009 to Ince & Co, in response to a letter from Ince to SMI of 22 nd

December asserting the existence of both. On 24th December 2009 Ince & Co wroteto Trustworth treating its conduct as a renunciatory breach of the charterparty whichGolden Ocean accepted.

33. On 23rd December Golden Ocean had threatened to issue a press release stating thatTrustworth had failed to honour its obligations under the charter and had statedwithout justification that there was no contract or guarantee; and that Golden Oceanwould pursue a claim for damages and arrest Trustworth and SMI assets if Trustworthdid not confirm by midnight that it would take the vessel. This produced a responsefrom SMI dated 24th December warning Golden Ocean against issuing the pressrelease and reiterating that it had entered into no contract of guarantee with GoldenOcean nor authorised anyone to provide such a guarantee on their behalf.

Legal Proceedings

34. The charterparty contains a London arbitration clause. Golden Ocean commenced anarbitration against Trustworth and SMI on 30 December 2009. On 2nd January 2010SMI sent a letter objecting that it was not a party to the arbitration agreementcontained in the charterparty. Golden Ocean now accepts that to be so and has notcontinued arbitration proceedings against SMI. Trustworth, however, denies theexistence of any arbitration agreement on the basis that it denies that a bindingcharterparty was ever concluded. It has appointed an arbitrator without prejudice toits contention that there is no contract between Golden Ocean and itself. GoldenOcean has applied under s 32 of the Arbitration Act 1996 for the court to determinethe tribunals jurisdiction. The hearing has been fixed for April next year.

35. On 6th February 2010, SMI filed a claim in India before the Court of the Civil Judge,Senior Division at Panaji, Goa, against Golden Ocean, Trustworth, and HoweRobinson. In that suit SMI seeks (i) a declaration that there is no contract ofguarantee between Golden Ocean and SMI, (ii) injunctive relief restraining GoldenOcean from taking any steps to enforce the Guarantee, and (iii) approximatelyUS$32.5 million in damages for defamation relating to the press release. On the sameday the Indian court issued a temporary injunction restraining Golden Ocean from


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pursuing proceedings against SMI in arbitration. The injunction did not extend tocourt proceedings.

36. On 5th March 2010 Golden Ocean commenced the present action by filing the ClaimForm, Particulars of Claim and Application for permission to serve out. On 11 th

March 2010 I gave permission to serve both defendants out of the jurisdiction.

37. The claim against SMI is a claim under the guarantee in respect of Trustworths

repudiation. The claim against Mr Salgaocar is an alternative claim in respect of hiswarranty that he had the authority to bind Trustworth and SMI.

38. On 13th April 2010 SMI applied to the Panaji court for ex parte orders against GoldenOcean and its managing director, Mr Herman Billung, for contempt by reason of thecommencement of the English proceedings and was granted a further temporary anti-suit injunction restraining these proceedings in England. But that order was set aside

by the High Court of Bombay at Goa on 7 th May 2010 on procedural grounds.

39. On 12th May 2010 SMI applied to amend its plaint to seek permanent and temporaryanti-suit injunctions restraining the present action in England. The application for an

interim anti-suit injunction was rejected by the Panaji court on 18th May 2010.Golden Ocean has applied to reject SMIs plaint and has been advised by its Indianlawyers that its application has good prospects of success. The hearing of bothGolden Oceans application and SMIs application to amend has been adjourned onnumerous occasions and remains pending in India.

40. On 25th June 2010, SMI issued its application in this action challenging Englishjurisdiction and on 28th June 2010 Mr Salgaocar issued his application in this action tothe same effect.

41. Permission to serve out was sought and given on the basis that:

i) The claims against both SMI and Mr Salgaocar were made in respect ofcontracts governed by English law (CPR PD6B, para 3.1(6) (c)).

ii) In relation to Mr Salgaocar, a claim has been made against SMI, and therewas between Golden Ocean and SMI a real issue which it was reasonable forthe court to try, and Mr Salgaocar was a necessary or proper party to thatclaim (CPR PD6B para 3.1(3)).

iii) The claims had a reasonable prospect of success and England was the properplace to bring the claims.

42. It is not, as I understand it, in dispute that the guarantee is arguably governed byEnglish law, as a result of the choice of law in the charterparty (see further, para 147

below). SMI also accepts that Golden Ocean has at least a reasonable prospect ofsucceeding in its case that a binding charterparty was concluded with Trustworth, andthat Mr Salgaocar had authority to bind Trustworth. SMI and Salgaocar also acceptthat there is an arguable case that Mr Salgaocar had authority to bind SMI to aguarantee.

The defendants submissions

SMI


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43. SMI contends that there is no serious issue to be tried because Golden Ocean cannotdemonstrate that its claim against SMI has a reasonable prospect of success becausethe guarantee is unenforceable pursuant to the Statute of Frauds 1677.

Mr Salgaocar

44. Mr Salgaocar contends that:

i) Golden Ocean fails the requirement under CPR PD6B para 3.1(3) that therebe a serious issue to be tried between Golden Ocean and SMI because theguarantee is unenforceable pursuant to the Statute of Frauds 1677;

ii) Golden Ocean does not have a good arguable case that its contractual claimagainst Mr Salgaocar for breach of warranty of authority is governed byEnglish law and so cannot establish gateway jurisdiction pursuant to CPRPD6B para 3.1(6)(c);

iii) If the guarantee is unenforceable pursuant to the Statute of Frauds 1677,Golden Ocean also has no reasonable prospect of succeeding in its claim for

breach of warranty of authority against Mr Salgaocar because even if MrSalgaocar had had authority to give the guarantee it would have beenunenforceable.

iv) Golden Ocean also has no reasonable prospect of succeeding in its claim forbreach of warranty of authority against Mr Salgaocar because there is noreasonable prospect of establishing that Howe Robinson had authority toconclude (or sign) the Guarantee.

45. In addition, both SMI and Mr Salgaocar argue that it would be more appropriate andjust for the claim to be tried in Goa rather than in England.

46. It is also submitted that when the courts permission to serve out was obtained GoldenOcean failed to disclose material circumstances; but Mr Dominic Kendrick, QC forSMI, realistically accepted that, even if this was so, the point was unlikely to benefitthe defendants, against whom, even if the original permission was set aside,

permission could be re-sought on the same grounds.

The Statute of Frauds

47. Section 4 of the Statute of Frauds 1677 (the Statute)2 provides:

No action shall be brought whereby to charge the Defendant upon anyspecial promise to answer for the debt default or miscarriage of another

person unless the Agreement upon which such Action shall be brought or

some Memorandum or Note thereof shall be in Writing and signed by the

party to be charged therewith or some other person thereunto by him

lawfully authorised.

48. Despite its antiquity this section is still in force and the parties have made extensivesubmissions on its meaning. The focus of the written submissions and (initially) ofthe oral argument was on whether there was anything which could be regarded as aMemorandum or Note of the agreement. It appeared to me, however, that the

matter could and should be looked at differently.2 An Act for prevention of Frauds and Perjuries. For prevention of many fraudulent

Practices which are commonly endeavoured to be upheld by Perjury and Subornation of

Perjury.


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49. The sequence of events which I have described in paras 9 - 23 above is notuncommon. Negotiations are entered into for a long term charter between Owner Oand potential Charterer C. O is not content only to have Cs promise, and so thenegotiations proceed on the basis that Cs obligations will be guaranteed by G. Theguarantee is set out in the draft charter by stipulating as charterer C as fully

guaranteed by G. If an agreement is eventually made in those terms by someonewho is duly authorised by C and G then, subject to any question as to the effect of theStatute, O has all the protection he needs in the form of a full guarantee by G. It isnot necessary for the guarantee to be in a separate document or in any ampler terms.

50. Negotiations continue by e-mail as to the basic terms of the charter (e.g. description ofvessel, commencement and end of the term, hire, and form of charterparty) and, ifthere is to be one, of any option to purchase (e.g. time for exercise of the option,amount of deposit and purchase price). Agreement is reached subject to variousconditions (e.g. board or other approval, and detailed terms of the charterparty andmemorandum of agreement), which are satisfied at various steps along the way. Thesubjects are progressively lifted as further agreement is reached. The negotiations

proceed by a sequence of offers which are accepted in part but with counter proposals,often in the form Accept/except, followed by a list of the terms proposed in respectof the items which have not been accepted or of new proposed terms.

51. The effect of any counter proposal is that the previous offer lapses and is no longeravailable for acceptance. But there comes a time, at the end of the process, when thelast counter offer on the last term(s) remaining unagreed is accepted and the contractis complete. The charterparty will then have become contractually agreed. Theguarantee does not become contractual until then, even though its intended form(fully guaranteed by G) has remained constant throughout, because, until thecharterparty terms are agreed, the obligations which are to be fully guaranteed areinchoate and yet to be determined. But, once they are agreed, the guarantee is

complete.

52. Mr Kendrick accepts that an agreement can be made in that way, and that such anagreement could satisfy the Statute. But, he submits, that is not so in this case. Thatis, as I understood him, for three reasons:

a) because the e-mail which reads YES CONFIRM THE 5 DAYS THATSFINE. CD U SEND ME RECAP WITH TODAYS DATE contains noreference to the guarantee;

b) because that e-mail refers to the agreement being recorded in a futuredocument;

c) because, both in relation to a memorandum or note in writing of anagreement and to an agreement in writing itself, case law establishesthat you can look at a number of documents together but only if there isin one document an express or necessary reference to another; and thatcondition is not satisfied in the present case.

53. As to (a), I do not accept that, if the parties agree by e-mail the basic terms of acharterparty including a guarantee, and then the detailed terms of the charterparty, sothat the concluding e-mails in the sequence of negotiations no longer make expressreference to the guarantee, their final agreement is not, qua the guarantee, anagreement in writing for the purpose of the Statute. If, as is accepted in the presentcase, there was arguably an agreement to charter and to guarantee, it was anagreement reached in writing. There is no suggestion that there was any term eitherof the guarantee or of the charterparty which was only agreed orally. I do not see why


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what, for all other purposes, is an agreement in writing, is not an agreement in writingfor the purposes of the Statute.

54. As to (b), it does not seem to me that the request for a recap means that there was noagreement in writing. The recap was a recapitulation of an agreement that had(arguably) already been made in writing.

55. As to (c), Mr Kendrick accepted that if there is a series of correspondence about (a)

the charterparty; (b) the guarantee; and (c) the memorandum of agreement as to theoption to purchase; culminating in Owners accept your last, it would be legitimateto look at the sequence of correspondence. But in the present case the last document(the Yes Confirm ... e-mail), looks forward, he submits, to a recap, andcontemplates an additional clause in the charter and seeks to know what the positionis in relation to the name Golden Beijing. Even though, looking backwards fromthe last communication, there might arguably be a contract, the Statute requires aclear memorandum in, as Mr Kendrick put it, a confined number or a veryconfined number of documents.

56. I do not accept this. The e-mail beginning Yes confirm the 5 days thats fine is the

culmination of a sequence of negotiations. Even if it stood alone it would, as it seemsto me, necessarily refer back to the sequence of communications of which it was thelast. As it is the e-mail appears in the same document as contains the messages at

paragraphs 18- 20 above, which themselves relate back to the negotiations of whichthey were a concluding part. Anyone reading them would realise that there was asequence of charterparty negotiation, including an option to purchase on the terms ofa memorandum of agreement, and that any contract made had to be discerned bygoing back through the preceding e-mails, as far as was necessary, to determine whatthe agreement was as to the charterparty (including guarantee), and MOA.

57. I do not accept that, if an agreement has been made in writing, there is some limit to

the number of documents to which reference is permissible. If there is said to havebeen an agreement in writing the Court is entitled to look at those documents whichare said to constitute the agreement, however many they may be. In contracts made inthe manner in which the present contracts are said to have been made, that involveslooking at more than two documents (one of offer and one of acceptance), both

because the terms of the charterparty and of the memorandum of agreement werenegotiated sequentially and because, in negotiations of the Accept/except type thelast offer, which may only except one small item (such as whether a sum should be

paid in 7 as opposed to 5 days), will not be intelligible without reference to thepreceding offers and counteroffers.

58. Mr Kendrick submitted that this was inconsistent with the line of authority quoted inElias v George Sahely [1983] A.C. 646 and summarised by Jenkins LJ in Timmins vMoreland Street Property Co Ltd[1958] Ch 110 when he said:

it is still indispensably necessary, in order to justify the reading of

documents together for this purpose, that there should be a document signed

by the party to be charged, which, while not containing in itself all the

necessary ingredients of the required memorandum, does contain some

reference, express or implied, to some other document or transaction. Where

any such reference can be spelt out of a document so signed, then parol

evidence may be given to identify the other document referred to, or, as the

case may be, to explain the other transaction, and to identify any document

relating to it. If by this process a document is brought to light which contains

in writing all the terms of the bargain so far as not contained in the document


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signed by the party to be charged, then the two documents can be read

together

59. Those observations were made in relation to a memorandum of an agreement and notto an agreement made in writing and, in my judgment, are not strictly applicable.

60. In any event the last e-mails in the chain of e-mails in the present case referredimpliedly to those that had gone before in the sequence of negotiation which led to the

contract. I reject Mr Kendricks submission that the court is confined to looking at avery confined number of prior documents. I note that in The Anemone [1987] 1Lloyds Rep 546 Staughton J regarded the Statute as satisfied by three telexes the lastof which contained by its reference to the penultimate telex an implied recognitionthat the defendant had contracted to guarantee the charterparty terms; the penultimatetelex referred to a letter of guarantee which could be taken as a reference to the firsttelex which set out the wording of the guarantee. There is no suggestion of a limit onthe number of documents that can be referred to.

61. These conclusions seem to me consistent with the policy behind the Statute andcommercial good sense.

62. As to the former, the Statute is concerned to see that guarantees cannot be enforced ifthey are not either embodied in an agreement made in writing or are ones in respect ofwhich a written note or memorandum exists signed by the person said to be liable. Ifon a proper analysis of the documents passing between the parties there is anagreement, the policy behind the Statute is in no way frustrated: see In re Hoyle[1893] 1 Ch 84:

The object of the Statute was to prevent fraud and perjury by taking away

the right to sue on certain agreements if only established by verbal

evidence ... The object of the statute being merely to exclude parol evidence,

any writing embodying the terms of the agreement and signed by the personto be charged is sufficient...3

... the court is not in quest of the intention of the parties, but only of

evidence under the hand of one of the parties to the contract that he has

entered into it....4

The question is not what is the intention of the person signing the

memorandum, but is one of fact, viz., is there a note or memorandum of the

promise signed by the party to be charged?5

63. As to commercial good sense, it seems to me highly desirable that the law should giveeffect to agreements made by a series of e-mail communications which follow, moreclearly than many negotiations between men of business, the sequence of offer,counter offer, and final acceptance, by which, classically, the law determines whethera contract has been made. This is particularly so when charterparties with guaranteesare often negotiated and concluded by the sort of e-mail exchange seen in this case;and are not necessarily followed by a drawn-up charter.

64. It is not necessary to decide this matter finally. I am, however, entirely satisfied thatit is well arguable that the Statute of Frauds has been satisfied because the agreement

3 At 98 per Lindley LJ.4 At 99 per Bowen LJ.5 At 100 per AL Smith LJ.


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upon which Golden Ocean bases its claim was an agreement in writing6. In the endMr Kendrick accepted that there was an arguable contract constituted entirely bydocuments.

65. There is therefore, a serious issue to be tried as between Golden Ocean and SMI.There is also a serious issue to be tried against Mr Salgaocar for breach of warranty ofauthority (if, as SMI contends, he lacked authority to bind it). He cannot contend thatit is unarguably the case that, even if he had had authority, there could have been no

recovery against SMI since the contract of guarantee was neither in writing nor wasthere a note or memorandum of it in writing.

The authorities

66. In the light of those conclusions it is perhaps otiose to address the considerablenumber of authorities to which I have been referred. I do so in deference to theextensive submissions of counsel, and in order to consider whether the approachwhich I have adopted in the previous paragraphs is contra-indicated by any of them,and also to address the submissions originally made as to what constituted therelevant memorandum or note.

67. InActionstrength Ltd v International Glass EngineeringIN.GL.ENSpA and another[2003] 2 AC 541 the House of Lords found that what had been said amounted to anoral guarantee. The House made clear that, so far as guarantees are concerned, thesection remained in full force and vigour and that its provisions were not to beemasculated by the estoppel on which the claimant sought to rely; but that they might

be sidestepped by an express oral assurance not to plead the Statute. Lord Hoffmanpointed out that the purpose of the Statute was to avoid the need to decide which sidewas telling the truth about whether or not an oral promise had been made and exactlywhat had been promised. The case was not concerned with a written agreement.

68. In Carlton Communications v The Football League [2002] EWHC 1650 (Comm)Langley J had to consider, inter alia, the impact of the Statute in relation to an allegedguarantee by the claimants, who were indirect shareholders in ONdigital (sic), infavour of the Football League. The guarantee was said to be contained in an InitialBid (which was followed by a Revised Bid and a later June contract being anamendment of a draft previously produced by ONdigital) in which there appeared thewords:

ONdigital and its shareholders will guarantee all funding to the FL outlined

in this document

69. Langley J recorded the putative guarantors submissions (all of which he thought tobe correct) that the Leagues case fell foul of the Statute because:

a) the requisite written document must actually record the agreement ofguarantee or be a note of it and none of the three documents relied on(Initial Bid, Revised Bid and June contract) did so. The Initial Bid did

6 When the matter comes to trial it will be necessary to assemble a bundle of the e-mailexchanges between the parties and Howe Robinson and between the brokers themselvesin chronological order; and probably helpful to have in addition a separate bundle

containing only the communications between the brokers. At present the correspondenceis spread over a number of exhibits. What was said to be a chronological bundle wasprepared during the course of the hearing at my request; but it omits a number ofrelevant documents. It is also apparent that there are further negotiating e-mails notcurrently exhibited anywhere.


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not record any agreement because it was subject to contract as was theRevised Bid. The June contract referred to further negotiation.

b) The only written document (the Initial Bid) did not record all thematerial terms of the alleged agreement of guarantee because it referredonly to the funding of the Initial Bid itself (240m not 315m); and

c) None of the documents relied upon by the League were signed by a

person authorised by Carlton and Grenada to do so. The Initial Bidwas expressly subject to contract.

70. Langley J referred to Tiverton Ltd v Wearwell Ltd [1975] Ch 146. In that case theCourt of Appeal decided that Law v Jones [1974] Ch 112, which decided that asubject to contract document might satisfy section 40 of the Law of Property Act1925 if the stipulation had later been waived, was wrong7; and that that case could not

be used to make a subject to contract letter written after an oral contract a sufficientmemorandum. Tiverton also decided that the requisite document must contain astatement of the material terms of the contract. It also re-affirmed a line of cases(described by Lord Denning as bold but very necessary to meet the justice of the case)

that an offer in writing, which was accepted orally or by conduct, could be enforcedagainst the offeror, notwithstanding the Statute.

71. Langley J concluded that Tiverton compelled him to hold that a subject to contractdocument was not sufficient as a note or memorandum and that the requisitedocument must contain a statement of the material terms of the contract of guarantee.That ruled out the Initial and Revised Bids. The June Contract contained no referenceto any guarantee and the Financial Arrangement statement in the Initial Bid, in whichthere was a reference to a guarantee, was limited by its terms to the funding statedin it which was markedly less than that contained in the June Contract. Nor was thereany document on which the League could rely which was, or purported to be, signed

by the alleged guarantors or any person lawfully authorised by either of them.

72. None of the considerations which applied in that case means that Golden Ocean fallsfoul of the Statute in this one. Langley J was dealing with a distinctly unpromisingcontention that the reference to a guarantee in the Initial Bid, itself subject to contract,could be regarded as a guarantee of obligations entered into in the June Contractwhich referred to a much larger amount and made no reference to any guarantee. Inthe present case the guarantee wording, although embodying a separate contract,remained a constant part of the charterparty terms under negotiation such that theguarantee is readily applicable to those terms (of which it formed part) in their finalform.

The defendants submissions

73. Mr Kendrick submitted that the Statute applies in a somewhat different way accordingto whether the guarantor or his agent signs.

Guarantees signed by the guarantor

74. Where the guarantor signs the Statute gives two options:

a) the agreement itself is in writing; or

b) there is some memorandum or note of the guarantee; and

7 As was Griffiths v Young [1970] Ch 675, unless, as Lord Denning thought, it could be

supported on other grounds.


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in each case the guarantor must sign. Any note or memorandum must postdate themain contract because the memorandum or note must be of the Agreement uponwhich such Action shall be brought.

75. I do not entirely accept this latter submission for the following reasons.

76. The Statute requires the note to be a note of the agreement upon which the action isbrought whereby to charge the Defendant upon any special promise to answer for

the debt default or miscarriage of another; and not just a note or memorandum of aproposal: Evans v Hoare [1892] 1 QB 593.

77. However, the Statute does not require that the memorandum must always postdatethe main contract i.e. the contract whose obligations are guaranteed or becontemporaneous with it. Thus, a contract of guarantee may exist before the debtsguaranteed by it arise, as where A agrees with B for good consideration, or by deed,to guarantee all the future debts of C to B.

78. Mr Kendrick further submits that any note or memorandum must contain all thematerial terms of the guarantee and recognise the terms of a concluded contract. If by

that is meant that it must be plain from the note what is the contract which theguarantee is guaranteeing, I agree. But I do not accept that the guarantee is requiredto set out in writing all the material terms of the contract guaranteed or refer to adocument that does. The Statute requires the special promise to answer for the debt,default or miscarriage of another to be made or noted in writing, not that the debtguaranteed should either be incurred under a contract in writing or of which a writtennote or memorandum exists. I do not see why an agreement in writing by X that, inconsideration of an agreement to extend further credit to Y up to a certain sum, Z willanswer for all the debts of Y, past and future, or a memorandum or note thereof,offends the statute even if the past debts have been incurred pursuant to oral contracts,whose terms are not set out in the guarantee, and the future debts cannot be specified

because they have not yet been incurred: see Westhead v Sproson [1861] 6 H & N7288.

79. These points have potential significance in the present case insofar as Golden Oceansought to rely, as it did, on the oft repeated references in the e-mail exchanges toTRUSTWORTH ... fully guaranteed by [SMI]. I do not accept that any of thosereferences constituted a sufficient note or memorandum prior to the time when thecontracts of charter and guarantee were arguably made on 21st February 2008. Untilthen there was no agreement of guarantee of which to make a record and it was notknown what exactly SMI was guaranteeing. A binding agreement can no doubt bemade to guarantee whatever charter is subsequently agreed in which case the contractof guarantee will precede the charter. But in the present case the charter and theguarantee were inextricably linked since (a) the guarantee was constituted by thespecification of SMI as guarantor following the description of the charterer; (b) it wasa guarantee of the charter, as finally agreed; and (c) the entry into the charter byGolden Ocean formed the consideration for the guarantee.

In what capacity must the note or memorandum be signed?

80. The Act says nothing about the capacity in which the guarantor signs; nor does itrequire that the note or memorandum be given to the beneficiary of the guarantee.

8 In that case the Court thought that a guarantee given in consideration of your

agreeing, at our request, from time to time to supply on credit to P such goods as he

may require and you may think fit to supply was not binding until the first supply: sed

quaere.


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Anything signed by the guarantor at any time and for whatever purpose will do. Hemay, for instance, have made a note in his personal diary one of the examples given

by A.L. Smith LJ., inIn Re Hoyle [1893] 1 Ch 84 or in his will:In re Hoyle.

81. In this connection Mr Kendrick referred me to The Maria D [1992] 1 AC 21.There the brokers (Marti) were to guarantee a charter on the Gencon form, whichcontained, as one of the additional typed clauses a provision (Clause 24) in thefollowing terms:

Demurrage guaranteed and payable directly by charterers to owners.

However Marti guarantees about outstanding demurrage, if any, and for

balance freight

82. The brokers stamped and signed the front page For and on behalf of charterers asbrokers only. The intervening pages were, so far as the brokers were concerned,simply stamped with the brokers stamp without any indication of capacity. The last

page (which was the last page of the typed additional clauses 18-55) bore the brokersstamp and a signature below the words Charterers.

83. In that case there had been an oral contract, made in the course of telephoneconversations, by which Marti guaranteed the liabilities of the charterers in respect ofdemurrage and the balance of the freight. Lord Brandon indicated that there were two

possibilities:

a) Marti signed the page containing clause 24 as a contracting party, inwhich case the prior oral agreement of guarantee was subsumed in thewritten agreement signed by Marti on its own account so that there wasa written agreement of guarantee signed by the person to be chargedtherewith and enforceable in the first of the two ways prescribed by theStatute;

b) Marti signed the charterparty, including clause 24, solely as agents ofthe charterers, in which case the signature, although affixed as agent forthe charterers, was nevertheless a note or memorandum of the priororal agreement. It was irrelevant with what intention or in whatcapacity Marti signed.

Accordingly, since there was no dispute that an agreement of guarantee had beenmade, it did not matter which analysis was correct. Lord Brandons analysisillustrates the distinction between an agreement and a note or memorandum thereof.

84. Nothing in that case detracts from the analysis made in this judgment. The presentcase is not said to involve a prior oral guarantee and there is, arguably, a writtenagreement signed on behalf of the party to be charged.

Guarantees signed by the agent

85. Mr Kendrick submitted that, where the signature is given by the agent, it must still bea note made after the main contract and must contain all the terms of the guarantee.But it is not sufficient that the signature was given in any capacity. The Statuterequires the agent to be lawfully authorised and that requires him to be lawfullyauthorised by the guarantor either to sign the agreement (if that is what he does) or to

sign the note as a note of the agreement, in each case on the guarantors behalf. Ifwhat is signed is a note, it is not necessary that the agent who signs the note on behalfof the guarantor is the agent who agreed the oral contract on his behalf.


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86. In Smith v Webster[1876] 3 Ch D 49 P verbally agreed to buy an inn from D. On thenext day D told his solicitors that he had entered into a verbal arrangement for the saleand instructed them to prepare an agreement. On the same day they forwarded a draftformal contract to Ps solicitors under cover of a letter which said:

[D] has been with us today, and stated that he had arranged with your

client [P] for sale to the latter of the Golden Lion for 950. We therefore

send herewith draft contract for your perusal and approval.

This was held by the Court of Appeal to be insufficient as a note or memorandum.James LJ held that the only authority given to the solicitor was to prepare a formaldocument. Even if the letter had said that D had told us that he has sold the propertyto you for 950 this would merely have been the communication of a fact. Thesignature would not make it a binding memorandum, not being affixed eo intuitu.The draft sent was not the same contract as had been agreed and a statement of thereason why it was being sent was not a memorandum signed by someone authorised

by the person interested to sign it as binding. Bagallay LJ regarded the agreementreached as conditional upon a formal contract and said that the authority conferred onthe solicitor by D was not authority to convert it into an absolute agreement. Lush LJheld that in order to satisfy the statute a note or memorandum must be one which the

principal had authorised the agent to sign as a record of the transaction and that theauthority actually given to the solicitors was merely to prepare a formal draft contractto be sent to the other side for perusal and approval.

87. The cases that have followed Smith v Websterhave restricted its scope.

88. Thus, inJohn Griffiths Cycle Corporation, Limited v Humber & Co, Limited[1899] 2QB 414 the Court of Appeal held that Smith v Websterwas not to be taken as meaningthat the agent must have had authority to sign the document as a record of the

contract. All that Smith v Webster decided was that, in order to satisfy the Statute,you must show that the agent signing was an agent thereunto lawfully authorisedi.e. that he was authorised to sign the document which referred to and recognised anagreement in the terms relied on. It was, the Court held, undoubted law that asignature to a document containing the terms of a contract could satisfy the Statute,although put alio intuitu and not in order to attest or verify the contract. In Smith vWebster, the court said, the solicitor was not expressly authorised to sign anydocument recognising the document which in fact contained the proposed terms9.Per contra, inJohn Griffiths officers of the defendants had, in the course of what theywere authorised to do, written to the plaintiffs with regard to the supply of goods in

terms which, the Court held, did refer to and recognise an agreement in the termscontained in a schedule to a memorandum of agreement, which had not itself beenexecuted.

89. In Daniels v Trefusis [1914] 1 Ch 788 Mr Trefusis agreed with an agent called MrGirdlestone to buy a house for 700. Girdlestone was in fact acting for a Mr Daniels

but later claimed to be a principal who had bought from Mr Daniels for 600 and wassub-selling to Mr Trefusis at an increased price. Girdlestone commenced an actionagainst Mr Daniels for specific performance of the agreement said to have been made

between them. In the latter action (which was ultimately dismissed) Mr Danielssolicitors wrote to Mr Trefusis solicitors asking for a short statement from Mr

Trefusis as to what had occurred between him and Mr Girdlestone. The solicitors sent

9 The meaning is somewhat obscure. There was no document which in fact containedthe proposed terms. The sense would appear to be that the solicitor was not authorisedto sign any document recognising the agreed terms.


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an unsigned statement by Mr Trefusis as to the verbal agreement he had made withMr Girdlestone, and, later, replies to certain questions which Mr Daniels solicitorshad posed. The accompanying letter said that they enclosed the questions with whatwere, and were said by them to be, Mr Trefusis answers. These answers were not,however, signed by him. It was common ground that the statement, answers andaccompanying letter were sufficient to constitute a note or memorandum for the

purposes of the Statute. When Daniels as vendor began an action against Trefusis asbuyer Trefusis alleged, inter alia, that there was no memorandum satisfying theStatute.

90. Mr Trefusis contended that the solicitors were not in fact acting as his agents inproviding the statements or proof from him, but were acting on behalf of the plaintiff,and that in any case their authority did not extend to signing a note or memorandumof the contract on the defendants behalf. Sargant J held that the first objection wasuntenable and that the second also failed. The solicitors had authority to forward tothe plaintiffs solicitors the documents which they sent. It did not matter that theymay not have been contemplating that those documents would form a memorandumfor the purposes of the Statute.

The unintentional by-product of satisfying the Statute may be produced as

completely by a note or memorandum signed by an agent of the party as by a

note or memorandum signed by the party himself, provided, of course, that the

agent had authority to sign the particular note or memorandum.

91. InNorth v Loomes [1919] 1 Ch 378, N agreed to sell to L certain premises in Chinnorfor 590 and gave him a receipt for a 50 deposit. The receipt, which was regarded

by both parties as their contract, was in the following terms:

Received of [L] the sum of 50 on the purchase price 590 for the house

and premises and landThe balance of the purchase price to be paid on or

before March 25th 1918. Purchase price 590. Deposit 50. Balance 540.

N signed the receipt.

92. L sent the receipt to his solicitor with instructions to carry out (i.e. complete) theagreement which L had made. Ns solicitor sent to Ls solicitor a draft contract. Lssolicitor wrote back on 8th February:

I need not trouble you to send me another contract as the one which your

client has signed is, I think quite sufficient.

The one which your client has signed was a reference to the signed receipt.

93. Younger J held that the letter of 8th February was authorised by L because instructionsto complete impliedly authorised, when necessary, the affirmation on behalf of theclient, of the contract made by him and, because the solicitors were so authorised, thereceipt was a sufficient memorandum for the purposes of the Statute.

94. The upshot of these cases is that, if a document is executed by an agent which recordsthe terms of the sale, it is not necessary, in order to satisfy the Statute, that the agentshould have been authorised to execute the document as a record of the transaction;

but it is necessary that the document, which is a record of the transaction, is one thathe is authorised to execute by the person sought to be charged.

Signature


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95. It is common ground between the parties that an electronic signature is sufficient, andthat a first name, initials, or, perhaps, a nickname will suffice. But there must besomething, which can be regarded as a form of signature, which is voluntarily affixedto the document by way of authentication thereof (see Caton v Caton [1867] LR 2 HL127).

96. In Leeman v Stocks [1951] 1 Ch 941 the plaintiff was the highest bidder for certainpremises at a public auction. Before the auction the auctioneer borrowed from a

solicitor, who was present at the auction but who had nothing to do with the premises,a form for sale by private treaty. A number of its provisions were inapplicable to thevendors property. The solicitor edited the document and put in the date forcompletion. The auctioneer put in the vendors initials and surname (W.E.Stocks).

97. After the premises had been knocked down to the plaintiff, the auctioneer inserted thepurchasers name and address, a description of the premises and the auction price and,when he had obtained it, the purchasers solicitors name. The document ended withthe words As witness the hand of the parties hereto the day and year before written.

Purchasers solicitor, R.A.C. Symes & Co, Southampton. Thepurchaser signed thedocument over a stamp. The auctioneer told the vendor of the sale but did not showhim the document. Neither he nor the vendor signed the document in the ordinarysense of the word. The vendor refused to complete alleging that there was no note ormemorandum.

98. Roxburgh J held that the auctioneer was the agent of both parties; and that he hadauthority to put before the purchaser, as he did, a document containing the name ofthe vendor as the party with whom the contract had been made, and the terms of thecontract which had been made, for him to agree in writing. The placing of the nameW.E. Stocks as the name of the vendor with whom the contract was made by theauctioneer was sufficient to count as a signature of a memorandum by an authorisedagent.

99. In so holding he relied on the observations of Denman J and Cave J inEvans v Hoare[1892] 1 QB 593. He also held that, although the vendors name was not inserted inthe first instance with reference to a contract with the purchaser, nevertheless when itwas put before the purchaser for signature, the vendors name was in the document inrelation to a contract which had become binding, albeit not actionable without amemorandum satisfying the statute.

100. The point which troubled him was that the document by its own terms contemplatedthat it should be signed in the ordinary sense by both parties, from which it could besaid that until then it had not been signed at all. As to that he held that when theauctioneer obtained the purchasers signature neither he, on behalf of the vendor, northe purchaser intended any other signature ever to be added; but that both intended thedocument with the purchasers signature to be the final written record of the contract.The court could examine the evidence to see if the document relied on came into

being as a perfect instrument i.e. as the intended final embodiment of the agreementand, if it found that it did, the court was not prevented from holding it to be asufficient memorandum.

101. Leeman v Stocks appears to me a case which stretches the concept of signature closeto its limits. The signature was constituted by the auctioneer writing the vendorsname at the beginning of a document which was then tendered to the purchaser andsigned by him. I do not regard Roxburgh Js reference to the perfect instrument asmeaning that there is a species of document which can count as a memorandumalthough unsigned; but as indicating that, if the document is the document which the


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parties intended to be the final record, the fact that it referred to a signature (in theconventional sense) from both parties did not prevent the insertion of the name of thevendor by his authorised agent being regarded as a signature, where that documentwas presented to the purchaser for signature (as occurred) after the sale.

102. The Court has in other cases shown itself somewhat generous in deciding what is asignature. Thus in Bluck v Gompertz [1852] 7 Ex 862 the defendant signed anundertaking to procure the acceptance of two bills for 200 and 146 for wine

supplied to an MP and agreed to see that they were duly paid. The latter draft shouldhave been for 150. The plaintiff drew bills for 200 and 500 and the defendantsaw that they were accepted. The defendant wrote across the guarantee I havereceived the two drafts, one being for 150l, instead of 146l, the other being an error

in the invoice of 4l). The plaintiff signed this but the defendant did not. Theguarantee as endorsed was treated as a valid memorandum of the contract since theendorsement had been made for the purpose of correcting the mistake and, beingwritten by the defendant on the same piece of paper as he had originally signed, hisoriginal signature was plainly intended to authenticate the memorandum as amended,and could therefore be considered as doing so, notwithstanding that the words writtenon the paper by the defendant were written as the words of the plaintiff. Pollock CBsaid that the court had come to its conclusion not without some difficulty. BaronParke said he had had great difficulty in bringing his mind to this conclusion. Thecase also affords an illustration of a guarantee which preceded the main contractwhich was constituted by the MPs acceptance of the bills.

103. There is authority that the insertion of a persons e-mail address by an internet serviceprovider after the document has been transmitted is, absent evidence to the contrary,incidental and not, as is requisite, intended as a signature, even if the address containsthe senders name:Pereira Fernandes v Mehta [2006] 1 WLR 1543; Sean Lindsay v

Jared OLoughnane [2010] EWHC 529, para 95, a decision undersection 6 of the

Statute of Frauds (Amendment) Act 1828. But an e-mail, the text of which beginsPaul/Peter, may be regarded as signed by Peter because by that form of wordingPeter signifies that he is addressing Paul and authenticates the content of the whole ofwhat follows: see Evans v Hoare [1892] 1 QB 593; Caton v Caton (1867) LR 2 HL127.

104. None of these cases affect the analysis in paras 47 - 65 above. The e-mails whichconstitute the contract are signed by the electronically printed signature of the personswho sent them.

If the agreement was not in writing signed by a person lawfully authorised, was

there a note or memorandum signed by a person so authorised?

105. Golden Ocean suggested that an e-mail of 8th January 2001 from Mr Hindley to MrHintz could constitute a memorandum. That e-mail rejected an offer from GoldenOcean and made a counter offer a/c Trustworth Shipping Pte Limited Singapore fully

guaranteed by Salgaocar Mining Industries Goa. After the offer Mr Hindley wroteLittle way to go but I hope along the right lines. As is apparent from what I havealready said (see paras 76 and 79 above) that will not suffice. It is simply an offer ofa charter on certain terms to be guaranteed by SMI. The terms of the charter are notagreed and are not the same as the terms that were agreed: the putative memorandumis not a memorandum of a contract of guarantee that has been made but of a contract

that might be made.


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106. Mr Young told me, in the course of Mr Kendricks submissions that, despite the termsof his skeleton10, what he intended to submit was that a note or memorandum of theagreement of guarantee could be found in the sequence of e-mail communicationsdown to the recap of the MOA terms on 21st February 2008. This sequence involvede-mail correspondence (a) between Golden Ocean and Mr Hintz (or Mr Hall) at HoweRobinson, acting on their behalf; (b) between Mr Hintz (or Mr Hall) for GoldenOcean and Mr Hindley, acting (or purporting to act) for Trustworth and SMI; and (c)

between Mr Hindley and Mr Salgaocar, who does not appear to be computer literateand who does not respond by e-mail. Throughout the charterer is referred to asTrustworth Pte Limited Singapore fully guaranteed by Salgaocar Mining IndustriesGoa.. It is this reference, when contained in e-mails in the last two categories,signed by Mr Hindley, which he relies on as notes or memoranda.

107. None of these communications prior to 21st February will suffice as a note ormemorandum of an agreement of guarantee and for the same reasons. Prior to thatdate there was no concluded agreement on the terms of the charterparty and MOA andthus no contractually binding agreement either to charter or to guarantee. It isimmaterial that the wording fully guaranteed by [SMI] remained the same since itcould not be known whether there would be a guarantee, and of what, until agreementon the charterparty had been concluded. The e-mail communications are negotiatingdocuments of agreements to be made, whose possible terms varied as the negotiations

progressed, not memoranda setting out the terms of an agreement that had been made.Until the conclusion of the charterparty the words relied on are no more than an offerto guarantee in respect of obligations yet to be determined.

108. On 7th March 2008 someone at Howe Robinson drew up an internal fixture note whichreferred to the vessel as Golden Beijing, set out details of the charter, named HR

Brokers as GCH + BMH i.e. Mr Hindley and Mr Hintz, and Our principals asSalgaocar (GCH) Golden Ocean Spore (BMH). On 13th March 2008 the note was

re-drawn so as to refer to the Vessel as Golden Ocean Jinhaiwan Newbuilding CapeTBN (Intention Golden Beijing).

109. On 17th July 2008 Mr Flaaten of Golden Ocean e-mailed Mr Hintz with comments ona working copy of the Golden Ocean Charterparty dated 2nd February 2008 saying:

After having made the above corrections you are herewith authorised to sign

the above on behalf of Owners.

Mr Hindley appears to have received a copy of this e-mail because he e-mailed it toLisa, a Howe Robinson employee, asking for a copy of the charterparty so as tocheck the comments.

110. Nothing seems to have happened for a while. On 19th November 2008 Mr Flaaten e-mailed to Mr Hintz the following on top of his e-mail to Mr Hintz of 17 th July 2008:

Trustworth/Salgaocar should have had ample time to review cp and

comments below by now

Please push for a signature from both

If guarantor doesnt sign we need to have a guarantee letter drawn up

as well

But sufficient for us if they co-sign the cp

Please forward a copy of the corrected cp signed on our behalf

10 Para 48 states that documents sufficient to satisfy the Statute include the working

charterparty and the e-mails of 8th January.


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111. On 20th November 2008 Ms Chrusciel of Howe Robinson e-mailed to Mr Flaaten acopy of the charterparty corrected as per his comments of 17 th July and said that HoweRobinson was arranging the signature on Golden Oceans behalf as per the authority

given to us on 17.7. Kindly re-confirm in order. On 2nd December 2008 the requestwas repeated. On the same day Mr Flaaten replied asking Ms Chrusciel to have itsigned on Owners behalf and forwarded to Charterers for their signature.

112. At some date between 2nd and 11th December 2008, Howe Robinson, as I infer, added

to the charterparty by typing in below Owners the words:

For the Owners

GOLDEN OCEAN GROUP LIMITED, BERMUDA

By e-mail authority received from

GOLDEN OCEAN MANAGEMENT AS

Dated 17th July 2008

For and on behalf of

HOWE ROBINSON SHIPBROKERS,LONDON

Director

As Broker Only.

I call this the working charterparty.

113. On 11th December 2008 Ms Chrusciel e-mailed to Mr Salgaocar a copy of the originalof the charterparty signed by the Owners and asked for authority to sign the same onhis behalf. Nothing seems to have come of this.

114. On 26th February 2009 Mr Flaaten e-mailed Mr Hintz to say that he needed a signedversion of the charterparty signed on Golden Oceans behalf and sent out to charterersadding Needs two signatures: Salgaocar being the important one.

115. In those circumstances Mr Kendrick is right to submit that the working charterparty isnot the type of perfect instrument to which Roxburgh J was referring. It was adocument intended to be signed by both parties and only signed by one and was notauthenticated by or on behalf of Trustworth or SMI. It was not intended, in the formwhich it took, as the final record of agreement.

Possible memoranda

The working charterparty

116. I cannot regard the working charterparty with its guarantee as a sufficient

memorandum for the purposes of the Statute. The question is whether thecharterparty was drawn up with the authority of SMI and records the terms of theguarantee; not whether Howe Robinson was authorised to draw it up as a recordofthe guarantee, nor whether Howe Robinson was authorised to sign it as a contract. Infact, however, it was drawn up and signed on behalf of the Owners. That is apparentfrom the e-mail correspondence to which I refer in paras 109 - 114 above and the factthat it embodies the corrections made by Golden Ocean in the e-mail of 17 th July. Itwas never signed on behalf of the charterers because Mr Salgaocar never gave HoweRobinson authority to do so. It is not necessary to decide what might have been the

position if Mr Salgaocar had authorised Howe Robinson to sign and they had done sounder the words Charterers without any reference to the guarantee.

The Howe Robinson stamps


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117. I do not regard the Howe Robinson stamps on the pages of the NYPE form as takingthe matter any further. They were no doubt put there when the working charterpartywas drawn up (incorporating Golden Oceans corrections). There is no evidence thatthey were somehow applied on behalf of charterers or the guarantor.

118. Those conclusions are consistent with what Mr Kerr-Dineen of Howe Robinson saidin his e-mail of 31st December 2009:

I would like to make it clear that no other documents (i.e. other than therecap) in respect of either the charterparty or the guarantee have been signedby Howe Robinson on behalf of either Trustworth or SMI. So far as we are

aware the charter party was never actually signed by Trustworth or SMI

although that statement does not deal in terms with whether Howe Robinson drew upthe working charterparty on behalf of SMI.

Micawber

119. If I had held that, on the material presently before me, there was no agreement in

writing or no sufficient note or memorandum, it would then have been necessary toconsider whether I should decline to set aside my order on the basis that disclosuremight reveal some note or memorandum signed by Mr Salgaocar (or someone else on

behalf of SMI). Mr Young submitted that it was inherently likely that such adocument existed.

120. I do not think it necessary to decide this point and do not do so. It is sufficient to saythat, as it seems to me, a person who wishes to invoke the courts jurisdiction inrelation to a foreign defendant needs to show that he has an actionable claim worthyof serious consideration on the material which he presents to the court. It is notsufficient for him to show that he has a claim which, on the material before the court,

is not actionable but which might later turn out to be so once disclosure has beengiven. He needs to show, at this preliminary stage, the existence of a sufficientmemorandum. In addition the Statute itself is a prohibition against the bringingof anaction absent a memorandum.

Guarantee or promise to get one?

121. Mr Kendrick had a further point which he developed in this way. Generally speakinga chartering broker has no actual authority to charter a ship; The Suwalki [1989] 1Lloyds Rep 511 (A broker, or even an exclusive broker, is not in the shipping traderegarded as having authority to commit his principals without reference back to

them). Mr Salgaocar told the brokers that he had authority to act for SMI. In fact heneeded Board approval. But, if he had no such authority, the need for it could not becircumvented by his (the agents) statement that he had it: The Ocean Frost[1986]AC 717. However, in certain circumstances an agent who has no actual or apparentauthority to conclude a particular transaction may have apparent authority to conveycertain information e.g. that a requisite consent or approval has been given: First

Energy v HIB [1993] 2 Lloyds Rep 194. Whether Mr Salgaocar had apparentauthority to communicate to Howe Robinson that a guarantee had been approved bySMI is, he accepts, a matter for trial.

122. But that begs the question as to whether SMI purported to give a guarantee at all. As

to that, Howe Robinson indicated in their e-mails that they were acting for charterers;thus the subjects to be lifted involved approval by the Board of Trustworth, notSMI. Further the words a/c Trustworth Shipping Pte Limited Singapore fully

guaranteed by Salgaocar Mining Industries Goa are not, on their true construction,


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to be taken as a guarantee itself but as an undertaking to procure such a guarantee,which could either have been given on a separate document or by SMI signing thecharter.

123. I do not accept this. It seems to me that the use of the phrase fully guaranteed by[SMI] signified that the charterparty, once its terms were agreed, was one that wasthen guaranteed by SMI. The words do not have any element of futurity in them (theydo not, for instance, even say to be guaranteed). Trustworth was a company

nominated by SMI. Mr Salgaocar was the individual who acted or appeared to act forboth. There is no indication in the e-mails that the contract of guarantee was subjectSMIs approval or that, after all the terms were agreed it would be necessary forTrustworth to approach SMI to obtain its guarantee. The parties appear to have

proceeded on the basis that, if Charterers approval was obtained, there was no needfor a separate SMI approval. In those circumstances the idea that, after all the termswere agreed, no guarantee was yet in existence seems to me artificial. This isespecially so if, as is conceded to be arguable, Mr Salgaocar had actual authority to

bind both Trustworth and SMI. At any rate I decline to hold that Mr Kendricksconstruction is indisputably right. Golden Ocean has a well arguable claim in thisrespect.

Howe Robinsons authority to bind SMI

124. Mr Charles Kimmins, QC, for Mr Salgaocar, submits that the fact that Mr Salgaocarmust, for present purposes, be assumed to have had authority to bind SMI, does notmean that Howe Robinson had such authority. That begs the question as to whetherMr Salgaocar authorised Howe Robinson to bind SMI. In his 3rd witness statementMr Chetwood reports what Mr Salgaocar has said, which is that, on his understanding,SMI would only ever give a guarantee of this kind if it was contained in a separatedocument and signed by SMI; and that he did not grant Howe Robinson authority toconclude or sign the guarantee on behalf of SMI in 2008. As far as he was concernedif Golden Ocean wanted a guarantee from SMI they would need a properly executedguarantee contained in a separate document duly signed by SMI.

125. The fact, he submits, that Charterers reportedly lifted the subject of their boardapproval on 15th January as per Mr Hindleys e-mail (Pleased to confirm Charterershave lifted their subjects), does not mean that Mr Salgaocar, even if he had authorityto bind SMI, chose to authorise Howe Robinson to do so. I agree. But, incircumstances where, for present purposes, it is to be assumed that he had suchauthority, where the e-mail negotiations were effected by Howe Robinson on MrSalgaocars instructions (he being notified of what was being negotiated), and where

what was ultimately agreed arguably amounts to a guarantee, and not merely apromise to procure one, it is well arguable that he authorised Howe Robinson to bindthe guarantor i.e. SMI, on whose authority he had power to act.

126. This is particularly so in circumstances where (a) there is no witness statement fromMr Salgaocar or Mr Hindley which reveals that the latter was ever told by the formerthat he had no authority to conclude the negotiations on behalf of SMI; (b) there are36 fixtures where SMI guaranteed Trustworth by the same one line reference in thecharterparty and where the guarantee was not contained in a separate letter (see para10 above). That is a form of guarantee which, in Howe Robinsons experience, iscommon in the chartering business, the use of a separate letter occurring in only a

minority of cases.

127. In addition it seems to me arguable that, if Howe Robinson were not given actualauthority to bind the guarantor, they had at least apparent authority to do so or, at


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least, to communicate Mr Salgaocars agreement on behalf of SMI. Mr Kimminsaccepted that that point might normally be open at this stage to someone in the

position of Golden Ocean but that, in the present case, it could not be because GoldenOcean did not think that any contract of guarantee had been entered into as appearsfrom the fact that in November 2008 they pressed for signature from both chartererand guarantor or, if the guarantor did not sign the charterparty, a guarantee letter.

128. I do not think that the November correspondence is fatal to any claim based on

ostensible authority. The fact that Golden Ocean pressed for two signatures inNovember does not necessarily mean that they must have thought there was nocontract of both charter and guarantee in February. A charterparty signed twice, oncefor the charterer and once for the guarantor, or a charterparty signed once togetherwith a guarantee letter would have resolved any question as to whether there was a

binding agreement on both counts. But the absence of such documents does not meanthat there was not, or could not have been thought to have been, such an agreement inFebruary. Further, it would seem unlikely that Golden Ocean would have lifted theirsubject if they thought that there was no binding guarantee in place once thecharterers had lifted theirs.

Summary so far

129. I am, therefore satisfied:

a) that Golden Ocean has a well arguable claim (i) that the charter andguarantee were valid contracts; (ii) that Trustworth repudiated thecharter; (iii) that the guarantee is an agreement in writing which doesnot fall foul of the Statute of Frauds; and (iv) that SMI is, therefore,liable to it in respect of Trustworths repudiation of the charter;

b) that the claim against SMI is governed by English law so that it is open

to the Court to exercise jurisdiction on that account.

130. I am also satisfied that Mr Salgaocar is a necessary or proper party to the claimagainst SMI, since there is a claim against him for breach of a warranty of authority inrespect of both Trustworth and SMI. Mr Salgaocar is a necessary or proper party

because the sensible course is to try the alternative claims in the same proceedings, soas to avoid the risk of inconsistent findings and waste of costs. It does not matter forthat purpose whether English or Indian law governs.

131. That conclusion makes it strictly unnecessary to decide which side has much thebetter of the argument in relation to the proper law of the claim against Mr Salgaocar.

That is, for present purposes, the relevant test: see Cherney v Deripaska [2008]EWHC 1530 (Comm); Rimpacific v Daehan [2010] 2 LL.R 236 [26] and the casesthere cited. Since, however, the matter has been argued I shall express myconclusions briefly.

The proper law of the claim against Mr Salgaocar for breach of warranty of authority

132. The claimants do not submit that there was any implied or inferred choice of law sothat Article 3 of the Rome Convention applies; but that Article 4 of the Conventiondoes. That Article provides:

(1) To the extent that the law applicable to the contract has not been chosenin accordance with Article 3, the contract shall be governed by the law of the

country with which it is most closely connected. ...


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(2) Subject to the provisions of paragraph 5 of this Article, it shall be

presumed that the contract is most closely connected with the country where

the party who is to effect the performance which is characteristic of the

contract has, at the time of conclusion of the contract, his habitual

residence ....

(5) Paragraph 2 shall not apply if the characteristic performance cannot be

determined, and the presumptions in paragraphs 2, 3 and 4 shall be

disregarded if it appears from the circumstances as a whole that the contract

is more closely connected with another country.

133. I do not accept Mr Kimmins submission that the characteristic performance of awarranty of authority contract is the provision of the warranty. The provision of thewarranty is the promise, not the performance of it. A person who warrants hisauthority warrants that a state of affairs exists. The warranty is fulfilled if he has theauthority which he claims to have. It is a somewhat curious use of language todescribe that as a performance effected by the warrantor, an expression more easilyapplicable to a physical act. But since, in essence, the warrantor agrees to see to itthat he has authority, he can properly be regarded as the party who is to effect the

performance which is characteristic of the contract. In addition there is no one otherthan Mr Salgaocar who can be said to perform the contract11. Accordingly thecontract is to be presumed to be most closely connected with India, Mr Salgaocarshabitual residence.

134. The next question is whether it appears from the circumstances as a whole that thecontract whereby Mr Salgaocar warranted his authority is more closely connectedwith England. Golden Ocean submits that that is so because English law was togovern the guarantee and charterparty, which, had he had authority, would have been

concluded between Mr Salgaocar and his apparent principals. There is an expresschoice of English law in the charterparty, which also contains the guarantee. GoldenOcean supposed itself to be contracting with SMI for the provision to it of a guaranteeto be governed by English law. It was entitled to expect that the question of MrSalgaocars warranty of authority should be determined by the system of law byreference to which he was negotiating the contract in respect of which he purported toact as agent.

135. Such an approach seems to me to fall foul of the observations of Hobhouse LJ (withwhom the rest of the Court agreed) in Credit Lyonnais v New Hampshire [1997] 2Lloyds Rep 1 in connection with the provisions of sections 2 (2), (3) and (4) of

Schedule 3 A of the Insurance Companies Act 1982, which were similar in terms tosections (1), (5) and (2) of article 4 of theRome Convention, when he said [p 7]:

I accept the defendants submission that once it is seen that there is no

choice of applicable law satisfying par. 2 (i) of the schedule, the question of

choice and absence of choice becomes irrelevant to the question of

11 In Samcrete Egypt Engineers v Land Rover Exports Ltd (see para 135 ) the Court of

Appeal held that there was no room for doubt that the obligation characteristic of the

performance of a guarantee (which is somewhat analogous to a warranty of authority)

was the payment of money by the guarantor (para 38). The Giuiliano and Lagarde Report

is to the same effect (see para 36 of the judgment). The Court also held that in theabsence of an express or inferred choice of law under Article 3, the Article 4 (2)

presumption should only be disregarded in circumstances which clearly demonstrated

the existence of connecting factors justifying the disregard of the presumptions in Article

4 (2).


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ascertaining with what State the contract is most closely connected. Similarly

to refer to the contemplation by one party or another that certain local laws

may or may not be relevant is to be influenced by considerations of inferred

choice and connection with legal systems and not with the question of

performance and the location of performing parties.

This passage was quoted with approval in Samcrete Egypt Engineers and Contractors

S.A.E. v Land Rover Exports Ltd[2001] EWCA Civ 2019.

136. In the present case any contract whereby Mr Salgaocar warranted his authority to actfor SMI seems to me more closely connected with India, where he and SMI residedand where he would secure the necessary authority from SMI. Further Indian law isthe law which governs the relationship between SMI and Mr Salgaocar; and the claimfor breach of warranty of authority only arises if there is no valid contract (under anylaw) between Golden Ocean and SMI. At any rate Golden Ocean has not persuadedme that it has much the better argument on this point; that distinction belongs to thedefendants.

137. Accordingly I would not allow the permission to serve Mr Salgaocar out of thejurisdiction to stand on the basis that any warranty of authority contract was governedby English law.

Forum conveniens

138. I turn to consider the question of the appropriate forum i.e. the forum in which thecase can most suitably be tried in the interests of all the parties and the ends of justice.A number of factors are of relevance in determining that question. These include (a)the applicable law, (b) the location of the parties, the likely witnesses, and thedocuments.

139. As to (a), the contract was negotiated in England through English brokers, and theparties expressly chose English law. Those are potentially powerful factors in supportof England as a forum. They are not, however, conclusive. The significance of thefact that English law is the law of the contract depends on all the circumstances. InThe Elli 2 [1985] 1 Lloyds Rep 107 Ackner LJ observed that where exclusivereliance was placed on the contract being governed by English law, the burden ofshowing that there was good reason justifying service out of the jurisdiction was a

particularly heavy one.

140. In the present case two circumstances seem to me of especial importance.

141. The first is that a major issue in the present case is the application of the Statute ofFrauds. The English Courts are markedly better equipped to deal with the validity ofa defence based on this ancient English Statute than any other. It does not seem to mesatisfactory to have such an issue determined by expert evidence of English lawyers.The proper interpretation of the Statute of Frauds is not something beyond furtherdevelopment (which can only be judicial), and its proper application is not entirelystraightforward (as the cases to which I have referred and the current controversyshow). In those circumstances it is an issue much better left to the determination ofan English judge.

142. The second is that it appears from the third witness statement of Mr Hughes on behalfof SMI that as a matter of Indian law, on which he exhibits advice from DSK Legal, afirm of advocates in Mumbai, the Guarantee is void and will not be enforced in theIndian courts because it was entered into in contravention of the Foreign Exchange


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Management (Guarantees) Regulations 2000. If this be so, any claim by GoldenOcean would be doomed to fail in India when it would not do so (on that account) inthe courts of this country whose law the parties have expressly chosen. There is noevidence from Golden Ocean accepting what Mr Hughes says about Indian law; butno refutation of it either. At the very lo

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