House of Lords
|Session 2001- 02
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|Judgments - Albright & Wilson Uk Limited v. Biachem Limited and Others Albright & Wilson Uk Limited
HOUSE OF LORDS
Lord Nicholls of Birkenhead Lord Slynn of Hadley Lord Hoffmann Lord Hutton Lord Rodger of Earlsferry
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
ALBRIGHT & WILSON UK LIMITED
BIACHEM LIMITED (APPELLANTS) AND OTHERS
ALBRIGHT & WILSON UK LIMITED
BIACHEM LIMITED AND OTHERS
ON 17 OCTOBER 2002
 UKHL 37
LORD NICHOLLS OF BIRKENHEAD
1. I agree that the appeal of Biachem Ltd should be allowed. A muddle occurred in the performance of two contracts. As a result, a tanker load of sodium chlorite being supplied by Berk to Albright & Wilson was delivered with the wrong delivery note. The documentation supplied related, not to the order of sodium chlorite from Berk, but to a different order: an order by Albright & Wilson for a tanker load of a different chemical, epichlorohydrin, from a different supplier, Biachem. Both loads were due for delivery on the same day and at the same factory: Albright & Wilson's Avonmouth works. Albright & Wilson is now seeking to recover damages for the loss flowing from the explosion which occurred when the load of sodium chlorite was mistakenly discharged into Albright & Wilson's store of epichlorohydrin at Avonmouth.
2. The documentation muddle became possible because, by chance, Berk and Biachem employed the same haulage contractor, Huktra, to deliver both tanker loads to Albright & Wilson's Avonmouth works. In turn, Huktra employed one subcontractor, Stevens, in respect of both loads.
3. Had Albright & Wilson advanced claims in negligence against Berk and Biachem, no doubt it would have been met with a plea that Albright & Wilson was itself guilty of contributory negligence when its employees at Avonmouth directed the tanker containing sodium chlorite to the tanks where the epichlorohydrin was stored. In order to avoid any such plea of contributory negligence being raised Albright & Wilson has advanced its claims against Berk and Biachem solely on the basis of loss arising from breach of contract. It has eschewed a claim based on a failure to exercise care, either in tort or contract. Hence the questions now confronting the House.
4. In answering these questions the acts done by Huktra and its subcontractor are to be characterised, so far as possible, in a way which makes legal and practical sense. In doing an act Huktra is to be taken as acting on behalf of the principal whose obligation it was to do the relevant act.
5. On this footing the load of sodium chlorite delivered by Huktra's subcontractor is to be taken to have been delivered on behalf of Berk. Berk was under a contractual obligation to supply this quantity of sodium chlorite to Albright & Wilson. Huktra was acting on behalf of Berk, whose goods these were.
6. The provision of appropriate documentation was ancillary to the sale of goods to which it related. The function of the documentation was to authenticate and identify the goods being supplied. To this end the seller of the goods was under a contractual obligation to provide the necessary documents. Thus, Berk was under a contractual duty to provide the appropriate delivery note as part of its sale of its sodium chlorite to Albright & Wilson. This being so, in providing the wrong delivery note with the tanker load of Berk's sodium chlorite Huktra is to be taken as having been acting on behalf of Berk. Berk was contractually obliged to provide the appropriate documentation. In breach of contract, it failed to do so.
Lord Slynn of Hadley
7. In the end the answer to this appeal turns on a proper analysis of the facts; it does not depend on any issue of the law of agency or of estoppel. The facts have been fully set out in the opinions of Lord Hutton and Lord Rodger of Earlsferry and nothing is served by repeating them.
8. It seems to me plain that when the driver of the vehicle hauling tanker HUKU 302012-8 delivered a consignment of sodium chlorite to Albright & Wilson UK Ltd on 3 October 1996, which was due to be delivered under a contract between Berk and Albright & Wilson, (even though it was accompanied by a delivery note which related to a load of epichlorohydrin due to be delivered to Albright & Wilson under a contract with Biachem Ltd) the driver, his employers and their principals, were not performing or purporting to perform both contracts. They were performing the contract to deliver sodium chlorite made between Berk and Albright & Wilson. The muddle by Huktra over the delivery note and the tanker number did not detract from the essential nature of what they were doing. The answer to the appeal is thus simply that it was Berk's contract which was being performed. It follows that Biachem's appeal must be allowed.
9. The explosion at the Albright & Wilson works happened because Mr Gerd van Poucke of Huktra made one and possibly two mistakes. The one he undoubtedly made was to write the number of the tank containing sodium chlorite on a copy of the delivery note issued by Biachem in connection with its consignment of EPI. The result was that the driver instructed to deliver Berk's sodium chlorite was given the wrong delivery note. The other possible mistake was to tell the driver, following what he thought to be Biachem's instructions, to withhold all the documentation except the delivery note.
10. So there is no doubt whose fault it was. But Albright & Wilson are not suing for negligence. They are suing Berk and Biachem for breach of contract. They say that what happened that morning was a delivery in breach of contract. For this breach of contract they claim damages for consequential loss, irrespective of fault. But whose contract was being performed? Huktra, as agents for both Berk and Biachem, had muddled up the performance of two contracts. Delivering sodium chlorite was performance of Berk's contract. But it should have been delivered with documents saying that it was sodium chlorite. To deliver it with documents saying it was EPI was a breach of contract. On the other hand, handing over Biachem's delivery note was part of the performance of Biachem's contract. But it should have been handed over with a delivery of EPI, not sodium chlorite.
11. The Court of Appeal solved the riddle by saying that both contracts were being performed simultaneously. For the reasons I have just given, it was an improper performance of both. This does not seem to me possible. I do not see how the same act can be simultaneously a proper performance of part of one contract and an improper performance of part of an altogether different contract. If delivering sodium chlorite is regarded as part of the performance of Berk's contract, it cannot also have been an improper part of the performance of Biachem's contract. Equally, if handing over the delivery note was part of the performance of Biachem's contract, it cannot also have been an improper part of the performance of Berk's contract. In my opinion there is no escape from having to decide whose contract was being performed.
12. How does one decide? Berk say that it depends upon how it would have looked to Albright & Wilson. The delivery note indicated that Biachem's goods were being delivered. Everything that happened afterwards was done on that assumption. Therefore Biachem's contract was being performed.
13. But this is not a case which turns upon ostensible authority or any other form of estoppel. Albright & Wilson are not claiming on the basis that they relied upon a representation that they were getting EPI (though they may well have done so). Their cause of action is breach of a contract for the sale of goods. So what matters is whose contract was being performed, not whose contract may have appeared to Albright & Wilson to be being performed.
14. I think that one has to decide what was the substance of the contract and what was ancillary. Was this a contract for the delivery of chemicals with the appropriate papers? Or was it a contract for the delivery of papers with the appropriate chemicals? It seems to me clear that it was the former. The contract was for the sale of goods, not documents. If that is right, then Huktra were performing Berk's contract to deliver sodium chlorite. But handing over the wrong delivery note made it a breach of contract. For these reasons and those of Lord Rodger of Earlsferry, I would allow Biachem's appeal and answer the first question "Berk".
15. The basic facts of this case can be briefly stated. The claimants Albright & Wilson UK Ltd on 16 September 1996 placed an order with one or more of the second, third and fourth defendants ("Berk") for delivery of 23 metric tonnes of sodium chlorite to their fluid plant at their works in Avonmouth and it was subsequently agreed that the delivery was to take place on 3 October 1996. On 20 September 1996 Albright & Wilson placed an order with the first defendant ("Biachem") for delivery on 3 October 1996 of 23 metric tonnes of epichlorohydrin ("EPI") to their phosphates plant at their works in Avonmouth, the phosphates plant and the fluids plant being located in the same complex of premises. 23 metric tonnes constitutes one load for a road tanker consisting of a tank pulled by a tractor.
16. The consignment of sodium chlorite was produced by a company in Italy. It instructed a transport company called "Huktra" based in Belgium to deliver that consignment to Albright & Wilson in Avonmouth. The consignment of EPI was produced by a company in Czechoslovakia and Biachem instructed Huktra to deliver that consignment to Albright & Wilson in Avonmouth.
17. Huktra subcontracted the transporting of the consignment of sodium chlorite and the consignment of EPI from the port of arrival in England, which was Purfleet, to a firm trading as Stevens Transport.
18. By reason of a mistake made by Huktra (to which I will refer later in more detail) when the driver of the tanker containing the sodium chlorite arrived at Albright & Wilson's works in Avonmouth on 3 October 1996 he presented Biachem's delivery note which related to the consignment of EPI intended for the phosphates plant. In consequence the sodium chlorite contained in the tanker was discharged into the phosphates plant containing EPI. The sodium chlorite reacted with the EPI which resulted in an explosion which caused extensive damage to property and some personal injuries. At the time that the explosion occurred a second tanker was travelling from Purfleet to Avonmouth carrying the consignment of EPI, but there was no evidence before the House as to what delivery note or other documents the driver of that tanker was carrying.
19. Albright & Wilson commenced an action claiming damages against Biachem and Berk. The action was pleaded solely in contract, and no claim was brought in tort. Counsel explained that the reason for the claim being restricted to breach of contract was to prevent any argument being advanced by Biachem and Berk that Albright & Wilson were guilty of contributory negligence in failing to check that the tanker was carrying EPI before its contents were discharged into the phosphates plant.
20. In the High Court Eady J was concerned to answer certain preliminary issues which had been ordered by the Master by consent. He answered those questions by holding that the delivery of the consignment of sodium chlorite to Albright & Wilson at their Avonmouth works constituted a breach of contract by both Biachem and Berk.
21. On appeal by Biachem and Berk the Court of Appeal upheld this judgment and dismissed both appeals in a judgment delivered by Buxton LJ with which Henry LJ and Sir Swinton Thomas agreed  2 All ER (Comm) 537. In considering the reasoning of the Court of Appeal it is relevant to set out two passages in the judgment. Buxton LJ stated, at p 543, para 18:
And, at p 546, para 27:
22. The essence of the reasoning that Biachem was liable in breach of contract is contained at p 545, para 22:
23. The essence of the reasoning in respect of Berk's liability is contained, at p 545, para 24:
24. In order to consider the submissions of counsel it is necessary to describe in more detail how it happened that the driver of Stevens Transport arrived at the premises at Albright & Wilson with a tanker containing a consignment of sodium chlorite but with Biachem's delivery note in respect of a consignment of EPI. Prior to the arrival of the tank containing sodium chlorite and the tank containing EPI at Purfleet docks Huktra allocated its job reference number ZA 54307 to the consignment of sodium chlorite and its job reference number ZA 54085 to the consignment of EPI. The consignment of sodium chlorite was contained in a Huktra tank which carried the number HUKU 302012-8 and the consignment of EPI was contained in a Huktra tank which carried the number HUKU 302014-9. Both of these tanks had arrived at Purfleet docks by 1 October 1996 and were ready to be transported to Albright & Wilson's works at Avonmouth.
25. On 2 October 1996 in accordance with the usual procedure between Huktra and Stevens Transport Huktra sent to the latter's office in England a fax containing driver's instructions ("the driver's instructions fax ZA 54307"). This fax contained (inter alia) the following instructions and information:
(1) It set out Huktra's job reference number ZA 54307 in respect of the consignment of sodium chlorite.
(2) It named the driver as Dave Ardrey.
(3) It contained the instruction to lift the tank HUKU 302012-8.
(4) It stated that delivery was to be on 3 October 96 to Albright & Wilson Ltd, Avonmouth Works.
(5) It specified the product as sodium chlorite.
(6) It specified the tonnage as being 22,000 and it specified the litres as being 18,181.
It is therefore clear that this was an instruction from Huktra to Stevens Transport to deliver a consignment of sodium chlorite contained in tank HUKU 302012-8 to Albright & Wilson at their Avonmouth works on 3 October 1996.
26. On 2 October Huktra also sent to Stevens Transport a fax containing driver's instructions in respect of the consignment of EPI. It contained the following instructions and information:
(1) It set out Huktra's job reference number ZA 54085 in respect of the consignment of EPI.
(2) It named the driver as Alan Lyons.
(3) It contained the instruction to lift the tank
(4) It stated that delivery was to be on 3 October 96 to Albright & Wilson Ltd, Avonmouth Works.
(5) It specified the product as epichlorohydrin.
(6) It specified the tonnage as being 22,060 and it specified the litres as being 18,383.
27. It appears that Huktra thought (but thought incorrectly, according to Biachem) that Biachem wished the delivery of EPI to Albright & Wilson to be a "neutral delivery" consignment. A "neutral delivery" consignment is explained as follows in the statement of Mr Roland Van Poucke the managing director of Huktra:
Therefore Huktra thought that Biachem wished its own delivery note with the heading "Biachem Ltd" to be handed over by the driver of the tanker when he delivered the EPI to Albright & Wilson.
28. Mr Gerd van Poucke was Huktra's manager in Belgium supervising the delivery of the two consignments of sodium chlorite and EPI to Albright & Wilson. It appears that on 2 October 1996 in looking at Huktra's computer generated truck plan print and the job cards displayed on the wall of Huktra's office he made a mistake and thought that tank HUKU 302012-8 contained the consignment of EPI. Therefore on 2 October he sent a second fax relating to the "neutral delivery" of the consignment of EPI (whether this fax was sent before or after the driver's instructions fax ZA 54307 is not clear but is immaterial). This fax ("the neutral delivery fax") was in the following terms:
Attached to this fax was a delivery note which was as follows:
In addition there was written on the delivery note in manuscript under the line GA9189 IN BULK TANKER (apparently by Mr Gerd van Poucke):
29. A traffic operations clerk with Stevens Transport gave the driver, Mr Dave Ardrey, the driver's instruction fax ZA 54307, the neutral delivery fax and the Biachem delivery note. Mr Ardrey went to Purfleet docks where, on 2 October 1996, he collected the tank HUKU 302012-8 containing the consignment of sodium chlorite which he drove to Albright & Wilson's works at Avonmouth, arriving on the morning of 3 October 1996 having parked overnight on the M4. On arrival at Albright & Wilson's works he presented the Biachem delivery note which represented the contents of the tank to be EPI and the contents were discharged into Albright & Wilson's phosphates plant containing EPI and the explosion occurred.
30. Therefore when the driver, Mr Ardrey, arrived at the Albright & Wilson complex on 3 October he delivered a load of sodium chlorite but he handed over a delivery note from Biachem which stated that the load was EPI. Berk had contracted to deliver a load of sodium chlorite to Albright & Wilson's works on 3 October and Biachem had contracted to deliver a load of EPI to the works on 3 October. Huktra and Stevens Transport were acting as agents to make the delivery of the load of sodium chlorite on behalf of Berk and as agents to make the delivery of the load of EPI on behalf of Biachem.
31. Mr Norris QC, for Biachem, submitted that the Court of Appeal had erred in concluding that the delivery of the load of sodium chlorite and the handing over of the Biachem delivery note constituted the performance or purported performance of both contracts. What occurred at the complex on 3 October was the carrying out of Berk's contract because the load which was delivered was the load of sodium chlorite which Berk had contracted to deliver on that date and which Huktra, Berk's agent, intended should be delivered and which it instructed its subcontractor, Stevens Transport, to deliver.
32. Mr Leggatt QC, for Berk, also submitted that what occurred at the Avonmouth works on 3 October could not be viewed as performance or purported performance of their contracts by both Berk and Biachem. His submission was that the issue should be determined in accordance with the law of agency. Huktra and Stevens Transport were the agents of both Biachem and Berk, but they were not acting for both companies at the Avonmouth works. It was necessary to see on whose behalf the driver, Mr Ardrey, intended to act, and it was clear that in handing over the Biachem delivery note he was intending to act for Biachem and the employees of Albright & Wilson at the complex understood that this was the position.
33. Mr Bartlett QC, for Albright & Wilson, submitted that the decision of the Court of Appeal was correct. What occurred was that the agents (Huktra and Stevens Transport) of both Biachem and Berk acting within the scope of their authority misperformed both contracts by mistakenly delivering Berk's chemical and Biachem's paperwork. In the context of Berk's contract with Albright & Wilson, the delivery of sodium chlorite with wrong documents was a faulty performance of Berk's contract. In the context of Biachem's contract with Albright & Wilson, the making of the delivery of what purported to be EPI from Biachem, when it was in fact sodium chlorite, was a faulty performance of Biachem's contract.
34. The Court of Appeal accepted that the delivery of one load cannot be the performance of two contracts each for one load. I am unable, with respect, to agree with the opinion of the Court of Appeal that the delivery of the load of sodium chlorite with the Biachem delivery note for EPI showed that both parties were trying to perform or representing that they could perform both contracts. This analysis errs in assuming that both Biachem and Berk as separate companies were each trying to perform its contract at the time of the delivery at Avonmouth. Biachem and Berk were not directly involved in the instructions which Huktra sent to Stevens Transport on 2 October and with the actions of Stevens Transport on 2 and 3 October and, in my opinion, it is the intentions and actions of Huktra and Stevens Transport which are important. It is contrary to common sense to think that Huktra and Stevens Transport were trying to carry and deliver, or to represent that they could carry and deliver, a load of sodium chlorite and a load of EPI in the same tank. The question which has to be decided by objective assessment is what load were Huktra and Stevens Transport intending to deliver.
35. There is no doubt that the neutral delivery fax with the Biachem delivery note attached was muddled and contained a contradiction in referring both to EPI and to HUKU 302012-8 which was the tank containing the sodium chlorite. But I am of the opinion that, notwithstanding this contradiction, the two faxes, the driver's instruction fax ZA 54307 and the neutral delivery fax, point much more strongly to an intention to deliver a load of sodium chlorite than to an intention to deliver a load of EPI. My reasons are these. The driver's instruction fax ZA 54307 from Huktra is quite clearly an instruction to deliver a load of sodium chlorite. It instructs the driver in express terms to lift tank HUKU 302012-8 and states in express terms that the product is sodium chlorite to be delivered on 3 October 1996 to the Avonmouth Works of Albright & Wilson. The neutral delivery fax bears Huktra's internal reference number ZA 54307 which relates to the load of sodium chlorite. It refers to delivery to Avonmouth on 3 October and refers to tank HUKU 302012-8. The Biachem delivery note attached to this fax does relate to EPI and specifies the order date and customer order number which were those of the purchase order issued by Albright & Wilson to Biachem, and it also refers to delivery to the phosphates plant of Albright & Wilson at its Avonmouth Works. However under the word EPICHLOROHYDRIN there are written the letters and number HUKU 302012-8. Therefore when the driver, Mr Ardrey, went to collect a tank at Purfleet docks on 2 October to transport to Avonmouth it is clear that he was intended to collect and to deliver to Avonmouth the tank HUKU 302012-8.