CL-2024-000457, 000458, 000459 - [2025] EWHC 1803 (Comm)

To understand the case law and the arguments on these appeals, it is necessary to rehearse some basic points about f.o.b. contracts and to explain why the only claim for the price that has to be considered is the claim, if any, under s.49(2) of the Sale of Goods Act 1979. Doing that will dispose of the seller’s second alternative case (paragraph 19(iii) above).

Subject as always to the parties’ freedom to provide otherwise by the terms agreed in any given case, under an f.o.b. contract:

However, if payment is to be “cash against documents” including bills of lading by the terms and holding of which the seller reserves the right of disposal of the goods:

That is all consistent with the further provisions of the Act that (a) the unpaid seller of goods the property in which has not passed to the buyer has a right to withhold delivery similar to and co-extensive with the unpaid seller’s right of lien where property has passed (s.39(2) of the Act; and then for the unpaid seller’s right of lien and its effects, see ss.39(1)(a), 41 to 43, and 47 to 48 of the Act), and (b) delivery of goods to a carrier for transmission to the buyer only terminates the unpaid seller’s lien if it is a delivery to the carrier “without reserving the right of disposal of the goods” (s.43(1)(a)).

FOB INCOTERMS 2020, which were incorporated generally in the contracts in this case, provide at “A2 DELIVERY” that, “The seller must deliver the goods either by placing them on board the vessel nominated by the buyer … at the named port of shipment or by procuring the goods so delivered”. That does not create an absolute rule capable of displacing the effects set out above of an f.o.b. contract that provides for payment against shipping documents with a reservation of the right of disposal through the bills of lading.

That understanding of f.o.b. contracts underlies what has been the conventional view of s.49(2), summarised in Sassoon on CIF and FOB Contracts, 7^th Ed. (2020), at 14-021:

“… [s.49(2)] does not avail the seller under an ordinary c.i.f. or f.o.b. contract because the ordinary express or implied stipulation that payment is to be against tender of the documents, e.g. “net cash against documents”, or “net cash”, makes the price not “payable on a day certain irrespective of delivery”. The point was raised and decided in Stein, Forbes & Co v County Tailoring Co,⁸⁹ where payment was to be made “cash against documents on arrival of the steamer”, and the buyers who rejected the documents were sued for the price. Atkin J held that in such a contract the price was payable expressly against delivery, i.e. of the documents, and not on a day certain irrespective of delivery. …

⁸⁹

Stein, Forbes & Co v County Tailoring Co (1916) 86 L.J.K.B. 448, and per Roche J, Muller, Maclean & Co v Leslie & Anderson (1921) 8 Ll. L. Rep. 328, dismissing the contention that the rule laid down in Stein’s case was based on the terms of the contract there considered, i.e. that payment was to be made on arrival.”

Benjamin is to materially like effect, at 20-232, describing it as “the prevailing view”; as is Chitty on Contracts, 34^th Ed. (2021), at 46-362, 46-366 at n.1624.

It was not suggested by either party in the present case, either to the Board of Appeal or on these appeals, that it should make any difference that the shipping documents were to be, and were, delivered by emailing scanned copies.

Part VI of the 1979 Act concerns “Actions for Breach of the Contract”, ss.49-50 dealing with “Seller’s remedies”, ss.51-53 with “Buyer’s remedies”, and s.54 with “Interest, etc.” By s.49, concerning specifically the seller’s action for the price, the Act provides as follows:

“Action for price.

49.--(1) Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.

(2)

Where, under a contract of sale, the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed and the goods have not been appropriated to the contract.

(3)

Nothing in this section prejudices the right of the seller in Scotland to recover interest on the price from the date of tender of the goods, or from the date on which the price was payable, as the case may be.”

The 1979 Act was enacted “to consolidate the law relating to the sale of goods”. It did so as regards the seller’s action for the price by reproducing s.49 of the Sale of Goods Act 1893, which was “An Act for codifying the Law relating to the Sale of Goods”. The parties supplemented the oral argument with short written submissions on the principles of statutory interpretation, in which both sides referred to Bennion, Bailey and Norbury on Statutory Interpretation, 8^th Ed. (2020), Sections 24.6 and 24.7. On those submissions, it was common ground that:

As regards that second principle, Mr Debattista submitted that care must be taken only to have resort to pre-existing case law where there is real doubt as to meaning that cannot otherwise be resolved: Farrell v Alexander [1977] AC 59, per Lord Wilberforce at 72E-73C, per Lord Simon of Glaisdale at 84G-H, per Lord Edmund-Davies at 96H-97B. Nonetheless, accepting the existence of the principle as he did, Mr Debattista did not submit that it was impermissible to refer on s.49 to the case law pre-dating the 1979 Act. Indeed, as is common in sale of goods cases, the argument at the hearing on both sides simply treated the authorities on s.49 of the 1893 Act as authorities on s.49 of the 1979 Act, which is also the approach adopted in the sale of goods textbooks. In his supplementary note, Mr Debattista summarised his argument for the seller as having been “that none of the cases decided between 1893 and 1979 were clear or expansive enough definitively to provide a single and binding definition of the [statutory] phrase [viz., “on a day certain irrespective of delivery”]”.

For his part, Mr Nolan KC relied also on the statement of principle by Lord Carnwath, JSC, obiter, in R(N) v Lewisham LBC; R(H) v Newham LBC [2014] UKSC 62, [2015] AC 1259, at [95] (with which, in the principal judgment in that case, Lord Hodge, JSC, agreed, at [53]), that:

“… settled practice may, in appropriate circumstances, be a legitimate aid to statutory interpretation. Where the statute is ambiguous, but it has been the subject of authoritative interpretation in the lower courts, and where businesses or activities, public or private, have reasonably been ordered on that basis for a significant period without serious problems or injustice, there should be a strong presumption against overturning that settled practice in the higher courts.”

As Bennion notes, it is unclear whether there is any such principle: ibid, Section 24.20(2), and, in the Comment, “Settled practice or understanding” on p.774ff, referring inter alia to the dissenting judgments in R(N); R(H), supra, per Lord Neuberger, PSC, at [142]-[147] and Baroness Hale, DPSC, at [167]-[168]. It is not necessary for me in this judgment to resolve that uncertainty.

The decision in Caterpillar is Court of Appeal authority for the proposition that a claim for the price under a contract for the sale of goods may only be maintained if it falls within s.49 of the 1979 Act. I do not accept Mr Debattista’s submission that that is not part of the ratio of the Court of Appeal’s decision. As interpreted by the Court of Appeal in Caterpillar, the combined effect of s.49(1)-(2), read together, might be expressed thus: where under a contract of sale the buyer wrongfully neglects or refuses to pay the price, the seller may maintain an action for that price only if (1) the property in the goods has passed to the buyer, or (2) the price was payable on a day certain irrespective of delivery (even if no goods have been appropriated to the contract). Therefore, since the seller accepted before the Board of Appeal that property had not passed, I would be bound to hold that in law the seller’s price claims before the Board were good claims only if they fell within s.49(2) of the 1979 Act.

In The Res Cogitans, PST Energy 7 Shipping LLC et al. v OW Bunker Malta Ltd et al. [2016] UKSC 23, [2016] AC 1034, a contract for the supply of bunkers was held not to be a contract for the sale of goods, so that an action for the price as a debt due under the contract could be maintained without reference to s.49. Lord Mance, JSC, with whom the other Justices of the Supreme Court agreed, said at [58], obiter, that if the contract had been a contract for the sale of goods, he would have held, overruling Caterpillar, “that section 49 is not a complete code of situations in which the price may be recoverable under a contract of sale, and that, in the present case, the price was recoverable by virtue of its express terms in the event which has occurred, namely the complete consumption of the bunkers supplied.” That does not mean that Caterpillar has been overruled. I consider that it remains binding on this court, therefore, and I do not agree with the submission in Benjamin, at 16-003, that “a court”, which I think is intended to mean any court, “should now reject an argument that s.49 comprises a comprehensive code as to the circumstances in which the price is recoverable”.

Mr Debattista for the seller did not in fact urge that course upon the court (aside from the suggestion I do not accept that the point was not ratio in Caterpillar). Rather, he relied on Benjamin, 16-028 to 16-029, clarifying in his oral argument that the seller’s second alternative case was limited to claiming the remedy outside s.49 suggested at 16-029, namely damages for failure to pay the price. Caterpillar does not decide against the possible existence of such a claim, since no such claim was advanced in that case (see per Longmore LJ at [55]).

However, equally no such claim of that kind was advanced here, before the Board of Appeal. In my judgment, the absence of any such damages claim in the arbitration is fatal to the seller’s second alternative case. Applying the cases referred to in paragraph 22 above, it is not open to the seller in response to these appeals, leave having been granted, to seek through s.69(7) of the Arbitration Act 1996 to introduce a different claim not made in the arbitration, for which it would need findings of fact it did not seek from the Board of Appeal.