HC Trading Malta Ltd v Savannah Cement Ltd

A party that has unconditionally admitted sums as due and owing may be sued on that freestanding obligation, even where the settlement agreement also requires payment through letters of credit. Failure to procure the required letters of credit may alternatively sound in damages measured by the sums for which the credits should have been established.

Where parties agree that a dispute shall be referred for expert determination, that procedure is mandatory before litigation, even if one party has failed to cooperate. The court may stay proceedings brought prematurely and has no proper basis for ordering an interim payment before the agreed determination.

HC Trading claimed against Savannah Cement under a settlement agreement arising from cement-clinker shipments. The application sought summary judgment, strike-out, judgment on admissions and an interim payment in respect of shipment prices and demurrage.

Savannah had admitted liability for specified shipment sums and historic demurrage, but had failed to procure the agreed letters of credit. The parties had also agreed that the historic demurrage dispute would be referred to an independent expert if settlement was not reached. Savannah did not participate in the hearing, although it had received notice and voluntarily declined representation. The issues were whether summary judgment was available for the shipment prices, what demurrage fell within the agreed dispute, and whether the demurrage claims could proceed in court before expert determination.

1. Proceeding in the defendant’s absence. The hearing could proceed. The application had been properly served by email, the defendant had received adequate notice and opportunity to participate, had voluntarily waived representation, and an adjournment was unlikely to secure attendance. The court nevertheless considered the position advanced in the defence and required the claimant to draw attention to points the defendant might have taken.
2. Shipment prices. The defence admitted the relevant contractual allegations and disclosed no arguable defence to the failure to procure the letters of credit. Commercial difficulty and alleged reasonableness did not assist, particularly in the absence of force majeure, hardship or frustration. Clause 1, by using the words “admits and agrees” that the sums were due and owing, created a freestanding obligation on which the claimant could sue. Clause 2 prescribed the means of discharging that obligation but did not create a further independent payment obligation. Alternatively, failure to procure the letters of credit constituted a breach sounding in damages measured by the sums for which the credits were required. Summary judgment was therefore granted for US$4,696,712.04 plus interest.
3. Scope of the demurrage dispute. Construed as a whole, “Historic Demurrage” included both the earlier demurrage and demurrage on all four Sale Contract shipments. The quantified figure, the recitals and the commercial coherence of addressing all demurrage through one mechanism supported that construction. Subsequent conduct could not be used to construe the agreement absent an estoppel by convention.
4. Expert determination. No enforceable implied term requiring cooperation in settlement was necessary. Clause 8 and the Schedule supplied a complete mechanism even if cooperation failed. The words “shall be referred” made expert determination mandatory. The claimant therefore had to invoke that procedure before pursuing the substantive demurrage dispute in court. The demurrage claims were stayed, and no interim payment was ordered before determination.

First-instance decision of the High Court (Commercial Court). No appellate history is stated in the judgment.