SOF - Always Check Before Signing

In a recent London Arbitration Award (6/17) the Tribunal held that Section 13 of the Supply of Goods and Services Act 1982 (as amended) (“SOGSA 1982”) applies to the Master’s duty when signing the statement of facts (“SOF”) presented to him. This means that the Master must exercise reasonable care and skill when signing the SOF.

S.13 provides as follows:

“In a relevant contract for the supply of a service, where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill”

In this case, the Master, having checked the rain periods in the SOF presented by charterers’ agents accorded with those rain periods in the deck log, signed the SOF. He was then presented with an SOF prepared by the sub-charterers’ agents. The representative from the sub-charterers’ agent assured the Master that the rain entries in the SOF were the same as in the one he had just signed for charterers’ agent. Without checking this to be the case, the Master signed the sub-charterers’ SOF.  However, the two were not the same and the charterers said this resulted in them having to accept a lesser demurrage sum from sub-charterers who relied on their agents’ SOF.

The Master accepted he had made a mistake in signing the sub-charterers’ SOF.  However, he said that his reason for not checking was that he was focused on the vessel’s departure. The Master was particularly pressed as there was a need for the vessel to sail if she was not to miss the tide.  Also, two days after sailing, the Master provided charterers with copies of the log books and the daily reports evidencing the correct rain periods. He also subsequently issued a letter of protest to the sub-charterers’ agent with supporting documents rejecting their SOF.

While the owners had accepted that s.13 applied, they argued that it was limited to the cargoes to be loaded and the voyages to be undertaken. However, the Tribunal saw no reason to restrict s.13 in this way. The Tribunal held that, as the signed statements of fact were inconsistent, the Master was in breach of his duty of reasonable care and skill under s.13.

It was also held that the Master was in breach of Clause 8 of the charter (NYPE 1946 form) for failing to comply with the directions of the charterers as to the signing of the statements of facts. This is because the charterers had given an express instruction to the Master to carefully check the statement of facts presented to him.

The Tribunal found in favour of the charterers and owners had to pay for the Master’s mistake.

SOF – Good Practice for Masters

• Any SOF presented should be carefully checked before being signed.
• Do not rely on an agent’s (or anyone else’s) assurance that the SOF is correct.
• If you don’t agree with the content, make this clear on the SOF.
• Never sign without comment if you don’t agree with content.
• If you suspect disagreements over SOF are likely, it may be worth appointing a protective agent.

SOF are Strong Evidence

It is also worth remembering the evidential importance of an SOF. This was considered in The Newforest [2007] EWHC 673 (Comm). Here the Judge determined that, although the SOF is not final and binding (unless stated), the evidential value is unquestionably strong. He stated that, in general, the SOF evidence when signed by the Master is likely to discharge charterers’ burden of proof as to the facts, unless owners can show it to be wrong. For owners to do this would require more than speculation – and needs convincing live evidence and/or persuasive contemporaneous documents.  In a later arbitration award (London Arbitration 9/11), a Tribunal agreed that the SOF (in the absence of any contractual provision to the contrary) might be the most persuasive evidence, if it was signed by the Master. However, the Tribunal did say it is open to the owners to prove the SOF to be incorrect. Therefore, the signed SOF is a very important document for the purpose of evidencing the facts.