Statements of Facts – Performance Clarified

STATEMENT OF FACTS

Steve Mann, Claims Executive at the Charterers’ Club writes on the importance of the Statement of Facts (“SOF”) for Charterers in achieving the maximum financial outcome from any fixture. Bold references below are to relevant English court and arbitration decisions on the subject.

The general importance of a SOF

SOFs are important documents for many charter purposes but most important in relation to proving the facts used in laytime and demurrage calculations. From the Charterers’ side, it is vital for Charterers to be fully aware that in order to make any deductions from laytime (e.g. under a strike or bad weather exception) it is for them to prove on the balance of probabilities all the facts giving rise to the right to deduct, and the duration of the same. This is where attention to detail in the SOF is most important. See eg “The Khian Captain” Lloyd’s Law Reports [1985]- 2-212.

Usual Content of a SOF

Assuming one of the BIMCO-recommended forms (or something similar) is used, the SOF should show the following information, which of course is highly relevant to laytime/demurrage and other matters:-

  1. Notice of readiness time;
  2. Existence commencement and ending of any weather interruptions (see eg London Arbitration 13/17);
  3. Existence, commencement and ending of non-weather interruptions (eg strikes and force majeure matters and local holidays (see eg London Arbitration 33/04) and matters such as shifting and hatch opening/ closing and completion of cargo documents);
  4. Cargo working time, commencement and completion and any time actually used in periods which would not count unless used (eg in turn-time) linking causation to fact (see eg London Arbitration 25/16 and London Arbitration 8/16);
  5. Whether certain days (eg Saturdays) are local working days or non-working days (see eg London Arbitration 5/15);
  6. Miscellaneous matters affecting operations and the Owners/Charterers’ respective rights (see eg London Arbitration 1/17 (evidencing cargo solidifying in lines) or waiver of strict charter conditions on time counting (see eg “The Vine” Lloyd’s Law Reports [2011]-1-301).

This information in the SOF is used to prepare laytime and demurrage time sheets.

An important principle for Charterers to remember in relation to the content of SOF’s and laytime

A Charterer who seeks to rely on laytime and/or demurrage exceptions (eg rain preventing cargo operations – see London Arbitration 13/17) bears the burden of proof of showing the existence and duration of the exception. Unless Charterers can persuade a court/ Tribunal of any fact they may lose the point, and the right to discount time for it. This means showing probability of more than 50/50. If any statement is ambiguous, Charterers will not be able to prove the point in question by using it. Hence the need for full, precise and clear SOFs : to be effective they must show all the facts establishing a right to deduct, and the period to be deducted.

Evidential Status of SOFs

Primarily, this is a matter of contract. The parties could agree a SOF will be final and binding evidence on all matters therein. This is rare. It would need clear enough words – unlike the more ambiguous words discussed in “The Newforest” [2008] 1 LLR. If there are no such clear words it seems that a SOF, signed by the parties involved (in that case Master, agents and port authorities) would, while not generally binding, be of “unquestionably strong” evidential value. This gives a Charterer a good start in beating the burden of proof discussed above. If Owners seek to challenge the SOF they will then need to produce convincing evidence to overcome it. This will be evidence from live witnesses or persuasive documents, as to contemporary events and it is generally a difficult task.

London Arbitration 13/17 (for example) shows the difficulty for Owners in trying to defeat the weather content of an SOF by using weather station reports, since these often cover a more remote or less focused geographical location. This difficulty for Owners partly arises because of the appeal of finality the SOF has for courts and arbitrators as to its content. It seems from the authorities that the actual evidential strength of a statement in the SOF will vary according to the matters discussed below, so Charterers must appreciate that a court or arbitrator may find one fact in the SOF proven and others not.

Matters affecting the evidential value of a SOF: silence or ambiguity on a fact relevant to laytime

Since Charterers bear the burden of proving exceptions this cannot be done by the absence of a comment in a SOF (see London Arbitration 8/14) and the same may be true of an ambiguous comment, at least where there is some other evidence contrary to Charterers’ case. Because of the evidential value of the SOF (as above) Charterers will find it very hard to prove any fact left out of the SOF by other evidence (see London Arbitration 25/16). See below as to the importance of instructions to agents in this respect.

Matters affecting the evidential value of a SOF: signature by the Master

His signature duties are discussed below. If he signs and the fact in question is one within his personal knowledge this will make it very difficult for Owners to disprove the fact (see eg London Arbitration 9/11 as to time of tender of the NOR.) This is because as per normal practice the Master will be expected to do normal checks (eg of the deck logs) before signing the SOF it will be hard for Owners to prove he did not do them (albeit they might try, as in London Arbitration 6/17, arguing the Master was distracted by other duties). However, his signature should be treated as adding little or no evidential weight where the fact was outside his knowledge, or where a fact is shown to have been inserted after his signature (as in London Arbitration 11/06). If Owners can show he was somehow coerced into signing, Charterers may find the SOF is disregarded in evidence entirely, as in “The Finix” [1975] 2 LLR). As Charterers will generally not want the SOF to be excluded from evidence altogether, agents should be instructed to avoid any inappropriate pressure on the Master or exaggeration of the facts.

Obliging the Master to sign the SOF

This is important for the evidential reasons above. The Master will only be under a duty to sign a SOF if the charter states this (London Arbitration 15/13). For time charters, such a duty will arise under clause 8 of the NYPE form, requiring him to comply with a direction to sign from time charterers. He will not be obliged to sign to matters he does not agree with and here can sign under reservation or issue a Letter of Protest stating his view of the facts. Charterers should look to investigate and record any objection to his comments at the time.

Standard of skill required of a Master signing a SOF

Charterers should be aware that a Master has a duty, when he signs a SOF, to do so with normal care and skill. If he doesn’t Owners will be liable to Charterers for any loss which is caused by this. In London Arbitration 6/17 Owners were held liable to Charterers where the Master signed to incorrect information in sub-charterers’ SOF after failing to check it, causing the Charterer to be unable to recover some demurrage. This arises because the implied term in section 13 of the Supply of Goods and Services 1982 applies to the service of preparing the SOF’s required under time charter service.

Importance of clear instructions to agents

Commonly, Charterers will have the right to nominate and will pay the port agents who prepare the SOF. Charterers should take care to instruct the same (or ensure that Owners instruct the same) to include in the SOF clear accurate information about all matters relevant to the counting of time/ running of hire at the subject port, ensuring that the fact of, causative effect of and duration of any matters going to charter exceptions are fully stated (see eg London Arbitration 25/16 where failure to clearly describe the cause of a delay Charterers lost the right to deduct). Failure to do so may lead to considerable additional liability, and at best, a time-consuming and expensive dispute relating to matters not clearly proved by the SOF which Charterers seek to rely on. As above, nothing should be included in the SOF that it is so obviously wrong it puts the integrity of the whole document in doubt, as the SOF may then be excluded entirely, leaving Charterers in difficulty in establishing any exceptions. Provision of the charter terms in relation to running of time is most important.

Inconsistent and different SOF’s

In the common situation where there are head and sub-charters it may be that each charterer has a different agent who presents a different SOF to the Master (see eg London Arbitration 6/17 where the SOF’s contained different rainfall evidence). The Master may, as in London Arbitration 8/16, produce his own SOF. For the purpose of any charter, the laytime calculation is important to identify which is the contractual SOF. Whenever there are different SOFs it is very important for Charterers to ensure as far as possible that care is taken to insert in all SOFs the same sort of detailed wording Owners would seek to include in a SOF prepared by agents so as to protect their position and avoid the danger, arising from the burden of proof above, of failing to establish that a SOF containing those facts is the contractual one, so that another, not containing them, is found to be it.

Importance of SOF under demurrage time-bar clauses

The SOF will invariably be one of the pack of documents that a Charterer, making a demurrage claim against a sub-charterer, in circumstances where the charter includes a demurrage time-bar, will need to send within the period specified (see eg “The Adventure” [2015] EWHC 318. ) If this is not done the claim is lost completely. Charterers should be careful to ensure all and any SOFs required by such a clause are provided in time and in the proper form.

Conclusion

The SOF is a vital document and careful attention should be given to ensuring proper instructions for its creation are given, that it is created in accordance with them, that it contains all the detail required to prove rights of deduction and other matters favourable to Charterers, that it is signed by all concerned, that it is not tainted by undue pressure or misstatement, and that it is deployed as per contract(s) in making any claim. Doing this will maximise recoveries, minimise liabilities and limit wasteful disputes. It is worth spending time getting this right.

 

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