Payment problem

A ship agent was appointed by owners who asked them to arrange a ship inspection for their ship which had been detained by the MCA (Marine and Coastguard Agency).

The agent was told by the MCA that they would not perform the inspection until both the inspection request form and the fees had been received at the same time. Although the owner transferred the funds in advance, they only sent the completed form a few days later. The agent was therefore not able to make the payment to the MCA until they had also received the inspection request form. The form was finally received on a Thursday afternoon and the agent sent the form and payment to the MCA on Friday upon receiving the green light from owners. However, through no fault of the agent, the payment was only credited on the Monday, and the MCA would not carry out the inspection until the funds were cleared.

The owners alleged that members were negligent in not paying the MCA as soon as they had received the funds. They calculated the losses due to the ship being held in port during a weekend at £75,000.

Owners appointed lawyers who sent several emails regarding their claim. ITIC refuted their arguments in detail, including citing various provisions of the terms and conditions which had been incorporated - namely that there was no liability for delay which was not caused by the agent and there was a limit of liability of the agency fee (£1,500). The owners gave up and went silent.

In the meantime owners continued to refuse to pay the agent for their agency fees/disbursements, which totalled approximately £55,000 over five ship calls, all beneficially owned by the same owners.

ITIC advised the agent to wait until the nine month time bar (in the terms conditions) for claims against them had passed before chasing their own claim. After the nine months, ITIC sent letters to the owners demanding payment but received no response. This was followed by a threat of arrest and commencement of proceedings.

A response was received from the owner offering to drop hands. ITIC pointed out that their claim was now time barred. Owners had no choice but to agree that the debt was undisputed and finally paid the outstanding £55,000. ITIC covered the legal fees of £7,000.