PST ENERGY 7 SHIPPING LLC AND ANOTHER V O W BUNKER MALTA LTD AND ANOTHER (THE "RES COGITANS")

[2016] UKSC 23, Supreme Court, Lord Neuberger, President, Lord Mance, Lord Clarke, Lord Hughes and Lord Toulson, 11 May 2016

Contracts - Bunker supplier contracting with shipowner to supply bunkers - Supplier to retain title in goods - Contract permitting consumption of bunkers prior to expiry of credit - Whether buyer obliged to pay in the absence of acquiring title to the bunkers - Whether a contract of sale to which Sale of Goods Act 1979 applicable - Sale of Goods Act 1979, sections 2 and 49

On 4 November 2014 the first respondents, OW Bunker Malta Ltd ("OWBM") supplied 1,000 mt of fuel oil and 100 mt of gasoil to the vessel Res Cogitans at Tuapse pursuant to a contract which incorporated its standard terms of business. Those terms provided for payment 60 days after delivery and included a retention of title clause under which property was not to pass to the vessel's owners or managers until the bunkers had been paid for in full. The contract provided that from the moment of delivery the vessel was entitled to use the bunkers for the purposes of propulsion. OWBM had obtained the bunkers under a contract with the ultimate parent company of the group, "OWBAS", which had obtained them from another bunker supplier, "RMUK". RMUK had obtained the bunkers from one of its associated companies, "RNB", which had facilities at Tuapse and made the delivery to the vessel. The contract between OWBAS and RMUK incorporated RMUK's standard terms which provided for payment to be made 30 days after delivery and also included a retention of title clause. That contract did not allow the owners to use the bunkers for the purposes of the propulsion of the vessel pending payment. OWBAS then entered into restructuring before the Danish courts; an event of default under the financing agreement. The arbitration tribunal, Males J at first instance and the Court of Appeal all held that the Sale of Goods Act did not apply to the contract.