Afovos Shipping Company S.A. v R Pagnan and F.lli
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE GRIFFITHS,LORD JUSTICE KERR |
| Judgment Date | 02 March 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0302-3 |
| Docket Number | 82/0079 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 March 1982 |
[1982] EWCA Civ J0302-3
The Master of the Rolls
(Lord Denning)
Lord Justice Griffiths
and
Lord Justice Kerr
82/0079
1979 A. No. 2411
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE LLOYD)
Royal Courts of Justice.
MR. ANTHONY HALLGARTEN. Q.C. and MR. MARTIN MOORE-BICK (instructed by Messrs. Constant & Constant) appeared on behalf of the Respondent.
MR. KENNETH ROKISON. Q.C. and MR. R. WOOD (instructed by Messrs. Middleton Potts & Co.) appeared on behalf of the Appellants.
In time charterparties there is very often a clause giving the shipowners the right to withdraw the vessel from service in case the charterer fails to make regular and punctual payments of hire. This is called a "withdrawal clause". When market rates are rising shipowners look at the time of payment very keenly. If the charterer falls behind, even by a second or two by the slightest mischance, the shipowner will seize the opportunity and issue a notice of withdrawal. As a rule there is no actual withdrawal because of the difficulties which would arise for the chargo owners, with the bills of lading, and the like. After the notice of withdrawal is given, in nine cases out of ten the parties agree to go on just as before. If it turns out that notice of withdrawal was rightly given, the charterer will pay the increased market rate. If it was wrongly given, then the rate remains the same.
In order to avoid the strict and literal interpretation which the House of Lords has given to the effect of the withdrawal clause, in many cases an anti-technicality clause has been introduced into charterparties. It is that clause—in the charterparty in this case—which comes for consideration today.
Before I come to deal with the interpretation of this clause, I will set out the facts of the case. The charterparty was dated the 8th February, 1978. It was between owners in Panama (Afovos Shipping Company—a Greek group) and charterers in Padua, Italy (the Pagnan brothers—a well known Italian firm of charterers). The charterparty was for two years, three months more or less in charterers' option. Delivery was made on the 14th February, 1978. It was on the New York Produce Exchange form. Clause 5 and clause 31 are the two clauses in question in this case. Clause 5 says:
"Payment of said hire to be made in London to the FIRST NATIONAL BANK OF CHICAGO, 1, Royal Exchange Buildings, Cornhill, London EC3P 3DR for the credit of ANGELICOUSSIS SHIPHOLDING GROUP LIMITED, account No. 6060202036 in cash in United States Currency, semi-monthly in advance…otherwise failing the punctual and regular payment of the hire…the Owners shall be at liberty to withdraw the vessel from the service of the Charterers…"
That is the withdrawal clause. Then clause 31, the anti-technicality clause, was added in type:
"When hire is due and not received the Owners, before exercising the option of withdrawing the vessel from the Charter-Party, will give Charterers fortyeight hours notice, Saturdays, Sundays and Holidays excluded and will not withdraw the vessel if the hire is paid within these forty-eight hours".
The semi-monthly payment—which gave rise to this case—was due on the 14th June, 1979. The charterers made arrangements in good time with their bank at Padua for the payment to be made. On the 11th June, 1979, Pagnan sent this message to Credito Italiano in Padua:
"Please arrange for the following telex remittance on our instructions and for our account:
U.S.$53,308 (fifty three thousand three hundred and eight United States dollars)
in favour of: ANGELICOUSSIS SHIPHOLDING GROUP LIMITED". I will not read the whole telex: but it was in exact conformity with the clause. Payment was to be made through the First National Bank of Chicago in London "as payment hire vessel 'AFOVOS'". They enclosed the charterparty which they asked to be returned to them duly validated.
Credito Italiano in Padua did everything in order to get the payment through in due time. They sent a telex to the First National Bank of Chicago in London—and a telex to the bank in Chicago itself asking them to credit the London bank with $53,308.
Although everything was done in due time, a misfortune occurred. The owners' bank had three telex numbers in the directory of telexes. Anyone who wanted to telex them in London could operate any of those numbers. Unfortunately the last of the three numbers had been given up in 1975. But the directory of telexes had not been rectified accordingly. The result was that after Credito Italiano in Padua had dialled the first two numbers and failed to get through, they then tried the third number. That number had been given to a firm of sand suppliers in Reigate in Surrey. So the telex message did not get to the First National Bank of Chicago in London at all. It was an error. The Italian bank did not check to see if the message had got through. So both banks were to blame for the credit transfer not arriving in London in due time by the 14th June. We now know that the mistake was discovered later and the credit transfer was made on the 19th June. But that is said to be too late.
I now come to the crucial matters in dispute in this case. The first is the telex which is said to be a good notice of withdrawal. It was sent at 1640 hours on the 14th June:
"Owners have instructed us that in case we do not receive the hire which is due today, to give charterers notice as per clause 31 of the charter party for withdrawal of the vessel from their service".
That was sent at 1640 hours on Thursday, 14th June.
Friday, 15th June, came and went. The Saturday and Sunday (16th and 17th June) were excluded. Then on Monday, 18th June, at 1920 hours this telex was sent by the owners:
"Please note that owing to charterers failure to pay hire due on the 14 June 79 punctually as per the above quoted charter party owners having already given charterers forty-eight hours notice under clause of the charter party have now withdrawn vessel from service of charterers as from 1900 hours London time 18th June 79".
It was signed by Mr. Kowler, a director of the Agelef Shipping Company by authority of the owners.
That withdrawal was not operated because—by arrangement between the parties—the vessel continued in service. It was left to the decision of the courts as to whether the withdrawal was effective. In which case, a higher market rate would have to be paid. If it was ineffective, the lower rate of hire would be payable. We are told that the difference comes to $2 1/2 million.
The judge held that the withdrawal was effective and good. There was argument before him as to whether there should be relief from forfeiture. He held that, in the circumstances, there should not be. He held in favour of the owners that the higher market rate should be payable after the date of withdrawal. Now there is an appeal to this court.
As I have said, the case depends upon the construction of clause 5 and clause 31. It is largely a matter of impression. The judge said in his judgment:
"By clause 31 notice may be given as soon as hire is 'due'. When is hire 'due' under the charterparty? It seems to me that it is due on the last day for payment. It follows that the notice could be given at any time on the 14th. By the 15th the hire was not due but overdue".
I am sorry to say that I cannot agree with that interpretation of the anti-technicality clause. Clause 5 of the charterparty states that the owners shall be at liberty to withdraw the vessel "failing the punctual and regular payment of the hire". When does the failure occur? It seems to me that, in this case, the failure occurred at midnight on the 14th/15th June. The general rule of law was well-stated by Mr. Justice Patterson in Startup v. Macdonald (1843) 6 Manning & Granger's Reports 593 at page 619:
"I apprehend the general rule of law to be, that where a thing is to be done on a certain day, it may be done at any time before twelve o'clock at night, unless there be any particular usage [to the contrary]".
So in this case the last moment for payment was at midnight on the 14th June unless there was any usage to the contrary. What would be usage to the contrary? It is suggested that in ordinary banking practice in London the telexes would only be received and processed on that day if they had been received by three o'clock within banking hours. The judge said that they might be processed in exceptional circumstances—on a special request—up until five o'clock when the banks close. But they would not be processed except in the most unusual circumstances after five o'clock in the evening.
Although that may be well understood to be normal banking practice, nevertheless it seems to me that the general rule of law applies that a default only occurs at midnight on the due date for payment.
I now turn to clause 31. Reading into it the general rule of law, it seems to me that the clause should be interpreted in this way: When hire is due and is not received by midnight on the 14th/15th June the owners, before exercising the option of withdrawing the vessel, will give the charterers 48 hours' notice, etc. It seems to me that the notice cannot be given in advance of midnight. It may be that the owner can see beforehand that the transfer cannot be processed on that day. Nevertheless, he must wait. A parallel situation arose in The Mihalis Angelos (1971) 1 Queen's Bench 164, where the...
To continue reading
Request your trial
- Stx Pan Ocean Company Ltd v Bowen Basin Coal Group Pty Ltd (No 2)
-
North Range Shipping Ltd v Seatrans Shipping Corpn
...is established as a matter of law that one cannot give a notice that hire is due and not received until the hire has become overdue: see The Afovos by Lord Hailsham at p.339." They therefore concluded that the notice was invalid because it was premature. 6 The Applicant appealed to the High......
-
Chua Chay Lee and Others v Premier Properties Pte Ltd
... ... In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB ... Ltd [1980] AC 827 , 849 and in Afovos Shipping Co SA v R Pagnan & F Lli [1983] 1 All ... ...
-
Wardley Ltd v Datin Chong Mooi Lan and another (administratrix and administrator of the estate of Dato Tong Lee Hwa)
... ... Before the parties parted company, Wardley's solicitor handed to Tong's solicitor a ... Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195; [1983] ... ...