Aktieselskabet Reidar v Arcos Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 22 July 1926 |
| Date | 22 July 1926 |
| Court | Court of Appeal |
Shipping - Charterparty - “Full and complete cargo” - Demurrage - Summer Cargo - Winter Cargo - Dead Freight.
A charterparty provided that the chartered vessel should proceed to a named port on the White Sea and there load a full and complete cargo of 850 standards of sawn timber and proceed therewith to an English port and there deliver the cargo on being paid freight at a fixed sum per standard. The vessel was to be loaded at the rate of so many standards per weather working day. If she were detained beyond the time stipulated for loading, demurrage was to be paid at so much a day. The vessel arrived at the port of loading early in October. If she had loaded at the specified rate she could have loaded and could lawfully have carried to the port of discharge on or before October 31 a full and complete cargo of 850 standards, and the shipowners would have earned freight on the full cargo; but, from causes for which the owners were not responsible, she had loaded no more than 544 standards by October 17, and could not then reach the port of discharge by October 31, and so could not carry more than this amount of cargo without infringing s. 10 of the
Held, that the charterers were not entitled as of right, upon payment of the sum due for demurrage, to detain the vessel beyond the time stipulated for loading; but that in so detaining her they had committed a breach of the charterparty; that as through this breach they were prevented from loading a full cargo, they were liable in damages as for dead freight beyond the sum due for demurrage; and further, that the sum named for demurrage was not intended as liquidated damages for breach of the obligation to load a full cargo.
APPEAL from the judgment of Greer J.F1
By a charterparty made in London on May 26, 1923, it was agreed between the agents for Aktieselskabet Reidar, the owners of the steamer Sagatind of 964 tons net register and of about 850 St. Petersburg standards deals capacity, and Arcos, Ld., of London, that the steamer should after delivering a cargo proceed to Mesane and there load from the agents of the charterers a full and complete cargo of mill sawn deals, etc. The steamer was to be provided with a deck load, at full freight, at the charterers' risk, not exceeding what she could reasonably stow and carry over and above her tackle, provisions, and furniture, and being so loaded, was to proceed therewith to London or east coast of the United Kingdom or west coast of England or Scotland or the English Channel or North France or Holland or Belgium or French Bay-port not south of Bordeaux at the charterers' option, one port only, as ordered on signing the bill of lading or at Lodingen, and to deliver the cargo on being paid freight as follows:—
The freight to London, east coast of the United Kingdom, North France (not west of Calais), Holland, or Belgium was for deals, battens, and boards for cargo 3l. 10s. 6d. per St. Petersburg standard hundred of 165 cubic feet; and 3s. per standard extra for deals, etc., under 1 inch, boards exceeding one-third of the cargo, bundled goods and ends beyond such as were required for broken stowage. To the west coast of England, Scotland, English Channel, North France (west of Calais) 3l. 13s. To a French Bay-port, not south of Bordeaux, 3l. 15s.
By clause 3 of the charterparty the steamer was to be reckoned as a four-hatch steamer and the cargo was to be loaded at the rate of 80 standards per weather working day for deals and battens and 60 standards for other goods, the steamer having four winches, and being discharged with the customary steamship dispatch as fast as the steamer could receive and deliver during the ordinary working hours of the respective ports but according to the custom of the respective ports, Sundays and general or local holidays in both loading and discharging excepted. Should the steamer be detained beyond the time stipulated as above for loading or discharging, demurrage was to be paid at 25l. per day, and pro rata for any part thereof. The cargo to be brought to and taken from alongside the steamer at charterers' risk and expense as customary. ….
By clause 20 the steamer was “to pay the charterers 9s. per standard on the quantity of cargo on which freight is paid to cover the cost of stevedoring, port dues, pilotages, etc., at the loading port, and the steamer to be free of any other expenses there, notwithstanding anything in this charterparty which may appear to the contrary, excepting that the steamer is to clear with the Russo-Norwegian Navigation Co., Ld., at the loading port paying an agency fee of 10 guineas and to give the use of winches in loading.”
Through no fault of the owners the steamer was delayed in London in discharging her former cargo until the middle of September, 1923, and therefore, in the fear that Mesane might be inaccessible owing to ice, the following document was signed by agents for the parties: “Agreement. Referring to the charterparty per ss. Sagatind dated May 26, 1923, from Mesane to the United Kingdom or Continent it is hereby mutually agreed that the steamer is to load at Archangel instead of at Mesane and at the basis rate of freight of 67s. 6d. per standard. All other conditions of charterparty to apply.”
The steamer arrived at Archangel on October 3. Notice of readiness to load was given on October 4. If she had loaded within the time stipulated for loading she would have taken on board a full summer cargo of 850 standards by October 17. By October 23 she had loaded no more than 544 standards. She was ordered to Manchester, a port in the United Kingdom to which the provisions of the
The plaintiffs claimed dead freight on 306 standards at 70s. per standard, i.e. 1101l. less the cost of discharging the 306 standards, i.e. 112l. 13s., leaving a sum of 988l. 7s.
The defendants pleaded that on October 24, when the steamer left Archangel for Manchester, a full and complete cargo was a winter deck load and that the vessel was loaded with a winter deck load. They admitted that they had incurred demurrage for 11¼ days at 25l. a day on account of which they had paid for 6¼ days.
The learned judge held that on the true construction of the charterparty a full and complete cargo meant a full summer cargo of 850 standards; that the obligation of the defendants was to load the vessel within the time specified for loading and that they had committed a breach of this obligation, notwithstanding the provision relating to demurrage, which did not, in his opinion, convert the demurrage days into mere lay days in accordance with the view expressed by Lord Trayner in Lilly & Co. v. Stevenson & Co.F2 He therefore gave judgment for the plaintiffs for 988l. 7s.
The defendants appealed.
Le Quesne K.C. and Somervell for the appellants. The learned judge was wrong in holding that the appellants committed any breach of the charterparty in failing to load the ship within the lay days and in becoming liable for demurrage. “Days stipulated for by the merchant, on demurrage, are just lay days, but lay days that have to be paid for”: per Lord Trayner, Lilly & Co. v. Stevenson & Co.F2; and see the opinion of the same learned judge in Gardiner v. Macfarlane & Co.F3 Demurrage, properly so called, is not in the nature of liquidated damages for a breach of a charterparty; it is an agreed payment for the use of the ship beyond the lay days: Lockhart v. FalkF4; Carver on Carriage by Sea, 7th ed. (1925), § 609, p. 829; Scrutton on Charterparties, 12th ed. (1925), art. 128, p. 347; Abbott's Merchant Shipping, 14th ed. (1901), p. 371. Under the old system of pleading, indebitatus assumpsit lay for demurrage, but a plaintiff claiming liquidated damages was obliged to declare specially: Bullen and Leake's Precedents, 3rd ed., pp. 130, 217.
[SARGANT L.J. referred to Patrick v. MilnerF5 and Howe v. Smith.F6]
The better opinion is that a charterer is entitled to keep the ship at least a reasonable time beyond the lay days:
Wilson v. Otto Thoresen's LinieF7; Inverkip Steamship Co. v. Bunge. & Co.F8
But assuming that this is not the meaning of demurrage in this charterparty, and that the word means, in the language of Lord Salvesen in Moor Line v. Distillers Co.F9, “agreed damages to be paid for delay of the ship in loading …. beyond an agreed period,” the owners cannot recover anything beyond the agreed damages: Ethel Radcliffe Steamship Co. v. W. & R. Barnett, Ld.F10
[Procter Garrett Marston, Ld. v. Oakwin SS. Co.F11 was also cited.]
A. T. Miller K.C. and Sir Robert Aske for the respondents. The...
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