Alma Shipping Corporation of Monrovia v Mantovani (Dione)

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE ORR,LORD JUSTICE BROWNE
Judgment Date20 November 1974
Judgment citation (vLex)[1974] EWCA Civ J1120-1
Date20 November 1974
CourtCourt of Appeal (Civil Division)

[1974] EWCA Civ J1120-1

In The Supreme Court of Judicature

Court of Appeal

Appeal by claimants from Judgment of Mr. Justice Mocatta on 28th November 1973.

Before:

The Master of the Rolls (Lord Denning),

Lord Justice Orr and

Lord Justice Browne.

In the Matter of THE ARBITRATION ACT 1950 and

In the Matter of an arbitration

Between:
The Alma Shipping Corporation of Monrovia
and
Otello Mantovani

Mr. ANTHONY EVANS, Q. C., and Mr. D. GRACE (instructed by Messrs Ince & Co.) appeared on behalf of the Appellant Claimants.

Mr. MICHAEL MUSTILL, Q. C., and Mr. S. BOYD (instructed by Messrs. Elborne Mitchell & Co.) appeared on behalf of the Respondent.

THE MASTER OF THE ROLLS
1

1 THE MATERIAL CLAUSES

2

By a time charter dated 6th March 1970, the shipowners under a clause 1 let the steam tanker Dione to the charterers

3

"for a period of 6 (six) months time charter 20 days more or less in Charterers' option from the time the vessel is delivered and placed at the disposal of the Charterers when/where ready Savannah".

4

The Charterers were "to pay as hire U. S. $3.50 per ton deadweight per 30 days or pro rata commencing in accordance with Clause 1 until her re delivery to the owners".

5

The vessel was "to be re delivered on the expiration of the Charter….at a safe ice free port in the Charterers' option in Italy, at any time during day or night including Sundays and Holidays……".

6

The Charterers to give the owners not less than ten days definite notice at which port and on about which day the vessel will be re delivered".

7

The payment of hire was "to be made in cash in London every 30 days in advance, except for the last months' hire to be estimated and paid in advance (less banker and owner's disbursements) us to such time as vessel is expected to be re–delivered".

8

There was an off hire clause in the event of breakdown of machinery, accident and so forth hindering the efficient working of the vessel for more than 24 hours: and then a clause that "all periods lost by reason of the vessel being off hire are to be added to the charter period at charterers' option".

9

2 THE VOYAGES

10

The Dione was put at the disposal of the Charterers on 8th March, 1970. The charter period of "six months" would last from 8th March 1970, until 8th September 1970. The "20 days more or less" would, be for "less" the 18th August 1970 to 8th September 1970: and for "more" the 8th September 1970, to 28th September 1970.

11

The first voyage was from Savannah down the Missouri and the Mississippi through the Gulf of Mexico and the Caribbean to Port of Spain, Trinidad. Then round South America and up the River Plato toRosario, where she loaded a cargo of grain. Then back by Bucnos Aires and St. Vincent (in the Windward Islands) to Lisbon, where she discharged her cargo. That first voyage took 73. 5 days.

12

The second voyage was from Lisbon to Santa Cruz (in the Canary Islands) then across the Atlantic and up the River Plato to Rosario back to Buenos Aires then up to Rosario again, then return via St. Vincent to Ancona (in Italy, Northerr riatic). She arrived at Ancona on 19th July 1970, and was ready, with her cargo discharged, to sail on 2nd August 1970. That second voyage took 73. 7 days.

13

On 2nd August 1970, there; was no time left sufficient for a third round voyage to the River Plate. The first two voyages had taken 73 days each. The charter period of "six months" would end on 8th September 1970. The "20 days more" would end on 28th September. That gave 57 days from 2nd August to 28th September. If the charterers sent her on a third round voyage to the River Plato, they could not reasonably expect to re deliver her until about the middle of October that is, 35 days after the "six months" had expired.

14

Yet the charterers (through a sub contract) ordered the vessel on a third round voyage to the River Plate. On 24th July 1970 (when the vessel was still discharging at Ancona) the charterers by telex notified the owners: "She will do another Plate round: foreseen re delivery two months and a little more".

15

The owners reacted with strong objections. They insisted on re delivery at latest on 28th September 1970 {that is, the "20 days more"). They protested "at charterers obvious premeditated breach of contract". In spite of the owner's objection, the charterers persisted, They sent the vessel to the River Plate, She sailed from Ancona on 2nd August 1977, went across to the River Plate, up to Rosario, back to Buenos Aires, called in at St. Vincent, then back to Genoa in Italy.

16

She was re delivered on 7th October 1970. She thus made good time. She finished the third round ' voyage in 66 days, whereas the first two voyages had been 73 days. Yet she was still late. The "20 days more" ended on 28th September 1970. She was re delivered on 7th October 1970. The exact time late was 8.416 days.

17

Now the question arises as to payment for those 8.416 days. The marked rate had risen during the six months. The Shipowners claim that the charterers should pay damages for not delivering to time. The amount should be based on 8.416 days at the higher market rate. But the charterers claim that they are not in breach, nor liable in damages. They say they are only liable to pay at the lower charter rate. The difference is £6,058.

18

3 THE PROPOSITION DERIVED FROM THE CASES

19

The point is really a short point of construction. What is the meaning of the words "for a period of six months time charter 20 days more or less". These words have to be construed in relation to these surrounding circumstances. But I will first state some propositions which can be derived from the cases:

20

(a) Implied margin or allowance

21

When a charter party is for a stated period such as "three months" or "six months" without any express margin or allowance, then the Court will imply a reasonable margin or allowance. The reason is because it is not possible for anyone to calculate exactly the day on which the last voyage will end. It is legitimate for the charterer to send her on a last voyage which may exceed the stated period be a few days. If the vessel does exceed the stated period and the market rate has gone up nevertheless the charterer is only bound to pay the charter rate until she is actually re delivered, see ( Gray and Co. v. Christie 1889) 5 TLR 577: Watson Steamship Co. v. Morryweather & Co. (1913) 18 Commercial Cases at page 300 ( without the handwritten words) (b) No margin or allowance express or implied

22

But it is open to the parties to provide in the charterparty by express words or by implication that there is to be no margin or allowance. In such a case the charterer must ensure that the vessel is re delivered within the stated period. If he does not do so and the market rate has gone up he will be bound to pay the extra. That is to say, he will be bound to pay the charter rate up to the end of the stated period, and the market rate thereafter, see Watson v. Merryweather 18 Commercial Case 294 ( with the handwritten words).

23

(c) Express margin or allowance

24

It is also, in my opinion, open to the parties themselves to fix expressly what the margin or allowance shall be. In that case the charterer must ensure that the vessel is re delivered within the permitted margin or allowance. If he does not do so and the market rate has gone up he will be bound to pay the extra. That is to say, he will be bound to pay the charter rate up to the end of the expressly permitted margin or allowance, and the market rate for any overlap thereafter, see ( Prebensens Dawpskibsselskabet A/S v. Munson S. S. Line 1919) 258 Fed. R. 227 by the U. S. Circuit Court of Appeals, Second Circuit.

25

In view of those three propositions, when I speak of the "charter period", I mean the stated period plus or minus any permitted margin or allowance, express or implied. There follows these two propositions (d) If the charterer sends the vessel on a legitimate last voyage -that is, a voyage which it is reasonably expected will be completed by the end of the charter period, the shipowner must obey the directions. If the vessel is afterwards delayed by matters for which neither party is responsible, the charter is presumed to continue in operation untilthe end of that voyage, even though it extends beyond the charter period. The hire is payable at the charter rate until re do livery, even though the market rate may have gone up or down, see ( Timber Shipping Co. S. A. v. London & Overseas Freighters Ltd. 1972) Appeal Cases 1. (e) If the charterer sends the vessel on an illegitimate last voyage that is, a voyage which it cannot be expected to complete within the charter period, then the shipowner is entitled to refuse that direction and call for another direction for a legitimate last voyage. If the charterer refuses to give it, the shipowner can accept his conduct as a breach going to the root of the contract, fix a fresh charter for the vessel, and sue for damages. If the shipowner accepts the direction and goes on the illegitimate last voyage, he is entitled to be paid for the excess period at the current market rate, and not at the charter rate, see ( Meyer v. Sanderson 1916) 32 TLR 428. The hire will be payable at the charter rate up to the end of the charter period, and at the current market rate for the excess period thereafter. 4 THE INTERPRETATION OF THIS CLAUSE

26

If this clause had said simply "six months time charter" without any express margin or allowance, I should have thought that there would be implied a reasonable margin or allowance. But this clause expressly defines the margin as "20 days more or less". That leaves no room for any implied margin or allowance. The express margin is greater than any period which would normally be implied. But that is to be explained by the nature of the voyage. The vessel was to load grain in "Argentina, U. S. Gulf, U. S. Atlantic and St....

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1 books & journal articles
  • The Achilleas: Custom and Practice or Foreseeability?
    • United Kingdom
    • Edinburgh Law Review No. , January 2010
    • 1 Enero 2010
    ...charter rate and the market rate during the period of delay.88For example, Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd's Rep 115 at 117-118 per Lord Denning MR; Arta Shipping Co Ltd v Thai Europe Tapioca Shipping Service Ltd (The Johnny) [1977] 2 Lloyd's Rep 1 at 2......

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