B S & N Ltd (BVI) v Micado Shipping Ltd (Malta) (No 2) (Seaflower)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Rix,Lord Justice Jonathan Parker |
| Judgment Date | 22 November 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J1122-4 |
| Date | 22 November 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2000/2101 |
[2000] EWCA Civ J1122-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
Mr Justice Aikens
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Waller
Lord Justice Rix and
Lord Justice Jonathan Parker
Case No: A3/2000/2101
Mr Timothy Hill (instructed by Shaw and Croft) for the Appellant.
Mr David Joseph (instructed by Norton Rose) for the Respondent.
This is an appeal from a decision of Aikens J given on 2 July 1999. He ruled at an interlocutory stage on the true construction of a charterparty that a term, clause 46, was not a condition breach of which entitled the Charterers to terminate automatically. He ruled that the term was an intermediate term in relation to which the Charterers would have to establish that the Owners were in repudiatory breach before they could terminate the charterparty. The evidence before Aikens J was contained in three affidavits together with a limited number of exhibits thereto.
Aikens J ruled that the point on construction was worthy of consideration by the Court of Appeal but that any appeal should be postponed pending the trial of the action so that all matters went to the Court of Appeal at the same time.
The matter came on for trial before Timothy Walker J and he handed down judgment on 19 April 2000, reported at [2000] 2 LLR 37. He held in favour of the Owners that there had not been a repudiatory breach of the intermediate term. He also held that separate claims brought by the Charterers for misrepresentaion failed both with respect to the Exxon and BP approvals. He further refused permission to appeal on any aspect, leaving it to the Court of Appeal to decide whether leave should be given on any aspect.
The Charterers took the decision simply to pursue an appeal on the question whether Aikens J was correct to classify clause 46 of the charterparty as an intermediate term as opposed to a condition and sought permission to appeal. Permission to appeal was granted by Rix LJ and the matter was argued before us pursuant to that permission on Monday 6 November 2000.
Facts
It is possible to take the facts largely from the judge's judgment. Micado Shipping Limited as Owners, chartered their vessel to B.S. & N. Limited as Charterers for a period of minimum eleven months, maximum twelve months. The relevant terms are first, clause 1, which provides that at the date of delivery, the vessel shall be classed in every way fit to carry fuel oil and vacuum gasoil and/or its products, together with certain other matters; second, clause 5, which provides that the vessel is not to be delivered before 1st November 1997 and, if not delivered by 30th November, the Charterers have the right to cancel. Thirdly, there are the usual provisions in clause 15 with regard to delivery of bunkers on board and redelivery. Fourthly, clause 61 provides that the bunker quantities are to be approximately the same on delivery and redelivery. Fifthly, there is the critical clause, which is clause 46. This is an additional clause at the end of the standard printed clauses and which reads as follows:—
" MAJORS' APPROVAL CLAUSE
Vessel is presently MOBIL (expiring 27/1/98), CONOCO (expiring 3/2/98), BP (expiring 28/1/98) and SHELL (expiring 14/1/98) acceptable. Owners guarantee to obtain within 60 (sixty) days EXXON' approval in addition to present approvals. On delivery date hire rate will be discounted USD250 (two hundred and fifty) for each approval missing, ie MOBIL, CONOCO, BP, SHELL, EXXON.
If for any reason, during the time-charter period. Owners would loose (sic) even one of such acceptances they must advise Charterers at once and they must reinstate same within 30 (thirty) days from such occurance (sic) failing which Charterers will be at liberty to cancel charterparty or to maintain same at reduced rate as stipulated above. Hire rate will be reinstated once Owners will show written evidence of approvals from Major Oil Companies."
The Charterparty also provided for English law and for the exclusive jurisdiction of the English Court.
The vessel was delivered to the Charterers on 5 November 199In fact Exxon approval had not been obtained by the Owners at that stage. On 30 December 1997, Charterers concluded, with "subjects", a proposed sub-charter of the vessel as is set out in the recap fixture exhibited to one of the Affidavits. The vessel was to be delivered not before 4th and not after 6th January 1998. The recap provides:
"The best of owners' knowledge vessel is acceptable by Shell/BP/Mobil/Conoco/Exxon (to be reconfirmed by owners before lifting subjects)."
The Charterers sought Owners' confirmation that the vessel was to be approved by Exxon but the Owners were unable to confirm that there would be such approval. The Owners sent a telex at 1445 on 30th December 1997 explaining that :
"At time of writing vessel is not Exxon acceptable and frankly speaking won't be able to get it within the 5th of Jan 98."
The significance of 5th January is that it was within the laycan period of the sub-charterparty and was the date falling 60 days after delivery of the vessel under the Head Charterparty. The telex explained that the vessel had been subjected to heavy weather and that the vessel would require high level alarms which needed to be fitted in drydock prior to Exxon giving their approval. The telex went on:—
"Owners believed to be ready for Exxon inspection by the end of Jan/ely Feb considering also that all the other approvals are elapsing within Jan and owners will apply first to them which are easier to extend. FYG Shell has been extended til July 98."
The sub-charter could therefore not be confirmed and the Charterers sent a telex to the Owners at 1713 on the same day as follows:
"Reference various telex exchanged we understand that vessel at of today December 30th 1997, is not acceptable by Exxon even though such acceptance was guaranteed to be obtained by owners within 60 days from vessel's delivery.
As above and without prejudice to charterparty terms and conditions charterers regretfully have no alternative to cancel charterparty redelivering vessel today.
Charterers also keep the right to claim for all damages, extra costs incurred due to vessel's non-compliance with the charterparty terms.
Full calculation for extra hire paid plus ROB bunker on redelivery and reimbursement for ROB on delivery due to owners' erraneous bunker invoice will follow soon."
The position then was that the charterparty had been terminated on 30 December 1977. The critical question is whether the Charterers had the right so to terminate the charterparty.
The Issues
Both parties accept the clarification of the issues of the judge. He put the issues in this way. The Charterers say that clause 46 which provides for Exxon approval to be obtained within 60 days in addition to the presence of approvals is a condition of the charterparty. That is, if the Owners fail to obtain approval within 60 days, the Charterers had the right to terminate the charterparty immediately as the Owners were in repudiatory breach. The Charterers also say that the obligation to obtain approval had to be fulfilled within 60 days of the date of the charterparty. The latest time for fulfilment on this basis was, therefore, 20th December 1997. Accordingly, as the approval had not been obtained by 30th December, the Owners were in repudiatory breach. In the alternative, the Charterers say that if the obligation had to be fulfilled within 60 days of delivery of the vessel, that period expired on 5th January 1998. The telex sent by Owners on 30th December was on this basis an anticipatory repudiatory breach of the charterparty by the Owners. The Charterers allege that this entitled them to accept the repudiatory breach which they did on 30th December. The Charterers claim certain sums in consequence of this alleged breach, the total amounting to some US$151,377.55.
The Owners contend that the obligation to obtain the approval of Exxon was not a condition. They also contend that the obligation was one requiring fulfilment only within 60 days of delivery of the vessel. However they do accept that approval had not been obtained by 30th December and would not and could not have been obtained by 5th January 1998. The primary submission by the Owners is that their failure constituted a breach of an innominate term which sounds in damages unless the consequences of the beach are proved by the Charterers to be so serious as to entitle the Charterers to terminate. The Owners accept that if they are wrong, and that the obligation does constitute a condition, then if time for fulfilling the obligation stems from the date of the charterparty itself, it must follow they were actually in breach by 30th December and that the Charterers had the right to terminate. They also accept that if the obligation is a condition that the time for fulfilment runs from the date of delivery under the charterparty, then, as at 30th December, the Owners would be in anticipatory repudiatory breach and the Charterers could terminate.
The issue on the appeal has been no different. Mr Timothy Hill, who on this occasion represents the Charterers, has contended that clause 46 is a condition and that failure to obtain the approval of Exxon within 60 days, from whichever date that runs, would be a repudiatory breach entitling the Charterers to cancel.
Mr Joseph, for the Owners, submits that clause 46 is an innominate (or...
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