B S & N Ltd (BVI) v Micado Shipping Ltd (Malta) ('The Seaflower') (No 2) [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Timothy Walker J. |
| Judgment Date | 19 April 2000 |
| Date | 19 April 2000 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Timothy Walker J.
Timothy Hill (instructed by Shaw & Croft) for the charterers.
David Joseph (instructed by Norton Rose) for the owners.
The following cases were referred to in the judgment:
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha LtdELR [1962] 2 QB 26.
Mihalis Angelos, TheELR [1971] 1 QB 164; [1970] 2 Ll Rep 43.
North Sea Energy Holdings NV v Petroleum Authority of ThailandUNK [1999] 1 Ll Rep 483.
Shipping — Charterparty — Major oil company approvals clause in tanker charter — Effect of failure to obtain approval — Whether repudiatory breach — Whether charter induced by misrepresentation — Measure of damages — Whether charter would have come to an end in any event for failure to reinstate approval.
This was a claim by charterers that owners' failure to obtain Exxon approval for a tanker was a repudiatory breach of the charterparty, alternatively that they were induced to enter the charter by misrepresentation.
Owners chartered the “Seaflower” to the charterers for 11 months, maximum 12 months at charterers' option, under a charterparty dated 20 October 1997 containing a major oil company approvals clause to the effect that the vessel was approved by Mobil, Conoco, BP and Shell, that owners would obtain Exxon approval within 60 days, that the daily hire rate would be discounted US$250 for each missing approval, and that if an approval was lost it had to be reinstated within 30 days failing which charterers would be at liberty to cancel. The vessel was delivered on 5 November 1997. Exxon approval had not been obtained. Between 5 November and 30 December the vessel performed three voyage fixtures carrying fuel oil for BP. On 30 December 1997 the charterers fixed the vessel “on subjects” to carry an Exxon cargo. Exxon approval could not be obtained in time and charterers terminated the charter and redelivered the vessel. Charterers issued proceedings for refund of hire paid in advance and for bunkers remaining on board. Owners counterclaimed for wrongful termination. Aikens J held ([2000] CLC 795) that the obligation to obtain Exxon approval was not a condition giving charterers an automatic right to terminate on breach. The charterers amended to plead that failure to obtain Exxon approval was a repudiatory breach, that the charter was induced by misrepresentation and that Mobil approval would have been lost in January 1998 and not reinstated giving rise to a right to cancel. Charterers' claim for hire paid in advance and bunkers was admitted in principle on the first day of the trial.
Held, ruling accordingly:
1. Failure to obtain Exxon approval was not a repudiatory breach. The parties had agreed that hire should be reduced by only three per cent for failure to obtain Exxon approval. The fact that the vessel lacked Exxon approval made it less flexible but Exxon's share of the relevant market was only some five per cent and charterers obtained continuous employment for the vessel without Exxon approval.
2. On the evidence there were no representations separate from the negotiation of the charter itself. Any representation that Exxon approval would be obtained was a statement of owners' intention and since it was honestly held by owners it was not a misrepresentation. Likewise there was no misrepresentation about the vessel's BP approval.
3. The evidence showed that the charter would inevitably have come to an end in February 1998 because owners would have lost and not regained Mobil approval. The vessel was not in a state to have gained approval, since it could not have been inspected in time and written approval would not have been forthcoming for some weeks. The effect was that owners' counterclaim for lost hire succeeded only in respect of the period until February 1998.
Timothy Walker J: Introduction
By a charterparty dated 20 October 1997 the defendants (the owners) chartered the “Seaflower” to the claimants (the charterers) for a period of 11 months, maximum 12 months at the charterers' option. The charter contained the following major approvals clause, namely:
“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 USD 250 (two hundred and fifty) for each approval missing, i.e. MOBIL, CONOCO, BP, SHELL, EXXON. If for any reason, during the time-charter period, owners would lose even one of such acceptances they must advise Charterers at once and they must reinstate same within 30 (thirty) days from such occurrence failing which Charterers will be at liberty to cancel charter party 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 vessel was delivered to the charterers on 5 November 1997. At that date Exxon approval had not been obtained by the owners. It is apparent as a matter of construction of the major approvals clause that time starts to run for the purposes of the obligation to obtain Exxon approval from the date of the charter, and not from the date of delivery of the vessel, although both parties at the time appear to have thought that the latter construction was correct.
Between 5 November 1997 and 30 December 1997 the vessel performed three separate voyage fixtures, all carrying fuel oil, one of them from 27 November until 14 December 1997 on charter to BP Shipping Ltd.
On 30 December 1997 the charterers fixed the vessel “on subjects” to load a cargo of Exxon products. On the same date charterers' brokers telephoned owners' brokers in order to find out whether Exxon approval had been obtained. Charterers' brokers then gave notice requiring owners to obtain Exxon approval for the vessel by 5 January 1998 at the latest. On 30 December 1997, on the express instructions of Mr Magliveras of the owners, charterers were advised that:
“At time of writing vessel is not Exxon acceptable and frankly speaking won't be able to get it within 5th January 98…Owners believe to be ready for Exxon inspection by the end of Jan/early Feb…”
Owners followed this up, again on Mr Magliveras' express instructions, with a telex of reassurance on the same day that:
“…Owners wish to confirm that preparation works for all Majors approval concerning the charter (including Exxon) are in progress and proper schedule of vetting inspections will take place within Jan/Feb 1998.”
The charterers' response, by telex also dated 30 December 1997, was to terminate the charter and redeliver the vessel.
When the proceedings were first issued by the charterers, the only point pleaded by them was that they were entitled to terminate the charterparty for breach of condition if Exxon approval was not obtained within 60 days of the charter. On 2 July 1999 Aikens J held that the guarantee given by the owners to obtain Exxon approval was an innominate term and not a condition (see [2000] CLC 795). Thus despite the owners admitted breach of this term, the charterers had no automatic right to terminate.
Undaunted by this defeat, the charterers subsequently amended their claim so as to expand considerably the scope of the issues in the action. In July 1999 they amended to plead that the owners' failure to obtain Exxon approval was itself a repudiatory breach of the charter. Subsequently, by reamendments intimated in October 1999, they alleged that the charter was induced by misrepresentations made to their broker Mr Claudio Cepollina (1) that the vessel was approved for the carriage of BP products expiring 28 January 1998, when the approval was in fact due...
To continue reading
Request your trial
-
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory) [QBD (Comm)]
...Ltd (unreported, 30 June 1995, CA). Baker v WilloughbyUNK [1969] 2 All ER 549. BS & N Ltd v Micado Shipping Ltd (The Seaflower) (No. 2) [2000] CLC 802. Bwyllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks CoELR [1903] AC 426. County Personnel (Employment Agency) Ltd ......
-
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha
...Ltd v Thai Europe Tapioca Service Ltd (The Johnny)UNK[1977] 2 Ll Rep 1. BS & N Ltd v Micado Shipping Ltd (Malta) (The Seaflower) (No. 2)[2000] CLC 802. Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks CoELR[1903] AC Dampskibsselskabet Norden A/S v Andre & Cie SAUN......
-
B S & N Ltd (BVI) v Micado Shipping Ltd (Malta) ('The Seaflower')
...breach. Aikens J ([2000] CLC 795) determined that the term was not a condition but only an intermediate term. At trial Timothy Walker J ([2000] CLC 802) held that there had not been a repudiatory breach of the intermediate term. Charterers appealed from the decision of Aikens J that the pro......