Bank Line, Ltd v Arthur Capel and Company

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Finlay L.C,Viscount Haldane,Lord Shaw of Dunfermline,Lord Sumner,Lord Wrenbury
Judgment Date12 December 1918
Judgment citation (vLex)[1918] UKHL J1212-1
Date12 December 1918

[1918] UKHL J1212-1


Bank Line, Limited.
Arthur Capel And Company

The House took time for consideration.


Dec. 12, 1918.

Lord Finlay L.C

My Lords, in this case an action was brought by Messrs. Capel & Co., the respondents, against the Bank Line, Limited, the appellants, to recover damages for failure by the defendants to put at the disposal of the plaintiffs the steamship Quito, which the plaintiffs had chartered from the defendants for a period of twelve months. The points of defence allege that the vessels had been requisitioned by the British Government, and that the charter was put an end to by such requisitioning from its date, May 11, 1915.


The case was tried by Rowlatt J., who held in favour of the defendants that the requisition had put an end to the contract.


On appeal the majority of the Court of Appeal (Pickford and Warrington L.JJ.) reversed this decision. Scrutton L.J. dissented, and expressed his agreement with the conclusion arrived at by Rowlatt J.


The Bank Line, Limited, have now appealed to this House, and ask that the judgment of Rowlatt J. should be restored.


The charter is dated February 16, 1915, and was entered into between the appellants, owners of the Quito, and the respondents, the charterers. By the first clause the owners agreed to let, and the charterers to hire, the steamer for a term of twelve calendar months from the time the vessel should be delivered and placed at the disposal of the charterers ready to load at a coal port in the United Kingdom as ordered by charterers to be employed in trade between safe ports and places within the limits of the United Kingdom, France, the Bay of Biscay, Portugal, Spain, and the Mediterranean not east of Sicily during the war.


By the fifth clause the charterers were to pay as hire 2919 & L per calendar month, commencing from the time the steamer was placed at their disposal. By the fourteenth clause it was provided that throughout the charter losses or damages, whether in respect of goods carried or to be carried, or in other respects, should be absolutely excepted if they arose from certain causes enumerated, among which were the act of God, perils of the sea, and arrests and restraint of princes, rulers, and peoples.


The two most important clauses for the purposes of the present appeal are the twenty-sixth and the thirty-first, which run as follows:-

26. "That the steamer shall be delivered under this charter not before April 1, 1915, and should the steamer not have been delivered latest on the 30th day of April, 1915, charterers to have the option of cancelling this charter.

"That should it be proved that the steamer, through unforeseen circumstances, cannot be delivered by the cancelling date, charterers, if required, shall within forty-eight hours after receiving notice thereof declare whether they cancel or will take delivery of the steamer."

31. "Charterers to have option of cancelling this charterparty should steamer be commandeered by Government during this charter."


The vessel was not ready by the cancelling date (April 30, 1915), but the respondents did not exercise their option of cancelling, nor were they invited to say whether they would cancel or not. The Quito went into dry dock at Hull to prepare for entering upon service under the charterparty, and while there she was, on May 11, requisitioned by the British Government. Efforts were made by the charterers and owners to get her released, but without success. On May 17 the charterers wrote that they had informed the owners that they would take the steamer on her original charter on the same conditions for twelve months, if tendered to the charterers any time within the next three months, but no agreement was arrived at as to this suggestion. The efforts to get the vessel released ceased early in June, 1915, and there was no further communication between the parties on the subject until September 3, 1915. On this last day the charterers, who had heard that the owners were selling the Quito, having got the Government to release her, called upon them to deliver the steamer under the charter. The owners replied on the same day that in their view the charter had long since become inoperative, as the owners were prevented from tendering the steamer within the exceptions in the charter, and added that the request that the owners should tender the steamer seemed to ask them to enter into an entirely new agreement, and not such as was contemplated by the charter of February 16.


The facts were that in July, 1915, the appellants had received from third parties an offer to purchase the Quito which on August 11 they accepted, subject to their being able to procure her release from the requisition. On August 17 the Government intimated that they would release the Quito provided the owners replaced her by another vessel of theirs - the Mansuri - which was free of engagements, and on September 2 this was carried out and the Quito was released.


The appellants contend that they were not liable in the action, on the ground that they were entitled to treat the charterparty as at an end owing to the requisition by the Government, and the detention under it, as this amounted to a frustration of the adventure by circumstances beyond the appellants' control. The respondents urged that on the construction of the charterparty all application of the doctrine of frustration was excluded, and denied that there was in fact any frustration of the adventure. Rowlatt J. and Scrutton L.J. held that the charterparty was at an end, the adventure having been frustrated; while Pickford L.J. and Warrington L.J. held that the charterparty was still in existence, and awarded the plaintiffs damages on a scale which worked out at 31,000 l.


The doctrine that a contract may be put an end to by a vital change of circumstances has been repeatedly discussed in your Lordships' House, and most recently in the case of the Metropolitan Water Board v. Dick, Kerr & Co. (1), in which a great number of cases were reviewed. I do not propose to repeat what has been said in these cases on the law of the subject, which is well settled, and proceed at once to consider the application of the doctrine to the circumstances of the present case.


The first question that falls to be determined is whether, as contended by the respondents, the doctrine of frustration of the adventure as terminating the contract is excluded by the terms of the charterparty. The clauses relied on as having this effect are clauses 26 and 31. In my opinion neither of these clauses can have the effect of preventing the termination of the charterparty by the requisition in the present case and the detention under it.


The twenty-sixth clause provides that if the steamship should not have been delivered by the end of April, 1915, the charterers were to have the option of cancelling the charter. This option would apply, if there were any delay

beyond April 30, and if the delay was through unforeseen circumstances (in other words, if it was not due to the default of the owners) it was provided by the second paragraph that the charterers might be called on to declare within forty-eight hours whether they cancelled or would take delivery of the steamship. It was urged for the respondents that this clause meant that only the charterers could cancel in case of non-delivery, and that however long the owners might have been prevented from delivering by unforeseen circumstances beyond their control, they were bound to hold the vessel at the disposal of the charterers. I cannot read this clause as having any such effect. The charter was to be for twelve months from delivery, which the owners were to make by the end of April unless prevented by unforeseen circumstances, in which case-the charterers had the option of cancelling, however short the delay. If, owing to unforeseen circumstances, it became impossible for the owners to deliver under the charterparty until many months after the end of April, the whole character of the adventure would be changed. A charter for twelve months from April is clearly very different from a charter for twelve months from September. In such a case the adventure contemplated by the charter is entirely frustrated, and the owner, when required to enter into a charter so different from that for which he had contracted, is entitled to say "non hæc in foedera veni." In other words, the owner is entitled to say that the contract is at an end on the doctrine of the frustration of the adventure as explained in Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. (1) It would be quite unreasonable to construe clause 26 as meaning that the owners are in such a case to hold the vessel at the disposal of the charterers for an unlimited period.

In the Tamplin Steamship Co. Case (1) the House of Lords was divided three to two, Lord Loreburn, Lord Parker, and Lord Buckmaster L.C. (who concurred with Lord Parker's judgment) forming the majority, while Lord Haldane and Lord Atkinson dissented. But it will be found that the

principles of law enunciated by Lord Loreburn and by the two dissentients are identical; the difference between them being as to the application of these principles to the particular circumstances of the case. The concurrence of Lord Parker and of Lord Buckmaster L.C. with Lord Loreburn was to some extent rested on the ground that a clause in the charter providing for the case of restraint of princes would exclude the doctrine of frustration of the adventure as terminating the contract. This proposition should not, in my opinion, be regarded as forming part of the judgment of the House, and the judgment of Lord Parker when scrutinized will be found to treat this as only one of the circumstances which led him to the conclusion that in the case of the time...

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  • Building and Construction Law
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    • Singapore Academy of Law Annual Review Nbr. 2007, December 2007
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