China National Foreign Trade Transportation Corporation v Evlogia Shipping Company S.A. of Panama (Mihalios Xilas)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Viscount Dilhorne,Lord Salmon,Lord Fraser of Tullybelton,Lord Scarman |
| Judgment Date | 12 July 1979 |
| Judgment citation (vLex) | [1979] UKHL J0712-3 |
| Date | 12 July 1979 |
| Court | House of Lords |
[1979] UKHL J0712-3
Lord Diplock
Viscount Dilhorne
Lord Salmon
Lord Fraser of Tullybelton
Lord Scarman
House of Lords
Upon Report from the Appellate Committee to whom was referred the Cause China National Foreign Trade Transportation Corporation against Evlogia Shipping Company S.A. of Panama, That the Committee had heard Counsel as well on Wednesday the 16th as on Thursday the 17th days of May last upon the Petition and Appeal of Evlogia Shipping Company S.A. of Panama Avenida Cuba No 33A-34, Edif. Del Banco General No. 31/3 Panama, Republic de Panama praying that the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 5th day of July 1978 might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order might be reversed, varied or altered or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as also upon the Case of China National Foreign Trade Transportation Corporation, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 5th day of July 1978 complained of in the said Appeal be, and the same is hereby, Reversed and that the Order of Mr. Justice Kerr of the 2nd day of July 1976 be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay or cause to be paid to the said Appellants the Costs incurred by them in the Courts below and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments if not agreed between the parties: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice to do therein as shall be just and consistent with this Judgment.
My Lords,
The only question in this appeal is whether the appellants ("the Owners") who had let their vessel "Mihalios Xilas" to the respondents ("the Charterers") under a Baltime uniform time charter for a period of "8/10 months in Charterers' option" were, in the events that happened in March 1974, entitled to withdraw the vessel "in default of payment [of hire]".
This question was one of a number of matters arising under the charterparty which were in dispute between the parties and were referred to arbitration. That part of the umpire's award that dealt with the charterer's claim for damages for wrongful withdrawal of the vessel was stated in the form of a special case for the opinion of the High Court under section 21(1)(b) of the Arbitration Act 1950. The clause in the charter dealing with payment of hire was not in any standard form but was a typed clause special to the particular charter. The answer which your Lordships give to the question that is before you, although important to the parties because a sum of quarter of a million U.S. dollars is involved, can as it seems to me be reached by applying well-settled principles of law to facts found by the umpire and phrases used in the charter which are idiosyncratic to the instant case. But for the fact that the judgments in the courts below have already appeared in law reports ( [1978] 1 WLR 1257) this seems to me to be a good example of the kind of case which since it will cast no new light upon the law, is best left unreported.
The vessel was delivered to the charterers under the charterparty on 13th July 1973. The hire was at the rate of U.S.$6.60 per deadweight ton on vessel's actual deadweight per calendar month. Payment of hire was to be made in accordance with the special clause, 39:
"Payment of hire to be made within seven working days from the time of her delivery and within seven working days from the date of every subsequent month in cash in external sterling in London to Williams and Glyn's Bank Ltd., 22 St. Mary Axe, London, E.C.3, for the credit of Marathon Shipping Co. Ltd., London, without discount every calendar month in advance, except for the last month's hire to be estimated and paid in advance, less bunker cost and owners' disbursements and other items of owners' liability up to such time as vessel is expected to be redelivered."
By clause 7 the charterers undertook "to give the Owners not less than 20 days approximate and ten days' notice at which port and on about which day the vessel will be delivered", and by clause 45 the vessel was to be "redelivered with 200/350 tons fuel oil and 40/60 tons diesel oil".
For the first eight months of the charter viz. until 13th March 1974 the charterers, through their London agents ("Lamberts"), paid the monthly hire in accordance with clause 39, except that in practice during those eight months the charterers were allowed by the owners, acting through their managing agents ("Marathon") to deduct from the hire owners' disbursements that had actually been paid by the charterers and for which vouchers were produced.
Payment of hire for the ninth month, ending 13th April, was due under clause 39 not later than 22nd March 1974. Hire for the full month amounted to $127,050. On 19th March Lamberts informed Marathon that they were arranging payment of the sum of $88,404 into Marathon's bank account in respect of the ninth month's hire and enclosed a credit note showing that in arriving at this sum unspecified deductions of $31,354 from the full hire for the month had been made.
What happened during the next few days is set out in detail in the stated case. On 20th March, when this letter and credit note were received, Marathon protested to Lamberts that the deductions were unacceptable to the owners. Nevertheless on 21st March, the day before the last date for payment, the sum of $88,404 was transferred to Marathon's account with Williams and Glyn's Bank. On 22nd March, which was a Friday, Lamberts received from the charterers particulars of the deductions and passed them on to Marathon on that day first by telephone and then by letter which Marathon received by noon. This particularised the deductions as follows:
As the umpire found the inclusion of estimated figures in the deductions should have made Marathon aware that the charterers were treating the ninth month as the last month; and so they did, for in the afternoon of 22nd March Marathon telephoned Lamberts, asked for vouchers for the expenses incurred at Galveston and New Orleans and disputed the charterers' estimate of 13th April as the re-delivery date and the amount of the deduction for bunkers remaining on board and owners' disbursements on re-delivery.
On the next working day, Monday 25th March, Marathon telephoned Lamberts to ask if further details of the deductions were available and told them that the owners would withdraw the vessel unless the details were received by noon next day. No further details were given and no further payment by the charterers was made. Shortly after noon on 26th March Marathon informed Lamberts that the vessel was withdrawn.
The whole of the $88,404 paid on 21st March in respect of thirty-one days' hire from 13th March to 13th April, of which thirteen had expired by the time the vessel was withdrawn, was retained by the owners; that part of it which exceeded the hire for those thirteen days was not returned; the owners were claiming to have cross accounts against the charterers.
The umpire made the following findings which are, in my view, crucial. The first is that in the light of the information available to them at the time the charterers' estimate that the vessel would be re-delivered at the end of the ninth month (viz. 13th April 1974) was not reasonable; in the light of her commitments she would probably have been re-delivered towards the end of April 1974 had she not been withdrawn. The second was that the charterers' estimate of $18,000 for the value of bunkers on board at re-delivery and owners' disbursements up to re-delivery was not reasonable but was excessive. Third, that having received the hire less the deduction on 21st March, the owners were entitled to a reasonable time to ascertain whether the amounts claimed as deductions were correct and that the time from 21st March to noon on 26th March was a reasonable time for doing this. Fourth, the decision of the owners to withdraw the vessel in the early afternoon of 26th March was made within a reasonable time.
He held, however, as a matter of law that in failing to return the hire in respect of the period after withdrawal the owners waived their right to withdraw and/or were precluded from exercising the same.
The question of law stated for the opinion of the High Court was whether upon the facts found and true construction of the charterparty the owners were in breach of the charterparty in withdrawing the vessel from the charterers' service.
At the hearing of the special case in the Commercial Court before Kerr J. it was conceded that on 22nd March 1974 there had been a default of payment by the charterers and the only question argued was whether the owners had waived their right to withdraw the vessel. The charterers relied upon three acts of the owners as constituting waiver. The first was their failure to instruct their bankers not to accept the underpayment which the owners had received advance warning would be made; the second was their inquiries made to Lamberts on 22nd and 25th March for details of the deductions and vouchers for those owners' disbursements that had already...
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