Chiswell Shipping Ltd v National Iranian Tanker Company (World Renown, World Symphony)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BUTLER-SLOSS,SIR DAVID CROOM-JOHNSON |
| Judgment Date | 15 April 1992 |
| Judgment citation (vLex) | [1992] EWCA Civ J0415-4 |
| Docket Number | 92/0373 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 April 1992 |
[1992] EWCA Civ J0415-4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE HOBHOUSE)
Royal Courts of Justice
The Master of The Rolls
(Lord Donaldson)
Lord Justice Butler-Sloss
Sir David Croom-johnson
92/0373
and
MR. BERNARD EDER Q.C. (instructed by Messrs. Alsop Wilkinson) appeared for the Appellants (Second Plaintiffs).
MR. STEVEN GEE AND MR. ALAIN CHOP CHOY (instructed by Messrs. Lovell White Durrant) appeared for the Respondents (Defendants).
This is an appeal by shipowners against a decision of Hobhouse J. that on the true construction of clauses 3 and 18 of the Shelltime 3 charterparty, the charterers were entitled to order the vessel to. undertake a round voyage which on no view would end before the expiration of the period of the charter mentioned in clause 3. The judge outlined the facts, reviewed the authorities and explained his reasons for reaching this conclusion in a judgment of outstanding clarity, which has been reported in [1991] 2 Ll.L.Rep. 251. This enables me to express my views much more succinctly than would otherwise be the case.
Hobhouse J. accepted, on the authority of Hyundai Merchant Marine Co. Ltd. v. Gesuri Chartering Co. Ltd. ("The Peonia") [1991] 1 Ll.L.Rep. 100, that in the present case if clause 3, which defines the charter period in terms of "six (6) months fifteen (15) days more or less in charterers' option", had stood alone, the charterers would have been in breach of the time charter in two separate respects. First, they would have been in breach of contract in ordering the master to proceed on a voyage the undertaking of which would inevitably result in the vessel being re-delivered after the expiration of the period specified in clause 3, i.e. after 22.50 hours on 24th December 1988. It would not have been a legitimate order. Second, they would have been in breach of the independent obligation to re-deliver the vessel by that date.
In Hyundai and in The Black Falcon [1991] 1 Ll.L.Rep. 77 the vessels were chartered on the New York Produce Exchange Form of charterparty, the definition of the charter periods being slightly different. In Hyundai it was "for about minimum 10 months maximum 12 months time charter, exact duration in charterers' option. Charterers have further option to complete last voyage within below mentioned trading limits". In The Black Falcon it was "for about 9 months, charterers' option 3 months, charterers' option further 3 months, 15 days more or less on final period. Charterers having option to complete last round voyage under performance prior to delivery at charterparty rate".
In each case it was held that the last part of the clause applied and negatived any breach of contract by the charterers if when the order for the last voyage or last round voyage was given (assuming the order to have been given at the appropriate time) it was a voyage which could reasonably have been expected to result in re-delivery before the expiration of the primary period of the charter, notwithstanding that, due to circumstances for which the charterers were not responsible, there was in the event a "late" re-delivery. However in Hyundai (this court) and in The Black Falcon (Steyn J. as he then was) the courts rejected the submission that these words entitled the charterers to order the vessel to undertake a last voyage or last round voyage which could not be expected to permit of re-delivery within the primary period of the charter.
Hobhouse J. then referred to Bucknall Brothers v. Murray [1900] 5 Com.Cas. 312 (Mathew J.) and Dene Steam Shipping Co. Ltd. v. Bucknall Brothers [1900] 5 Com.Cas. 372 (Bigham J.) in which the relevant words were "Should the vessel be upon a voyage at the expiration of the within named period, the charterers are to have the use of the steamer at the same rate and conditions for such extended time as may be necessary for the completion of their contemplated voyage, and in order to bring the steamer to a port of delivery as provided". Mathew J. suggested and Bigham J. held that on this wording the charterers were entitled to order the vessel to undertake a voyage which would prevent re-delivery before the expiration of "the within named period", provided that the orders were given and the voyage begun before that expiration.
Against this background Hobhouse J. pointed to the fact that owners and charterers were free to make, and did make, contracts which might not be classic voyage or time charterparties, but were hybrids and cautioned against judges attaching too much importance to what they might think was or was not a businesslike contract, contrasting the views expressed in the Hyundai case and in The Black Falcon with those of Kennedy J. in the matter of an arbitration between The Owners of the Istok and Drughorn [1901] 6 Com.Cas. 220, 225. He also pointed out that neither Bucknall nor Dene had been expressly overruled by any subsequent decision, including The Dione [1975] 1 Ll.L.Rep. 115, a decision of this court, which he regarded as concerned with "broader principles" and Hyundai, again a decision of this court, where Dene was mentioned in the judgment of Bingham L.J. with surprise rather than clear disapproval.
Hobhouse J.'s conclusion was summed up in the following passage from his judgment:
"The actual wording of the clause uses the phrase 'at the expiry of the period of this charter' and expressly provides that the charterers shall have 'the use of the vessel' for the 'extended time'. It is on the natural meaning of the wording an 'extension of the period clause' so as to add to the calendar period an extended period defined by reference to the time it takes to complete the round voyage upon which the vessel is engaged at the expiry of the calendar period. In this charterparty this conclusion is further supported by the insertion at the commencement of the relevant sentence of the words 'notwithstanding the provisions of clause 3 hereof'. This indicates that the relevant sentence is intended to qualify the period provision in the first line of clause 3 and that clause 3 is not to prejudice the right given under clause 18."
I accept unreservedly that owners and charterers are free to make any contract which in their view meets their commercial needs. I also accept, equally unreservedly, that arguments based upon apparent commercial absurdity need to be regarded with caution, not least because, whilst judges of commercial experience are in a position to make some evaluation of the benefits and burdens of liberties and limitations contained in a charterparty, they are unlikely to be able to evaluate the countervailing burden or benefit of a particular rate of hire or length of charter, which depends upon current market conditions and because the alleged absurdity of a particular provision has...
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