Galaxy Energy International Ltd v Novorossiysk Shipping Company (Petr Schmidt)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EVANS,LORD JUSTICE PETER GIBSON,SIR CHRISTOPHER SLADE |
| Judgment Date | 26 March 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0310-7 |
| Date | 26 March 1998 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | QBCMR 96/1708 CMS3 |
[1998] EWCA Civ J0310-7
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MR JUSTICE LONGMORE)
Royal Courts of Justice
Strand
London W2A 21L
Lord Justice Evans
Lord Justice Peter Gibson
Sir Christopher Slade
QBCMR 96/1708 CMS3
MR NICHOLAS HAMBLEN QC (instructed by Messrs Stephenson Harwood, London EC4M 8SH) appeared on behalf of the Appellant/Plaintiff.
MR PRIDAY (instructed by Messrs Lawrence Graham, London EC3A 8JN) appeared on behalf of the Respondent/Defendant.
This appeal is from a judgment given by Longmore J. in the Commercial Court on 8 November 1996. He dismissed the charterers' appeal against an Award by three arbitrators dated 20 May 1996 in a demurrage dispute. The arbitrators were Mr Michael Mabbs, Mr Mark Hamsher and Mr Donald Davies. The charterers now renew their appeal by leave of the judge. He certified the question of law as follows:—
"Whether if a clause in a charterparty requires a notice of readiness to be tendered within particular hours of the day and it is, in fact, tendered outside those hours but at a time when the ship is physically ready to load or discharge, it is an invalid notice and a nullity so that a fresh notice has to be given before laytime can begin or whether the notice takes effect when those hours begin".
The issue is the commencement of laytime under a voyage charterparty of the vessel "Petr Shmidt" on the Asbatankvoy form. The charterparty dated 2 August 1994 was for a loaded voyage from Tuapse to two discharging ports, Trieste and Venice. The time when laytime began at each of these three ports depends upon the validity and effectiveness of the notices of readiness which were given.
Two clauses only of the charterparty are relevant:—
Clause 6
NOTICE OF READINESS. Upon arrival at customary anchorage at each port of loading or discharge the Master or his agent shall give the Charterer or his agent notices by letter, telegraph, wireless or telephone that the vessel is ready to load or discharge cargo, [berth] or no berth and laytime, as hereinafter provided, shall commence upon the expiration of six(6) hours after receipt of such notice, or upon the Vessel's arrival in berth…..whichever first occurs…….
Clause 30 (typed addition)
NOTICE OF READINESS CLAUSE
Vessel not to tender notice of readiness at loading port prior to laydays, unless Charterers give their cconstant (sic) to do so. Notice of readiness at loading and discharing port (sic) is to be tendered within 06.00 and 17.00 hours local time.
Note the laydays (laycan period) were 9/11 August (part 1).
The facts are stated in the judgment (reported at [1997] 1 Ll. R. 284 ). In summary, notices of readiness were given by telex or fax to the charterers or their agents, as follows:—
| Loading | Tuapse | 0001/Aug.9 |
| Discharge | Trieste | 1800/Aug.16 |
|
| Venice | 1800/Aug.18 |
It is common ground (1) that when each of these notices was given the vessel had arrived at the appropriate place within the port in question and was in fact ready to load or discharge as required by the charterparty. The statement of readiness contained in each notice was in fact correct when it was made; (2) that the vessel's state of readiness continued thereafter; and (3) that no further notices were given.
Pursuant to clauses 6 and 30, the shipowners (respondents) claim that laytime commenced at:—
| Loading | 1200/Aug.9 (6 hours after 0600/9) |
| Discharge | Trieste 0750/Aug.17 (vessel berthed within the 6 hour period from 0600/17) |
|
| Venice (6 hours after 0600/19). |
The charterers (appellants) contend that the notices of readiness were invalid and of no effect, having been "tendered" outside the period specified in clause 30, between 0600 and 1700. In each case, they submitted, laytime commenced no earlier than when the loading or discharge operation began.
How were the notices given? The arbitrators' finding is that they were "transmitted and received in the charterers' office by telex or other such means, prior to the 0600-1700 clause 30 period" (Award para. 9). 0600 was regarded as the time when the office opened (para.1) and the finding in para. 9 continues:—
"In short, the valid notice was put in the right form and place for the charterers' agents to have seen it at 0600 hours had they so wished".
The question of law as certified appears to relate to a notice which "is, in fact, tendered outside those hours", but it concludes "or whether the notice takes effect when those hours begin". It is therefore wide enough, in my judgment, to include what was essentially the principal ground on which the arbitrators based their decision in shipowners' favour:—
"In the present case it appears to us that, to all intents and purposes, not only was the notice of readiness valid when it was passed to the charterers but that it was "tendered" to the charterers at 0600 hours or soon thereafter when the office was opened; at the least, there was surely a constructive tender of the notice of readiness at those times….".
Later, the arbitrators referred to the notices being "deemed effective when the "office hours" or "specific hours" commence" (para.11).
As will appear below, I do not consider that questions of "constructive tender" or "deemed tender" arise. It is, however, necessary to consider (1) when were the notices "tendered", for the purposes of clause 30, and (2) whether the notices so tendered were valid and effective for the commencement of laytime, as required by clause 30 and clause 6.
Authorities
The notice of readiness contains statements of fact as to the arrival of the vessel, her state of readiness for loading or discharge of the contractual cargo and any other matters which the charterparty may require e.g. that customs clearance has been obtained. This is more fully discussed in the recent judgment of Thomas J in The Agamemnon (T.A. Shipping Ltd v. Comet Shipping Ltd. ) [1998] CLC 106 at pages 110 and 112, with which I respectfully agree. In particular, "…the commencement of laytime begins only when the event stipulated in the charter occurs—the giving of the requisite valid notice and [its] validity depends on the conditions stipulated in the charterparty for its giving being met" (page 112F).
It is clearly established that a notice which contains these statements but which is inaccurate—the statements are incorrect—is invalid and is a nullity so far as the contract is concerned. Moreover, if the statements were inaccurate when they were made, the notice does not become valid and effective merely because the relevant factors change—if, for example, the vessel thereafter becomes an arrived ship, or becomes ready to load or discharge, which it was not : The Mexico I [1990] 1 Ll Rep. 207 and The Agamemnon (above). A notice which is invalid, because inaccurate, does not have some kind of "inchoate" status enabling it to ripen into a valid notice whenever the change of circumstances occurs. In such cases, a fresh notice must be given : The Mexico I (at page 513).
For the same reason, the statements contained in the notice must relate to the times when they are made and when the notice is given. In practice, if the notice is given orally, by telegraph or wireless as clause 6 permits, then these two coincide, but if it is in writing, e.g. by letter (as clause 6 also permits), then there will inevitably be some time difference between them. I assume, for present purposes, that the statements must be accurate at both points in time, cf. Scrutton on Charterparties (20th ed.) p. 149:—
"Unless the charter provides to the contrary, facts entitling notice to be given, such as readiness, must exist at the time notice is given, and not only at its expiry, for the notice to be valid".
Therefore, a notice cannot be valid if it states merely that the vessel will be ready at some future time. The notice as given must contain a statement of existing fact (see The Mexico I at page 513 per Mustill L.J.).
Submissions
Mr Hamblen Q.C. for the charterers submits that in the light of these authorities a notice is invalid and a nullity in contractual terms if it is tendered outside the period stated in clause 30, which for convenience I shall refer to as office hours. These notices, he submits, which were sent by telex or fax outside office hours, were "tendered" by the shipowners and received by the charterers or their agents when the telex or fax messages were transmitted. Therefore, they were non-contractual, and it follows as a matter of principle that they were invalid and should be regarded as "nullities" so far as the contract is concerned. Moreover, the notices contained statements relating to the time when they were sent. Even if they can be regarded as having been "tendered" at 0600 on the following day, the notices could not then be regarded as statements of existing fact. By that time they had become either statements of the ship's condition some twelve hours before or earlier statements of projected or expected readiness, which the law or more strictly the contract terms do not allow.
Mr Priday for the shipowners responds that the arbitrators and the judge reached the correct conclusion, for the reasons which they gave. Primarily, the notices were "tendered" when office hours began at 0600 on the morning after the telex or fax messages were sent. Secondly, the notices that were given were factually correct (this is not in dispute). The fact that they were tendered as they were does not prevent them from being valid...
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