Glencore Grain Ltd v Goldbeam Shipping Inc.; Goldbeam Shipping Inc. Navios International Inc. (MV 'Mass Glory') [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Moore-Bick J |
| Judgment Date | 25 January 2002 |
| Date | 25 January 2002 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Moore-Bick J.
Sioban Healy (instructed by Richards Butler) for Glencore Grain.
Simon Croall (instructed by Bird & Bird) for Goldbeam Shipping.
Clare Ambrose (instructed by Rayfield Mills) for Navios International.
The following cases were referred to in the judgment:
Aquator Shipping Ltd v Kleimar NV (“ The Capricorn 1”)UNK [1998] 2 Ll Rep 379.
Barrett Bros (Taxis) Ltd v DaviesWLR [1966] 1 WLR 1334.
Becher (Kurt A) GmbH & Co KG v Roplak Enterprises SA (“The World Navigator”)
Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd (“The Kyzikos”)ELR [1989] AC 1264.
Glencore Grain Ltd v Flacker Shipping Ltd (“The Happy Day”) [2001] CLC 813.
Grebert-Borgnis v J & W NugentELR (1885) 15 QBD 85.
Hadley v BaxendaleENR (1854) 9 Exch 341.
Inca Compania Naviera SA v Mofinol Inc (“The President Brand”)UNK [1967] 2 Ll Rep 338.
Koufos v C Czarnikow Ltd (“The Heron II”)ELR [1969] 1 AC 350.
Oldendorff (E L) & Co GmbH v Tradax Export SA (“The Johanna Oldendorff”)ELR [1974] AC 479.
Pteroti Compania Naviera SA v National Coal Board (“The Khios Breeze”)ELR [1958] 1 QB 469.
Sacor Maritima SA v Repsol Petroleo SAUNK [1998] 1 Ll Rep 518.
Shipping Developments Corp v v/o Sojuzneftexport (“The Delian Spirit”)ELR [1972] 1 QB 103.
SIB International SRL v Metallgesellschaft Corp (“The Noel Bay”)UNK [1989] 1 Ll Rep 36.
Sociedad Carga Oceanica SA v Idolinoele Vertriebsgesellschaft mbH (“The Angelos Lusis”)UNK [1964] 2 Ll Rep 28.
Stargas SpA v Petredec Ltd (“The Sargasso”)UNK [1994] 1 Ll Rep 412.
TA Shipping Ltd v Comet Shipping Ltd (“The Agamemnon”) [1998] CLC 106.
Transgrain Shipping BV v Global Transporte Oceanico SA (“The Mexico 1”)UNK [1990] 1 Ll Rep 507.
Shipping — Carriage of goods — Laytime — Despatch — Damages for detention of vessel — Remoteness — Charterers' breach of contract caused delay at discharge port — Whether premature notice of readiness under berth charter invalid — Whether laytime saved could be set off against period of detention at anchorage — Whether time saved during discharging to be paid for in despatch — Whether laytime began on commencement of discharge — Whether voyage charterers' liability to time charterer too remote to be recoverable from subcharterer.
These were two appeals under s. 69 of the Arbitration Act 1996 from the decision of arbitrators in disputes under two charters which were heard together assessing owners' damages for delay at the first discharge port caused by charterers' breach of contract.
In November 1997 “Glencore” entered into a contract of affreightment with “Goldbeam” on the Synacomex form with amendments for the carriage of between three and five cargoes of grain in bulk from South American ports to ports in South East Asia and the Far East. Goldbeam nominated the vessel “ Mass Glory” to perform one of the voyages under the contract, having chartered the vessel on substantially the same terms from “Navios”. Navios was a time charterer from “Bonusnauta”. The vessel loaded at Rio Grande and sailed for Xiamen, China as the first discharge port. The vessel entered the port of Xiamen on 14 June 1998 and passed the normal inward inspection that day. She was ready to berth and a berth was available for her but she was unable to occupy it because the cargo documents were not in order and the sellers ordered the vessel not to allow anyone access to the vessel without production of an original bill of lading. The master gave notice of readiness on 15 June, but it was common ground that both voyage charters were berth charters and that since the vessel was not prevented by congestion from reaching her berth the notice of readiness was invalid. The problems with the cargo documents were not resolved until 9 August when the vessel was able to shift to berth and begin discharging. No further notice of readiness was given. The owners under each of the voyage charterers claimed damages for detention from the charterers in respect of the time lost at Xiamen. Arbitrators heard the disputes under the two charters together and held that the delay was caused by charterers' breach of contract. Since the notice of readiness was invalid, laytime did not start to run and the whole waiting period was to be taken into account in calculating damages for detention. Laytime began to run at the commencement of discharge despite the fact that no notice of readiness was given. Charterers' breach of contract caused the notice of readiness to be invalid and they could not benefit from their own breach of contract and rely on the absence of a valid notice to claim despatch. The charterers appealed arguing that in assessing damages for detention the arbitrators should have taken into account the laytime notice periods and exceptions as well as the period by which laytime had ultimately been exceeded; alternatively that the arbitrators erred in holding that laytime began to run when the vessel commenced discharging at Xiamen. In the absence of a valid notice of readiness laytime did not begin to run at all and the charterers should therefore be credited with despatch of the whole of the allowed laytime.
The arbitrators found that the loss actually suffered by Navios was represented by the additional hire that had become due during the period of the vessel's detention at Xiamen. Hire was payable under the time charter between Navios and Bonusnauta at the rate of US$10,400 a day, but the arbitrators found that since July the market had fallen considerably to the point where the rate for the Mass Glory in the Pacific in August 1998 was US$7,250 a day. They also found that Navios would have redelivered the vessel to Bonusnauta as soon as she had completed her employment under the charter to Goldbeam. The arbitrators held, applying Koufos v C Czarnikow Ltd (“The Heron II”)ELR [1969] 1 AC 350, that that loss was not too remote to be recoverable by Navios from Goldbeam and, applyingStargas SpA v Petredec Ltd (“The Sargasso”)UNK[1994] 1 Ll Rep 412, that Glencore was liable to indemnify Goldbeam in full. The charterers in each case appealed.
Held remitting the award to the arbitrators:
1. The charterers could not obtain the benefit of the laytime provisions from the moment the vessel passed her inward inspection at Xiamen. In the circumstances of this case the owners could not give notice of readiness and laytime could not begin to run until the vessel had entered a berth at Xiamen. Since the carrying voyage had not ended when the vessel reached the anchorage and the owners were not entitled to give notice of readiness until the vessel reached berth (by the combined effect of cl. 6 and 37 of the charter), the laytime provisions could not operate.
2. The effect of charterers' breach of contract was to prevent the vessel completing the carrying stage and reaching the point at which notice of readiness could be given. A notice of readiness could not be given simply because the vessel had been prevented from becoming an arrived ship by the charterers' breach of contract. (The President BrandUNK[1967] 2 Lloyd's Rep 338 applied; The Delian SpiritELR[1972] 1 QB 103 distinguished.)
3. The arbitrators were right to hold that the notice of readiness was invalid, and to reject the argument that laytime saved should be set off against the period of detention at the anchorage.
4. The arbitrators were wrong to hold that laytime started from the commencement of discharge on the basis that the only reason the notice of readiness was invalid was the charterers' breach of contract and they could not be permitted to rely on their own breach. Where a charter stipulated that laytime was to begin following the giving of notice of readiness, time would not begin to run, in the absence of waiver or agreement to the contrary, unless and until a valid notice was given. There were no findings of fact to support any such waiver or agreement and no basis on which the arbitrators could hold that laytime at Xiamen started to count from the commencement of discharge. There was no agreement between Goldbeam and Navios that laytime commenced when discharging began at Xiamen. (The Mexico IUNK[1990] 1 Ll Rep 507 and The Agamemnon[1998] CLC 106applied.)
5. The arbitrators were wrong to hold that the charterers' breach of contract caused the notice of readiness to be invalid. The notice given from the anchorage rather than the berth would always have been premature. In so far as charterers' breach of contract prevented the vessel from becoming an arrived ship, the owners were entitled to recover damages for delay. By making a claim for despatch on the basis that no effective notice of readiness was given, the charterers were not seeking to benefit from their own breach of contract but from owners' independent failure to give notice of readiness once the vessel had reached the point at which notice could properly be given. Laytime did not begin to count from the commencement of discharge at Xiamen because the charter provided for laytime to be started by a valid notice and in no other way. (The Happy Day[2001] CLC 813applied.)
6. Clause 7 of the charter provided for owners to pay charterers despatch money for working time saved in loading/discharging. That meant owners would pay charterers for each day of working time allowed by the contract but not used (under cl. 5 and 33). A failure to give notice of readiness resulted in none of the time allowed being used and therefore the whole of that time was saved and owners were liable for despatch. (The Mexico IUNK[1990] 1 Ll Rep 507, The Happy Day[2001] CLC 813applied.)
7. In general damages for the detention of a vessel were to be calculated by reference to the prevailing market rate. However it was open to the arbitrators in this case to hold that Navios could recover the higher level of...
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