Glencore Grain Ltd v Flacker Shipping Ltd (MV 'Happy Day') [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Langley J |
| Judgment Date | 25 January 2001 |
| Date | 25 January 2001 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Langley J.
S Healy (instructed by Richards Butler) for the appellants.
Peter Gross QC and M Ashcroft (instructed by Ince Consultants OE) for the respondents.
The following cases were referred to in the judgment:
Agamemnon, The[1998] CLC 106.
Barrett Bros (Taxis) Ltd v DaviesWLR[1966] 1 WLR 1334.
Chanda, TheUNK[1985] 1 Ll Rep 562.
Franco-British Steamship Co Ltd v Watson and YouellUNK(1921) 9 Ll L Rep 282.
Helle Skou, TheUNK[1976] 2 Ll Rep 205.
Kyzikos, TheUNK[1989] 1 Ll Rep 1.
Mexico 1, TheUNK[1988] 2 Ll Rep 149; [1990] 1 Ll Rep 507 (CA).
Mozart, TheUNK[1985] 1 Ll Rep 239.
Pteroti Compania Naviera SA v National Coal Board (The Khios Breeze)ELR[1958] 1 QB 469.
Shackleford, TheUNK[1978] 1 Ll Rep 191; [1978] 2 Ll Rep 154 (CA).
Shipping Carriage of goods Charterparty Notice of readiness Laytime Demurrage Despatch Notice to start laytime required under voyage charter Invalid notice of readiness to discharge given from outside berth No further notice given Whether laytime ever started Whether laytime commenced on actual discharge by reason of waiver, estoppel or agreement.
This was an appeal by charterers, Glencore, against an interim final arbitration award in which arbitrators decided that, where an invalid notice was given to commence laytime, laytime began to run as if the notice had been correctly given at the first opportunity.
The Happy Day was chartered by Flacker to Glencore on an amended Synacomex form for a voyage from Odessa to 1-2 safe berth(s) at a number of named ports including Cochin. The charter required a written notice of readiness to be given to start laytime. The vessel arrived at Cochin at 16.30 on Friday 25 September 1998 but could not immediately enter the port because she had missed the tide. Nevertheless the master gave notice of readiness. Since the charter was a berth charter and there was no congestion at the berth the notice of readiness given from outside the berth was invalid (The KyzikosUNK[1989] 1 Ll Rep 1). The vessel entered the port on the next tide and berthed at 13.15 on Saturday 26 September and discharge commenced. No further notice of readiness was given. Discharge was not completed until 25 December. The vessel's agents, the receiver's agents and the vessel then signed a statement that the notice of readiness had been tendered and accepted. The owners claimed demurrage and the charterers claimed despatch arguing that since no valid notice was ever given laytime never commenced (relying onThe Mexico 1UNK[1990] 1 Ll Rep 507andThe Agamemnon[1998] CLC 106). Arbitrators rejected owners' submissions that laytime could start at the commencement of discharge without a valid notice of readiness but held that laytime commenced at 08.00 on Tuesday 29 September which was when it would have commenced had a valid notice been given. Charterers appealed arguing that charterers had accepted the notice of readiness, or had not rejected it, and that once discharge commenced it would have been futile to serve another notice.
Held, allowing the appeal:
1. Where a charter provided for laytime to be started by a valid notice it could not be started in any other way and an invalid notice could not become effective when the cargo was or was known to be available for discharge. No different conclusion could be justified by substituting the time when discharge actually commenced for the time when the vessel was known to be ready to discharge. In the absence of an estoppel or the like, that would involve an impermissible rewriting of the terms of the charter. The bare fact that discharge was carried out did not amount to a waiver of the entitlement to a notice of readiness. (The Mexico 1UNK[1990] 1 Ll Rep 507applied.)
2. The acceptance of the notice was of no significance because that might only have mean that the notice had been received and because such acceptance must have been based on the master's implied assurance that the ship was at the berth and ready to discharge.
3. There could be no estoppel because the findings of the arbitrators did not establish any mutual assumption that laytime was to commence on discharge despite the terms of the charterparty. Nor did the receivers, if they were agents for the charterers, ever agreed to laytime commencing on actual discharge.
4. The fact that discharge actually commenced did not mean that a notice of readiness otherwise required by the charterparty could be dispensed with as futile. (Barrett Bros (Taxis) Ltd v DaviesWLR[1966] 1 WLR 1334considered.)
5. Therefore owners' claim for demurrage failed and charterers' claim for despatch succeeded.
Langley J:
This appeal against an interim final arbitration award is brought by the charterers with the leave of David Steel J. Subject to a number of important procedural points, it raises in stark circumstances a question which Mustill LJ in The Mexico 1UNK[1990] 1 Ll Rep 507 at p. 510 left open for detailed exploration should it arise in future, namely what are the rights of owners to demurrage and charterers to despatch when a charterparty provides for a notice to be given at the discharge port to trigger the start of laytime but only an invalid notice is given, and yet the vessel commences and completes discharge over an extended period in circumstances in which a substantial claim to demurrage would otherwise have arisen. The arbitrators decided that laytime commenced to run as if the notice had been correctly given at the first opportunity. The charterers say that was wrong and as no valid notice was ever given no demurrage ever became payable but, to the contrary, they have a claim for despatch.
The Happy Day was chartered on an amended Synacomex form which contained the following clauses of potential relevance to this appeal:
5. Cargo to be discharged at the expense and risk of Receivers/Charterers. Discharging to be effected at the average rate of 1,500 metric tons per weather working day of 24 consecutive hours pro rata. Laytime to be non-reversible.
6. Laytime at loading ports shall commence if written notice of readiness to load is given.
7. Demurrage is payable at the rate of US$ 4,500 per day. Owners to pay Charterers despatch money for working time saved in loading/discharging at the rate of US$ 2,250 per day of 24 consecutive hours or pro rata.
10.At discharging port Owners to appoint agents nominated by Charterers.
23. The freight is payable as follows: 95% less commission, brokerage, estimated despatch in loading, if any and Owners' contribution towards extra insurance payable within three banking days after signing all the required number clean Bills of Lading Balance plus demurrage or less despatch as the case may be payable after completion of discharge against Timesheets, Statements of Facts and Notices of Readiness.
28. If by reason of congestion the vessel is unable to enter the loading/discharging ports, Master has the privilege to tender Notice of Readiness in accordance with the Charter Party by cable radio and laytime is to commence as per clause 6, 30 and 31, whether in berth or not, whether in port or not, whether in free pratique or not, whether entered customs or not, provided vessel has arrived in the commercial area of the port or any anchorage designated by Port Authorities. Shifting time from anchorage or place of waiting to loading discharging berths not to count.
30. At first or sole discharging port notice to be given to Receivers/agents during normal local office hours and laytime to start counting at 8 am next working day whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.
Time from Friday 5 pm until Monday 8 am not to count even if used.
Clause 3 of the charterparty provided that the vessel Being so loaded shall proceed direct to 1-2 safe berth(s) anchorage(s) out of a number of named ports in charterers' option. An addendum to the charterparty added the port of Cochin, India to the list of discharge ports. The arbitrators found that the charterparty was a berth charter, rejecting an argument to the contrary which had been advanced by the owners in relation to the port of Cochin. That finding is not in issue in this appeal.
The Happy Day completed loading 23,000 mts of wheat at Odessa on 6 September 1998 and departed for Cochin where she arrived off the port on Friday 25 September 1998 at 1630 hours. At the time of her arrival off the port the vessel was unable immediately to enter the port because she had missed the tide. Nevertheless, the master purported to give notice of readiness at 1630 hours on 25 September 1998. The vessel was only able to resume her voyage into the port on the next tide at 1016 hours on Saturday 26 September, berthing at 1315 hours. In circumstances where the charter was a berth charter and there was no congestion at the berth, the notice of readiness given from outside the berth on 25 September 1998 at 1630 hours was invalid when given: see The KyzikosUNK[1989] 1 Ll Rep 1. No further notice of readiness was ever given. Discharge commenced on Saturday 26 September but was not completed until 25 December. Also on 25 December the statement of facts concerning the vessel's arrival at Cochin was signed by the vessel's agents, the receiver's agents and the vessel. So far as material it recorded:
NOR Tendered 1630 hours on 25/09/98
NOR Accepted 1630 hours on 25/09/98.
The owners submitted that, notwithstanding cl. 30 of the charterparty, laytime commenced because (1) as regards Cochin the charterparty was a port charter so that the notice given from outside the berth was valid; (2) the charterers were responsible for the vessel's inability to enter the port due to tidal restrictions; (3) the charterers were estopped from contending that no valid notice of readiness was given because the notice that was given was marked...
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