Hyundai Merchant Marine Company Ltd v Gesuri Chartering Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BINGHAM,LORD JUSTICE BALCOMBE,LORD JUSTICE SLADE |
| Judgment Date | 16 October 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J1016-5 |
| Docket Number | 90/0947 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 October 1990 |
[1990] EWCA Civ J1016-5
Lord Justice Slade
Lord Justice Balcombe
and
Lord Justice Bingham
90/0947
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 Saville)
Royal Courts of Justice
MR. B. RIX, QC and MR. B. EDER, QC (instructed by Messrs Sinclair Roche & Temperley) appeared on behalf of the Respondents (Plaintiffs).
MR. A. GLENNIE (instructed by Messrs Shaw and Croft) appeared on behalf of the Appellants (Defendants).
By a charterparty on the New York Produce Exchange form dated 3rd April 1987 Hyundai Merchant Marine Company Limited as disponent owners chartered their vessel PEONIA to Gesuri Chartering Company Limited as charterers. The charterparty provided.
| line 13 | "…the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for |
| line 14 | about minimum 10 months maximum 12 months time charter, Exact duration in Charterers option |
| line 15 | Charterers have further option to complete last voyage within below mentioned trading limits." |
Hire was to continue until the hour of the day of the vessel's redelivery to the Owners within specified areas.
The vessel was delivered to the Charterers on 11th June 1987 (thus the 10 month period expired on 11th April and the 12 month period on 11th June 1988). On the 6th May 1988 the Charterers concluded a voyage sub-charterparty to carry soyabeans from the River Plate to Singapore and Butterworth. Had this sub-charterparty fixture been performed the vessel (then discharging at Ravenna) would have been redelivered to the Owners no earlier than about 19th July 1988. On 11th May the Owners protested, contending that the proposed voyage was illegitimate. They asked for voyage orders which would enable the vessel to be redelivered within 45 days, namely by 25th June, thereby giving effect to the expression "about" in line 14. On 17th May the Owners call for voyage orders which would enable the vessel to be redelivered within the charter period or alternatively for payment of hire at an enhanced rate for the duration of the voyage outside the charter period. The Charterers accepted neither condition and the vessel was withdrawn by the Owners from the service of the Charterers.
The parties differed as to their respective rights and, more particularly, as to the correct construction of lines 13–15 of the charterparty quoted above. They appointed Messrs Clifford Clark and Mark Hamsher as arbitrators to decide their dispute. For purposes of an interim final arbitration award made by the arbitrators on 1st March 1989 (but only for those purposes) the facts set out in the last paragraph were assumed (although not proved) to be true. In their award the arbitrators jointly declared that under the provisions of the charterparty the Charterers were entitled to order the vessel to undertake a last voyage that started before the latest time for redelivery, namely before 11th June 1988 as extended by any tolerance to be implied by the use of the word "about". On the assumed facts the Charterers were therefore entitled to give the orders they did.
Leave to appeal against that award was given to the Owners by Evans J. and on 31st July 1989 Saville J. allowed the appeal and varied the award so as to declare that upon a true construction of the charterparty the Charterers were not entitled to order the vessel to perform a voyage which could not reasonably be anticipated to be completed before about 11th June 1988 and that the Owners were entitled to refuse to comply with any such order. The learned judge certified that the question of law to which his decision related was one of general public importance and gave leave to appeal. As between the parties themselves, the financial implications of the decision are (we are told) considerable. The Charterers now seek to reinstate the arbitrators' decision, the Owners to uphold the decision of the judge.
The immediate legal background to the dispute is not now controversial. A time charterparty such as this is a contract by which the shipowner agrees with the time charterer that during a certain named period he will render services by his servants and crew to carry the goods which are put on board his ship by the time charterer ( Sea and Land Securities Limited v. William Dickinson and Company Limited [1942] 2 KB 65 at 69). It is for the time charterer to decide, within the terms of the charterparty, what use he will make of the vessel. References to delivery and redelivery are strictly inaccurate since the vessel never leaves the possession of the shipowner, but the expressions are conventionally used to describe the time when the period of the charter begins and ends ( The Berge Tasta [1975] 1 Ll. 422 at 424). Where a time charterparty stipulates a definite date for the termination of the charter period without any express margin or tolerance the courts imply a reasonable margin or tolerance to allow for the exigencies of maritime business ( Gray & Co v. Christie & Co (1889) 5 TLR 577; Watson Steamship Co v. Merryweather & Co (1913) 18 Com Cas 294; The London Explorer [1972] AC 1; The Dione [1975] 1 Ll. 115). Where the parties have expressly agreed a margin or tolerance (as by agreeing a minimum and maximum period for the charter or a "more or less" provision) such implication will not be made ( Watson v. Merryweather, supra; The Dione, supra). In the present case the words "minimum 10 months maximum 12 months" which, standing alone, would ordinarily be effective to exclude the implication of any additional margin or tolerance are prefaced by the word "about", which is effective to provide for such an additional margin or tolerance. It is not, however, suggested that even this additional margin or tolerance could be effective to cover the five week period between 11th June 1988, when the 12 months maximum period of the charter ended, and 19th July when, on the facts assumed for purpose of the arbitrators' award, the vessel would at the earliest have been redelivered had she performed the sub-charterparty voyage fixed by the Charterers to Singapore and Butterworth via the River Plate.
It would seem to me (although challenged by the Charterers) that every time charter must have a final terminal date, that is a date by which (in the absence of an exonerating cause) the charterer is contractually obliged to redeliver the vessel. Where the law implies a margin or tolerance beyond an expiry date stipulated in the charterparty, the final terminal date comes at the end of such implied extension. When the parties have agreed in the charterparty on the margin or tolerance to be allowed, the final terminal date comes at the end of such agreed period. But the nature of a time charter is that the charter is for a finite period of time and when the final terminal date arrives the charterer is contractually bound (in the absence of an exonerating cause) to redeliver the vessel to the owner. I shall hereafter use the expression "final terminal date" to mean the final contractual date for redelivery, after the expiry of any margin or tolerance which the parties may agree or the law imply.
The cases and books draw a distinction between two cases which have become known as "the illegitimate last voyage" and "the legitimate last voyage". In the former case the charterer gives orders for the employment of the vessel which cannot reasonably be expected to be performed by the final terminal date. He is therefore seeking to avail himself of the services of the vessel at a time when the owner has never agreed to render such services. It is accordingly an order which the charterer is not entitled to give (just as an order to visit a prohibited port would be) and in giving it the charterer commits a breach of contract (perhaps a repudiatory breach but that we need not decide). The owner need not comply with such an order, because he has never agreed to do so. Alternatively, he may comply with the order although not bound to do so: if he does comply, he is entitled to payment of hire at the charterparty rate until redelivery of the vessel and (provided he does not waive the charterer's breach) to damages (being the difference between the charter rate and the market rate if the market rate is higher than the charter rate) for the period between the final terminal date and redelivery. In the further alternative, if (which we do not decide) the charterer's breach is repudiatory, the owner may accept the repudiation, treat the charter as at an end and claim damages. In this first case, the charterer's order is illegitimate because he was not contractually entitled to give it, and the voyage (whether performed or not) is stigmatised as illegitimate because it is one the charterer could not under the charterparty lawfully require the owner to perform.
In the contrasting case of the legitimate last voyage the charterer gives orders for the employment of the vessel which can reasonably be expected to be performed by the final terminal date. These are orders which the charterer is entitled to give, and so legitimate. If the parties' reasonable expectations are fulfilled and the voyage is performed by the final terminal date no difficulty of course arises. If the voyage is not performed by the final terminal date through some fault by the owner, whether strictly a breach of contract or not, again there is no legal difficulty: the owner cannot complain of the charterer's failure to redeliver by the final...
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