Joseph Constantine Steamships Line v Imperial Smelting Corporation
| Jurisdiction | UK Non-devolved |
| Judge | The Lord Chancellor,Viscount Maugham,Lord Russell of Killowen,Lord Wright,Lord Porter |
| Judgment Date | 09 May 1941 |
| Judgment citation (vLex) | [1941] UKHL J0509-2 |
| Date | 09 May 1941 |
| Court | House of Lords |
[1941] UKHL J0509-2
Lord Chancellor
Viscount Maugham
Lord Russell of Killowen
Lord Wright
Lord Porter
House of Lords
After hearing Counsel, as well on Thursday the 20th, as on Friday the 21st, days of February last, upon the Petition and Appeal of Joseph Constantine Steamship Line, Limited, of Maritime Buildings, Middlesbrough, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 18th of June 1940, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises, as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Imperial Smelting Corporation, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 18th day of June 1940, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Atkinson, of the 1st day of March 1940, thereby set aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
By a charterparty, dated August 5th, 1936, the Appellants, who were the owners of a steamship called the "Kingswood", chartered the ship to agents for the Respondents for a voyage with a cargo of ores and concentrates from Port Pirie in South Australia to Europe. The vessel duly sailed for Port Pirie for the purpose of loading her cargo. On January 3rd, 1937, while she was anchored in the roads at Port Pirie, but before she became an "arrived ship", there was an explosion of extreme violence in the neighbourhood of her auxiliary boiler, which caused such damage to the steamer that she could not perform the charterparty, and the Appellants gave notice to the Respondents to that effect. The Respondents claim damages from the Appellants, alleging that the latter have broken the charterparty by failing to load a cargo. The Appellants set up the defence that the contract was "frustrated" by the destructive consequences to the "Kingswood" of the explosion.
The dispute was referred to the Arbitration of Mr. H. U. Willink, K.C., and the learned arbitrator has made an interim award in the form of a Special Case. He finds that the explosion was one "of an unprecedented character" and that no probable sequence of events had been suggested as capable of having given rise to it. The energy released by the explosion was so great that the auxiliary boiler was projected forward through two water-tight bulkheads, finally piercing the collision bulkhead at the forward end and breaking the shell plates at the starboard bow. The distance travelled by the auxiliary boiler, owing to the propulsion of the explosion, before it came to rest in the fore-peak was approximately 164 feet, while the two main boilers, situated aft of the auxiliary boiler, were forced backwards by the concussion 4 feet and 5 feet 6 inches respectively. It is not disputed that the time needed to repair the damage and to make the "Kingswood" fit for her voyage was so great as to frustrate the commercial object of the adventure. The Respondents, however, contend that this frustration does not suffice to excuse the Appellants from having to pay damages for non-performance unless the Appellants establish affirmatively that the explosion occurred without any fault on their part. The Appellants, on the other hand, contend that, once the frustrating event is proved, the onus is upon the Respondents to establish such default on the part of the Appellants as would deprive the latter of their right to rely upon it.
After examining three principal theories which were suggested in evidence as possibly accounting for the disaster, the arbitrator declares himself unable to decide whether any one of them provided the true explanation, and he goes on to say that he is not satisfied that the direct cause of the disaster has as yet been suggested at all. His conclusion is that he was not satisfied that any of the servants of the Appellants were guilty of negligence. On the other hand, neither was he satisfied that negligence on the part of the servants of the Appellants did not cause or contribute to the disaster. It is this nicely balanced conclusion on the facts which provides the question of law which this House has now to decide.
That question is whether, when parties have contracted in such circumstances as require a term to be implied in the contract that it shall be determined, and the mutual obligations of the parties discharged, by supervening destruction of essential subject-matter of the contract, the party alleging frustration must prove affirmatively that the destruction has not been brought about by his own neglect or default.
The Special Case came before Mr. Justice Atkinson, who, in a most careful and elaborate Judgment, in the course of which he examined a large number of authorities, decided that the present Appellants succeeded: [1940] 1 K.B. 812. On the subject of onus of proof Mr. Justice Atkinson cited the well-known passage from the Judgment of Lord Justice Bowen in ( Abrath v. The North Eastern Railway Company 11 Q.B. 440 at p. 456) and applied it as follows. (I have substituted "charterers" and "shipowners" throughout as the description of the parties.)
"In such a case as this, the charterers begin by proving that the ship did not arrive within the contract time, or at all. If the case stopped there, the charterers win; but the shipowners then prove an accident which destroyed the ship as a navigable unit. The shipowners prove an event which was the immediate, direct and dominant cause of that destruction. If the case stopped there, what is the position? Who wins? Well, I do not think the answer is a simple one; but in my view the onus of ultimately satisfying the tribunal that the ship was at fault rests on the charterers. Whether or no they have discharged that onus, must be judged by applying the following principles. (1) If it appears that the accident proved was of such a nature as to raise a presumption of negligence, that is to afford some evidence of negligence, the onus is on the shipowners to destroy that presumption created by the nature of the accident. (2) If it appears that the accident proved was of such a nature as to afford no evidence of negligence, the onus is on the charterers to prove negligence in fact. (3) Where the onus is upon the shipowners under the first principle that onus is discharged by proving facts from which the inference that the accident was not caused by negligence is as equally strong (that is, equally consistent with the facts) as the inference that it was caused by negligence."
The charterers appealed to the Court of Appeal, which reversed Mr. Justice Atkinson's decision. Lord Justice Scott delivered the first Judgment, with which the Master of the Rolls and Lord Justice Goddard agreed. Lord Justice Scott declared that this was a "very simple case", and this view is no doubt the explanation of the fact that his Judgment does not provide this House with the arguments or authorities which led the Court of Appeal to their conclusion. The only help Your Lordships can get is the assertion by the learned Lord Justice that "a party prima facie guilty of a failure to perform his contract cannot escape under the plea of frustration, unless he proves that the frustration occurred without his default. There is no frustration in the legal sense unless he proves affirmatively that the cause was not brought into operation by his default." If this assertion is correct, it of course disposes of the case. The Court of Appeal refused leave to appeal, which however the Appeal Committee of this House thought it right to grant. The House has been assisted by a full and careful argument from Counsel on each side in determining the issue.
The question to be answered is not, in my view, a very simple one, and it has not as yet, so far as I can discover, been the subject of direct decision. There is no doubt, of course, that what Lord Sumner in Bank Line v. Arthur Capel and Co. [1919] A.C. 435 at p. 452 called "self-induced" frustration provides no defence. Thus, in Mertens v. Home Freeholds Co. [1921] 2 K.B. 526, Lord Sterndale observed (at p. 536):
"It has never been held that a man is entitled to take advantage of circumstances as a frustration of the contract if he has brought those circumstances about himself";
and the Master of the Rolls went on to illustrate his meaning by saying that in Taylor v. Caldwell, 3 B. and S. 826, the defence of frustration would have failed "if the defendant had burned down the music-hall himself" Similarly, in Maritime National Fish Ltd. v. Ocean Trawlers Ltd., decided by the Judicial Committee and reported in [1935] A.C. 524, my noble and learned friend Lord Wright, who delivered the judgment of their Lordships, laid it down that "the essence of 'frustration' is that it should not be due to the act or...
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