Kodros Shipping Corporation v Empresa Cubana de Fletes (No. 2) (Evia)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,SIR SEBAG SHAW,LORD JUSTICE ACKNER |
| Judgment Date | 05 February 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0205-1 |
| Docket Number | 82/0022 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 February 1982 |
[1982] EWCA Civ J0205-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISTION
COMMERCIAL COURT
(MR. JUSTICE GOFF)
Royal Courts of Justice.
The Master of the Rolls
(Lord Denning)
Lord Justice Ackner and
Sir Sebag Shaw
82/0022
MR. JOHAN STEYN, Q.C. and MR. N. LEGH-JONES and MR. D. MILDON (instructed by Messrs. Ince & Co.) appeared on behalf of the Respondents.
MR. NICHOLAS PHILLIPS, Q.C. and MR. J. SUMPTION (instructed by Messrs. Coward Chance) appeared on behalf of the Appellants.
The "Evia" is yet another of the ships trapped in the Shatt-al-Arab waterway. Again it gives rise to big problems. This time it is not only about "frustration" but about "safe port" as well. The arbitrators were unable to agree, so the matter was left to be decided by the umpire, Mr. Basil Eckersley. The facts have been set out by him in an interim award to which he has annexed his reasons.
The "Evia" is owned by a Monrovian company. She was let on time charter to a Cuban State Corporation. It was for 18 months from the 20th November, 1979. So it was due to expire on the 20th May, 1981. In May 1980 she sailed from Cuba with a cargo of cement. Her destination was Basra. It was in a war zone. But it was a "safe port" for her to go to at that time because there was no anticipation of hostilities affecting the port. She berthed on the 20th August, 1980. Discharge of the cargo was completed at 1000 hours on the 22nd September, 1980. She was then ready to leave—with eight months of the charterparty still to go. But on that very day there was heavy fighting in and around the port. Large-scale hostilities had broken out between Iran and Iraq. She was trapped there. She is still trapped there. So are 60 other ships.
The shipowners claim damages from the charterers on the ground that the charterers warranted that Basra was and would be a "safe port" for the whole of her stay there and her departure: and that, when Basra became unsafe, the charterers were in breach of that warranty and are liable to pay damages amounting at least to the whole of the hire for the remainder of the charter.
In answer the charterers say that they were not in breach of the "safe port" warranty. They say that, owing to the delay occasioned by the hostilities, the charterparty became frustrated on the 4th October, 1980. They admit that they are liable for hire up to that time but that they are not liable for hire after that time.
In reply the owners say that the charterers cannot rely on frustration because it was self-induced—by reason of the charterers' own breach of the "safe port" warranty—and so they can recover damages for that breach.
The great question therefore is whether there was a breach by the charterers of the "safe port" warranty. The umpire, Mr. Basil Eckersley, said "No". The charterers were not in breach and can rely on frustration. The judge said "Yes". The charterers were in breach and cannot rely on frustration. It is interesting to observe that in a similar case, The Chrysalis, Mr. R.A. MacCrindle, Q.C., sitting as sole arbitrator, would have taken the same view as Mr. Eckersley—that there was no breach of the "safe port" warranty. But he felt constrained by the judge's ruling in our present case to hold that the charterers were in breach.
In the circumstances I propose first to consider the nature of the "safe port" warranty. It arises under clause 2 of the charterparty on the Baltime form which says:
"The Vessel to be employed in lawful trades for the carriage of lawful merchandise only between good and safe ports or places where she can safely lie always afloat or safe around where vessels of similar size and draft are accustomed to lie safely".
Many cases have been considered on those and similar words. Sometimes in voyage charterparties. Sometimes in time charterparties. Sometimes in one formula. Sometimes in another. But in most cases nothing turns on the kind of charterparty—nor on the precise formula used. Sufficient that the charterer has to nominate a "safe port" or to employ her at or between "safe port or ports".
At one time it was suggested that the duty of the charterer was limited to the time when he nominated the port or the time when the vessel was directed to the port. It was thought that, if the port became unsafe afterwards, that was no fault of his. He was not responsible for it. But that suggestion has gone by the board. The charterer is held to warrant that the port will be safe when the vessel arrives there, during the time that she stays there, and when she departs from it. Safe, that is, for this very vessel of her size and draft at the time of year when she is to go there and be there. Safe, not only in the inner limits of the harbour, but also in the approaches to it and departures from it. If she suffers damage—physical damage—owing to the port being unsafe, the shipowner is entitled to recover damages from the charterer for breach of warranty, see " The Stork" (1955) 2 Queen's Bench 68.
At another time it was thought that, if the port was unsafe, the only remedy of the shipowner was for the master not to obey the nomination or not to carry on with the employment. He ought not, it was said, to go into the port if it was unsafe. But that suggestion too has gone by the board. The master is entitled to rely on the warranty of the charterer and to go into the port, remain there, and leave there, on the faith of it: unless the danger is so obvious that he can be said to have voluntarily taken on himself the risks of it. If the vessel suffers damage by reason of the breach of warranty, the owner can recover damages, see The Sussex Oak (1950) 2 King's Bench 383 at pages 394—397 by Mr. Justice Devlin.
What then are the characteristics of a "safe port"? What attributes must it possess and retain if the charterer is to fulfil his warranty?
To my mind it must be reasonably safe for the vessel to enter, to remain, and to depart without suffering damage so long as she is well and carefully handled. Reasonably safe, that is, in its geographical configuration on the coast or waterway and in the equipment and aids available for her movement and stay. In short, it must be safe in its set-up as a port.
To elaborate a little, every port in its natural state has hazards for the ships going there. It may be shallows, shoals, mudbanks, or rocks. It may be storms or ice or appalling weather. In order to be a "safe port", there must be reasonable precautions taken to overcome these hazards, or to give sufficient warning of them to enable them to be avoided. There must be buoys to mark the channel, lights to point the way, pilots available to steer, a system to forecast the weather, good places to drop anchor, sufficient room to manoeuvre, sound berths, and so forth. In so far as any of these precautions are necessary—and the set-up of the port is deficient in them—then it is not a "safe port".
Once the set-up of the port is found to be deficient—such that it is dangerous for the vessel when handled with reasonable care—then the charterer is in breach of his warranty and he is liable for any damage suffered by the vessel in consequence of it. To illustrate this proposition, I will give some of the deficiencies in set-up which have been held to render a port unsafe:
Its tendency to be ice-bound during that very winter, see Grace v. General S.N. Co. (1950) 2 King's Bench 383.
Its tendency to sudden storms, endangering a vessel of this size in this bay, see The Stork (1955) 2 Queen's Bench 68.
The absence of navigational aids such as a hauling-off buoy or waling-piece, see The Houston City (1956) Appeal Cases 266.
The lack of reliable holding ground in the anchorage area, see The Eastern City (1958) 2 Lloyd's Law Reports 127.
The absence of an adequate weather forecasting system, see The Dagmar (1968) 2 Lloyd's Law Reports 563.
The absence of adequate room to manoeuvre in bad weather, see The Khian Sea (1979) 1 Lloyd's Law Reports 545.
The tendency of the channel to become silted up so as to produce narrowing or shoaling, see The Pendrecht (1980) 2 Lloyd's Law Reports 56 and The Mary Lou (1981) 2 Lloyd's Law Reports 272.
On the other hand, if the set-up of the port is good but nevertheless the vessel suffers damage owing to some isolated, abnormal or extraneous occurrence—unconnected with the set-up—then the charterer is not in breach of his warranty. Such as when a competent berthing-master makes for once a mistake, or when the vessel is run into by another vessel, or a fire spreads across to her, or when a hurricane strikes unawares. The charterer is not liable for damage so caused.
I have said that the set-up of the port must be safe so that she can enter, remain and depart without suffering damage. I did not say without suffering delay. The charterer does not warrant that she will be safe from delay or that she will not suffer delay—even if this is caused by some deficiency in the set-up of the port. A few years ago the port of Lagos was congested with hundreds of vessels waiting to come in. I described it in Trendtex Trading v. Bank of Nigeria (1977) Queen's Bench 529 at pages 548–549. But no one suggested that it was not a "safe port" on that account. Again, the port of Sorel was strike-bound for nine months so that no vessels could come in or berth. I described it in The Nema (1980) 2 Lloyd's Law Reports 539 at page 342. But no one suggested that it was not a "safe port" on that...
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