London & Overseas Freighters Ltd v Timber Shipping Company S.A. (Charterparty, London Explorer)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SALMON,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE PHILLIMORE |
| Judgment Date | 14 July 1970 |
| Judgment citation (vLex) | [1970] EWCA Civ J0714-3 |
| Date | 14 July 1970 |
| Court | Court of Appeal (Civil Division) |
[1970] EWCA Civ J0714-3
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Judgment of Mr Justice Mocatta.
Lord Justice Salmon,
Lord Justice Edmund Davies and
Lord Justice Phillimore
In the Matter of an Arbitration
Mr ROBERT GOFF. Q.C. and Mr J.C. TYLOR (instructed by Messr Bentleys, Stokes & Lowless) appeared on behalf of the Appellants (Charterers).
Mr R.A. MacCRINDLE, Q.C. and Mr A.E. DIAMOND (instructed by Messrs Holman, Fenwick & Willan) appeared on behalf of the Respondents (Owners).
By a time charterparty dated 25th October, 1967, it was agreed that the Owners should "let" and the Charterers should "hire" the "London Explorer" — then I quote from the charterparty — "from the time of delivery, for 12 months 15 days more or less in Charterers' option". The printed word "about" was struck out in line 14 of the charterparty where it would otherwise have appeared between the printed word "for" and the manuscript words "12 months 15 days more or less". Mr Goff appears to set great store by this deletion. I confess, however, that in spite of his most able argument, I for my part am wholly unable to understand how the deletion can have the slightest influence on the result of this appeal.
Clause 4- (lines 51 to 57) of the charterparty provided for the rate at which the Charterers should pay (omitting irrelevant words) "for the use and hire of the … vessel … commencing on and from the day of her delivery … hire to continue until the hour of the day of her re-delivery … to the Owners". The range of ports at which re-delivery was to take place was "Galveston/Montreal". There was, of course, no "letting" or "hire" or "delivery" in the literal sense of these words. The ship remained in the possession of the Owners manned by a crew in their employment. The so-called "hire" (a survival from the language used in the old demise charterparties) is in reality remuneration payable by the Charterers to the Owners for the use and services of the ship.
The "London Explorer" was delivered on the 29th December, 1967, and no doubt went on a number of voyages on behalf of the Charterers until some time in October, 1958, when she was loaded with a cargo of steel in Japan. Eventually she left Japan on what was intended to be her last voyage under the charter; she was destined to discharge her cargo at New Orleans and Houston. At the time when the Charterers ordered her on this last voyage, no question arose as to whether she could be re-delivered within a reasonable timeafter the 29th December, 1968, because there was no reason to suppose that there would be any difficulty in re-delivering her on or before that date. It follows that the vessel was lawfully ordered on this last voyage by the Charterers and neither the Captain nor his employers, the Owners, could lawfully have refused the order to undertake that voyage. Matters turned out, however, very differently from what was anticipated. As a result of dock strikes first at ITew Orleans and then at Houston, the whole of the cargo was not finally discharged until the 18th April, 1969. The vessel was not re-delivered to the Owners until the 24th April, 1969, when a re-delivery certificate headed "Charterparty dated London 25th October, 1967" was signed on behalf of the Owners and the Charterers.
There is a number of cases in the books in which a ship has not been re-delivered until after the date mentioned in the charterparty. In these reported cases, in addition to hire under the charterparty for all the time the ship was retained and used by the Charterers, the Owners have claimed damages for breach of contract. The market had of course risen and the damages claimed by the Owners was the difference between the charterparty rate and the market rate during the excess period for which the Charterers had kept the ship. Some of these cases were decided in favour of the Charterers and others in favour of the Owners. Each depended upon its own particular facts and the terms of the charterparty in question: Compare, for example, Watson v. Merryweather, (1913) 18 Commercial Cases, 294, and Meyer v. R.F. Sanderson & Co., 32 Times Law Reports, 428, on the one hand, with Gray & Co. v. Christie & Co., 5 Times Law Reports, 577, and Hector Steamship Co. v. V.O. Sovfracht, 1945 1 King's Bench, 343, on the other.
There must, of course, have been many cases like the present in which the Charterers kept the ship beyond the date of re-delivery mentioned in the charterparty after the markethad fallen below the rate of hire specified in the charterparty. There is, however, no such reported case, for the simple reason that this is admittedly the first claim of its kind which has been resisted. And I am not at all surprised. Never before have Charterers had the hardihood to assert that because (a) they were in breach of contract in failing to re-deliver the ship on time, and (b) without a shadow of right, had kept and used the ship for their own purposes beyond the re-delivery date, they could lawfully escape from paying the charterparty rate of hire for the whole period for which they had used the ship. If Charterers unlawfully keep and use a ship beyond the date upon which they are contractually bound to re-deliver her, it hardly lies in their mouths to say that the contract has expired, that therefore-they are unlawfully using the ship, and that this entitles them to pay less for her services than if they had been lawfully using her. No doubt if the present Charterers unlawfully failed to re-deliver within the time fixed by the charterparty, the Owners could, on notice, have withdrawn their vessel and dumped the cargo at the nearest convenient port. This would necessarily have caused great inconvenience and expense to the Charterers. Moreover, it would not have helped the Owners as the market had fallen. If the failure to re-deliver the ship by the 29th December, 1968, constituted a breach of the charterparty, it clearly was in the interests of both parties that the Owners should not treat this as a fundamental breach by withdrawing the ship but that the Charterers should continue to use her under the terms of the charterparty until the cargo had finally been discharged.
In this case we have the absurd spectacle of the Charterers insisting that they were in breach of contract in failing to re-deliver the ship on time and that they were unlawfully detaining her whilst using her for their own purposes and therefore they are liable to pay less for herservices than if they had been using her lawfully. I reject that argument. In ay judgment, the charterparty did not automatically come to an end even if there was a breach on the part of the Charterers. Even if the charterparty did expire, this would not affect the Charterers' liability to pay hire at the charter rate up to the date of re-delivery. The Owners did not withdraw the ship and nothing was said between the parties; the irresistible implication would be that the Charterers, with the Owners' consent, continued to use the ship under the relevant terms of the charterparty. They were therefore liable to pay hire at least at the charterparty rate during such time as they continued to use her.
In any event, since the Charterers' order to proceed on the last voyage was clearly lawful and there is no finding that the Charterers failed to deliver the ship within a reasonable time after the 29th December, 1968, it follows from the principle laid down by Mr Justice Atkin (as he then wad) in Watson v. Merryweather, in relation to charterparties such as the present, (1) that there was no breach on the part of the Charterers, (2) that the charterparty did not die by effluxion of time, and (3) that the Charterers certainly continued liable to pay the hire up to the 24th April, 1969.
The only circumstances in which Charterers who re-deliver a ship after the date stipulated by the charterparty would not continue liable for the hire would be if, but I think only if and when, the charterparty were frustrated. But in this case there is no finding, nor indeed was it argued, nor could it sensibly have been argued, that the charterparty was frustrated. For these reasons, I agree with the finding of the Arbitrators and the decision of the learned Judge. Accordingly, I would dismiss the appeal on the issue of the Charterers' liability to pay hire at the charter rate up to the 24th April, 1969.
A more difficult question arises in relation to the Arbitrators' award of interest on sums due under the charterparty at the rate of 8% per annum from the date of the award until payment. Had the Arbitrators any power to make such an Order? Over 100 years ago, Section 17 of the Judgments Act, 1838, provided that "Every Judgment debt shall carry interest at the rate of £4 per centum per annum from the date of the entering up of the judgment until the same shall be satisfied.
Having regard to the general interest rates prevailing at the time when that Act was passed and for many years thereafter, the provision that a judgment debt should carry interest at 4% per annum was unexceptionable. In modern times, however, when general interest rates have fluctuated violently and are now about double what they were in 1838, the provision has become ridiculously unjust. Indeed, legislation has at last been introduced to cure what has for so long been a glaring anomaly. It positively encouraged all judgment debtors to postpone discharging their liability for as long as possible. In cases in which very large sums were involved, it paid a defendant with a bad case to carry it to the Court of Appeal and, if possible, to the House of Lords, even if he knew that he had no real chance of winning. He might then postpone the date of payment for...
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