Mansel Oil Ltd v Troon Storage Tankers SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Christopher Clarke J. |
| Judgment Date | 09 June 2008 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 09 June 2008 |
Queen's Bench Division (Commercial Court).
Christopher Clarke J.
Luke Parsons QC and Poonam Melwani (instructed by Stephenson Harwood) for the claimants.
Steven Berry QC and Jeremy Brier (instructed by Clyde & Co LLP) for the defendants.
The following cases were referred to in the judgment:
Barrett Bros (Taxis) Ltd v DaviesWLR [1966] 1 WLR 1334.
Bulk Shipping v Ipco Trading (The Jasmine B)UNK [1992] 1 Ll Rep 39
Bunge Corp v Tradax Export SAWLR [1981] 1 WLR 711.
Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea)UNK [1997] 2 Ll Rep 324; [1998] CLC 1395 (CA).
Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2003] 1 CLC 537.
Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory) [2002] CLC 586.
Hudson's Bay Co v Domingo Mumbru SAUNK (1922) 10 Ll L Rep 476.
Mozart, TheUNK [1985] 1 Ll Rep 239.
Noemijulia Steamship Co Ltd v Minister of FoodUNK (1950) 83 Ll L Rep 500.
Senate Electrical Wholesalers Ltd v Alcatel Submarine Networks LtdUNK [1999] 2 Ll Rep 423.
Shipping Corp of India Ltd v Naviera Letasa SAUNK [1976] 1 Ll Rep 132.
Universal Bulk Carriers Pte Ltd v André et Cie SA [2001] CLC 1179.
Valla Giovanni & Co SpA v Gebr Van Weelde Scheepvaart Kantoor BV (The Chanda)UNK [1985] 1 Ll Rep 563.
Shipping — Time charterparty — Shelltime 4 form — Cancellation — Obligation to nominate delivery port — Notice of estimated delivery date — Futility — Owners to deliver vessel in Ghana/Nigeria range in charterers' option — Conversion work to vessel carried out in Greece — Owners' case that charterers gave instructions for modifications which meant vessel could not be delivered before cancelling date — Charterers gave notice of cancellation — Charter obliged charterers to nominate delivery port — Time for fulfilment of obligation to nominate never arose — Charterers not obliged to make nomination which would be futile.
This was the trial of an issue whether the claimant charterers were entitled to cancel a time charterparty on an amended Shelltime 4 form in the absence of nomination of a delivery port.
The charter provided for the vessel to be delivered by owners at a port in WAF-Ghana/Nigeria range in charterers' option. Originally charterers had the option of cancelling the charter if the vessel was not ready and at their disposal on or before 31 October 2007.
The charterparty had been agreed in the context of discussions between the owners and the charterers about the modification of the vessel for use as a floating storage capacity for petroleum products off West Africa. The charterparty was subsequently amended, during conversion work to the vessel at Piraeus, and the delivery date extended up to 15 November 2007. The owners' case was that significant modifications were requested by the charterers on or about 18 October 2007 which would take about an extra 14 days to carry out. The owners commenced those works. Given the voyage time to West Africa, it was obvious that the vessel would inevitably miss the revised cancelling date.
On 16 November 2007 the charterers sent a notice of cancellation to the owners on the basis that the vessel, which was still in Piraeus, had not been delivered. Charterers did not at any point nominate a delivery port within the delivery range. Any nomination of the delivery port would have been futile because the vessel was not and could not have been ready and at the charterers' disposal in the delivery range by the cancelling date.
Charterers contended that the charterparty did not oblige them to nominate a delivery port at all but gave them an option, which they were not obliged to exercise, to specify a port within the range. If, as happened, charterers failed to nominate a port, it was open to owners to deliver the vessel at any port within the contractual range. Even assuming that they were bound to nominate a delivery port, the time for the fulfilment of that obligation never arose.
The owners contended that the structure of the charterparty was such that the charterers had an option, which they were bound to exercise, to nominate a delivery port within the range. That nomination had to be made before owners' 30 days estimated notice of delivery. When, but not before, nomination had occurred the owners came under an obligation to deliver the vessel. In the absence of any obligation to deliver there could be no question of cancellation for non-delivery.
Held answering the preliminary issue in favour of the charterers:
1. Owners and charterers would ordinarily understand that charterers' option to select the delivery port was an option that they were obliged to exercise. The expectation of the parties was that the charterer would declare where the vessel was to be delivered, not that he might do so. Further, the nomination was necessary in order to complete the definition of the parties' contractual obligations. It was unlikely that the parties to the charterparty contemplated that the vessel could properly be left without orders from the charterers as to where the charterparty service should begin, with the owners being left to choose one of the several ports along the coast of Ghana and Nigeria, including, presumably ports where the charterers had no business or agents, as the port of delivery. Accordingly, charterers in the present case were prima facie obliged to nominate the port of delivery.
2. The parties contemplated that the vessel would set off for the Ghana/ Nigeria range, and that the charterers, if they had not already done so, would nominate a delivery port as the vessel approached the range. Charterers were not bound to nominate the delivery port before receiving owners' 30 days notice of estimated delivery. The nature of the notices which the owners were to give would depend on whether or not a nomination had been made. It would not be open to the charterers to delay giving notice until the last moment. It could not be right that the charterers could nominate a delivery port, which might be days sailing time away, immediately before the cancellation date, unless the vessel was already there. In respect of this charterparty, it was for charterers to make their nomination within a reasonable time which would be such time as was (a) not so late as would mean that, because of the lateness of the nomination, the vessel could not make her cancelling date; and (b) early enough to ensure that the vessel suffered no delay resulting from the absence of nomination.
3. If that was so, then, in the present case, the time by which charterers were bound to make a nomination never arrived. On the assumed facts there was never a moment beyond which the lateness of the nomination was the cause of the vessel not meeting her cancelling date since she was never capable of meeting the cancelling date whenever notice was given. Nor was she caused any delay by want of a nomination. In those circumstances there had been no failure on charterers' part to make a nomination because the time when they were obliged to do so had not arisen. The parties could not have intended that the charterers should be disentitled from exercising a right to cancel because they had failed to make a nomination before they were obliged to do so.
4. It was not necessary to determine whether any notice of delivery from the owners was a precondition to any obligation on the part of the charterers to nominate the delivery port.
5. If, before 15 November 2007, the charterers prima facie came under an obligation to nominate the delivery port, then the question arose as to whether or not they were bound to do so notwithstanding the futility of the exercise. The answer was that the parties to the charterparty had not agreed that, in order to be able to exercise a right of cancellation, it was necessary for the charterers to have nominated a loading port even in circumstances in which it was futile to do so because, no matter what nomination was given, the vessel would never arrive by the cancelling date. (Hudson's Bay Co v Domingo Mumbru SAUNK(1922) 10 Ll L Rep 476 and Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea)UNK[1997] 2 Ll Rep 324; [1998] CLC 1395 (CA) considered.)
Christopher Clarke J:
1. By a charterparty on an amended Shelltime 4 time charterparty form (“the charterparty”), the defendant owners (“the owners”) chartered to the first claimant (“the charterers”) the vessel “AILSA CRAIG” (“the Vessel”) for a period of 24 months +/—30 days in the charterers” option commencing from the date and time of her delivery. The charterparty is evidenced by a number of documents beginning with an e-mail recap of 31 May 2007. It is expressly subject to English law. The second claimant was guarantor of the charterparty.
2. The charterparty provided, by clause 1, that “at the date of delivery of the vessel under this charter” the Vessel should have a number of characteristics (such as that she should be classed RRS, be fit in every way to carry crude petroleum and/or its products, etc.) and, by clause 2, that “At the date of delivery of the vessel and throughout period [sic] under this charter” she should fulfil certain other criteria. Under clause 3 the hire was to commence from the time and date of delivery of the Vessel.
3. Clauses 4 and 5 of the charterparty provided as follows:
“4. The vessel shall be delivered by Owners at a port in WAF-Ghana/Nigeria range in Charterers' option and redelivered to Owners at a port in WAF-Ghana/ Nigeria range in Charterers' option.
5. The vessel shall not be delivered to Charterers before 25 September 2007 and Charterers shall have the option of cancelling this charter if the vessel is not ready and at their disposal on or before 31 October 2007. Notices: delivery/redelivery 30–25–15 days estimated then 10–7–5–3–2–1 definite days notice. All times are to be based on Universal Time (UT).”
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