Marbienes Compania Naviera S.A. v Ferrostaal A.G. (Democritos)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE LAWTON,LORD JUSTICE BRIDGE
Judgment Date14 Jan 1976
Judgment citation (vLex)[1976] EWCA Civ J0114-1

[1976] EWCA Civ J0114-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Division

(Commercial Court)

(Mr. Justice Kerr)

Before:

The Master of the Rolls (Lord Denning)

Lord Justice Lawton

and

Lord Justice Bridge

In the Matter of the Arbitration Act, 1950

and

In the Matter of an Arbitration

Between:
Marbienes Compania Naviera S.A.
Claimants Respondent
and
Ferrostaal A.G.
Respondents Appellants

MR.G.POLLOCK (instructed by Messrs. Richards, Butler & Co., Solicitors, London) appeared on behalf of the Respondents (Appellants).

MR.D.JOHNSON (instructed by Messrs. Constant & Constant, Solicitors, London) appeared on behalf of the Claimants (Respondents).

1

THE MASTER OP THE ROLLS: In November 1969 the owners of the motor vessel "Democritos" chartered her to a German Company, Ferrostaal. The charter was however "Time charter" and was on the New York produce form. It contains these clauses "The Owners agree to let and the Charterers agree to hire the said vessel from the time of delivery for about a trip via port or ports via the Pacific, duration about 4 to 6 months", "Vessel to be placed at disposal of Charterers at Durban", "The vessel on her delivery to be ready to receive cargo with clean-swept holds and tight, staunch, strong and in every way fitted for ordinary cargo service", "That if required by the Charterers, time not to commence before 1st December 1969 and should the vessel not have given notice of readiness on or before 20th December 1969 but not later than 4 p.m. Charterers or their agents to have the option of cancelling this charter any time not later than the best notice of the vessel's readiness".

2

The vessel arrived at Durban on 16th December 1969. Her 'tween deck in No. 2 hold was found to be collapsed. If the repairs had been done straight away at Durban, they would have taken some days. She might have been delayed so long that she could not have been ready by the cancelling date 20th December 1969. This did not suit anyone. The Charterers had steel ready to load. So the repairs were not done at Durban. The Master gave a written guarantee that the vessel could load the amount of steel available, namely, 9,230 long tons. She did in fact start loading at Durban on 18th December 1969.

3

It took a long time loading her. She did not finish until 26th January 1970. Then she started off on her voyage. The Charterers had let her on a sub-charter for a voyage to 1 or 2 ports, Los Angeles-Portland-Range on the west coast of America. But after she had rounded the Cape, she developed engine trouble.She had to go "back to Capetown, where her engines were repaired. It delayed her 7½ days in all. She eventually arrived at Portland on 2nd April. She discharged her cargo there. Then she went on to Seattle, where the 'tween deck was repaired. She had by this time been sub-let on another sub-charter to carry a cargo of grain from Seattle down to two ports in Central America on the Pacific coast, Acajutla and Punta Arenas. She loaded the cargo of grain at Seattle, sailed to Punta Arenas and completed the discharge of her cargo there on 6th June 1970.

4

It will be remembered that the head charter gave the "duration about 4 to 6 months". The 6 months started on 18th December 1969. This would expire on 18th June 1970. Allowing a margin for "about" of 5 days, as the arbitrators did, that would give up to 23rd June 1970.

5

So there she was at Funta Arenas on 6th June 1970. She had been already sub-chartered for a voyage from Port Arthur in Houston in Texas with a cargo of petroleum coke to be discharged at Porto Marghera in Italy. She sailed from Punta Arenas on 6th June. She went to Port Arthur in the Gulf of Texas, near Houston, where she loaded a cargo of petroleum coke. She set sail across the Atlantic, eventually reaching Venice on 11th July. She completed her discharge on 20th July and eventually, after cleaning and so on, she was redelivered on 23rd July of 1970. That was some 35 days later than the 6 months stated in the head charter.

6

Many points arose. They then referred to two arbitrators. They came to an agreed decision on them. They stated a Case for the opinion of the Judge. He agreed with the arbitrators, except that he did remit one matter for further consideration. How there is an appeal to us, but only upon two points.

7

The first point is about the delivery of the vessel at Durban. It is said by the Charterers that the Owners were under an absolute obligation to deliver the vessel at Durban by the cancelling date, 20th December 1969 - and this is the point - they were bound to deliver her by that date in a fit condition as required by the charter; and that the owners were in breach of that condition because the vessel was not in a fit state then. The 'tween decks were broken. The Charterers admit that they may have waived any right to reject the vessel, but never- theless they claim that they had a right to sue for damages for the vessel being in an unfit condition. The damages would be for loss incurred by her not being able to carry a full cargo, and also by the time occupied later at Seattle in doing the repairs.

8

Now there is nothing in this charter which binds the owners positively to deliver by 20th December 1969. The only clue to any time of delivery is to be found in the cancelling clause. There is, of course, an implied term that the Owners will use reasonable diligence to deliver the ship in a fit condition by the 20th December 1969. But that is not an absolute obligation. So long as they have used reasonable diligence, they are not in breach. In this case it is found that reasonable diligence was used, so there is no breach by them of that implied obligation.

9

Next the cancelling clause. Its effect is that, although there may have been no breach by the Owners nevertheless the Charterers are, for their own protection, entitled to cancel if the vessel is not delivered in a proper condition by the cancelling date. That is the solo effect.

10

On this point the judge referred to the English cases, particularly Smith v. Dart & Son, (1884) 14 Queen's Bench Division, page 105 at page 110, when Mr. Justice A.L. Smith said: "The shipowner does not contract to get there by a certainday, "but says: 'If I do not get there you may cancel'". But we have had the benefit of one or two others. The first is from Scotland, Nelson & Sons v. The Dundee East Coast Shipping Co. Ltd. (1907) 44 Scottish Law Reporter, page 661. It was a voyage charter, but Lord M'Laren said this: "If it can be shown that the shipowners had used their best endeavours and that the delay was due to unavoidable accident or perils of the sea, I should have been of opinion that no damages were due. The contract could be cancelled but damages would not be due, for each party would then be within his rights". A more direct authority is from the United States, United States Gypsum Transport Co. v. Dampskibs Aktieselskabet Karmoy (1930) 48 Federal Reporter, Second Series, page 376. It was a time charter; there was no date of delivery promised: but nevertheless there was a cancelling clause. It was on the New York produce form with the clauses similar to those here. The District Court said that; "The most that can be required of the Owner where no delivery date is provided in the charter, is to tender with reasonable dispatch, and the burden of proof is on the" (Charterer) "to show that the owner has not used reasonable dispatch in tendering the ship". The court went on to say: "The charter did not by its terms promise that the vessel would be delivered by any specified date, nor did it by reason of any of its provisions imply a promise by the Owner to deliver the vessel on or before any specified day but the most that was implied was that the Owner would use reasonable dispatch in tendering the vessel". These authorities show that as long as the owner uses reasonable diligence, he is not in breach, but the Charterer is entitled to cancel if the vessel is not delivered by the cancelling date.

11

Mr. Pollock referred to several voyage charters in whichthere was an "estimated time of arrival". It has "been always held that the estimated date has to "be given honestly and on reasonable grounds and that he has to sail from his last port on his approach voyage so as to get there in time. That obligation is absolute. But those cases have no...

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