Mardorf Peach & Company Ltd v Attica Sea Carriers Corporation of Liberia (Laconia)

JurisdictionUK Non-devolved
JudgeLord Wilberforce,Lord Simon of Glaisdale,Lord Salmon,Lord Fraser of Tullybelton,Lord Russell of Killowen
Judgment Date02 February 1977
Judgment citation (vLex)[1977] UKHL J0202-2
Date02 February 1977
CourtHouse of Lords
Mardorf Peach & Co. Limited
(Respondents)
and
Attica Sea Carriers Corporation of Liberia
(Appellants)

[1977] UKHL J0202-2

Lord Wilberforce

Lord Simon of Glaisdale

Lord Salmon

Lord Fraser of Tullybelton

Lord Russell of Killowen

House of Lords

Upon Report from the Appellate Committee, to whom was referred the Cause Mardorf Peach & Co. Limited against Attica Sea Carriers Corporation of Liberia, That the Committee had heard Counsel as well on Monday the 15th, as on Tuesday the 16th, Wednesday the 17th, Thursday the 18th, Monday the 22d, Tuesday the 23d and Thursday the 25th, days of November last, upon the Petition and Appeal of Attica Sea Carriers Corporation of Liberia of 80 Broad Street, Monrovia, Liberia (c/o N. J. Goulandris (Agencies) Ltd., Lee House, London Wall, London E.C.2), praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 25th of February 1976, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioners might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the Case of Mardorf Peach & Co. 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 Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 25th day of February 1976, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Donaldson of the l5th day of November 1974, 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 Queen's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Wilberforce

My Lords,

1

The appellants are the owners of the ship "Laconia" which they chartered, in January 1970, to the respondents on a time charter for 3 months 15 days more or less in charterers' option. The charterparty, on a New York Produce Exchange form, provided that the hire was to be paid in cash in U.S. currency semi-monthly in advance.

"to the owners � into their account with First National City Bank of New York, 34, Moorgate, London, E.C.2 to the credit of O.F.C. Account No. 705586".

2

and that "failing the punctual and regular payment of the hire" the owners should be at liberty to withdraw the vessel.

3

The seventh and final instalment became due on Sunday 12th April, 1970. It was conceded by the charterers, and this case has been conducted on the footing, that, as London banks are closed on Sunday and Saturday, the due date for payment of this instalment was Friday 10th April, 1970. It was not paid on that day but was tendered or paid to the owners' bank (this will be discussed later), about 3.00 p.m. on Monday 13th April, 1970. At 6.55 p.m. on the same day the owners withdrew the vessel. The question is whether they had the right to do so. In accordance with the charterparty the matter went to arbitration. The arbitrators found in the owners' favour, but, on request, stated their award in the form of a special case which asked whether, as a question of law, the owners were entitled so to withdraw the "Laconia". This was answered affirmatively by Donaldson J. but in the negative in the Court of Appeal (Lord Denning, M.R. and Lawton L.J., Bridge, L.J. dissenting).

4

The result of this appeal turns, in my opinion, upon the answer to two and only two questions. First, what is the meaning of the withdrawal clause. Second, whether the owners have waived the default of the charterers in not making punctual payment. These questions are, in themselves, comparatively simple, but they attract in their wake some others with which I shall have to deal.

5

The clause which regulates the payment of hire and the right to withdraw is, in full, as follows:

"5. Payment of said hire to be made in New York in cash in United States Currency, semi-monthly in advance, and for the last half month or part of same the approximate amount of hire, and should same not cover the actual time, hire is to be paid for the balance day by day, as it becomes due, if so required by Owners, unless bank guarantee or deposit is made by the Charterers, otherwise failing the punctual and regular payment of the hire, or bank guarantee, or on any breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from the service of the Charterers, without prejudice to any claim they (the Owners) may otherwise have on the Charterers."

6

The provision as to payment was altered by a typed addendum (clause 52) which produced the results I have previously stated.

7

My Lords, I cannot find any difficulty or ambiguity in this clause. It must mean that once a punctual payment of any instalment has not been made, a right of withdrawal accrues to the owners. Conversely, it is incapable of meaning that a charterer who has failed to make a punctual payment, can (unless the owners have waived the default) avoid the consequences of his failure by later tendering an unpunctual payment. He would still have failed to make a punctual payment, and it is on this failure and by reason of it that the owners get the right to withdraw. That this was so was decided, on this same clause, in Tenax Steamship Co. Ltd. v. The Brimnes (Owners) ("The Brimnes") ([1973] 1 W.L.R. 386, [1975] Q.B. 929 C.A.) in which powerful judgments were given by Brandon J. and by the Court of Appeal (Edmund Davies, Megaw and Cairns L.JJ.), a decision which, in my opinion, was, on this point, unquestionably correct.

8

My Lords, on this part of the argument, the Court of Appeal in the present case appears to have been influenced to decide in the charterers' favour by an earlier decision� Empresa Cubana de Fletes v. Lagonisi Shipping Co. Ltd. ("The Georgios C") [1971] 1 Q.B. 488. There, the Court of Appeal (Lord Denning, M.R., Phillimore and Cairns L.JJ.) held that a late tender by the charterers, given before the owners withdrew the ship, was sufficient to prevent the withdrawal. This case was distinguished in The Brimnes which was the most that the Court of Appeal could do. It was applied in the present case by the Master of the Rolls through a proposition that the withdrawal clause was a forfeiture clause, and that even if there does appear to have been a cause of forfeiture, the law will not enforce it, "if before receiving notice of withdrawal, the charterers had remedied the breach by payment or tender: see The Georgios C [1971] 1 Q.B. 488, 504."

9

On the approach of the Court of Appeal I would make three observations:

10

1. The charterparty in The Georgios C. was a Baltime form and the relevant part of the clause was as follows:

"Payment of hire to be made in Pounds sterling � without discount, half-monthly, in advance.

In default of payment the owners to have the right of withdrawing the vessel from the service of the charterers."

11

The Court of Appeal construed the words "in default of payment" as meaning "in default of payment and so long as default continues": (per Lord Denning, M.R. at p. 504).

12

I regret that I cannot agree with this interpretation. The clause must be read as a whole, not in two separate parts. The words "in default of payment" must relate to the obligation to pay monthly in advance which this clause imposes. It is this failure to pay�in advance�which constitutes the default, and this cannot be cured by late payment. The Court of Appeal have in effect construed the words "in default of payment" not as meaning "in default of payment in advance", but as meaning "in default of payment whether in advance or later, so long as the vessel has not been withdrawn". This is a reconstruction not a construction of the clause. Moreover, if, as I think, a provision requiring "punctual payment" must be strictly complied with (see The Brimnes) so also must a clause using the words "in advance". A payment one day late is not a payment in advance and I can see no difference in effect between the two phrases.

13

2. I cannot regard The Georgios C. as establishing a general rule as regards interpretation applicable to the present case, or to other different clauses.

14

The present New York Produce Exchange clause is not identical with The Georgios C. Baltime clause. If it were necessary to harmonise the clauses, so as to produce the same result, this could only be done by aligning the interpretation of The Georgios C. clause with that in The Brimnes and not by a contrary operation. There is, of course, nothing unusual, or undesirable, in there being different charterparty forms in existence which produce different results, but fine distinctions ought to be avoided. We were referred to a number of commonly used forms. The Shelltime 3 form (1972) uses the words "In default of such payment"�these words were considered in the Tankexpress, A/S v. Compagnie Financi�re Belge des Petroles S. A. [1949] A.C. 76 where late payment was held unavailing, though the charterers were excused there because of an accepted course of dealing. The speeches in this House are explicit. Lord Porter said:

"Default � means in this charterparty a failure without excuse to pay hire on the due date. Apart...

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