Pan Ocean Shipping Company Ltd v Creditcorp Ltd (Trident Beauty)
| Jurisdiction | England & Wales |
| Judgment Date | 25 January 1993 |
| Date | 25 January 1993 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Neill, Lord Justice Beldam and Lord Justice Kennedy
Shipping - charterparty - advance payment to assignee - no repayment
An assignee who received an advance payment of hire under a charterparty was not liable to repay it in the event that the hire was subsequently not earned.
The Court of Appeal so held in a reserved judgment, allowing an appeal by Creditcorp Ltd against the order of Judge Diamond, QC, sitting as a judge of the Queen's Bench Division on December 11, 1991 giving judgment for Pan Ocean Shipping Co Ltd, the charterers, and ruling that they were entitled to recover the charter hire paid to Creditcorp Ltd, as assignees of the shipowners' rights, on the ground that subsequent to the payment of hire there had been a failure of consideration under the charterparty.
Mr Angus Glennie, QC, for the appellants; Mr Jonathan Hirst, QC and Mr Thomas Adam for the charterers.
LORD JUSTICE NEILL said that the appeal had raised questions as to the nature of payments made in advance by way of hire in respect of periods which at the time of payment lay in the future.
The appeal concerned a time charterparty but it was common ground that the decision might have implications for payments made in advance in other types of contract.
The issue was whether an assignee who received an advance payment of hire under a charterparty was liable to repay it in the event that the hire was subsequently not earned.
The charterers argued that the payments of advance hire under a charterparty had a special characteristic. Like other advance payments of hire made in respect of a period which at the time of payment lay in the future the payments were only conditional or provisional.
The charterers accepted that the obligation to make the payment was, subject to any right to make deductions in respect of previous off-hire periods, an absolute one.
But if, at the end of the period covered by the advance payment, all or part of the hire had not been earned, the charterers were entitled to the return of the hire or to deduct it from future payments.
It was clearly established that an advance payment of hire under a charterparty was provisional in the sense that if the hire was not earned for the whole period covered by the payment the charterer would be entitled to recovery pro tanto. But those were the rights as between the owner and the...
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- Pan Ocean Shipping Company Ltd v Creditcorp Ltd (Trident Beauty)
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...can only be a payment of what the contract says is earned." 32 More recently Tonellier was followed by the House of Lords in Pan Ocean Shipping Ltd v Creditcorp Ltd, "The Trident Beauty" [1994] 1 WLR 161 (infra). 33 The case on which Mr Hamblen focussed his argument was the decision of Bin......
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