Scandinavian Trading Tanker Company A.B. v Flota Petrolera Ecuatoriana (Scraptrade)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ROBERT GOFF |
| Judgment Date | 26 November 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J1126-1 |
| Docket Number | 82/0447 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 November 1982 |
[1982] EWCA Civ J1126-1
The Master of The Rolls
(Sir John Donaldson)
Lord Justice May
and
Lord Justice Robert Goff
82/0447
1980 S. No. 1254
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE LLOYD)
Royal Courts of Justice.
MR. KENNETH ROKISON, Q.C. and MR. T.P.D. SALOMAN (instructed by Messrs. Sinclair Roche & Temperley) appeared on behalf of the (Plaintiffs) Respondents.
MR. J.V.Z. STEYN, Q.C., MR. P.H. GROSS and MR. A.G. BOMPAS (instructed by Messrs. Ince & Co.) appeared on behalf of the (Defendants) Appellants.
The judgment of the court has been prepared by Lord Justice Robert Goff, and the appeal is dismissed for the reasons therein stated.
There is before the court an appeal from a judgment of Mr. Justice Lloyd under which he made a declaration that the respondents, Scandinavian Trading Tanker Company A.G., were entitled to withdraw a vessel named the "Scaptrade" from the service of the appellants, Flota Petrolera Ecutoriana, and also made certain consequential orders. We shall in this judgment refer to the respondents as "the owners", and to the appellants as "the charterers"; and we shall refer to the "Scaptrade" as "the vessel".
The matter arises as follows. The owners, who are a Swedish oil trading company, chartered the vessel (as disponent owners) to the charterers, who are a state trading corporation set up by the Government of Ecuador. The charter, which was dated the 11th May, 1977 was a time charter in the Shelltime 3 form. The charter period was originally 12 months, 30 days more or less in charterers' option: hire was payable monthly in advance at the rate of $4.65 per ton of the vessel's deadweight per calendar month. By an addendum dated the 14th June, 1978 the period of the charter was extended for a further 24 months, the rate of hire being $4.10 for the first 12 months and $4.30 for the second 12 months of the extended period, this second part of the extension being subject to the approval of the charterers (and of certain head charterers) of the vessel's performance.
The clause of the charter which dealt with the payment of hire was clause 8 of the printed form. After making provision for the time and manner of payment, and allowing for certain deductions to be made from the hire, the clause provided as follows:
"In default of such payment Owners may withdraw the vessel from the service of the Charterers, without prejudice to any claim Owners may otherwise have on Charterers under this charter."
Since the vessel was delivered under the charter on the 8th July, 1977 it followed that the monthly hire payments had to be paid on or before the eighth day of each month. We are concerned in this case primarily with the hire payment which fell due in July 1979. The 8th July, 1979 was in fact a Sunday. The charterers failed to pay the July hire instalment when due. We shall have to consider later in this judgment the circumstances in which this omission occurred. By that time, the market had risen steeply, the market rate being almost double the charter rate. At 1546 hours on Thursday, 12th July, the owners sent a telex to the sole brokers, Odin Marine Incorporated, withdrawing the vessel; that telex was passed on to the charterers at 1557 hours on the same day. At that time the charterers had paid no part of the relevant hire instalment to the owners.
Thereafter, on the 24th July, 1979, the parties entered into a without prejudice agreement under which the vessel resumed her service under the charter, the rate of hire being dependant upon the answer to the question whether the owners were entitled to withdraw the vessel from the charterers' service. If they were so entitled, the difference between the old charter rate and the market rate payable under the without prejudice agreement for the balance of the charter period has been estimated to be $1,200,000.
Before the learned judge four paints were taken by the charterers. First, they submitted that by leaving it until Tuesday, 12th July, before they purported to withdraw the vessel, the owners either failed to comply with an implied term of the charter that the right of withdrawal could only be exercised by them forthwith or promptly upon the happening of any default in payment or within the shortest time reasonably necessary to enable the owners to hear of the default and to give instructions, or alternatively the owners must be taken to have elected to affirm the contract and so have lost their right of withdrawal. This submission was rejected by the learned judge, who held that there was no such implied term as alleged, and that no sufficient lapse of time had occurred from which it could be inferred that the owners had elected to affirm the contract. On this point there is no appeal. Second, the charterers submitted that, by reason of the owners having received late payments of hire in the past without complaint, they could not exercise their right of withdrawal in July 1979 without prior notice to the charterers of their intention so to do. This submission the learned judge also rejected, on the basis that there had been no unequivocal representation by the owners, express or implied, that they would not insist on punctual payment. The charterers now appeal on this point. Third, the charterers asked for relief against forfeiture. The learned judge held that, assuming that he had jurisdiction to grant such relief, he would not do so, primarily because the delay in payment was entirely the fault of the charterers. On this point also the charterers now appeal. The fourth point raised a question of construction of the without prejudice agreement. As to that, there is no appeal, and so we need not deal with it.
We turn therefore to the first of the two grounds of appeal which relates to the effect of the owners having, before July 1979, accepted late payments of hire from the charterers. There was no dispute that, in this connection, the applicable principle was that of equitable estoppel. There was also no dispute that, in order to bring themselves within that principle, the charterers had to establish that two criteria had been fulfilled. First, they had to establish that the owners had represented unequivocally that they would not enforce their strict legal right, under the contract between the parties, to withdraw the vessel from the charterers' service in the event of a default in payment of an instalment of hire (see Woodhouse A.C. Israel Cocoa Ltd. S.A. v. Nigerian Marketing Co. Ltd. (1972) Appeal Cases 741). Second, they had to establish that in the circumstances it would be inequitable to allow the owners to enforce their strict legal right, having regard to the dealings which had taken place between the parties (see Hughes v. Metropolitan Railway Co. (1877) 2 Appeal Cases 439 at page 448, per Lord Cairns, L.C.). The former requirement may however be fulfilled if a reasonable man in the shoes of the charterers would have inferred from the owners' conduct that they were making such a representation (see Bremer Handelsgesellschaft m.b.H. v. Vanden Avenne - Izegem P.V.B.A. (1978) 2 Lloyd's Law Reports 109 at page 126, per Lord Salmon). As to the latter requirement, since the equitable estoppel is founded upon a representation, it can only be unconscionable for the representor (here the owners) to enforce his strict legal right if the conduct of the representee (here the charterers) has been so influenced by the representation as to call for the intervention of equity. Whether or not the representee's conduct has been so influenced must depend upon the evidence; but the court is entitled to infer from the evidence that his conduct has been so influenced.
With these principles in mind, we turn to the question whether the owners did unequivocally represent that they would not exercise their strict legal right to withdraw the vessel from the charterers' service in the event of a default in payment of an instalment of hire. On this point we were provided (as was the learned judge) with a most helpful schedule setting out what had occurred in relation to the 24 instalments of hire paid before July 1979. From this it appears that several instalments were in fact paid late and were accepted without protest; but there was no consistent pattern. Taking (as the learned judge did) the date of receipt by the owners' bank of the telex transfers as being the date of payment, and ignoring both the first payment (which is often, as here, late—usually for administrative reasons) and the first payment at the commencement of the second year of the charter (the subject of a special agreement), the position was, as the learned judge found, that (1) six payments were made on time; (2) eight payments were one day late; (3) two payments were two days late; and (4) six payments were three days late.
Now it is not at all easy to infer, from the mere fact that late payments had been accepted in the past by the owners without protest, an unequivocal representation by them not to exercise their strict legal right of withdrawal in the event of late payment by the charterers of a subsequent instalment of hire—if only because the circumstances prevailing at the time when the earlier late payments were accepted may not be the same as those prevailing in the future. Of course, if for example the charterers chose regularly to use a particular route for payment which involved the consequence that payments were always...
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