The Brimnes ; Tenax Steamship Company Ltd v The Brimnes (Owners)
| Jurisdiction | England & Wales |
| Judgment Date | 23 May 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0523-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 May 1974 |
[1974] EWCA Civ J0523-2
In The Supreme Court of Judicature
Court of Appeal.
Lord Justice Edmund Davies,
Lord Justicje Megaw and
Lord Justice Cairns.
(Appeal of Plaintiffs from Order of Mr. Justice Brandon, London, dated November 2, 1972.)
re THE SHIP "BRIMNES"
MR R. GOFF. Q. C. and MR B. ECKERSLEY, (instructed by Messrs. Sinclair, Roche & Temperley) appeared or behalf of the Appellants (Plaintiffs).
MR A. EVANS. Q. C. and MR M. SAVILLE, (instructed by Messrs. Constant & Constant) appeared on behalf of the Respondents (Defendants).
The plaintiffs, who were time charterers of the M.V. "Brimneas," appeal against the decision of Mr. Justice Brandon of July 26thy 1972, whereby he dismissed their claim against the defendant ship-owners (Reinante Transoceanica Navegacion S.W.) for damages for wrongful withdrawal of the vessel. The sole question is whether or not in all the circumstances the owners were entitled to withdraw the vessel because of the charterers' undoubtedly late payment of the charter-hire which fell due on April 1st, 1970. Mr. Justice Brandon held that they were, but he so held only by virtue of Clause 5 of the charter-party, and that late payment of hire by the charterers did not of itself entitle the owners to regard the charter-party as repudiated and so confer on them the right to withdraw independently of its express provisions. Not only do the charterers appeal against the dismissal of their claim, but the owners cross-appeal from the finding as to repudiation.
I. INTRODUCTION.
"Brimnes" originally belonged to the charterers, but in November, 1968, they agreed to sell her to the shipowners on terms that she would immediately be time-chartered back to them. The shipowners borrowed the purchase price from their bankers, Morgan Guarantee Trust Co. of New York (hereinafter called "M.G.T."), repayment of the loan and payment of the interest thereon being secured (a) by a mortgage of the ship, and (b) by an absolute assignment of the charter-hire by the shipowners to M. G.T. That assignment was effected on December 16th, 1968, and on the same day the owners, pursuant to Section 136 (1) of the Law of Property Act 1925, gave notice to thecharterers of the assignment.
The charter-party had been made on November 22nd, 1968. It was for 24-26 months, the hire was at the rate of U.S. $3.80 per ton deadweight per calendar month. Clause 5 provided: "Payment of said hire to be made in New York in cash in United States currency to Morgan Guaranty Trust Co. of New York, 23 Wall Street, New York, for the credit of the account for Reinante Transoceanica Navegacion S.W. of Panama re m.v. "Brimnes", monthly in advance, and for the last half month or part of the 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 falling the punctual and regular payment of the hire, or bank guarantee, or 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". Pursuant to the charter-party "Brimnes" was delivered to the charterers on December 18th, but the first monthly period of hire was treated as being from December 16th, 1968, to January 16th, 1969. Later that year the monthly hire period was treated as beginning on the first day of the month, and it is undisputed that the charterers' obligation at all times material to this appeal was to pay the hire on that day each month.
For the first year of the charter-party the shipowners' agents were S.G. Embiricos Ltd., but from December 1st, 1969, they were replaced by Embiricos Shipping Agency Ltd. of Cheapside ("Embiricos S.A"). The hire was paid by thecharterers instructing Hambros Bank Ltd. of Cheapside each month to transfer the amount due to M.G.T., New York, for the credit of the shipowners' "Brimnes" account. For this purpose the charterers' accountant, Mr. Sanders, would fill in a form issued by Hambros, get it signed by two directors, and then send it along to Hambros at Cheapside. He would also send a letter to Embiricos S.A. showing his calculation of the hire due and stating that it had been paid or transferred.
On receipt of their clients' instructions, Hambros took steps to implement them. In relation to twelve out of the sixteen monthly payments with which we are concerned they used what the learned judge called the "direct" method. This was feasible only because, as it happened, Hambros themselves had an account with M. G. T., New York. What they did was to send by Telex an order to M. G. T., New York, to pay into the owners' "Brimnes" account the amount the charterers had instructed them to pay. This order would include a statement of the "value date", meaning thereby the date for the delivery of the United States dollars under exchange sale involved. Hambros would then send to the charterers their "Exchange Sale Advice", informing them of what they had done and showing the sterling amount debited to the charterers" account with them.
The "indirect" method of payment was used on only three occasions (February, March and August, 1969). It differed from the more general "direct" method, in that Hambros' order to pay the hire was sent to a New York bank other than M.G.T., and this other bank, acting as correspondents for Hambros, then sent a bankers' cheque to M.G.T., New York, for the credit of the owners' "Brimnes" account.
Whichever method was used, there is no doubt that on numerous occasions the monthly hire was paid late, and certainly from August, 1969, onwards it was never paid on the first day of the month. But it was not until January 2nd, 1970, that Mr. Patsalides, a director and also the secretary of Embiricos S.A. telephoned Mr. Sanders (the charterers' accountant) and complained about late payments. On February 3rd Mr E. G. E. Embiricos (the managing director) wrote asking the charterers to "ensure that all future payments of hire are effected on the first day of the month", and for that month payment was in fact three days late.
The position was unsatisfactory to the owners, particularly as the freight market had from their point of view improved in January. As March 1st, 1970, was a Sunday, their agents were content if payment was made on March 2nd, but the owners instructed them that they were to withdraw the ship if payment was not duly made on that date. Mr. Embiricos thereupon telephoned Mr. Valli, an assistant treasurer of M. G. T., New York, and enquired of him what was the earliest time when M. G. T. Could be sure that payment of the hire had or had not been paid on the first day of the month. Mr. Valli replied that a definite answer could not be given until 11.00 hours New York time (or 17.00 hours B.S.T.) on the 2nd day of the month. On learning this, Mr. Embiricos wrote to Mr. Noble of the London office of M. G. T. on February 26th, asking them to inform Embiricos S. A. as soon as possible whether or not the next hire payment was made by March 2nd, and on the latter date he sent a telex to M.G.T., New York, saying:" essential you telex advise us soonest after close business New York today, 2ndMarch, and in any case before 5 p.m. London time, 3rd March, whether hire 'Brimnea' paid before close business New York on Monday 2nd March. We must emphasize that what you must advise us is whether you have received the funds and not whether the funds have been credited to vessel's account, since payment to you constitutes payment." This evoked a telegram to the owners' agents that payment of hire had been duly made from "Hambros London order of Tenax". So much for the March hire.
On March 31st the owners' agents wrote to M.G.T., London, and also sent a telex to M. G.T., New York, in the same terms, mutatis mutandis, as those used by them regarding the March hire. The charterers for their part were taking steps to make "punctual" payment of the hire due on April 1st and to this end Mr. Sanders completed on March 31st Hambros' form of application, requesting them to transfer to M. G. T., New York, for the benefit of the "Brimnes" account U.S. $51,210.95, being the amount of the April hire. But there occurred some delay in his obtaining the necessary signature of two directors, and it was not until 10.53 B.S.T. (or 04.53 New York time) on April 2nd that Hambros sent off to M. G. T., New York, a telex which read: "Value 2/4. pay Reinante Transoceanica Navegacion account m. f. 'Brimnes' order Tenax Shipping Company Ltd. London U.S. $51.210.95. All charges forward". This payment was, on any view, not "punctual" But Mr. Embiricos lacked this knowledge and, as Mr. Valli of New York had earlier informed him, it would not be forthcoming until 17.00 hours B.S.T. on April 2nd. To ensure that they received the information at the earliest moment, the owners' agents sent a telex to M.G.T.,New York, at 14.06 B.S.T. which read: "H.V. 'Brimnes'. Kindly do not fall to advise us by telex before 5 p.m. London time today whether charter hire on m.v. 'Brimnes' received before close of business yesterday in New York." But by 5 a.m. B.S.T. the owners' agents had received no answer. Mr. Embiricos therefore telephoned Mr. Noble at M. G. T.s London office and asked for news. Following upon a telephone call by Mr. Noble to M. G. T., New York, he telephoned back to Mr. Embiricos and informed him that no hire had been paid on April 1st. Mr. Embiricos then telephoned one of the owners' directors, who confirmed his authority to give notice of withdrawal, he dictated a notice of withdrawal to Miss Rangecroft, his...
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