White Roseby Shipping SA v Hong Kong Chain Glory Shipping Ltd "The Fortune Plum"
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Teare,Mr. Justice Teare |
| Judgment Date | 23 May 2013 |
| Neutral Citation | [2013] EWHC 1355 (Comm) |
| Docket Number | Case No: 2013 Folio 33 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 May 2013 |
[2013] EWHC 1355 (Comm)
Mr. Justice Teare
Case No: 2013 Folio 33
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexander Gunning QC and Elspeth Owens (instructed by Ince & Co LLP) for the Claimant
Philip Edey QC and Alexander Wright (instructed by Wickborg Rein LLP) for the Defendant
Hearing date: 10 May 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an appeal from an arbitration award pursuant to section 69 of the Arbitration Act 1996 brought with the leave of Cooke J. The claimants in the arbitration were White Rosebay Shipping SA, the owners of mv Fortune Plum, a "Supermax" bulk carrier, and the respondents in the arbitration were Hong Kong Chain Glory Shipping Limited who had chartered the vessel from the owners for a period of 35/38 months pursuant to the terms of a charterparty on an amended New York Produce Exchange Form. The owners claimed, inter alia, that the charterers had renounced the charterparty by evincing an intention not to perform the charterparty and the owners purported to terminate the charterparty on account of such renunciation. The arbitral tribunal, which consisted of Duncan Matthews QC, Belinda Bucknall QC and Timothy Rayment, held that there had been a renunciation of the charterparty by the charterers but that the owners, before terminating the charterparty, had affirmed the charterparty. Accordingly the owners were unable to claim damages, estimated at over US$4m., from the charterers. By this appeal the owners seek to challenge the tribunal's conclusion that the owners had affirmed the charterparty.
The renunciation of the charterparty by the charterers
Whether or not there had been a renunciation of the charterparty and if so, when, was a major issue in the arbitration. The tribunal made detailed findings in paragraphs 14–83 of its award as to the charterers' conduct. Those findings may be summarised as follows.
By clause 4 of the time charterparty dated 20 July 2010 the charterers promised to pay hire at the rate of US$17,700 per day. The vessel was delivered to the charterers on 23 July 2010 and thereafter all hire payments were due on or before 23 rd. of each month.
Between July and December 2010 hire was paid a few days late but always in a single payment. Between January and March 2011 hire was paid but a week or more late. The tribunal concluded that there was nothing "seriously worrying" about the way the charterers were paying hire. However, the tribunal said that a significant change occurred from April 2011. The hire due on 23 April 2011 was not paid. The charterers apologised for that and offered to pay the hire in two 50% tranches on subsequent dates. They in fact did not do so but paid in three instalments with the last on 3 June 2011. There were similar difficulties with the hire due on 23 May 2011 and on 23 June 2011. By this time the owners were seriously concerned that the charterers' persistent late payment of hire was causing financial difficulties for the owners. The pattern of late payment continued with the hire due on 23 July 2011 and 23 August 2011. On 14 September 2011 the owners demanded payment of the outstanding hire, then over US$1m., by 15 September 2011 and reserved their rights to withdraw the vessel and/or exercise their lien on cargo and sub-freights. The charterers apologised and said that they hoped to have "a good cash flow by the end of the month". They had earlier referred to a cash injection from the Group of which they formed part and to the redelivery of their most expensive Capesize vessel to its owners. They now referred to the fact that a number of their vessels would arrive at their discharge port by the end of the month.
On 22 September 2011 the owners informed sub-charterers that they were exercising their lien on all sub-freights and sub-hires. They also informed the charterers but received no reply from them. A sum of US$138,097.29 was recovered from the sub-charterers.
The hire due on 23 September 2011 was not paid on that day. On 27 September 2011 the owners required payment of the hire due on 23 September 2011 within 3 banking days failing which they would withdraw the vessel from the charterers' service. On 29 September 2011 the charterers apologised for the delay in payment and requested more "time and understanding". They promised to pay at least one month's hire within a week and the rest before the end of October 2011.
On 30 September 2011 the owners asked the charterers whether their parent company would provide a guarantee of all past and future payments of hire. The charterers said that would have to be taken up internally and in the meantime offered an immediate payment of US$500,000. The owners were contacted by sub-charterers who told them that they understood from the charterers that unpaid hire was no longer a problem. The tribunal concluded that a reasonable shipowner could infer that this was an attempt by the charterers to persuade the sub-charterers to pay hire to the charterers. The owners instructed the master not to enter port or deliver the cargo on board the vessel.
On 4 October 2011 the sum of US$529,373.75 due on 23 July 2011 was paid and the vessel proceeded into port and discharged her cargo. The owners thought that the charterers would honour their promise to pay the other outstanding hires. So on 4 October 2011 the owners said they had decided not to withdraw the vessel. In fact there were to be no further payments of hire.
On 13 October 2011 the owners learnt that a freezing order had been issued by the English Court against the assets of the group of which the charterers were part. On the same day the owners asked the charterers when the next payment of hire would be made. No reply was received and the owners inferred that the charterers would only make payments when under extreme commercial pressure to do so and otherwise intended to trade the vessel without paying hire. The tribunal considered that this was a reasonable inference to draw. The owners therefore informed the sub-charterers that they were exercising their lien over sub-freights and sub-hires and served a statutory demand on the charterers pursuant to section 155 of the Insolvency Act 2003 (of the British Virgin Islands). The sum claimed as due was over US$1m. and the notice warned that if it was not paid within 21 days (on or before 4 November 2011) it would be open to the owners to put the charterers into liquidation. There was no response from the charterers either to notice of the statutory demand or to notice of the exercise of the owners' lien.
On 21 October 2011 the owners issued an invoice for the sum of US$1,533,861.37 in respect of the hire due on 23 August, 23 September and 23 October 2011. On 24 October 2011 the owners gave notice of withdrawal if the sums due were not paid within 3 banking days. However, the vessel was not withdrawn because the owners thought that the threat of winding up the charterers would cause them to pay the outstanding hire.
On 1 November 2011 the owners learnt that the current sub-charterparty had been amended to delete the owners' right to a lien on sub-freights and sub-hires. They inferred that the charterers were seeking to divert the sub-freights and sub-hires to themselves, allowing them to trade the vessel without paying hire. The tribunal concluded that this was a reasonable inference to draw. On 4 November 2011 sub-hire in the sum of about US$187,000 was paid by the sub-charterers to the owners.
By 7 November 2011 (a Monday) it was apparent to the owners that the statutory demand had not been paid and they concluded that the charterers were not going to make any more payments. The tribunal found and held in paragraph 104 of the award that a reasonable shipowner, in the position of the owners, was entitled to conclude on 7 November 2011 that the charterers did not intend to pay hire in the future. Thus there had been a renunciation or anticipatory breach of the charterparty by the charterers.
The affirmation of the charterparty by the owners
The findings of particular relevance to this issue, which were made by the tribunal in paragraphs 86–92 of the award, may be summarised as follows.
On 9 November 2011 the vessel anchored at Bayuquan and tendered notice of readiness to discharge. On 11 November (a Friday) the charterers instructed the master to proceed to Hong Kong after leaving Bayuquan. On the same day the owners learnt of personnel departures and changes within the charterers' group which cemented the owners' conclusion that the charterers were not going to pay any more money. The owners decided on that day that they would have to end the charterparty.
On 12 November 2011 the owners sent the master a message saying that the charterparty was to be terminated and that following departure from Bayuquan the vessel was to proceed to a suitable area to wait for further instructions. They had not so informed the charterers but the master passed on to the charterers the information he had been given and urged the charterers to pay the hire. The charterers replied to the master saying that the owners should withdraw their order and that if it were carried out the vessel would be put off-hire. They apologised for the late payment of hire but made no proposals for paying it.
On 14 November 2011 (the Monday) the vessel completed discharging and sailed from Bayuquan. In the morning the owners informed the charterers that they had evinced a clear intention...
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