121. Scandanavian Trading Tanker Co. A.B. v Flota Petrolera Ecuatoriana (The “Scaptrade”) [1981] 2 Lloyd’s Rep 425; [1983] 1 Lloyd’s Rep 146; [1983] 2 Lloyd’s Rep 253

Withdrawal – delay of four days in exercising right not amounting to waiver

The facts

The vessel was time chartered on the Shelltime 3 form.

Hire which was due on a Sunday, was not paid by the following Thursday at which time the owners withdrew.

The charterers took 3 points:

1. that the four day delay in exercising the right to withdraw amounted to waiver;
2. that acceptance of late payments in the past gave rise an estoppel; and
3. that the withdrawal was a forfeiture which could be relieved on equitable grounds.

Findings

Lloyd J in the Commercial Court found in favour of the owners.

The Court of Appeal (Sir John Donaldson MR, May and Robert Goff LLJ – judgement given by Robert Goff LJ) was called upon to decide the latter two of the original three points.

With regard to the second point it was found that the facts did not establish an estoppel.

With regard to the third point, Robert Goff LJ found that there was no jurisdiction in charterparty disputes to exercise an equitable discretion. The main justification for this was the requirement of certainty in commercial transactions which required parties to be able to act swiftly and with a sure knowledge of their rights. An equitable discretion on the part of the court would frustrate such swift decision making.

The House of Lords (Lords Diplock, Keith of Kinkel, Scarman, Roskill and Bridge of Harwich – unanimous speech delivered by Lord Diplock) were called upon to decide only the jurisdiction point.

Lord Diplock endorsed the views of Robert Goff LJ.

Commentary

Lord Diplock referred once more to the effect of the fusion between equity and law brought about by Judicature Acts of 1873/1875.

The fusion of equity and law did not bring about an automatic application of an equitable discretion to all aspects of the law. Rather, the rules for each situation, whether they arose in equity or in law, historically, remained as they were. Fusion provided the opportunity for, but did not require, the law to develop along the lines of equity.