127. Tropwood AG v Jade Enterprises Ltd (The “Tropwind”) [1977] 1 Lloyd’s Rep 397

Withdrawal – dispute regarding payment of additional insurance premium – interpretation of clause 5 of the NYPE form

The facts

The vessel was let on the NYPE form for 9 to 12 months for worldwide trading within Institute Warranty limits.

The vessel was traded to Churchill, Manitoba attracting an extra insurance premium.

Hire was due on 8 September. The owners’ claim for additional premiums reached the charterers after they given instructions to pay the monthly hire.

The charterers replied to the owners’ letter of demand stating that the claim had been forwarded to the sub-charterers who were responsible for the additional premium.

The owners repeated their claim, insisting on immediate payment. They withdrew the vessel on 3 October.

The charterers had, in the event, caused the money to be transmitted by cable from the Bank of America in New York to the owners’ account with the Bank of America in Chicago on the previous day, 2 October.

Findings

Kerr J in the Commercial Court decided three issues in favour of the charterers:

1. Insofar as no time had been stipulated in the contract, he found that the charterers were not in breach of the implied term that payment be made within a reasonable time.

2. He found that even if the charterers were late, clause 5 created a dichotomy between late payments for hire and other payments and that clause 5 therefore did not provide a remedy for the late payment of monies other than hire.

3. Thirdly, Kerr J found that, on the authority of the Laconia (Court of Appeal stage), payment was considered to be made once the monies were cabled to the owners’ bank. The owners bore the onus of proving that payment only arrived after notice of withdrawal on 3 October, on the authority of the Georgios C (overruled). They did not discharge that onus and the charterers were, consequently, entitled to succeed.

Commentary

This case:

1. Affirms the principle that payment is effectual once cabled money reaches the owners’ bank.

2. Holds that that incidental extra expenses (as opposed to hire) are usually settled by charterers in arrears.

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