246. Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corporation (The “Apollonius”) [1978] 1 Lloyd’s Rep 53

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Baltime 1939 – hull fouling qualifying as an accident for the purposes of the off-hire clause

The facts

The vessel was chartered for a one time charter trip between Japan and South America. She was to be re-delivered at the expiry of the charter in the river Plate or the river Parana.

The vessel loaded a cargo of steel coils at Fukiyama and steamed to Ensenada on the river Plate.

Prior to delivery, the vessel was detained at Whampoa in Southern China where the hull became encrusted with barnacles. Due to the encrustation, the vessel was unable to achieve the fourteen and a half knots warranted in the charterparty for the voyage from Japan to South America.

In terms of clause 3 the owners had the obligation to maintain the vessel in a thoroughly efficient state.

Clause 11(A) provided as follows:

“In the event of dry-docking or other necessary measures to maintain the efficiency of the vessel, deficiency of men or owners’ stores, break down of machinery, damage to hull or other accident, grounding except in berth, strike of officers and/or crew either injuring or preventing the efficient working of the vessel (emphasis added), no hire to be paid in respect of any time lost thereby during the period in which the vessel us unable to perform the service immediately required. Any hire paid in advance to be adjusted accordingly.”

Clause 13 provided as follows under the rubric “Responsibility and Exemption”:

“The owners only to be responsible for delay in delivery of the vessel or for delay during the currency of the charter and for loss or damage to goods on board, if such delay or loss or damage has been caused by want of due diligence on the part of the owners or their servants or their manager in making the vessel seaworthy and fitted for each voyage during the currency of the charter, or any other personal act or omission or default of the owners or their manager”

The charterers claimed for the loss of 5.821 days with 4.821 days attributed to hull fouling and 24 hours to the failure on the part of the engineers to operate the vessel at full output relative to safe working temperatures in periods of moderate weather.

To support their claim, the charterers relied on three grounds:

1. The speed warranty;

2. The owners’ obligation in terms of clause 3 to maintain the vessel in a thoroughly efficient state in hull and machinery; and

3. The off-hire clause (11(A)).

The owners claimed that the speed warranty was not applicable at the time of delivery but only at the time when the charterparty itself was entered into, based Lorentzen v White Shipping Co Ltd. In the alternative they argued that they were protected by clause 13. The last defence raised by them was that the encrustation of the hull did not fall within clause 11(A).

Findings

The matter was referred to arbitration before Mr Cedric Barclay who found that the charterers were only entitled to loss of 24 hours during which the engineers failed to run the vessel at full capacity but not for slow steaming. He referred both points to the Commercial Court in the form of a special case.

Moccatta J came to the opposite conclusion on both points.

He held that Lorentzen v White was obiter and in any event wrongly decided.

Although he held that the speed warranty, if not continuing, applied at least at the time of delivery, he considered that clause 13 exempted the owners from liability.

He did not consider that clause 3 applied where the vessel was delivered in its defective state.

Because the accretion of barnacles had not been expected in the fresh water at Whampoa, such accretion qualified as an “accident” for the purposes of clause 11(A).

He found also that clause 13 protected the owners from the engineers’ failure to travel at full steam.

Commentary

Although the outcome seems right, it would have been preferable to base such outcome on the speed warranty clause.

The difficulties in interpretation encountered in this case were caused by the fact that this charter was more of a voyage charter than a time charter.

“Delay” in clause 13 referred more properly to events occurring during the execution of the voyage. Likewise, “accident” in clause 11(A) could hardly apply to events occurring before delivery as found by Moccatta J.

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