29. Glencore Grain Ltd v Flacker Shipping Ltd (The “Happy Day”) [2001] 1 Lloyd’s Rep 754; [2002] 2 Lloyd’s Rep 487

Cargo discharged in spite of invalid Notice of Readiness – laytime commencing.

The facts

Wheat was shipped from Odessa to Cochin under a voyage charterparty (amended Synacomex form).

Clause 30 read as follows:

A first or sole discharging port notice to be given to Receivers / agents during normal local office hours and laytime to start counting at 8.00am next working day whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.

The master purported to give Notice of Readiness before being able to enter the port having missed the tide. The Notice of Readiness was therefore invalid. The vessel resumed its voyage the next day, berthed and commenced discharge. No further Notice of Readiness was given.

Discharge was completed after approximately three months. The delay was due to the unavailability of the original bills of lading.

The owners claimed demurrage. The charterers claimed despatch on the basis that laytime never commenced in the absence of a valid Notice of Readiness.

Findings

A panel of arbitrators found in favour of the owners. The charterers appealed and the arbitrators reserved a question of law for the Commercial Court, asking whether and in what circumstances laytime could run in the absence of a valid notice of Readiness.

The Commercial Court (Langley J), relying principally on the Mexico I, found in favour of the charterers.

The Court of Appeal (Potter and Arden LJJ and Sir Denis Henry) held that by commencing discharge, the charterers had waived their right to rely on an invalid Notice of Readiness. The arbitrator’s decision was therefore restored.

Commentary

Both courts referred extensively to authority.

Potter LJ’s view of the judgment of the Commercial Court was that an obiter dictum of Mustill LJ in Mexico I suggesting a valid Notice of Readiness as an immutable requirement for the commencement of laytime was given too much weight.

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