486. Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (the “North Sea”) [1997] 2 Lloyds Rep 324; [1999] 1 Lloyds Rep 21

Charterers failing to nominate a loading place within port of delivery when vessel already within port, not entitled to cancel for missing of laycan

The Facts

The vessel was let on an Asbatime form for a one time charter trip with an intended itinerary Hong Kong / Kobe / Nagoya / Yokohama / Oakland / Long Beach.

The vessel, already in the port of Hong Kong, was to be placed at the disposal of the charterers at charterers’ berth, Hong Kong or dropping last outward pilot, in charterers’ option.

The laycan spread was about five days.

The vessel was to be delivered with specified quantities of HFO and MDO.

Charterers did not respond to requests enquiring where they wanted the vessel delivered and at the cut off time, because the vessel was neither at their berth nor dropping off the last outward pilot, charterers purported to cancel. They also relied on the fact that the vessel was not ready because the quantity of bunkers onboard at the cut off time was not as stipulated.

The vessel was bunkering at the time of the purported cancellation. Although the vessel had enough fuel to reach its first destination in Japan at the cut off time, bunkering was completed about four hours later.

Owners claimed damages for repudiation.

Findings

John Maskell found that the charterers were not entitled to cancel on the first ground but that they were on the second.

Mance J held that neither ground sufficed. In the absence of orders from the charterers, the obligation on the owners to deliver did not arise.

On the second point, even if the shortfall in bunkers had commercial consequences, which it did not, the charterparty did not allow for cancellation for breach of this term.

On appeal, Hobhouse LJ (Waller and Robert Walker LJJ concurring) agreed with Mance J’s reasoning on the bunkers point and held that the appeal should fail. Hobhouse LJ was of the view that Mance J was incorrect to introduce the element of fault into the reason for charterers losing their right to cancel because they had not nominated a place of delivery. He referred to the Madeleine as authority that fault was irrelevant in deciding whether the vessel had missed the cancelling date.

Hobhouse LJ also remarked that the charterers would not have been required to nominate a loading place if it had been objectively impossible for the vessel to sail.

Commentary

In the Madeleine it was the owners’ obligation to deliver pertaining to which the element of fault was irrelevant. On these facts, the use of “fault” in relation to the charterer’s failure to nominate was colourless, simply identifying the cause of the vessel missing the cancelling date.

Mance J, although certifying the points as worthy of public interest refused leave to appeal which was given by Staughton LJ. Hobhouse LJ doubted whether principles, as opposed to singular facts, were involved in this case.

Hamblen QC appeared for the owners. Tomlinson QC appeared for the charterers on appeal.

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