496. Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (the “Madeleine”) [1967] 2 Lloyds Rep 224

Time charter – vessel temporarily unseaworthy at time of cancelling date – charterers entitled to cancel

The Facts

The vessel was let on the Baltime 1939 form.

Clause 1 read:

The owners let, and the charterers hire the vessel for a period of three calendar months (15 days more or less in charterers’ option) from the time (not a Sunday or a legal holiday unless taken over)  the vessel is delivered and placed at the disposal of the charterers between 9am and 6pm or between 9am and 2pm if on a Sunday, at Calcutta in such available berth where she can safely lie always afloat, she being in every way fitted for ordinary cargo service” 

Clause 22 read:

Should the vessel not be delivered by the [10th] of May 1957 the charterers to have the option of cancelling.  If the vessel cannot be delivered by the cancelling date, the charterers, if required, to declare within 48 hours after receiving notice thereof whether they cancel or will take delivery of the vessel” 

On 6 May 1957, the vessel’s deratisation certificate expired.  Fumigation was carried out and a fresh certificate was issued after the cancelling date on 12 May 1957.

Without a certificate, the vessel could not leave Calcutta for any port outside India and was therefore unable to trade within world wide limits as provided for in the charterparty.

Because of the absence of a certificate, charterers purported to cancel at 8am and again at 8.38pm on 10 May 1957.  Owners tendered delivery at 2.30 on 10 May 1957.

Findings

The umpire, John Stewart Wordie, held that charterers were not entitled to cancel and awarded owners substantial damages.

Roskill J held that clauses 1 and 22 had to be read together.  Owners were therefore obliged to deliver the vessel in a state “in every way fitted for cargo service”.  The absence of a deratisation certificate meant they had failed to do this.

The notice given at 8.48pm i.e. after the cancelling time of 6pm was effective; the notice given at 8am, before the cancelling time of 9am, was premature.

Commentary

This case has been referred to as authority for the proposition that missing the cancelling date does not involve breach by the owners (with the consequence that they are liable for damages): it merely gives the charterers the right to cancel.

This may be what was intended by this particular contract where charterers were given the option to continue or cancel after the expiry of the cancelling date.

This will not necessarily be so in every contract.  Wording may be devised which does put the owners in breach by failing to deliver by a stipulated time.

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