Voyage charterparty – damages for charterers’ repudiation – the usual measure of difference between contractual and actual earnings departed from
An oil/chemical tanker was fixed on 6 January 2011 on an amended Vegoil form to carry vegoil from South America to 1-4 safe ports in the Gibraltar – Rotterdam range.
The vessel commenced her ballast voyage from Boma on the River Congo on 19 January 2011. Charterers repudiated two days later on 21 January 2011.
The vessel nevertheless proceeded to South America where she was fixed to carry vegoil from San Lorenzo, Argentina to Rotterdam on 24 February 2011. She completed the substitute fixture on 12 April 2011.
Had the contractual voyage been performed, the vessel could have made another round trip to North America by the end of the substitute fixture i.e. 12 April 2011.
Mark Hamsher and Patrick O’Donovan with Christopher Moss as chairman awarded owners the difference between the sum of the projected earnings of the contractual voyage and a notional round trip back to Europe and what the vessel actually earned on the substitute charter.
This was about three times what the traditional measure i.e. the difference between the projected earnings of the contractual voyage and what the vessel had actually earned on the substitute charter, computed at the point in time at which the contractual voyage would have ended.
Males J upheld the award.
The measure of damages for repudiation of a voyage charterparty was traced back to Smith v M’Guire, a decision of the Court of Exchequer (Watson B) in 1858. Here the measure of damages was simply the difference between what the vessel could have and did earn because of the breach.
Modern decisions such as the Concordia C and the Noel Bay recognised that the traditional measure was not always adequate to place the injured party in the same position as if the contract had been fulfilled on the compensatory principle.
As result of the breach the vessel could be left in a more or less advantageous position – this also had to be taken into account.
Here, the charterers’ breach caused the vessel to sail in ballast to South America where she encountered a delay which led her to miss out on a lucrative future round trip from Europe to North America and back. The compensatory principle required the measure of damages which was applied.
The outcome is unusual because the benchmark used was not the contractual voyage, the obvious standard against which to measure actual earnings, but rather the contractual voyage plus 2 further voyages ( to North America and back).
The judgment applies principle, and is guided, but not hidebound by precedent.
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