98. Transgrain Shipping B.V. v Global Transporte Oceanico S.A. (The “Mexico 1”) [1988] 2 Lloyds Rep 149; [1990] 1 Lloyds Rep 507

Voyage charterparty – role of Notice of Readiness in commencement of laytime – effect of premature NOR.

The facts

Maize and white beans were shipped under two separate charterparties from South America to Angola.

The owners were given the right to complete the vessel with other lawful merchandise which was stowed over the maize and the beans.

When the vessel arrived in Luanda, a Notice of Readiness was given despite that the part cargo was inaccessible due to over-stowage.

The maize only became accessible for discharge 17 days later and the beans 13 days after that.

Actual discharge of both cargoes only commenced on the later date i.e. when both cargoes became accessible.

The charterers or their agents had informal notification of the maize becoming accessible.

The laytime provision read as follows:

“At loading and discharging ports Notice of Readiness shall be delivered in writing at the office of the shippers/receivers or their Agents…. Time to commence to count next working day 08 00 hours am whether in berth or not.”

Although contending that the Notice of Readiness was invalid when given because the ship was not ready to discharge, the charterers did not contend that laytime never commenced. The only issue between the parties was whether laytime commenced when the maize became available or when actual discharge commenced 13 days later.

Findings

The Arbitrators found that laytime commenced when the maize became available to the knowledge of the charterers.

Their findings were confirmed by the Commercial Court (Evans J).

Evans J found that the charterer’s agents, because they did not reject the Notice of Readiness when it was given, were to be taken to have agreed to proceed on the basis that the Notice of Readiness would become effective when all the requisite physical conditions for accessibility were met.

The Court of Appeal (Mustill, Farquharson LJJ and Sir Denys Buckley – judgement given by Mustill LJ) found that there was insufficient evidence of an agreement between the parties that the Notice of Readiness would become effective once the first part of the cargo became accessible. Laytime was accordingly adjudged to have commenced when the actual discharge began i.e. on the later date.

Commentary

The judgement of Evans J is useful in that it recognizes that the problem is one of interpretation of the contract between the parties rather than the application of a rule of law relating to the effectiveness of a Notice of Readiness.

The conclusion of the Court of Appeal was motivated by the consideration of certainty. It was pointed out that a Notice of Readiness serves to crystallize the time when laytime begins and that it would be unsatisfactory to make the question of the commencement of laytime depend on a subjective enquiry into the state of mind of the charterers or their agents.

A second question touched on by the Commercial Court was whether, because there were two separate contracts, demurrage could be recovered twice by the owners. The Commercial Court decided that, the intention of the parties that this was not to occur.

The Commercial Court also treated the time when it considered that a valid Notice of Readiness could be given i.e. when the maize became available, as the trigger for the laytime provision. Laytime would only commence at 08h00 on the following day as provided by the clause. This was contrary to the solution adopted by Diplock J in the Massalia where laytime was held to commence when the ship was in fact ready, despite premature Notice of Readiness having been given.

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