The vessel had departed Yokohama on 6 September, the intended next port being Shanghai. However the Master anchored outside Yokohama to avoid an approaching typhoon. On 7 September she dragged her anchor, hitting a breakwater. The vessel remained at Yokohama until 22 September, subsequent to which Class required her to proceed to Hong Kong to discharge her cargo and then sail to Guangzhou for repairs.
The charterparty contained two material rider clauses:
Clause 57:
"Any time lost, either in port or at sea, deviation from the course of the voyage, or putting back whilst on voyage caused by sickness of or any accident to the crew ... or due to an accident or breakdown to the vessel, the hire shall be suspended from the time of inefficiency in port or at sea, deviation or putting back, until the vessel is again efficient in the same or equivalent position, whichever is the shorter distance to the port where the vessel is originally destined, and the voyage resumed therefrom ... In the event of loss of time arising for arrest, government restrictions or boycott ... payment of hire shall cease for the time thereby lost."
and Clause 81:
“Unless caused by Charterers’ servants, if the vessel is off-hire…for a period of 20 consecutive days… then the Charterers have the option to re-deliver the vessel when next cargo-free."
On 28 September charterers terminated the charter relying on a 20 day period of off-hire from 7 September. Owners argued that charterers could not rely on clause 81 as the vessel had come back on hire when she left Yokohama on 22 September for a 1.5 day period whilst she followed a common route to Hong Kong and Shanghai for that time even though she was destined ultimately to Hong Kong and not Shanghai.
The Tribunal found that the vessel was indeed performing the service required of her during that 1.5 day period when she was on the route she would follow for Shanghai even though she subsequently deviated. The Tribunal felt that as clause 81 was for charterers' benefit and gave them a drastic remedy with extremely serious consequences for owners, the burden fell squarely on the charterers to bring themselves within the clause. Charterers appealed.
In considering the question of off-hire, Mr Justice Burton revisited the leading House of Lords decision of Hogarth v Miller [1891] and the principle established that:
“the vessel should be efficient to do what she was required to do when she was called upon to do it”
In this instance the question was whether the vessel on its way, by virtue of Class instructions, to a repair yard and not going to Shanghai as charterers so instructed was in fact tendering services to the charterers. Mr Justice Burton’s view was that the vessel was not.
The instructions the vessel was operating under at the time of her departure from Yokohama were not instructions to proceed to Shanghai to discharge and so the vessel could not be providing charterers with the service required by them. The vessel was operating under instructions from Class to discharge her cargo at Hong Kong so as to facilitate subsequent repairs.
Owners' case was clause 57 should be read commercially and to analyse the clause sensibly and with certainty one should look at the common route. Namely, that until 23 September the vessel was on a common route to Shanghai and Hong Kong. The judge however preferred to look to the commercial purpose of the charterparty, being to comply with charterers' instructions and allow trading opportunities to ports where the vessel could be loaded and discharged. When the vessel left Yokohama she was not engaged in that commercial purpose and thus on a proper construction of clause 57, she was off-hire. The vessel was not destined for Shanghai even if she was travelling in that general direction.
Mr Justice Burton acknowledged that whilst an off-hire clause can in certain circumstances have harsh results; this did not mean he had to conclude a vessel was in fact on hire when she plainly was not. Charterers' appeal was allowed.
TS Lines Ltd v Delphis NV [2009] EWHC 933 (Comm)
Article by Sian Morris
