Note: This Decision was reversed by the Court of Appeal, in a judgment delivered on July 15 2002. For a note of this judgment, click here.
Case No. DMC/ST/03/01
Glencore Grain Ltd. v. Flacker Shipping Ltd. "The Happy Day" TLR 22 Feb 2001
UK High Court Decision: Langley J. January 2001
VOYAGE CHARTERPARTY: COMMENCEMENT OF LAYTIME: NOTICE OF READINESS REQUIRED
This case decides that, where a charterparty provides that a notice of readiness is to be given before laytime commences, laytime will not commence unless a valid notice of readiness has been given. The commencement of loading/discharging operations will not of itself trigger the commencement of laytime.
DMC Category Rating: Developed
FOR MORE DETAIL, READ ON:
The Facts
‘The Happy Day’ was chartered on an amended Synacomex
form for a voyage with wheat from Odessa on the Black Sea to Cochin in
south-west India. She arrived off Cochin at 1630hrs on Friday, September 25 1998
but could not enter the port as she had missed the tide. She nevertheless gave notice of readiness to discharge.
The Receivers' agents acknowledged the notice as 'received'. As the charterparty was a berth
charter, the notice was invalid. The ship entered the port and berthed at
her discharging berth at 1315hrs on Saturday September 26. No further notice of
readiness was given. Discharge commenced that same day but was not completed
until three months later. In the statement of facts, signed on completion of
discharge, the notice of readiness was shown as 'accepted' at the same time and
date as it was given.
Owners, Flacker Shipping Ltd., claimed demurrage; the charterers, Glencore Grain, claimed despatch, on the grounds that, in the absence of a valid notice of readiness, laytime had never begun.
The relevant clause in the charterparty read: ‘At first or sole discharging port, notice to be given to Receivers/agents during normal local office hours and laytime to start counting at 8am next working day, whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.’
The Decision
The
court held that, in the absence of a valid notice of readiness, laytime never
began and charterers were therefore entitled to despatch.
The court quoted with approval from the headnote to the judgment of the Court of Appeal in The Mexico I [1990] 1 Lloyd’s Rep. 507, to the effect that it was right to reject the arguments
(a) that a notice of readiness was a delayed-action device, effective to start laytime automatically when at a later date, the ship became ready to discharge the cargo and
(b) that time began in any event when the charterers knew, or ought to have known, of the ship’s readiness.
The court also followed the decision in The Mexico as regards the effect of recording the notice of readiness as 'accepted' in the statement of facts. Since the statement recorded acceptance at the same time as the notice was given, 'any such acceptance must have been given on the basis of an implied assurance that the ship was at the berth and/or ready for discharge', which was not in fact the case. The owners could not therefore rely on it as evidencing an agreement to accept the notice as a valid and effective notice for the purposes of laytime.
Lessons to be learnt
In order to ensure that laytime commences, the Master must
give a valid notice of readiness; in cases of doubt, the Master may give more
than one notice of readiness, each without prejudice to the other. At the
latest, the Master should give notice at the time loading/discharging commences.
One alternative to giving multiple notices of readiness might be to provide in the charterparty for laytime to commence when loading/discharging commences, whether or not a valid notice of readiness has been given. This will not, however, protect the owner in respect of time lost before that event occurs.
The fact that the notice of readiness is acknowledged by the
recipients as 'received' or, indeed, 'accepted', is not of itself enough to
convert an invalid notice into a valid one.
Cases applied
The Mexico I [1990] 1 Lloyd’s Rep. 507;
Shipping Ltd. v. Comet Shipping Ltd. – "The Agamemnon" [1998] 1
Lloyd’s Rep. 675