QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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WHITE ROSEBAY SHIPPING SA |
Claimant |
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- and - |
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HONG KONG CHAIN GLORY SHIPPING LIMITED |
Defendant |
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Philip Edey QC and Alexander Wright (instructed by Wickborg Rein LLP) for the Defendant
Hearing date: 10 May 2013
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Crown Copyright ©
Mr. Justice Teare :
The renunciation of the charterparty by the charterers
The affirmation of the charterparty by the owners
"105. The Respondents contend that even if they were in renunciatory breach of the contract, nevertheless the Claimants affirmed it and were themselves in repudiatory breach in withdrawing the vessel from the Respondents' service. The principles are not in issue. See The KANCHENJUNGA [1990] 1 L1.L.R. 391 at 398 et seq. and Stocznia Gdanska v Latvian Shipping [2002] 2 L1.Rep 436. See also Chitty on Contract at para 24-003. See also Wilken & Villiers, The Law of Waiver, Variation and Estoppel (3rd ed.) at para 4.08 which states,
"It is important to note that even though a waiver may be spelt out from conduct, that conduct must be unequivocal in the true sense of the word. The conduct must be capable of one construction only, namely that X has chosen to forego its rights."
106. For the purposes of this contention the Respondents take as their starting point the expiry of the clause 31 notice sent on 24th October, namely 27th October. For the reasons already given, we do not consider that a reasonable shipowner in the position of the Claimants, would have been entitled to form the necessary conclusion any earlier than the next banking day after expiry of the statutory demand, namely 7th November. Thereafter the Claimants had a reasonable period of time in which to consider whether to accept the renunciation. The question therefore is, what period of time was reasonable in all the circumstances and, depending on the answer to that, did the Claimants after expiry of that period act in a manner consistent only with their treating the contract as still alive? As to what period of time was reasonable, it cannot be any later than 11th November because on that day Mr. Hiokazu in fact made up his mind to accept the breach and on the following day he acted upon that decision by giving the Master instructions not to comply with the Respondents' order to proceed to Hong Kong after completion of discharge at Bayuquan.
107. Bearing in mind the need to review with care the lengthy history of the Respondents' approach to its obligation to pay hire, almost certainly involving input from the Claimants' solicitors, we do not consider that the period between 7th and 11th November is unreasonable. In that period the charterparty remained on foot and the Claimants were bound to comply with it. It follows that such compliance did not constitute an unequivocal act from which it could be inferred that they would not exercise their right to treat the contract as repudiated. They took no other action that could have that effect.
108. After 11th November, however, the Claimants, having made up their mind to accept the repudiatory breach, did not do so by withdrawing the vessel immediately. Instead they allowed the vessel to remain in the service of the charterers for the purposes of discharging the cargo. We can understand the commercial reasons which gave rise to the Claimants' desire to relieve themselves of the expense and responsibility of delivering the cargo before withdrawing the vessel, but in our view, the continued compliance with the charterparty, was a clear affirmation. In the words of the editors of The Law of Waiver, Variation and Estoppel (supra) it was conduct capable of one construction only, namely that the Claimants had chosen to forego their rights. The Claimants sought to answer the Respondents' case by pointing out that they had repeatedly reserved all their rights. We do not, however, consider that a reservation of rights can suffice to protect the Claimants in circumstances where they acted in a manner which was wholly inconsistent with their accrued right to withdraw the vessel. It necessarily follows from the foregoing that the Claimants' withdrawal of the vessel on 14th November was itself a repudiatory breach."
The challenge to the tribunal's conclusion
The first suggested error; the "reasonable period" point
"In my judgment, there is of course a middle ground between acceptance of repudiation and affirmation of the contract, and that is the period when the innocent party is making up his mind what to do. If he does nothing for too long, there may come a time when the law will treat him as having affirmed."
"The length of the period given to the innocent party in order to make up his mind will very much depend upon the facts of the case. The period may not be a long one because a party who does nothing for too long may be held to have affirmed the contract. The length of time will also depend upon the time at which the innocent party's obligations fall due for performance."
The second suggested error; the discharge point
"the Court should not adopt an unduly technical approach to deciding whether the injured party has affirmed the contract and should not be willing to hold that the contract has been affirmed without very clear evidence that the injured party has indeed chosen to go on with the contract notwithstanding the other party's repudiation."
The third suggested error; the continued renunciation point
"It does not follow from this analysis that the innocent party may in all cases change his mind after affirming the contract. If, for example, after he had affirmed it, the repudiating party's conduct suggested that he proposed to perform after all, then that party's previous repudiation is spent. It has no further legal significance. If, on the other hand, the repudiating party persists in his refusal to perform, the innocent party may later treat the contract as being at an end. The correct analysis in this case is not that the innocent party is terminating on account of the original repudiation and going back on his election to affirm. It is that he is treating the contract as being at an end on account of the continuing repudiation reflected in the other party's behaviour after the affirmation. "
"A refusal to perform a contract can amount to a repudiation only if it is absolute and goes to the root of the contract. The words or conduct said to demonstrate this must, moreover, do so clearly and unequivocally. This is as much true of words and conduct said to demonstrate that a party is persisting in an earlier repudiation as it is of the earlier repudiation itself."
"overlaid with all that had gone before. It was a speaking silence. The difficulty with silence is that it is normally equivocal. Where, however, it is part of a course of consistent conduct it may be silence which not only speaks but does so unequivocally. Where silence speaks, there may be a duty on the silent party in turn to speak to rectify the significance of his silence."
Conclusion