Summary
Where a time charter permits withdrawal for failure of punctual payment of hire, late payment does not itself cure that default or extinguish the right to withdraw. This wording is materially different from a clause making withdrawal available merely while payment remains outstanding.
A telex notice is effective when it arrives at the recipient's business address in circumstances in which it should ordinarily come to the recipient's attention. A recipient cannot postpone its effect through its staff's failure to deal with the message normally. A bank-transfer instruction is not payment merely on receipt. Payment occurs when the bank has acted on it so that the payee has an unconditional credit available.
Factual background
The charterers paid monthly hire for the vessel Brimnes to Morgan Guaranty Trust Co of New York for the owners' account. The owners had assigned the hire to that bank. The charterers made the April 1970 payment late. The owners sent a telex withdrawing the vessel under a clause permitting withdrawal for failure of punctual and regular payment of hire.
Brandon J dismissed the charterers' claim for damages for wrongful withdrawal. He held that the withdrawal notice preceded payment and rejected the owners' alternative contention that the charterers' payment history was repudiatory. The charterers appealed. The owners cross-appealed on repudiation. The central issues were the effective times of the telex notice and payment, and the effect of the clause requiring punctual payment.
Held
Appeal dismissed; cross-notice dismissed. All three members of the court concluded that the owners effectively withdrew the vessel before the April hire was paid. The appeal was therefore bound to fail.
Edmund Davies and Megaw LJJ held that the notice was effective when it appeared on the charterers' working telex machine during ordinary business hours. The charterers' case was that a responsible employee remained in the office. They could not rely on her failure to see a message which, in the ordinary course of a competently run business, should have been seen. Cairns LJ reached the same conclusion on the trial judge's findings and the charterers' own evidence.
All three judges held that Hambros' telex instruction did not itself constitute payment. It was revocable and gave the owners no unconditional right to the money. Payment occurred when Morgan Guaranty Trust decided to debit Hambros' account and credit the owners' account. That decision was made within a period which, on the balance of probabilities, followed the effective withdrawal notice.
All three judges also regarded the clause requiring punctual and regular payment as materially different from the clause considered in The Georgios C. The adjective punctual required payment on the due date. Thus, subject to waiver, a later payment would not deprive the owners of the accrued contractual right to withdraw.
The judges expressed differing alternative views on waiver if payment had preceded withdrawal, particularly because of the assignment to Morgan Guaranty Trust. Those views were unnecessary to the result. Edmund Davies and Cairns LJJ considered that unqualified acceptance of the full month's hire could amount to waiver; Megaw LJ considered that, on the pleaded effect of the assignment, the bank accepted payment in its own right and there was no waiver by the owners.
The owners' cross-notice failed. Persistent late payments, even after complaints, did not clearly evince an intention by the charterers no longer to be bound by the charterparty. They were not repudiatory.
The appeal was dismissed with costs. Leave to appeal to the House of Lords was granted.
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Appellate history
- Court of Appeal: dismissed the charterers' appeal and the owners' cross-notice.
- High Court: Brandon J dismissed the charterers' claim for damages for wrongful withdrawal. He held that withdrawal was effective under the charterparty clause, but rejected the owners' repudiation case. No report citation for that decision is stated in the judgment.
Appeal route
- Appealed fromNot stated in the judgmentThis appealappeal dismissed unanimously (owners' cross-notice dismissed)
- This judgment [1975] QB 929 Court of Appeal
Key cases cited
3 authorities cited.
- The Langfond 1907) 96 LT 559 (PC
- Tonnelier v Smith (1897) 2 Com Cas 258
- Scarf v Jardine (1882) 7 AC 345
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Cases citing this case
8 later cases · 1 positive · 2 neutral · 5 caution
Most senior citing decisions:
- Newcastle upon Tyne Hospitals NHS Foundation Trust v Haywood [2018] UKSC 22 distinguished
- Gisda Cyf v Barratt [2010] UKSC 41 distinguished
- Newcastle Upon Tyne NHS Foundation Trust v Haywood [2017] EWCA Civ 153 distinguished
- Grand China Logistics Holding (Group) Co. Ltd v Spar Shipping AS (Rev 1) [2016] EWCA Civ 982
- Gisda Cyf v Barratt [2009] EWCA Civ 648
- LOMBARD NORTH CENTRAL PLC EUROPEAN SKYJETS LIMITED (IN LIQUIDATION) [2022] EWHC 728 (QB)
- Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm)
- Greenclose Ltd v National Westminster Bank Plc [2014] EWHC 1156 (Ch)
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