Tenax Steamship Co Ltd v Reinante Transoceanica Navigacion SA (The Brimnes) (Tenax Steamship Co Ltd v The Brimnes (Owners))

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.

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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

• 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.