GLENCORE GRAIN LTD. v. FLACKER SHIPPING LTD. (THE “HAPPY DAY”) [2002] EWCA Civ 1068

Laytime may commence although no valid notice of readiness was served. This occurs where a notice valid in form was served prematurely, the vessel later arrived and was ready to discharge to the charterers’ knowledge, and discharge began on their instructions without rejection of, or reservation about, the notice.

The charterers may thereby waive the notice’s invalidity and the requirement for a fresh notice. Laytime then runs under the charterparty regime as though a valid notice had been served when discharge commenced. Mere readiness, even if known to the charterers, does not automatically validate a premature notice.

The owners of the vessel Happy Day tendered a premature notice of readiness before the vessel reached its berth. No further notice was served, but discharge began with the charterers’ knowledge and continued for about three months.

The arbitrators held that laytime commenced under the charterparty’s notice regime as though notice had been validly given when discharge began. Langley J allowed the charterers’ appeal and set aside that conclusion: [2001] 1 Lloyd's Rep 754.

The central issue was whether laytime could commence where no valid notice of readiness was ever served and, if so, when it commenced.

1. Appeal allowed unanimously. Potter LJ delivered the judgment, with which Arden LJ and Sir Denis Henry agreed. The arbitrators’ award was restored.

2. A premature notice of readiness does not operate as an inchoate notice which automatically becomes effective when the vessel later becomes ready, whether or not the charterers know of that readiness. Ordinarily, a valid notice, an agreement dispensing with it, waiver or estoppel is required before laytime can begin.

3. Waiver was established on the facts found by the arbitrators. A notice valid in form had been tendered to the receivers’ agents shortly before the vessel reached its berth. The vessel then arrived ready to discharge. The charterers knew the material facts, while their receivers’ agents commenced discharge without rejecting the notice, reserving the charterers’ position or requiring another notice. Objectively, that conduct communicated acceptance that laytime should run without a fresh notice.

4. Commencement of discharge did not waive the charterparty’s detailed machinery governing the calculation of laytime. It waived only the premature notice’s invalidity and the requirement for a replacement notice. The previous notice was therefore treated as accepted when discharge began, after which laytime commenced in accordance with clause 30. The arbitrators correctly fixed commencement at 0800 on Tuesday 29 September 1998.

5. Where the charterparty requires notice to be served on receivers or agents through whom the charterers perform their obligation to discharge, commercial practicality ordinarily gives those persons implied authority to waive a condition concerning commencement of laytime.

6. The findings were insufficient to uphold the award independently on estoppel by convention, because that doctrine required findings about the parties’ actual assumptions. Nor was it necessary or appropriate to extend the principle of futility as a freestanding means of dispensing with a notice which both conveys information and activates the contractual laytime regime.

1. Court of Appeal (Civil Division): Allowed the owners’ appeal unanimously, set aside the relevant parts of Langley J’s order and restored the arbitration award: [2002] EWCA Civ 1068.
2. Commercial Court: Langley J allowed the charterers’ appeal from the award and set aside the arbitrators’ finding that laytime commenced: [2001] 1 Lloyd's Rep 754.
3. Arbitration: The arbitrators held that laytime commenced at 0800 on 29 September 1998 and made an interim final award in favour of the owners.