P&O Princess Cruises International Ltd v The Demise Charterers of the Vessel 'Columbus'

A contractual power to vary charges may permit a supplier to increase charges substantially where the contract gives complete freedom to do so, provided that reasonable prior notice is given. What is reasonable depends on the circumstances, including the duration of the existing arrangement and the availability of alternatives.

Short or absent notice does not necessarily invalidate a variation altogether. The variation may take effect after the period that reasonable notice would have required. Clear reference to an objectively identifiable published tariff can incorporate the applicable charge. Statutory powers to levy ship dues do not give the court a residual jurisdiction to moderate a charge that is legally due.

The Port of Tilbury claimed port charges arising from the extended lay-over of the vessels COLUMBUS and VASCO DA GAMA. The vessels had initially been charged an agreed preferential rate of £3,000 per vessel per week.

Following the collapse and administration of companies within the CMV group, the Port sent an email and letters stating that the vessels would thereafter be charged at the published tariff. The principal issue was whether those communications terminated or validly varied the contractual charging arrangements and, if so, when the increased rate took effect.

1. Nature of the communications. The email and letters did not terminate the contractual relationship. They treated the contracts as continuing and sought only to alter the charging rate. In any event, the administration of CMV was not a repudiatory breach capable of acceptance as termination.
2. Insolvency legislation. Section 233B of the Insolvency Act 1986 was potentially wide enough to prevent an upward variation triggered by insolvency. It ceased to have relevance once CMV and GCL had terminated their management arrangements and the Port was dealing directly with Lyric and Mythic, neither of which was subject to an insolvency procedure.
3. Notice. Regulation 5.6 of the Port of Tilbury’s General Trading Regulations 2005 required reasonable prior notice. Less than 12 hours’ notice was insufficient, and the letters gave no notice. In the circumstances, including the three-month lay-over and the difficulty of finding alternative berths, 28 days was reasonable. The communications remained effective notices of variation and took effect after that period.
4. Extent of the power. Regulation 5.6 did not restrict increases to a reasonable amount. It gave the Port freedom to increase charges as it saw fit, subject to reasonable notice. No term limiting the increase was necessary to give the contract business efficacy or obvious enough to go without saying.
5. Published tariff. The references to the published tariff clearly identified the £29 per metre length overall charge for each 12-hour period in the Extra Charges Schedule. The schedule’s extended lay-by provisions did not apply after the preferential negotiated rate had been withdrawn. The enhanced rate was also sufficiently drawn to the vessels’ representatives’ attention under the principle discussed in J. Spurling Ltd v Bradshaw [1956] 1 WLR 461.
6. Statutory effect and result. Section 22 of the Port of London Act 1968 did not prevent the Regulations from binding users because the published schedule referred directly to the Port’s General Terms and Conditions, available on the same website. The Port was entitled to recover the tariff rate from 20 August 2020 until delivery of the vessels. The court had no residual jurisdiction to moderate the resulting claim.