CHARTERPARTIES
Karim’s Ltd v Feeders Seafood Ltd [1995] FJHC 136; Hbc0555d.94s (10 August 1995)
Charterparties- Withdrawal of vessel for breach of contract by charterer- Injunction to prevent forfeiture not available to charterer because charter transfers no interest in the vessel to charterer but is merely a contract of service
The plaintiff chartered a vessel from the defendant. There was a disagreement on the contract and the defendant withdrew the vessel. The defendant sued for breach of contract. Among other complaints, the defendant claimed that the plaintiff had not insured the vessel and was behind in its monthly payments required by the charter party. The plaintiff counter sued for damages and losses resulting from the breach of contract and forfeiture of the vessel. The plaintiff (charterer) in this proceeding applied to the court for an injunction to restrain the defendant from selling, leasing or chartering the vessel, or for an Order for immediate return of the vessel to the plaintiff pending the hearing between the parties on the breach of contract action.
DECISION: Application dismissed.
HELD: The equitable injunctive relief against forfeiture is narrow in scope. In the case of a charter party the withdrawal of the vessel is not truly a forfeiture because the charter transfers no interest in the vessel to the charterer but is merely a contract of service. As such, the plaintiff has suffered only the loss of a contractual right and that alone is not enough to raise an equity in the plaintiff’s favour. To grant an injunction prohibiting withdrawal would be tantamount to an Order for specific performance which is generally refused in contract. The plaintiff had failed to insure the vessel as provided by the contract. That constituted a breach so serious that withdrawal of the vessel was the only way that the defendant could protect its position from substantial losses.
Karlander v Eriama Shipping Co. Ltd. [1965] PGSC 23; [1965-66] PNGLR 213 (17 April 1966)
Charterparties- Withdrawal of vessel for breach of contract by charterer-charterer’s default- damages are difference between lost hire less profits earned after withdrawal
The plaintiff vessel owner sought arrears under a charter party as well as damages for breach of the charter. The defendant charterer had failed to make advance payments for hire as agreed in the charter party. The plaintiff withdrew the vessel from the service of the defendant. It attempted, but failed to find alternate charters for the vessel but arranged voyages for the vessel until it was sold. The plaintiff claimed to be entitled to damages being the difference between the hire as provided in the charter party less the profits earned after its withdrawal up until the sale of the vessel.
DECISION: Plaintiff entitled to claim
HELD: The clause which entitles the ship owner to withdraw the ship on default by the charterer on the payment for hire cannot be treated as cutting down the right of the owner to treat the contract at an end, and to recover damages based on the charterer’s repudiation of the charter. The plaintiff had lost the benefit of the hire for the remaining period of the charter party and was therefore entitled to the difference between hire less the profits earned after the withdrawal.
National Trading Corporation Ltd v Huggett [1999] FJHC 6; Hba0011j.98s (19 February 1999)
Charterparties-implied warranty of seaworthiness at the commencement of the voyage- boat owner must indemnify charterer for repairs.
The first Defendant, the charterer was held to be liable to the Plaintiff for the repairs to the boat engine. The first Defendant was to be indemnified by the 2d Defendant, the owner of the vessel. The 2d Defendant appealed the findings. The vessel’s engine had broken down and had to be towed in while on the charter.
HELD: Appeal dismissed
DECISION: The ordinary rule is that there is an implied warranty that the ship is seaworthy at the commencement of the voyage. There was nothing in the Charter to exclude or limit this rule. The fault in the engine which caused the break-down existed when the vessel started and therefore the vessel was not seaworthy for the voyage.
Charterparties- Withdrawal of vessel for breach of contract- non punctual payment of hire fees may be excused where the charterer has a counterclaim against the owner of the vessel- interlocutory withdrawal of vessel not granted until rights determined
The plaintiff had filed a writ of summons claiming that the defendant was in arrears of hire fees for the vessel for 2 ½ months accruing in a charterparty. The plaintiff sought the fees owing and return of the vessel. The defendant counter claimed for money owed by the plaintiff to the defendant for spare parts and mechanical work done at the beginning of an earlier charter. The sum claimed by the defendant exceeded the accrued arrears under the charterparty. Before the action was heard, the plaintiff sought interlocutory relief in the form of orders to prevent the defendant from removing the vessel from Honiara, and the return of the vessel.
DECISION: interlocutory injunction refused
HELD: The primary purpose of an interlocutory injunction is to preserve the status quo until rights have been determined in the case. The court must consider if monetary damages will be adequate compensation in the event that the plaintiff’s interlocutory relief is refused and the plaintiff succeeds in obtaining a final permanent injunction; or if the interlocutory relief is granted and the defendant succeeds at final determination. The court found that the charterer has leeway to pay off the default arrears before the owner withdraws the ship under the charterparty, and the defendant’s counterclaim may qualify for the ‘special circumstances’ where the non punctual payment of hire may be excused.
State v Hung Kuo Hui [2006] FJHC 113; HAC40.2004 (24 February 2006)
Charterparties- Charterer guilty of illegal fishing- vessel forfeited with no requirement to name owner as party
The defendant company was Fijian owned and operated. The defendant company and captain were found guilty of illegal fishing in Fijian territorial waters. The state sought forfeiture of the vessel as part the penalty. The vessel was chartered from a company in Taiwan.
DECISION: order for forfeiture granted
HELD: The court found that the illegal fishing was blatant and repeated in spite of warnings. The penalties were meant to be harsh. It was not necessary to add the owner of the vessel as a party. Owners and charterers should be aware of the law and the penalties.
Yap v MV Cecilia I [2005] FMSC 41; 13 FSM Intrm. 403 (Yap 2005) (19 September 2005)
Charterparties- Pollution offences alleged against charterer and owner of vessel- Court gains no personal jurisdiction over vessel owner on basis of bareboat charter
There were 5 causes of action all based on a central allegation that the vessel had on numerous occasions discharged petroleum based effluent. The vessel was under a bareboat charter between the defendant owner and the defendant charterer. The defendant owner served a motion to dismiss for lack of personal jurisdiction on the basis that he had no control over the vessel and he lacked the minimum contacts with the forum sufficient to subject to the court’s jurisdiction.
DECISION: Motion granted
HELD: Under a demise or bareboat charter the charterer takes complete control of the vessel, mans it with its own crew and is treated by law as its legal owner. The charterer is potentially liable for collision, personal injury to master, crew and third parties, pollution damages, and for the loss or damage to the chartered vessel. Vessel owners normally have no personal liability but the vessel may be liable in rem. As such, the existence of the bareboat charter did not bring the owner into the court’s jurisdiction either on the basis of ‘doing business’ provision of the long arm statute, or under the provision based on the operation of the vessel within territorial waters.