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Colonial Cases

The Her Majesty v. Dadabhoy, 1865

[shipping, charter]

Owners of Her Majesty v. Dadhaboy and Co.

Consular Court, Shanghai
1865
Source: The North-China Herald, 28 January 1865

 

H.B.M. CONSULAR COURT.

Before Sir HARRY S. PARKES, K.C.B., H.B.M. Consul,

NICOL LATIMER, Esq., C. J. SKEGGS, Esq., Assessors.

OWNERS OF Her Majesty v. DADABHOY & Co.

January 24th, 1865.

The parties to this suit had agreed, by a charter-party dated Sept. 14th, 1864, that the ship Her Majesty should take on board at Shanghai a cargo of cotton or other merchandise, and therewith proceed to London of Liverpool as ordered by the charterers; the ship to have a lien on cargo for freight £3.10 per ton of 50 cubic feet. Seventy working days to be allowed, and demurrage beyond that time to be paid by the charterers at the rate of $80 a day.  The plaintiffs had done every thing to entitle them to have the cargo on board the ship; but the defendants had not fulfilled their agreement, and the plaintiffs claimed £6,500 in consequence.

The defendants replied that the time allowed for the loading of the vessel had not elapsed, and that the plaintiffs had wrongfully refused to receive cargo tendered by the defendants in pursuance of the agreement which had been concluded between them.  The plaintiffs had thus discharged defendants from the performance of the charter-party.

Mr. MYBURGH, in opening the case for the plaintiffs, said that this was an action for breach of charter-party in not loading the ship Her Majesty after she had been detailed a reasonable time on demurrage.  By the charter-party, seventy working days were allowed for loading the ship.  The time allowed the charterers to detain the ship on demurrage was not fixed by the charter-party.  It was a well-known rule in law that when such an agreement as a charter-party is silent as to time, the law will imply that a reasonable time should be allowed.  The plaintiff gave notice to the defendants, previous to the expiration of the lay-days, that he would not remain on demurrage for more than fifteen days, and also called the attention of the defendants to the fact that the loading of the ship had not commenced.  At the expiration of the fifteen days the defendants received notice that, as the ship Her Majesty had been detained a reasonable time on demurrage and the loading had not commenced, they would be held liable for breach of charter-party.

The questions for the Court to decide were, whether the plaintiff was entitled to sue the defendants for breach of charter-party on the 31st December when the plaint was filed, and, secondly, what was the amount if damages to which the plaintiff was entitled.

G. F. SEYMOUR said: - I am master of the ship Her Majesty.  Her register tonnage is 1,112 Tons, and she will carry not less than 1,000 tons of measurement cargo.  On the 14th September I made this charter-party with Messrs. Dadabhoy & Co. lay-days commenced 24 hours after written notice was given to the charterers that the vessel was ready to receive cargo.  I gave notice on the 17th through Gibb, Livingston & Co. to defendants, to remind them how nearly the lay-days had expired, and to ask them what they intended to do as there was not a single package on board up to that time.  On the 8th December, I wrote again stating that the lay-days had expired and I should them claim for demurrage from ten to fifteen days.  At the expiration of 15 days they had not commenced to load the ship.  They had not on the 31st December when this action was commenced.  Six days after this Dadabhoy & Co. sent 100 bales of compressed cotton alongside.  I declined to receive it on board and wrote this letter.  (Letter read) This is the letter I refer to in the one I have just read, written by Mr. Myburgh, my lawyer, to Mr. Cooper (letter reads.)  This is Mr. Cooper's reply (letter read).

The day before I refused to receive the 100 bales on board, I caused the letter I hand in to be written to Dadabhoy & Co. declining to receive further amounts in payment of demurrage.  I hand in Dadabhoy & Co.'s reply (letter read.)  While the working says were running, I have had conversations with Mr. Burjorjee of Dadabhoy & Co. on the subject of the charter-party.  He asked me in his office what I would cancel the charter-party for.  This occurred a week preceding the 21st November.  This letter embodies the result of our conversations (letter read).  The offer that I should go to Calcutta to load with rice amounted to an offer of $1.10 per bag.  I declined it as unremunerative.  They had previously offered to cancel the contract on payment of £2,000 which I also declined.  I received no answer to my letter of 21st November, but after a conversation on the 7th December, Dadabhoy & Co. wrote me this letter on that day, to which I replied on the 9th December.  (Letters read.)

The offer of £2,250 to cancel the contract was made by me about the 19th November.  The offer to re-charter was made at the same time £2.10 and 36 lay-days.  There were then about 12 lay-days of the old charter to run.  They made me this offer which I accepted, but it was afterwards withdrawn by Dadabhoy & Co.  In consequence of the defendants not loading my ship as per charter=-party, I estimate my loss at £6,000.  This is a statement of my estimate of loss.  We value the ship at £16,500 - not less.  The net earnings of the ship from August 1862 to 1863 were about £5,000.  The gross earnings were between £12,000 and £13,000.

TO THE COURT: - I cannot tell the net earnings in the succeeding year.

TO MR. MYBURGH; - To my knowledge all the items (as to working expense, &c.,) stated in the account (now in court) are correct.  My charter-party does not state the number of days my ship should be detained in demurrage.  I should certainly not have agreed to over fifteen lay-days.  In this ship I have been detained only once upon demurrage.  I was then detained for about five days.  Demurrage of $80 a day only pays my actual expenses.  I have a crew of forty Europeans.  I never consented in writing, or verbally, to any alteration in the terms of the charter-party.  I did not discharge the defendant from loading the ship in the number of days mentioned in the charter-party.  I consider ten to fifteen days a reasonable time to be detained on demurrage.  To the best of my knowledge I have never signed a charter-party for more then ten days on demurrage.  I have been captain for 12 years and during this time have signed several charter parties.

TO MR. COOPER: - When a ship is under demurrage according to a charter-party, she is under trhe charter-party up to a reasonable time.  I received demurrage under my charter-party up to the 6th January.  The amount stipulated in the charter-party was paid to that date.  I received the money in order to reimburse my owners for the expenses of the ship during her detention.  After fifteen days under demurrage, I did not consider the ship at the service of the charterers. I believe I gave the charterers notice before the 6th January that the charter-party was at an end, (a letter written to the defendants by Mr. Myburgh to that effect, on the part of Captain Seymour, on the 24th December, was handed in and read).  I am not aware that any notice was given to the charterers before Jan. 6th, that demurrage would not be received.

On 6th Jan. Before the cotton came alongside, I gave notice to my agents that demurrage would not be received.  I did not give notice to Dadabhoy & Co.  I would not have received demurrage after the 15th day (23rd), but for the advice of my agents to do so.  I left it to them.  I did not consider that as long as I received demurrage I was bound to receive cargo.  I declined to receive demurrage because I did not think it sufficient to pay the expenses of the ship.  I consider that when a vessel receives demurrage she is bound to receive her cargo.  I received demurrage on the 6th, but it was not by my consent.  I only learned last Saturday that demurrage had been received on the 6th.  I did not apply to Gibb, Livingston & Co. to enquire why they did not obey my injunctions.

I believe the Sailor's Home has been longer on demurrage than I have been, but she had a considerable portion of her cargo on board before the lay-days had expired.  I wanted $120 per day demurrage, and 1,000 bales of cotton as guarantee.  The current rate of freight is now £ 2.10 I believe.  I considered the charter-party at an end after the 15th day when action was commenced.  In any event I think my notice of the 6th put an end to the charter-party.  Gibb, Livingston & Co. Have shewn me the correspondence between themselves and Dadabhoy & Co.  During my last charter-party I received demurrage at Calcutta.  I received 100 rupees a day and port expenses were paid.  I don't know the amount of the port expenses.  My vessel is 8 years old.  Her original cost was between £30,000 and £40,000.  She was built in Calcutta.  Freights are stiffening now in Shanghai I believe.

To MR. MYBURGH: - My object in coming into Court is merely to sue for the actual expenses incurred by the delay.  Dadabhoy & Co. wanted me to sign bills of lading for cotton before it was received.  They said that if I did not sign the bills of lading they were afraid they would not be able to give me cotton.  This was on or about the 20th October.  It was about a month after that they made offers for cancelling the charter-party.  I did not sign the bills of lading. If they had kept the vessel at work every day they would have been laden in three weeks.  I don't know for how much the bills of lading were made out.  From the time of notice of action, I would not have received any more cotton on board.  I considered the charter-party at an end on that day.

TO THE COURT: - I first instructed Gibb, Livingston & Co. not to received demurrage on the 6th; I had a conversation with them on the subject previously, and they told me that the demurrage was taken as a reduction of damages.

E. F. DUNCANSON said: - I am a partner in the firm of Gibb, Livingston & Co.  We are agents for the owners of Her Majesty.  I am aware that a charter-party was executed between Captain Seymour on the part of his owners and Messrs. Dadabhoy & Co. (correspondence between Gibb, Livingston& Co. and Dadabhoy & Co. read).At the expiry of the fifteen days Mr. Dadabhoy had come to no terms with us nor with Captain Seymour.  I then put the matter in the hands of my legal adviser to claim damages.  I received notice from my legal adviser that the claim had been made.  We did receive money from Dadabhoy & Co. after receiving instructions to claim for the breach of charter.  I received it in order to reduce the amount of damages we had to claim from Dadabhoy & Co.  We never got the demurrage, in the morning as we should have, except on a few occasions.  We seldom got it before 3 o'clock, and have had to send for it two or three times a day.  Dadabhoy & Co. had to borrow money to pay our demurrage on one occasion.  I did not advise captain Seymour to receive cargo on board.  I advised him not to receive the hundred bales which were sent on the afternoon of the 6th, but requested him to see his legal adviser on the subject.  We do a large shipping business.  I think ten to fifteen days a reasonable tome for a ship to be detained in demurrage in Shanghai.

To MR. COOPER: - Captain Seymour consulted me about the hundred bales on the afternoon of the 6th, and asked me what to do.  I told him not to receive the cargo.  This was between 3 and 4 o'clock.  He then went to consult his legal adviser.  I was not aware that demurrage had been paid at the time.  It was my intention that the money (mentioned in receipt) should be considered as damages.  There are few ships in the position in which Her Majesty was placed.  If money is paid on demurrage day by day I consider the charter-party still intact.  I did not tell the captain in the forenoon that I had received demurrage, I did not know that it had been paid.  I wrote my letter at one o'clock.  I do not believe the money had been paid then.  We were anxious to fulfill the charter-party, up to the time notice was given.  If Messrs. Dadabhoy & Co. had given proper security, we should have been glad to have allowed them to go on loading.  We did not directly ask for security.  I received the money from Dadabhoy & Co., in liquidation of damages.

To MR. MYBURGH:- By saying that when a ship-owner receives demurrage day by day the charter-party remains intact, I meant that it remained intact up to the time of the claim being made for breach.  Up to the 31st December the vessel had been 22 days on demurrage.  It is not usual to received demurrage after a claim for breach of charter-party has been made.  A 2,000 tons ship might be loaded in three weeks or a month, if kept well supplied with boats.

Mr. COOPER was convinced that he might safely leave the case as it stood in the hands of the Court.  He was surprised that his friend (M r. Myburgh) should have brought such a case into court with the receipt for demurrage money staring him in the face.  The distinction between lay-days and demurrage days was that during the former, a ship was supposed to receive cargo out of freight, while during trhe latter, demurrage money was paid in addition, at a fixed rate.  In the present instance no number of lay-days was stipulated for in the charter-party, so it rested with the ship-owner to give notice that demurrage would be charged, as soon as he thought that a fair time had expired.  There was no question that a reasonable time had been allowed; and the lay-days had expired according to a notice given by Messrs. Gibb, Livingston & Co.  The ship was then on demurrage, and it was competent to the captain to say - I will allow you such a time to load; if you do not load within that time, I will load myself and  hold you responsible for any loss.  But this had not been done.  Demurrage had been collected from day to day; and then the plaintiff came into court and said this money was collected on account of damages.  Before this could be admitted, he must shew assent.  It did not require much law, but only a little common sense, to see the fallacy of the plaint.  The plaintiff collected demurrage until cargo was offered, and then suddenly turned round and said they were going to claim damages.  Dadabhoy & Co. had acted very fairly \in the case.  They had offered to pay a heavier rate of demurrage, if that which they were paying was insufficient, and to fix a fair number of days within which they would undertake to load her. Captain Seymour knew that no number of days was mentioned in the charter-party, he was receiving a rate of demurrage which many ships in harbour would be glad to get, and he appeared to wish to lay by on the advantageous terms.  In order to enable him to recover damages in this action, it was necessary that breach of charter-party should be shown.  The demurrage had been paid, so it was clear there was no breach there.

Some time previously, Dadabhoy had said - We'll keep your ship and pay demurrage as long as we keep it.  If ever there was a clear adherence to a charter-party, it was on the part of the defendants in this case.  The parties who had broken it were the plaintiffs, and if Dadabhoy wished to bring an action against them, he could do so.  The court would consider some time before it set aside the documents which had been put in evidence, and unless it held that the ship was not under charter to Dadabhoy & Co., on the 6th Jan, it would, he was sure, give judgment in favour of his client.

Mr. MYBURGH might remark that, on the 6th Jan., he had written to Mr. Cooper making the following offer - that Captain Seymour would stay until the end of February if Dadabhoy & Co. would pay demurrage at the rate of $120 per diem and would furnish security for the amount.  This offer had been refused by Dadabhoy, who objected to finding security.  His client was willing to leave the case to the arbitration of assessors or of the court.

Mr. COOPER at first said his client preferred that the case should be proceeded with; but eventually agreed that the whole case should be left to the decision of the court.  He might call Mr. Dadabhoy; but the case was already sufficiently clear.  He begged, however, that an opinion might be recorded whether or not his clients had broken the charter-party.  He hoped that the court would not stint his clients in time, so long as demurrage were paid in advance.

In reply to the court, Mr. Dadabhoy affirmed that he distinctly intended to load the ship, and it was arranged that the court should determine - whether there had been a breach of charter-party; if so what damages were to be paid, and if not, on what terms the parties were to go on.

Judgment was delivered to the following effect:-

1. That the charter-party continue in force, and that under its conditions Messrs. Dadabhoy & Co. are to provide the ship Her Majesty with a full and complete cargo on or before the 15th of March next, so as to enable the ship to sail upon the following day.

2. That demurrage at the rate of 80 Mexican dollars per day for eighteen days, namely, from the 7th instant to the present date, both days inclusive, be paid by Messrs. Dadabhoy & Co.  Within one week from this date, and that after to-day demurrage at the rate of 100 dollars per day, the omission of any daily demurrage payment to be held to be a breach of the charter-party.

3. The above decision, as shown by the proceedings of the Consular Court of yesterday, is final.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School