#6673 - Attica Sea Carriers V. Ferrostaal - Commercial Remedies BCL

Attica Sea Carriers v. Ferrostaal

Facts

The vessel is owned by a Liberian company, Attica Sea Carriers Corporation, and is managed by the Goulandris group. Since 1970 she has been let on successive time charters to one of the Ferrostaal group in Hamburg. The latest of these charter-parties is a bareboat time charter by demise, under which the vessel was manned and maintained by the charterers. She is powered by steam turbines. When she was delivered to the charterers in January, 1974, she was presumably in good repair. After six months use, in July, 1974, she was drydocked at Gdansk in Poland, and any necessary repairs were done.

Temporary repairs were done, but the surveyor recommended that permanent repairs be effected when the vessel reached Europe. The charterers thought that the best thing was to sell her then and there for scrap. They were losing $2000 a day on her. But no agreement was reached. So the charterers tried to repair her again. Temporary repairs were done and she set sail again from Rio de Janeiro, on May 13. But after a few days she again broke down and had to return to Rio. The charterers then decided that the only thing to do was to have her towed all the way to Europe. This was done. On June 18, 1975, the vessel, full of a cargo of soya bean meal, was towed out of Rio and then for six weeks across the oceans till she reached Gdynia in Poland on Aug. 1, 1975. Her cargo was there discharged. She was then towed to Kiel, where she arrived on Sept. 7, 1975.

The owners produced a specification for drydocking and repairs. If these repairs were all done, they would cost, it is said, about $2 million, whereas the value of the vessel, when repaired, would only be $1 million. They advised the charterers that it was open to them to redeliver the vessel to the owners in its unrepaired state-thus terminating the charter hire, but being liable in damages. The owners, however, refused to accept redelivery. They had a few men on the vessel and removed them next morning at 10 00. At 12 noon the charterers' men left. The only men left on the vessel were watchmen provided by the repairers. Nevertheless, the owners lodged another action against the charterers claiming hire at the charter rate of $46,000 a month until the vessel was repaired and redelivered in sound condition.

On Oct. 16, 1975, he gave judgment in favour of the shipowners, holding in effect that the charterers were bound to repair the vessel before redelivery, and that the owners were entitled to the hire until the charterers repaired the vessel.

Question

Are the shipowner bound to accept that repudiation and treat the charter as at an end? Or, can they ignore it, and sue for the charter hire until such time-if ever-as the repairs are done?

Holding

Denning LJ

The shipowners naturally relied on the decision of the House of Lords in White & Carter Ltd. v. McGregor, [1962] A.C. 413.

Even though it was a Scots case, it would appear that the House of Lords, as at present constituted, would expect us to follow it in any case that is precisely on all fours with it. But I would not follow it otherwise.

It has no application whatever in a case where the plaintiff ought, in all reason, to accept the repudiation and sue for damages - provided that damages would provide an adequate remedy for any loss suffered by him. The reason is because, by suing for the money, the plaintiff is seeking to enforce specific performance of the contract-and he should not be allowed to do so when damages would be an adequate remedy. Take a servant, who has a contract for six months certain, but is dismissed after one month. He cannot sue for his wages for each of the six months by alleging that he was ready and willing to serve. His only remedy is damages. Take a finance company which lets a machine or motor-car on hire purchase, but the hirer refuses to accept it. The finance company cannot sue each month for the installments. Its only remedy is in damages.

So here, when the charterers tendered redelivery at the end of the period of the...