Case: CMC (Australia) Pty Ltd v Ship 'Socofl Stream' [1999] FCA 1419 ; (1999) 95 FCR 403
Outcome: followed
second question, whether termination was effected, gives rise to several difficult issues. The first is whether a notice of termination will bring the charter to an end or whether the charter remains on foot until the vessel is repossessed. Unfortunately this is still a controversial topic. In The Turakina (1998) 154 ALR 666, Tamberlin J held that a demise charter, under which possession and control of the ship had been given to the charterer, could not be terminated by notice alone. He said termination would only occur when the owner retook possession of the ship. In The Rangiora [2000] 1 Lloyd's Rep 36, the New Zealand High Court followed that decision, stating that the principle was a rule of the common law. Nonetheless, there is a view that the rule established in The Turakina may be avoided by careful drafting. In CMC (Australia) Pty Ltd v Ship 'Socofl Stream' [1999] FCA 1419 ; (1999) 95 FCR 403 it was held that the question whether a demise charter could be terminated without repossession depended upon the terms of the charterparty. The judge, Moore J, said (at 419): "[I]t is necessary to ascertain from the terms of the charterparty whether the continuing physical possession of a vessel by the charterer (pending the taking of physical possession by the owner either by redelivery or some other means) is co-extensive with continuing possession and absolute control of the vessel of the type characteristic of a demise charter." He went on to say (at 520) that it: "... is difficult to avoid a conclusion that if a charterparty expressly provided for its termination and the power to terminate was exercised, then the charterer ceased to be a demise charterer from the time of termination at least in the absence of provisions in the charterparty that suggested some other result." Comity requires me to apply The Socofl Stream and thus hold that in the case of this charterparty, in particular because of cll 28 and 29, the charter can be terminated on written notice. Clause 28 provides for termination by notice and cl 29 says that when the charter is at an end the charterer is the "gratuitous bailee" of the vessel. If I may say so, this is a troubling conclusion. It is troubling because until the owner actually withdraws the vessel not only does the charterer retain possession it still mans and supplies her. The problem becomes acute if the notice of termination is served while the vessel is at sea. Applying The Socofl Stream, she is not under demise while returning to port. If that be true it may surprise the owner to learn that the master now has ostensible authority to bind it. There is also the possibility that the owner may decide to retake possession at the next port of call or at a convenient port or place as contemplated by cl 29. The result of the application of The Socofl Stream is that the owner has control of the vessel during the voyage. The true position is probably different. I prefer the view that it is not until the vessel has been withdrawn that the demise comes to an end for it is only then that the charterer has lost exclusive possession of the vessel. That the charterparty describes the charterer's possession before delivery as that of "gratuitous bailment" is not to the point. The real relation between the charterer and the vessel cannot be disguised by the use of an inapposite label or description. I appreciate, however, that others take a different view.