mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Cobelfret (UK) Ltd and Anor v Austen and Butta (Sales) Pty Ltd (unreported, Supreme Court of New South Wales Court of Appeal, Kirby P, Priestley JA, Meagher JA, 5 April 1991)
Outcome: distinguished
At the heart of the submissions for the defendants are the decisions in Cobelfret (UK) Ltd v Austin and Butta (Sales) Pty Ltd (unreported, Supreme Court of New South Wales, Brownie J, 24 February 1988); Cobelfret (UK) Ltd and Anor v Austen and Butta (Sales) Pty Ltd (unreported, Supreme Court of New South Wales Court of Appeal, Kirby P, Priestley JA, Meagher JA, 5 April 1991) (' Cobelfret '). It is submitted that that case involves the application of the normal rule to a case such as this and that it recognises that the plaintiff is under an obligation to seek alternative employment for the vessel which was intended to be used under the charter. This forms part of its proof of damage.
Case: Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2005] 1 Lloyd's Law Rep 443; [2005] 2 Lloyd's Law Rep 747
Outcome: applied
None of the cases which make reference to a substituted cargo and an obligation, on part of the shipowner, to obtain it, suggest that there is a ' rule ' to that effect which is of universal application, applying in every case involving a failure to supply cargo. The reference in the ' rule ' to the deduction of market freight, which was or could have been earned, expresses no more than what a shipowner, having a vessel available for the charter, would do in the ordinary course of business and acting reasonably. It is assumed that the shipowner would go into the market and obtain a substitute cargo. Likewise where a shipowner breaches a charterparty it is assumed that the charterer will charter a substitute vessel and this is reflected in statements of the ' normal ' measure of damage: Koch Marine Inc v D'Amica Societa Di Navigazione A.R.L (The Elena D'Amico) [1980] 1 Lloyd's Law Rep 75 (' The Elena D'Armico '). It is the operation of mitigation principles which are responsible for the rule. This was pointed out in Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory ) [2005] 1 Lloyd's Law Rep 443 (' The Golden Victory ') (appeal dismissed [2005] 2 Lloyd's Law Rep 747). It is not therefore to be seen as stating a new principle.
Case: Hensley v Reschke [1914] HCA 88 ; (1914) 18 CLR 452
Outcome: cited
Dartbrook and Anglo Coal sought to raise an issue as to whether Hyundai MM was ready and willing to perform the contract. An averment to this effect, on the part of a plaintiff, is usually taken as implied: Hensley v Reschke [1914] HCA 88 ; (1914) 18 CLR 452 at 467 (' Hensley v Reschke') . Whilst a plaintiff is absolved from further performance, upon their acceptance of a wrongful repudiation by the other party, it is nevertheless necessary for them to show that they were ready and willing to perform their part of the bargain, and this includes their ability to perform: Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25 ; (1954) 90 CLR 235 at 253 ( 'Peter Turnbull and Co' ); Hensley v Reschke at 467. The only allegation of inability to perform was that mentioned above and related to the vessel's draft. Dartbrook and Anglo Coal also submitted that Dartbrook's repudiation may not have been so clear as to amount to a refusal to perform. It was said there was a question whether ' the failure of Dartbrook necessarily conveyed to HMM that, even if HMM performed its obligations, Dartbrook will still not perform its obligations '. If Dartbrook had not clearly done so, it would follow that performance by Hyundai MM was not excused: see Peter Turnbull and Co at 246, 252 ; Mahoney v Lindsay (1981) 55 ALJR 118 at 119, referring to Jones v Barkley (1781) 1 Dougl. 684; 99 E.R. 434.
Case: Jones v Barkley (1781) 1 Dougl. 684; 99 E.R. 434
Outcome: referred to
Dartbrook and Anglo Coal sought to raise an issue as to whether Hyundai MM was ready and willing to perform the contract. An averment to this effect, on the part of a plaintiff, is usually taken as implied: Hensley v Reschke [1914] HCA 88 ; (1914) 18 CLR 452 at 467 (' Hensley v Reschke') . Whilst a plaintiff is absolved from further performance, upon their acceptance of a wrongful repudiation by the other party, it is nevertheless necessary for them to show that they were ready and willing to perform their part of the bargain, and this includes their ability to perform: Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25 ; (1954) 90 CLR 235 at 253 ( 'Peter Turnbull and Co' ); Hensley v Reschke at 467. The only allegation of inability to perform was that mentioned above and related to the vessel's draft. Dartbrook and Anglo Coal also submitted that Dartbrook's repudiation may not have been so clear as to amount to a refusal to perform. It was said there was a question whether ' the failure of Dartbrook necessarily conveyed to HMM that, even if HMM performed its obligations, Dartbrook will still not perform its obligations '. If Dartbrook had not clearly done so, it would follow that performance by Hyundai MM was not excused: see Peter Turnbull and Co at 246, 252 ; Mahoney v Lindsay (1981) 55 ALJR 118 at 119, referring to Jones v Barkley (1781) 1 Dougl. 684; 99 E.R. 434.
Case: Koch Marine Inc v D'Amica Societa Di Navigazione A.R.L (The Elena B'Amico) [1980] 1 Lloyd's Law Rep 75
Outcome: cited
None of the cases which make reference to a substituted cargo and an obligation, on part of the shipowner, to obtain it, suggest that there is a ' rule ' to that effect which is of universal application, applying in every case involving a failure to supply cargo. The reference in the ' rule ' to the deduction of market freight, which was or could have been earned, expresses no more than what a shipowner, having a vessel available for the charter, would do in the ordinary course of business and acting reasonably. It is assumed that the shipowner would go into the market and obtain a substitute cargo. Likewise where a shipowner breaches a charterparty it is assumed that the charterer will charter a substitute vessel and this is reflected in statements of the ' normal ' measure of damage: Koch Marine Inc v D'Amica Societa Di Navigazione A.R.L (The Elena D'Amico) [1980] 1 Lloyd's Law Rep 75 (' The Elena D'Armico '). It is the operation of mitigation principles which are responsible for the rule. This was pointed out in Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory ) [2005] 1 Lloyd's Law Rep 443 (' The Golden Victory ') (appeal dismissed [2005] 2 Lloyd's Law Rep 747). It is not therefore to be seen as stating a new principle.
Case: Lebeaupin v Richard Crispin and Co [1920] 2 KB 714
Outcome: cited
In any event the submission for Dartbrook and Anglo Coal ignores the need to construe each force majeure clause by reference to its words, having due regard to the nature and general terms of the contract: Lebeaupin v Richard Crispin and Co [1920] 2 KB 714 per McCardie J. Here the objective of Dartbrook was to load the specified cargo of coal. The obligation was not dependant upon the existence of a particular purchaser, as previously discussed, and could be fulfilled without a sale to National Power. Clause 45 requires that Dartbrook be prevented from performing that obligation before it is excused. The clause itself gives examples of what may amount to prevention. It includes ' hindrances of whatsoever nature in mining production ' with the rider that they not be caused by the actions of Dartbrook itself. The requirement that Dartbrook be prevented from performance, in practical terms, implies causation between the event and the inability to perform. Some force majeure clauses have been recognised as operating in this way (see Treitel at par 12 019). Nothing in National Power's refusal to proceed with its contract prevented Dartbrook from providing coal for delivery to Masinloc in accordance with the charter. The ' practical ' considerations, to which Dartbrook and Anglo Coal point, are indicative of matters which may affect a party which considers itself to be at risk of loss. Proceeding with the charterparty may not have been to their advantage, but there was nevertheless a choice open with respect to performance. They were not prevented from performance. They considered it not be in their interests to do so and chose not to perform. 63 In their defences Dartbrook and Anglo Coal alleged that Hyundai MM would not have been able to perform its obligations under the charterparty because it could not have secured a ship meeting the requirements of the charterparty within the time required for performance. Those defendants alleged that they would not have accepted the nomination of the ' Szare Szeregi ', or a like vessel, because it did not conform to the description of the vessel required under the charterparty. Further particulars of the allegation identified the requirement as to the maximum draft of the vessel as relevant. After some evidence was given on that matter I was informed that this allegation was no longer pursued. There was evidence that the Szare Szeregi would have been able to discharge the maximum load at Masinloc and that there were other vessels meeting the requirements of the charterparty which were likely to have been available at the relevant time.
Case: Mahoney v Lindsay (1981) 55 ALJR 118
Outcome: cited
Dartbrook and Anglo Coal sought to raise an issue as to whether Hyundai MM was ready and willing to perform the contract. An averment to this effect, on the part of a plaintiff, is usually taken as implied: Hensley v Reschke [1914] HCA 88 ; (1914) 18 CLR 452 at 467 (' Hensley v Reschke') . Whilst a plaintiff is absolved from further performance, upon their acceptance of a wrongful repudiation by the other party, it is nevertheless necessary for them to show that they were ready and willing to perform their part of the bargain, and this includes their ability to perform: Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25 ; (1954) 90 CLR 235 at 253 ( 'Peter Turnbull and Co' ); Hensley v Reschke at 467. The only allegation of inability to perform was that mentioned above and related to the vessel's draft. Dartbrook and Anglo Coal also submitted that Dartbrook's repudiation may not have been so clear as to amount to a refusal to perform. It was said there was a question whether ' the failure of Dartbrook necessarily conveyed to HMM that, even if HMM performed its obligations, Dartbrook will still not perform its obligations '. If Dartbrook had not clearly done so, it would follow that performance by Hyundai MM was not excused: see Peter Turnbull and Co at 246, 252 ; Mahoney v Lindsay (1981) 55 ALJR 118 at 119, referring to Jones v Barkley (1781) 1 Dougl. 684; 99 E.R. 434.
Case: Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353
Outcome: cited
Dartbrook and Anglo Coal do not dispute that an agreement came into existence with National Power by 29 March 2004, albeit one which was subject to the terms being restated in a fuller or more precise form, but not different in effect. It therefore belonged to the first class of contracts referred to in Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353 at 360, by which the parties intended to be immediately bound to performance. 45 Marubeni and Ssangyong however deny that an agreement between Dartbrook and National Power was concluded and allege that Ms Tan knew that it was not in place on 29 March 2004 when she concluded the charterparty agreement with Hyundai MM. Evidence as to her true understanding about the coal sales agreement is relevant to the allegations of wilful misconduct on the part of Dartbrook, which may affect its entitlement to an indemnity from these defendants. 46 Marubeni and Ssangyong contend that there was a lack of correspondence between the offer and acceptance with respect to a number of contractual terms: the price for freight; the FOBT price; the specifications as to the moisture and ash content of the coal; the terms as to the nomination of a vessel; and the terms and conditions as to discharge. Alternatively it is submitted that any binding agreement was made subject to a formal contract being agreed between the parties. This can be seen from the reference, at the foot of the letter of 25 March 2004, to ' all other terms and conditions are to be mutually agreed in a new contract '. The formal contract was never agreed.
Case: Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25 ; (1954) 90 CLR 235
Outcome: cited
Dartbrook and Anglo Coal sought to raise an issue as to whether Hyundai MM was ready and willing to perform the contract. An averment to this effect, on the part of a plaintiff, is usually taken as implied: Hensley v Reschke [1914] HCA 88 ; (1914) 18 CLR 452 at 467 (' Hensley v Reschke') . Whilst a plaintiff is absolved from further performance, upon their acceptance of a wrongful repudiation by the other party, it is nevertheless necessary for them to show that they were ready and willing to perform their part of the bargain, and this includes their ability to perform: Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25 ; (1954) 90 CLR 235 at 253 ( 'Peter Turnbull and Co' ); Hensley v Reschke at 467. The only allegation of inability to perform was that mentioned above and related to the vessel's draft. Dartbrook and Anglo Coal also submitted that Dartbrook's repudiation may not have been so clear as to amount to a refusal to perform. It was said there was a question whether ' the failure of Dartbrook necessarily conveyed to HMM that, even if HMM performed its obligations, Dartbrook will still not perform its obligations '. If Dartbrook had not clearly done so, it would follow that performance by Hyundai MM was not excused: see Peter Turnbull and Co at 246, 252 ; Mahoney v Lindsay (1981) 55 ALJR 118 at 119, referring to Jones v Barkley (1781) 1 Dougl. 684; 99 E.R. 434.
Case: PJ van der Zijden Wildhandel N.V. v Tucker [1975] 2 Lloyd's Rep 240
Outcome: considered
Impractability of performance is not generally recognised as a ground of discharge of a contracting party's obligations: E McKendrick, Force Majeure and Frustration of Contract , 2 nd edn, LLP, London, 1995 at pp 24-25; G Treitel, Frustration and Force Majeure , Sweet and Maxwell, London, 1994 at par 6-021. To the extent that it has been accepted as a ground by American courts, Treitel at par 6-020 observes that they have become increasingly reluctant to regard the increased cost or difficulty of performance as sufficient for this purpose. The assertion that force majeure ' includes every event which is beyond the control of the parties' (see L D'Arcy, Schmitthoff's Export Trade: The Law and Practice of International Trade, 9 th edn, Sweet and Maxwell, London, 1990 at p 199) has been regarded as too wide: McKendrick at p 8 footnote 41. In PJ van der Zijden Wildhandel N.V. v Tucker [1975] 2 Lloyd's Rep 240 the sellers were entitled to cancel the contract if they did not effect shipment in time by reason of war, flood, fire or storm or ' any other cause beyond their control '. This was held not to protect them when their supplier let them down, since the event did not prevent them from performing by other means. 61 There is no doctrine in English law which corresponds with the doctrine of force majeure in French law. The use of the words in contracts have required English and Australian courts to give them some meaning. The characteristics by McKendrick at pp 24 25, which have been recognised by the courts as constituting a force majeure event have regard to something which is: (a) irresistible; (b) unforeseeable; (c) external to the person claiming discharge; and has (d) made performance impossible and not merely more onerous or difficult (and see Treitel at par 12 017). In the present case (a) (b) and (d) are not present.
Case: Rheinoel v Huron Liberian Co.(The Concordia C) [1985] 2 Lloyd's Rep 55
Outcome: considered
McGregor points to the difference between stating the measure of damages as ' contract rate of freight subject to mitigation ' and as ' contract rate less market rate of freight ' as lying in the practical matter of onus of proof. Suggesting the latter as the ' modern rule ' (at par 27-066), the author explains that the effect is that a claimant will recover only contract rate less market rate unless the claimant can prove that in the particular circumstances substitute freight was not, and could not reasonably have been, earned. He cites two decisions as apparently supporting the modern rule: Rheinoel v Huron Liberian Co. (The Concordia C) [1985] 2 Lloyd's Rep 55 (' The Concordia C ') and SIB International v Metallgesellschaft Corp. (The Noel Bay) [1989] 1 Lloyd's Rep 361 CA (' The Noel Bay '). 78 In the Concordia C the ' guiding principle ' confirmed by Bingham J (at 57) was that ' the owners damages should be such sum as would put them in the same financial position as if the Rheinoel charter had been performed, ' noting that the principle is easy to state but far from easy to apply. In applying that principle it was considered necessary to reduce the net revenue which the owners would have earned under the charter by the net amount which they did in fact earn during its currency. In the The Noel Ba y Staughton LJ at 363 likewise described the shipowner's entitlement as taking into account the money they in fact earned.
Case: SIB International v Metallgesellschaft Corp. (The Noel Bay) [1989] 1 Lloyd's Rep 361
Outcome: considered
McGregor points to the difference between stating the measure of damages as ' contract rate of freight subject to mitigation ' and as ' contract rate less market rate of freight ' as lying in the practical matter of onus of proof. Suggesting the latter as the ' modern rule ' (at par 27-066), the author explains that the effect is that a claimant will recover only contract rate less market rate unless the claimant can prove that in the particular circumstances substitute freight was not, and could not reasonably have been, earned. He cites two decisions as apparently supporting the modern rule: Rheinoel v Huron Liberian Co. (The Concordia C) [1985] 2 Lloyd's Rep 55 (' The Concordia C ') and SIB International v Metallgesellschaft Corp. (The Noel Bay) [1989] 1 Lloyd's Rep 361 CA (' The Noel Bay '). 78 In the Concordia C the ' guiding principle ' confirmed by Bingham J (at 57) was that ' the owners damages should be such sum as would put them in the same financial position as if the Rheinoel charter had been performed, ' noting that the principle is easy to state but far from easy to apply. In applying that principle it was considered necessary to reduce the net revenue which the owners would have earned under the charter by the net amount which they did in fact earn during its currency. In the The Noel Ba y Staughton LJ at 363 likewise described the shipowner's entitlement as taking into account the money they in fact earned.
Case: Smith v M'Guire (1858) 3 H&amp;N 554; 157 E.R. 589
Outcome: considered
McGregor (from par 27-063) traces the development of the rule. The general rule as to the measure of damage is taken to have been stated and applied in Smith v M'Guire (1858) 3 H&amp;N 554; 157 E.R. 589, and as ascertained by the calculation of: ' ... the freight to be earned, and the deduction of the expenses which the shipowner would be put to in earning it; and what the ship earned (if anything) during the period which would have been occupied in performing the voyage, ought also to be deducted.' In that case Martin B expressed some doubt as to whether the shipowner was obliged to look for employment for his ship, but McGregor regards this as being wrong ' now that the rules as to mitigation have been worked out, and the contrary view is stated in later cases ' (at 27-065). Scrutton is of a similar opinion (at Art 192, p 389 footnote 31). McGregor refers to statements in Aitken Lilburn v Ernsthausen [1894] 1 QB 773 and Wallems Rederij A/S v Muller [1927] 2 KB 99, to the effect that the shipowner is bound to search out other cargo or otherwise he would not be able to recover full damages.
Case: Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd's Rep 605
Outcome: considered
Scutton on Charterparties , 20 th edn, Sweet and Maxwell, London, 1996, Art 193 at p 394 says that in an action against a charterer for not loading a cargo the measure of damage is: 'the amount of freight which would have been earned under the charter after deducting the expenses of earning it and any net profit the ship made, or might, have earned during the period of the charter on a substituted voyage.' and goes on to say that if the expense of earning freight on a substituted voyage of the same duration is the same as on the chartered voyage, the same result is arrived at by taking the difference between the charterparty rate of freight and the market rate of freight. In relation to the duty to mitigate (at Art 192, p 388, note 4) the authors say that a plaintiff is under a duty to mitigate its loss and damages will not be awarded for losses that it could reasonably have avoided. In relation to the 'so-called duty' reference is made to Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd's Rep 605. There Sir John Donaldson M.R. said (at p 608) that a plaintiff is under no duty to mitigate his loss despite the habitual use by lawyers of the phrase ' duty to mitigate '. As a matter of causation however a loss may be directly attributable to a breach of contract ' unless avoidable by some reasonable further action ', and that is a question of fact. Scrutton (at note 4) continues in the same terms as the previous edition (at [73] above). 75 McGregor on Damages, 17 th edn, Sweet and Maxwell, London, 2003 at par 27-062 deals with the 'growth of the modern measure ' of damages where there has been a failure to supply cargo. The author says that: 'The normal measure of damages may be stated today as the contract rate of freight less the market rate of freight. This is calculated by taking not the gross amounts of the contract and the market freights but the net amounts after the costs of earning the freights. The market freight is deducted on the ground that this sum was or could have been earned by the defendant on the claimant's refusal to supply cargo. This is in accordance with general principles and in particular with the measure of damages in an action for non-acceptance of goods sold. However, this measure allowing for the deduction of market freight developed slowly in carriage contracts.' In connexion with contracts for the sale of goods, Carter on Contract , Vol 2, Butterworths at par 41 380 notes that the prime facie rule, which relies on a comparison of market price and contract price, assumes that the plaintiff will (or should) mitigate loss by going into the market. G Treitel , The Law of Contract, 11 th edn, Sweet and Maxwell, London, 2003 at p 977 says that where a seller fails to deliver, the buyer must go into the market at the relevant time to buy substitute goods. This requirement finds expression in legislation concerned with the sale of goods.
Case: Stanley Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787
Outcome: cited
In the present case there was no qualification made by Dartbrook as to the capacity in which it contracted. The knowledge of a third party of the existence of the principal is not sufficient to excuse an agent from liability: Stanley Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787 at 795. To do otherwise would permit oral evidence to contradict the written agreement: Basma v Weekes [1950] AC 441 at 451. In the present case there is nothing to suggest that the parties intended that Dartbrook not be liable as charterer. Even if one were to have regard to Hyundai MM's state of knowledge, it could not be assumed that it understood Dartbrook was not intended to have that liability. It merely knew that it was acting for the joint venture in connexion with its sale.