The 'Great Creation': What Can A Shipowner Recover When A Charterer Gives Less Than The Agreed Notice For Redelivery?

In Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (The "Great Creation") [2014] EWHC 3978 (Comm) the High Court has considered the approach to be adopted to the calculation of damages where charterers are in breach of charterparty by not giving sufficient notice of redelivery.

Facts

Under a time charterparty on an amended NYPE form, the claimant chartered the vessel "Great Creation" from her disponent owners for a period of four (maximum five) months, plus 15 days at charterers' option. Following redelivery the parties were unable to agree the balance of final hire due to owners because of a number of outstanding disputes. The disputes were arbitrated and it was from those proceedings that one issue was challenged by charterers on appeal to the High Court concerning the calculation of damages arising from charterer's failure to redeliver the vessel in accordance with Clause 60 of the charterparty. The clause stated:

"On redelivery charterers to tender 20/15/10/7 days approximate and 5/3/2/1 days definite notice."

The earliest date for redelivery under the charter was 29 March and the latest date was 14 May. Charterers submitted what claimed to be an approximate 20 day notice of redelivery on 13 April but then proceeded to redeliver the vessel on 19 April, just six days later.

The problem faced by charterers was that the voyage for which they had sub-chartered the vessel had been subject to delays and it had been unclear whether the vessel would complete that voyage in time to arrange a second fixture within the time charter period. By 13 April, discharge at the end of the first voyage had not been completed and was subject to continuing delay. It therefore became apparent that it would not be possible to fix a second laden voyage for completion by 14 May. Accordingly the notice of redelivery was served.

Following redelivery the owners managed to fix the vessel on 21 April but the best they could achieve given the short notice was a voyage charter that required a nine day ballast voyage, thus significantly reducing the effective daily rate.

The dispute

It was common ground between the parties that damages for charterers' breach (i.e. redelivery on 19 April on six days notice) should, under normal English law rules, put the owners back in the position they would have been in if there had been no breach. However, for this purpose the parties could not agree on the hypothetical "no breach" situation to be adopted.

Charterers said the "no breach"...