The Happy Day [2002] EWCA Civ 1068

The Happy Day [2002] EWCA Civ 1068

Invalidity of notice of readiness in shipping contract waived by conduct of parties

Facts

The appellants were the owners of a ship knows as MV Happy Day. The vessel was chartered to transfer wheat from Odessa to Cochin. The vessel could not initially enter port to dock because it had missed the tide. The master of the ship nevertheless gave a notice of readiness. Because the charter was a berth charter, this notice was invalid. The charterers took a period of some three months to discharge the vessel’s cargo at the port. A dispute arose in relation to a claim of demurrage (the charge payable to the owner for failure to discharge the ship within the agreed time).

Issues

The owners appealed against a decision which allowed an appeal by the charterers against an interim final arbitration award in favour of the owners in relation to the demurrage. The charterers argued that because no valid notice of readiness had been given, no demurrage ever became payable.

Decision/Outcome

The owners’ appeal was allowed. Laytime in terms of the charter would not start running until a valid notice was given unless there was an agreement to dispense with such notice or a waiver on the charterers in respect of the necessity for further notice. The question of whether there was such an agreement or waiver was a mixed one of fact and law. Silence in response to an invalid notice may, in combination with other steps asserted under the contract, amount to a waiver of the invalidity of the notice or, in other words, amount to acceptance of the notice as complying with the contract pursuant to which it was given. Therefore, demurrage was required to be paid by the charterers to the owners.

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