Maestro Bulk Ltd v Cosco Bulk Carrier Ltd (The “Great Creation”) [2014] EWHC 3978 (Comm)

The vessel was chartered on an amended NYPE form for a minimum of four months and a maximum of five months, plus 15 days in Charterers’ option. Hire was at a rate of US$18,500/day gross. Clause 60 of the charterparty dealt with the timing of redelivery notices, and provided:

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

The earliest date for redelivery was 29 March 2010, and the latest date was 14 May 2010.

On 13 April 2010, Charterers determined that they would not be able to fix another voyage during the currency of the charter and that they would have to redeliver the vessel. On the same day, they served what purported to be a 20 day notice of redelivery. On 14 April they tendered 15/10/7 approximate notices of redelivery, and on 16 April tendered 3/2/1 definite notices. The vessel was redelivered on 19 April. Two days later, on 21 April, Owners fixed the vessel for a time charter trip at US$22,000/day (an effective rate of US$13,485/day taking into account a nine day ballast voyage).

The issue before the Court was: “where a time charterparty provides for charterers to give notice of redelivery, what is the correct approach to damages when redelivery takes place with insufficient notice(s)?”

This is a question which has long been the subject of debate – there being a recognition that, in such circumstances, the Owners lose the opportunity to fix the vessel at the best possible rate, this being the generally agreed purpose of the approximate and definite notices of delivery.

In a compelling judgment, Cooke J analysed the breach. He concluded that the breach was not failure to give the first approximate notice of redelivery 20 days before actual redelivery (at that time Charterers having no intention to redeliver the vessel in 20 days’ time and so such notice not being capable of being given honestly) but in not delivering the vessel 20 days after that first approximate notice of redelivery was given.

As soon as one analyses the breach in this way, the ‘breach / no breach’ approach to damages – being to put the innocent party in the position they would have been in if the contract had been properly performed – becomes clear. What the Owners had lost as a result of the breach was 20 days of hire from the first notice of redelivery (subject to any allowance made for the notice being ‘approximate’, a 2 day allowance being granted in this case), less any mitigation of such loss (in the form of hire earned under the next fixture).

This meant that Owners’ larger claim (which had found favour with the arbitrators), for their loss of opportunity to enter into a charter at a higher rate than the one they were actually able to negotiate as a result of the short notice of redelivery, was rejected.

The judgment also considers remoteness, and the difficulties with recovering damages for “follow on” voyages generally.

This is an interesting judgment, and one which focuses the mind very much on determining the actual breach in question, and therefore the damages that are to be awarded to put the innocent party in the position he would have been in if the contract had been properly performed.