SK Shipping Europe plc v. Capital VLCC 3 Corporation and Another (The “C Challenger”) – QBD (Comm Ct), 16 December 2020
TIME CHARTER – FUEL CONSUMPTION – REPUDIATORY BREACH
When the Vessel over consumed bunkers during a voyage, Charterer claimed Owner to be in repudiatory breach of the charter party.
[dropcap]A[/dropcap]lthough also dealing with an issue regarding a guarantor, this recap will only deal with aspects pertinent to TANKVOYager; consumption and repudiatory breach.
The VLCC Challenger was time chartered by Capital Maritime and Trading Corporation (CMTC) (hereinafter, “Charterer”) from SK Shipping (hereinafter, “Owner” or “SK Shipping”). When Charterer claimed Owner had been deceptive at the time of negotiating the fixture when providing consumption data and that same was a repudiatory breach of the C/P, the Owner in turn claimed unpaid hire and damages for an alleged breach of the charter party.
On 15 November 2016, SK Shipping sent a circular showing fuel consumption for the prior 3 voyages to Poten & Partners as brokers. Negotiations then occurred between SK Shipping and CMTC during which time, speed and consumption data of the Vessel was favorably compared to other ships on the market. CMTC subsequently chartered the Vessel; albeit signed hard copies were never received. This lack of signed hard copies was deemed by the court to not negate the existence of the C/P.
On 20 July, the Vessel conducted a voyage from Southwold to Tanjung Pelepas during which the Vessel’s consumption was high prompting Charterer to address same with Owner via a message alleging that Owner had purposefully misdescribed the speed and consumption data subsequently breaching the warranty. Charterer went on to say that if the matters weren’t resolved within a week, Charterer would rescind/terminate the charter party.
Owner in turn denied the allegations of giving misinformation and on 20 October 2017, Owner terminated the C/P basis Charterer’s message itself being a rejection of the C/P.
It was found that the fuel consumption statements were not factual, that the data was not consistent with the most recent performance of the Vessel, and that Owner did not have solid ground for believing that the representation was accurate. However, it was also found that if the Owner had made the same claims without the data, the charter party would still have ended in the same terms with Charterer’s recourse for over consumption being provided for within the C/P; cancellation of the C/P was not a recourse. Further, Charterer, in ordering the Vessel to continue its voyage, affirmed the charter party despite having had enough knowledge at that time that the ship’s speed and consumption were misrepresented.
The Charterer’s claim that Owner was in breach of the C/P was rejected and Owner was entitled to recover as damages its losses suffered by early termination. It was noted that these damages would be reduced for drydocking which was to occur during the C/P.