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Charter Parties

Case Summaries
Charters– Bailment – Waiver of Subrogation
North King Lodge Ltd. v Gowlland Towing Ltd. et al., 2005 BCCA 557 affg. in part
2004 BCSC 460
This matter concerned liability for the sinking of the barge “Sea Lion VI”. The barge
had been hired by the Plaintiff, the owner of the barge, to the first Defendant, a
logging company, for use as an accommodation barge at a remote logging camp. One
of the terms of the agreement was that the owner would provide a watchman. When
the logging operations had ceased the second Defendant, the towing company, was
retained to remove the log booms. In doing so the crew of the tug untied the port side
mooring lines of the “Sea Lion VI” which had been tied to the log booms. Shortly
thereafter the “Sea Lion VI” went aground and sank. The trial Judge found as a fact
that the removal of the port lines caused the sinking. The trial Judge held that the
contract between the owner and the logging company was one of bailment and that
the logging company was liable for failing to promptly advise the owner when it
became apparent that the barge was in danger. The trial Judge further held, however,
that because the owner was required by the contract to provide a watchman it had the
primary responsibility for the safe moorage of the barge. With respect to the liability
of the towing company, the trial Judge held that the owner had committed a trespass
by tying the barge to the log booms and that the duty owed by the towing company to
a trespasser was to not intentionally harm the Plaintiff, act recklessly or without
common humanity. He held that although the towing company did not act with
reasonable care it did not breach these duties. In the result, the action against the
towing company was dismissed and the liability for the sinking was apportioned 80%
to the Plaintiff and 20% to the logging company. The owner appealed the dismissal of
the action against the towing company and the logging company appealed the finding
that it was 20% liable. The British Columbia Court of Appeal dismissed the appeal by
the owner and allowed the appeal by the logging company. The Court of Appeal
rejected the argument that there was an implied permission to moor to log booms,
agreed that the tying of the barge to the boom sticks was an act of trespass and agreed
that the duty owed to a trespasser was to act with common humanity. The Court of
Appeal held that this duty had not been breached by the towing company. With
respect to the appeal by the logging company, the Court of Appeal disagreed with the
trial Judge that there was a contract of bailment. The Court of Appeal held that there
was no transfer of possession of the barge, that the logging company had a mere
licence to use the barge and that the contract between the owner and the logging
company was a time charter. The Court of Appeal further held that there was no
implied term in the charter that the logging company was to inform the owner of any
dangers to the barge. Such a term was inconsistent with the requirement that the
towing company keep a watchman on the vessel and was neither reasonable, in the
circumstances, nor required to make the contract effective.
Mareva Injunction – Breach of Charter Party

The Defendant argued that no charter party had been agreed because there had not been a meeting of the minds regarding a significant term. Further. 2005 NBPC 16 The registered owner of the subject vessel was charged with an offence under the Safe Working Practices Regulations passed pursuant to the Canada Shipping Act following an accident involving a crane on the vessel in which two stevedores were injured. whether the vessel to be chartered was certified by the International Transport Workers Federation.Concluded Agreement Armonikos Corp. 2006 FC 18 See the summary of this case under “Admiralty Practice”. notably. before these “loose ends” were dealt with the Defendant advised the Plaintiff that it had received another offer to time charter the ship which it intended to accept. The owner brought a non-suit motion following the conclusion of the Crown's case arguing that the vessel was under a bareboat charter at the time and that the definition of owner in the regulations did not include the registered owner under such circumstances. However. Charter Parties . the court stayed the present action in favour of London arbitration pursuant to an arbitration clause in the charter party. v Atlantic & Orient Shipping Corporation. Charter Parties . After extensively reviewing the definitions in the Canada Shipping Act and the regulations and noting the differences between the English and French versions of the definitions in the regulations the Court concluded that the definition of owner in the regulations did not extend to include the owner of a ship that was under a bareboat charter. All substantial matters had been agreed with the exception of lay days and quantity of cargo which were characterized as “loose ends” by the Defendant.Front Carriers Ltd. v Saskatchewan Wheat Pool. through their respective agents.Concluded Agreement Champion International v The “Sabina”. 2002 FCT 799 The issue in this case was whether a charter party had been concluded between the brokers acting for the parties. that the broker for the Defendant had not been particularly attentive to this issue and had confirmed the charter party without the inclusion of an ITF clause. The Plaintiff and Defendant. Bareboat Charter – Liability of Owner Under Safe Working Practices Regulations R v M/S Apollo Tiger Shipping GmbH & Co. had entered into negotiations for the carriage of the Plaintiff’s cargo. the court held that the broker for the Defendant did not view the absence of an ITF clause as an impediment to the charter party and. however. agreed to a charter party with a modified ITF clause. The Plaintiff sued for breach of contract. 2002 FCT 1122 Again the issue in this case was whether there was a concluded agreement between the parties. once the issue was squarely raised. KG. As a consequence of the court’s finding that there was a binding charter party.Negotiation . The court held.Negotiation . The court agreed with the Plaintiff that although a formal contract was never .

Clause 10 of the charter party specified an annual payment and clause 11 provided that the annual payment was to be paid in seven monthly instalments. v The "Challenge One". 265.C. the "Prosperity" had been chartered for the entire 1997 herring season. This was an appeal from the Federal Court of Appeal.). there was no vicarious liability on the part of the owner. The Court of Appeal held that the agreement did amount to a charter by demise as the owner effectively relinquished custody. The Court of Appeal further held that as all of the crew were appointed by the charterer. At the time. The appeal arose out of a net cutting incident that occurred during the roe herring fishery. Charter Parties . v The "Prosperity" et al.Liability of Owner North Ridge Fishing Ltd.signed there was agreement on the substantive terms and there was therefore an agreement which was breached by the Defendant. The fact that the charterer was required to appoint one of three named individuals to operate the vessel did not detract from this conclusion since it was the vessel’s insurer that required this condition and the owner had no right to chose which of the three named individuals would be appointed. operate the vessel. Both at first instance and on appeal the court held that the shipowner was not entitled to claim a set-off.R. in fact. A second issue on the appeal was whether the owner was negligent in failing to properly train the master or in holding him out as being properly trained. This was an appeal from a summary trial application. The Plaintiff alleged that the Defendant vessel "Prosperity" negligently cut its net during the fishery resulting in a loss of fish. One of those individuals did. 111 ACWS (3d)3 This was a dispute over fees payable to a broker by a shipowner. Charter Party . The charter party provided for daily demurrage which had been unpaid by the charterer. At issue in the summary trial and on appeal was whether the agreement was a charter by demise and the effect of such a charter by demise on the liability of the owner.C. Bareboat Charter . The terms of the charter party included an option to purchase the vessel at the end of the five year term subject to "full performance" of its obligations under the charter party.C. The practice of the parties was . In the result. (S.Option to Purchase . the appeal and the action against the owner was dismissed. A term of the agreement provided that only three named individuals were permitted to operate the vessel. [1999] 1 S.Substantial Performance Sail Labrador Ltd. v Angel Maritime Inc. The Court of Appeal agreed with the Trial Judge that an owner of a ship under bareboat charter had no duty to train those manning the vessel and that simply agreeing to have the ship operated by one of three individuals was not a representation as to the training of those individuals.Set-off Barber Dubai Shipping Agencies Co. possession and control over the "Prosperity" to the charterer.. The shipowner attempted to set-off the unpaid demurrage from the fees payable to the broker.. The Appellant/Plaintiff had entered into a 5 year charter party with the Respondent/Defendant.

that he acted only for the owner of the tug and was therefore only entitled to a fee of 2.) The issue in this case was the brokerage fee to which the Plaintiff was entitled. Marine Management Inc. (February 4. At the conclusion of the charter term. On the issue of the Plaintiff's failure to provide the log books the court noted that pursuant to section 26 of the Canada Shipping Act the log books must remain on the vessel. Pursuant to clause 25 of the charter party. Ltd. At trial.) This was an application for summary judgment by the disponent owner of the Defendant ship against the charterer for charter hire. (Nfld. The Plaintiff immediately rectified the non-payment and all subsequent payments were made on time. The Plaintiff failed to do so. the Plaintiff attempted to exercise the option to purchase but the Defendant took the position that the option was void because of the late payment and the failure to provide the log books.. Charter Hire. T-279-96 (F. pursuant to industry practice. the appeal was allowed. the first cheque for the fifth year was returned insufficient funds. In result. The charterer defended the application on the grounds that it had a right of set off in respect of a claim for demurrage.Brokerage Fee Spellacy v. As a bilateral contract the doctrine of substantial compliance was applicable and the court found that there had been substantial compliance by the Plaintiff.Set-Off Halla Merchant Marine Co. 1997) No. the Supreme Court of Canada held that the option to purchase was part of a bilateral agreement between the parties comprising both the charter and the option. the Federal Court of Appeal held that a party exercising an option to purchase must strictly comply with the conditions of the option and that. however. The Court held.for the Plaintiff to provide the Defendant with seven post dated cheques at the beginning of each year. it was not entitled to exercise the option. Therefore.00.C.T. The Plaintiff argued that he was entitled to a 5% commission on the basis that he was acting for both parties to the transaction and. Due to an error by the Plaintiff's bank.100. The Court held that there was no valid right of set off because the hire claim was for a different time period than the demurrage claim.Demurrage . S. al. was therefore entitled to a double fee. Charters . On further appeal. v.D. The Defendant then wrote to the Plaintiff advising that the option to purchase was void. The Plaintiff had negotiated a two year charter of a tug at $1. 1998). the Defendant also requested that the Plaintiff provide it with all of the log books for the vessel. the court held that the words used in the option were not precise enough to make time of the essence of the contract. The disponent owner .000. On appeal. The option to purchase was exercised.5% of the sum of the total charter payments and the purchase price. (February 26. the trial judge held that the Plaintiff had substantially performed its obligations under the charter party and was entitled to exercise the option to purchase.C.00 per day with an option to purchase for $900.4141. The "Lok Maheshwari" et. Further. the court held that all the Plaintiff was required to do was to make the logs available for inspection on the vessel. No.. as the Plaintiff had not done so.

C.) This was an application by the defendant for summary judgment dismissing the Plaintiff's action. The Court reviewed the authorities and noted that a charterer who cancels a charter-party has a claim in damages if the failure of the ship to arrive by the cancelling date was a result of a breach on the part of the shipowner of his obligation to load by a particular date.right to damages Melsa International Inc.D. et. The Plaintiff's action was for breach of a charter-party agreement. The Plaintiff and Defendant had entered into a charter-party agreement in the Gencon form. the Plaintiff exercised its right to cancel the charter-party and found another vessel to carry the cargo. The Defendant argued that pursuant to the charter-party the Plaintiff's remedy was to cancel the charter and that it had no right to claim damages. The Plaintiff claimed the difference in the freight payable under the two charter parties.Cancellation . . completely successful. Adecon Shipping Lines Inc. T2185-96 (F. In result.was not.T. (April 11. The Defendant was not able to meet the agreed upon loading date and. The Court held that there was a genuine issue for trial in respect of some of the periods for which hire was claimed.. however. as a consequence. the Court found that there was a genuine issue for trial and dismissed the motion for summary judgment. No. Charter party . 1997).