“3. The Vessels were both chartered to the Respondent Charterers, under Charterparties dated20 February 2017 (Skyros) and23 March 2020 (Agios Minas). By the terms of the Charterparties, the latest times when the Vessels could lawfully be redelivered were 24:00 on30 May 2021 (Skyros) and 24:00 on31 May 2021 (Agios Minas). Before these dates, the Owners entered into MOAs, dated22 April 2021 and23 March 2021 , agreeing to sell the Vessels to respectively MSC Shipping SA and Maersk A/S. In breach of the Charterparties, both Vessels were redelivered late by the Charterers: Skyros by about two days and Agios Minas by about seven days. During the overrun periods, the Charterers paid hire at the rates agreed in the Charterparties. By this time, the rates which the market would have offered for the Vessels were significantly higher than the Charterparty rates. The market rates in the Lists of Assumed Facts are for fixtures of around 30 to 60 days and 24 to 26 months. We emphasise that, for the purpose of the preliminary issue, we have not been asked to determine the relevant market rates, or how the Owners’ losses would be quantified if we were to hold that they were entitled to substantial damages. 4. It is common ground between the parties for the purposes of the assumed facts that, even if the Vessels had been delivered timeously, the Owners would not have chartered them again after redelivery and so would not have earned any further hire. The Vessels would have been delivered to the buyers as soon as they were redelivered under the Charterparties.”
“6. The preliminary issue raises a novel point. In essence, the question is whether substantial damages are recoverable for late redelivery of a ship under a time charterparty where there is evidence that after a timely redelivery, the owner could not or would not have chartered it out. Despite a thorough and helpful review of authorities, the parties’ counsel were unable to direct us to any reported case in which the courts dealt explicitly with circumstances of this sort. For that reason, it has been necessary for us to return to first principles and to look for guidance in those authorities, including a number of cases which arose from contracts outside the shipping sector, some in the context of torts.”
“… the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for a Timecharter period of a minimum 11 (eleven) months/maximum 13 (thirteen months, exact period in Charterers’ option. Charterers’ option is declarable latest on 31st December, 2017, for a further period, counting from the commencement of the 14th month onhire, of a minimum 11 (eleven) months/maximum 13 (thirteen) months, exact period in Charterers’ option…””
“4. That the Charterers shall pay for the use and hire of the said Vessel at the rate of US$14,750 … and US$30,000 … for the optional period… commencing on and from the time of her delivery, as aforesaid, and at and after the same rate for any part of a day; hire computation to be based on UTC; hire to continue until the hour of the day of her re-delivery in like good order and condition, ordinary wear and tear excepted, to the Owners (unless lost) on dropping last outward sea pilot one safe port in Charterers’ option Singapore/South Japan range including People’s Republic of China, Hong Kong, Taiwan, South Korea, anytime day or night Saturdays, Sundays and holidays included unless otherwise mutually agreed. Charterers to tender 60/45/30/30/10 days approximate noticed of delivery and probably port and 7/4/1 day(s) definite notice of vessels’ expected redelivery to Owners and definite port.”
“8. That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow, trim, discharge and lash/unlash the cargo at their expense under the supervision of the Captain, who if requested by Charterers and/or their agents, is to sign Bills of Lading for cargo in conformity with Mate’s or Tally Clerk’s receipts.”
“On the basis of the facts as alleged in the agreed Assumed Facts, are Owners entitled to recover from Charterers:- (i) substantial damages, compensation, remuneration or other monetary relief (as Owners allege); or (ii) only nominal damages (as Charterers allege)?”
“On the basis of the facts as alleged in the agreed Assumed Facts, the Owner is entitled to recover from the Charterer substantial damages, compensation, remuneration or other monetary relief.”
“Owners’ measure of damages for late redelivery 4.52 Where the charterers fail to redeliver the ship at the end of the agreed charter period and the market rate of hire at that time exceeds the charter rate, the owners are entitled to damages compensating them for the loss of the opportunity to take advantage of the market rate during the period of the overrun. In certain circumstances, discussed below at paragraphs 4.57 et seq., the owners may also be entitled to recover in respect of additional losses. The normal measure 4.53 The normal measure of damage is the difference between what the owners earned in hire under the charter during the period of the overrun and what the market would have paid for the use of the ship during the same period. An early statement of this measure of damages is in Atkin, J.’s judgment in Watson v. Merryweather (1913) 18 Com. Cas. 294. More recently Bingham, L.J., stated that this was the owners’ measure of damages in The Peonia [1991] 1 Lloyd’s Rep. 100 (C.A.), at page 108, and his statement was adopted by Lord Mustill in The Gregos [1995] 1 Lloyd’s Rep. 1 (H.L.), at page 5. The House of Lords confirmed the correctness of this measure in The Achilleas [2008] 2 Lloyd’s Rep. 275, discussed at paragraphs 4.58 et seq., below.”
“When considering the measure of damages for late delivery, it is important to keep in mind that each case will turn upon the particular terms of the charter under consideration and the facts. Nevertheless, where the time charterer is late in redelivering the vessel, the shipowner will in general be entitled to payment of hire at the charter rate until the date on which the vessel is actually redelivered and to damages for the overrun period (if the then current market rate is higher than the charter rate) for the difference between the charter rate and the market rate. If the market rate for the period of overrun is lower than the charter rate of hire, the charterer will nevertheless have to pay the charter rate of hire for that period.”
“In my opinion, in the ordinary case in which charterers give orders for an illegitimate last voyage there is no basis for implying a request by the charterers that the owners should perform such a voyage outside the charterparty and on terms that they will pay for the voyage at the market rate. There is no case, so far as I am aware, in which that has been suggested, let alone held to be the case. On the contrary the charterers are instructing the owners to perform a voyage under the charterparty. If it is a non-contractual order because the voyage would be illegitimate, the owners can refuse to perform it but, as explained above, if they do perform it, they do so under the charterparty but are entitled to damages at the market rate if redelivery takes place after the end of the charterparty period.”
“If the shipowner accepts the direction and goes on the illegitimate last voyage, he is entitled to be paid – for the excess period – at the current market rate, and not at the charter rate, see Meyer v Sanderson(1910) 32 TLR 428 . The hire will be payable at the charter rate up to the end of the charter period, and at the current market rate for the excess period thereafter.” (2) In Arta Shipping Co. Ltd v Thai Europe Tapioca Service Ltd (The ‘Johnny’) [1977] 2 Lloyd’s Rep. 1, at p. 2 rhc, he said that, in this situation: “… it is plain the owners could recover either damages or a quantum meruit – see The Dione [1975] 1 Lloyd’s Rep. 115 at p. 118.”
“It is an established principle concerning the assessment of damages that a person who has wrongfully used another’s property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the other s property.”
“(1) Damages assessed by reference to the value of the use wrongfully made of property (sometimes termed user damages) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass). The rationale of such awards is that the person who makes wrongful use of property, where its use is commercially valuable, prevents the owner from exercising a valuable right to control its use, and should therefore compensate him for the loss of the value of the exercise of that right. He takes something for nothing, for which the owner was entitled to require payment. … (6) Common law damages for breach of contract are intended to compensate the claimant for loss or damage resulting from the non-performance of the obligation in question. They are therefore normally based on the divergence between the effect of performance and non-performance upon the claimant s situation. (7) Where damages are sought at common law for breach of contract, it is for the claimant to establish that a loss has been incurred, in the sense that he is in a less favourable situation, either economically or in some other respect, than he would have been in if the contract had been performed. (8) Where the breach of a contractual obligation has caused the claimant to suffer economic loss, that loss should be measured or estimated as accurately and reliably as the nature of the case permits. The law is tolerant of imprecision where the loss is incapable of precise measurement, and there are also a variety of legal principles which can assist the claimant in cases where there is a paucity of evidence. (9) Where the claimant s interest in the performance of a contract is purely economic, and he cannot establish that any economic loss has resulted from its breach, the normal inference is that he has not suffered any loss. In that event, he cannot be awarded more than nominal damages.”
“where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed, as for example in cases concerned with the breach of a restrictive covenant over land, an intellectual property agreement or a confidentiality agreement. Such cases share an important characteristic with the cases in which Lord Shaw’s second principle Watson, Laidlaw & Co Ltd v Pott, Cassels & Williamson 1914 SC (HL) 18, per Lord Shaw of Dunfermline at pp. 29-31, setting out a principle of “price or hire”, applicable “wherever an abstraction or invasion of property has occurred” and Nicholls LJ’s user principle were applied. The claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the asset in question. The defendant has taken something for nothing, for which the claimant was entitled to require payment.”
“(10) Negotiating damages can be awarded for breach of contract where the loss suffered by the claimant is appropriately measured by reference to the economic value of the right which has been breached, considered as an asset. That may be the position where the breach of contract results in the loss of a valuable asset created or protected by the right which was infringed. The rationale is that the claimant has in substance been deprived of a valuable asset, and his loss can therefore be measured by determining the economic value of the right in question, considered as an asset. The defendant has taken something for nothing, for which the claimant was entitled to require payment”
“39. In our view, these conclusions are enough to enable the Owners to succeed on user damages, but we will address also the question of remoteness which was raised in this context. Mr Kenny described this as “complementary” to the submission that user damages are based on a valuation of the lost right, but capable of standing independently: if the former submission had failed, he could still have relied on the latter. 40. The Owners contend that the MOAs with the buyers, and any effect they might have had on the amount of any pecuniary detriment to the Owners, are circumstances which are too remote to be taken into account in determining their claim for damages: each MOA is res inter alios acta. Mr Kenny submitted that a transaction which is too remote for this purpose is to be disregarded, whether its effect, if it were taken into account, would be to increase or reduce those damages: remoteness, he said, is not just a rule in reduction of damages. The Charterers dispute this: on their case, the doctrine of remoteness operates only one way: it precludes recovery of certain losses that fall within the compensatory principle; it does not expand recovery to allow the innocent party to recover damages for losses it has not suffered.”
“46. We conclude that, where a contract between a claimant and a third party is too remote to be taken into account in assessing damages for breach, then it is disregarded for all such purposes. This is not to say, in Mr Karia’s words, that the doctrine of remoteness expands recovery to allow an innocent party to recover damages for losses which it has not suffered. Rather, the point is that the existence of contracts which are too remote does not affect the quantification of damages payable on the ordinary measure. In short, we conclude that the sale contracts are, to adopt the language of Bankes LJ, to be regarded as “accidental” as between the present Owners and Charterers, or “peculiar” to the Owners - or, if Latin is still permissible, to be regarded as res inter alios acta - and that therefore they do not affect the Owners’ claims as a result of the Charterers’ breach of contract and use of the Vessels in the overrun periods.”
“23. If, therefore, one considers what these parties, contracting against the background of market expectations found by the arbitrators, would reasonably have considered the extent of the liability they were undertaking, I think it is clear that they would have considered losses arising from the loss of the following fixture a type or kind of loss for which the charterer was not assuming responsibility. Such a risk would be completely unquantifiable, because although the parties would regard it as likely that the owners would at some time during the currency of the charter enter into a forward fixture, they would have no idea when that would be done or what its length or other terms would be. If it was clear to the owners that the last voyage was bound to overrun and put the following fixture at risk, it was open to them to refuse to undertake it. What this shows is that the purpose of the provision for timely redelivery in the charterparty is to enable the ship to be at the full disposal of the owner from the redelivery date. If the charterer’s orders will defeat this right, the owner may reject them. If the orders are accepted and the last voyage overruns, the owner is entitled to be paid for the overrun at the market rate. All this will be known to both parties. It does not require any knowledge of the owner’s arrangements for the next charter. That is regarded by the market as being, as the saying goes, res inter alios acta.”
“The case therefore raises a fundamental point of principle in the law of contractual damages: is the rule that a party may recover losses which were foreseeable (not unlikely) an external rule of law, imposed upon the parties to every contract in default of express provision to the contrary, or is it a prima facie assumption about what the parties may be taken to have intended, no doubt applicable in the great majority of cases but capable of rebuttal in cases in which the context, surrounding circumstances or general understanding in the relevant market shows that a party would not reasonably have been regarded as assuming responsibility for such losses?”
“22. What is the basis for deciding whether loss is of the same type or a different type? It is not a question of Platonist metaphysics. The distinction must rest upon some principle of the law of contract. In my opinion, the only rational basis for the distinction is that it reflects what would have been reasonable and have been regarded by the contracting party as significant for the purposes of the risk he was undertaking.”
“I therefore allow the appeal.”
“If the orders are accepted and the last voyage overruns, the owner is entitled to be paid for the overrun at the market rate. All this will be known to both parties.”
“My Lord, in my client’s village of [XXXX], they speak of little else.”
“ I think that the rule as to measure of damages in a case of this kind must be this: the measure is the difference between the position of a plaintiff if the goods had been safely delivered and his position if the goods are lost. What, then, is that difference? If the goods are delivered he obtains them, but in order to obtain them he must pay the freight in respect of which there is a lien on them. If there were no lien, he would be entitled to the goods without paying anything. Upon getting the goods he could sell them. He therefore would get the value of the goods upon their arrival at the port of discharge less what he would have to pay in order to get them. But what is to be the rule in getting at the value of the goods? If there is no market for such goods, the result must be arrived at by an estimate, by taking the cost of the goods to the shipper and adding to that the estimated profit he would make at the port of destination. If there is a market there is no occasion to have recourse to such a mode of estimating the value; the value will be the market value when the goods ought to have arrived. But the value is to be taken independently of any circumstances peculiar to the plaintiff. It is well settled that in an action for non-delivery or non-acceptance of goods under a contract of sale the law does not take into account in estimating the damages anything that is accidental as between the plaintiff and the defendant, as for instance an intermediate contract entered into with a third party for the purchase or sale of the goods. It is admitted in this case that, if the plaintiffs had sold the goods for more than the market value before their arrival, they could not recover on the basis of that price, but would be confined to the market price, because the circumstance that they had so sold the goods at a higher price would be an accidental circumstance as between themselves and the shipowners; but it is said that, as they have sold for a price less than the market price, the market price is not to govern but the contract price. I think, that if the law were so, it would be very unjust. I adopt the rule laid down in Mayne on Damages, which gives the market price as the test by which to estimate the value of the goods independently of any circumstances peculiar to the plaintiff, and so independently of any contract made by him for sale of the goods.”
“The truth is that the respondents' argument leaves them in a dilemma. Either the sub-sale was of the identical article which was the subject of the principal sale or it was not. If it was not, it is absurd to suppose that a contract with a third party as to something else, just because it is the same kind of thing, can reduce the damages which the unsatisfied buyer is entitled to recover under the original contract. If, on the other hand, the sub-sale is of the selfsame thing or things as is or are the subject of the principal sale, then ex hypothesi the default of the seller in the original sale is going to bring about an enforced default on the part of the original buyer and subsequent seller. And how can it ever be known that the damages recoverable under that contract will be calculable in precisely the same way as in the original contract ? All that will depend upon what the sub-buyer will be able to make out. The only safe plan is, therefore, in the original contract, to take the difference of market price as the measure of damages and to leave the sub-contract and the breach thereof to be worked out by those whom it directly concerns.”
“It is well settled that in an action for non-delivery or non-acceptance of goods under a contract of sale the law does not take into account in estimating the damages anything that is accidental as between the plaintiff and the defendant, as for instance an intermediate contract entered into with a third party for the purchase or sale of the goods.”
“The purchaser here has received inferior goods of smaller value than those he ought to have received. He has lost the difference in the two values, and it seems to me immaterial that by some good fortune, with which the plaintiffs have nothing to do, he has been able to recoup himself what he paid for the goods. If the goods had been of the quality contracted for he might have sold them at a higher price and made a profit. In truth, as I have already pointed out, in the class of case we are dealing with, the contract price does not directly enter into the calculation at all.”
“… sub-contracts do not come into account, for the buyer is under no obligation to use these goods for his sub-contract; he may buy in the market, and he will then be left with goods damaged to a certain extent at the then market price of such goods instead of sound goods at the then market, price of sound goods. The difference between the two market prices should be the measure of damages. If the buyer delivers under the sub-contract the damaged goods and has to pay damages, these damages will not be the measure of damages. As Lord Dunedin says[1914] AC 510 , 523…”
“If these damages are greater than the difference in market price of sound and damaged goods, they will clearly not be recoverable. The result seems the same if they are less; it is res inter alios acta: " circumstances peculiar to the plaintiff," which cannot affect his claim one way or the other. If the buyer is lucky enough, for reasons with which the seller has nothing to do, to get his goods through on the sub-contract without a claim against him, this on principle cannot affect his claim against the seller any more than the fact that he had to pay very large damages on his sub-contract would affect his original seller.”
“It is always so treated, as I understand the law, unless the buyer can affect the seller with such notice of the sub-contract as makes him liable for loss by its non-fulfilment.”
“For these reasons I think that Greer J. was right in dis-regarding the fact that the buyers, for reasons we do not know, were able to deliver inferior goods under their sub-contract, without having to pay damages, just as he would have been right in disregarding the fact if they had had to pay larger damages than the difference in market value.”
“72. The normal measure of damages for a failure to deliver goods is the estimated loss directly and naturally resulting, in the ordinary course of events from the seller's breach of contract: see section 51(2). Where there is an available market for the goods, the measure of damages is prima facie the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or (if no time was fixed) at the time of the refusal to deliver: see section 51(3). However, the application of section 51(2) may mean that the prima facie rule in section 51(3) is not applied, or may be “displaced” in the particular circumstances of the case. An example was given by Devlin J in [Chao v British Traders & Shippers Ltd[1954] 2 QB 459 , at p. 489]: a string contract for specific goods. The issue in each case depends on the particular circumstances. 73. In the present case, the sale contracts formed part of a series of what were effectively financing transactions involving Abilo, Euro-Asian and Real Oil (or another of Mr Igniska’s companies). They were not exactly string contracts, and I would accept that Euro-Asian could have performed its delivery obligation under the sub-sale other than through the purchase from Abilo. Nevertheless, there was a proper factual foundation, as set out at paras 72 to 79 of the judgment, which I have endeavoured to summarise at paras 12 to 14 above, for the judge's conclusion that “it was always contemplated” that Euro-Asian would nominate the same cargo to perform the Real Oil contracts that Abilo nominated to perform the sale contracts, so that he was entitled to his view that the damages he awarded was the measure of loss contemplated by the parties.”
“Res inter alios acta 11. The general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimant s loss. It is difficult to identify a single principle underlying every case. In spite of what the latin tag might lead one to expect, the critical factor is not the source of the benefit in a third party but its character. Broadly speaking, collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus a gift received by the claimant, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them. The same is true of a benefit received by right from a third party in respect of the loss, but for which the claimant has given a consideration independent of the legal relationship with the defendant from which the loss arose. Classic cases include loss payments under an indemnity insurance: Bradburn v Great Western Railway Co (1874) LR 10 Ex 1. Or disability pensions under a contributory scheme: Parry v Cleaver[1970] AC 1 . In cases such as these, as between the claimant and the wrongdoer, the law treats the receipt of the benefit as tantamount to the claimant making good the loss from his own resources, because they are attributable to his premiums, his contributions or his work. The position may be different if the benefits are not collateral because they are derived from a contract (say, an insurance policy) made for the benefit of the wrongdoer: Arab Bank plc v John D Wood Commercial Ltd[2000] 1WLR 857 , paras 92—93 (Mance LJ). Or because the benefit is derived from steps taken by the claimant in consequence of the breach, which mitigated his loss: British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd[1912] AC 673 , 689, 691 (Viscount Haldane LC). These principles represent a coherent approach to avoided loss. In Parry v Cleaver[1970] AC 1 , 13, Lord Reid derived them from considerations of justice, reasonableness and public policy. Justice, reasonableness and public policy are, however, the basis on which the law has arrived at the relevant principles. They are not a licence for discarding those principles and deciding each case on what may be regarded as its broader commercial merits.”
“What difference did the breach make?”
“No difference whatsoever”