BRITISH INDIA STEAM NAVIGATION CO., LTD., Appellant, and THE ATTORNEYGENERAL,

138-NLR-NLR-V-60-BRITISH-INDIA-STEAM-NAVIGATION-CO.-LTD.-Appellant-and-THE-ATTORNEYGENERAL-.pdf


WEERASOORIYA, J.—British India Steam Navigation Co., Ltd.
v. The Attorney-General
553
Present: Weerasoorlya, J., and K. D. de Silva, J.
BRITISH INDIA STEAM NAVIGATION CO., LTD., Appellant, andTHE ATTORNEY-GENERAL, Respondent
8. 0. 678—D. 0. Colombo, 36,065lM
Contract—Carriage of goods by ships—-Demurrage—Computation of lay time anddemurrage time—Civil Law Ordinance (Gap. 66), s. 2—Carriage of Goods bySea Ordinance (Gap. 71)—Pilots Ordinance (Gap. 264)—Ceylon QuarantineRegulations, Chapter II, Regulation 6 (I).
In a claim for demurrage against the Government of Ceylon in respect of acargo of rice conveyed from Rangoon to Colombo in the s.s, “ Padana ” ownedby the plaintiff-appellant—
Held: Under section 2 of the Civil Law Ordinance questions relating tocarriage of goods by ships and demurrage are governed by English law.
Although, in a port charterparty, the number of lay days for the discharge ofcargo is usually computed from the time the ship is within the port, i.e., withinthe “ commercial area ” of the port, it is not unusual for express provision to bemade that the days for discharging the cargo should begin at some arbi-trarily selected anterior point of time. Accordingly, express provision may bemade in a charterparty that the lay time should commence to run from thepoint of time when notice of readiness to discharge cargo is given while the shipis still outside the commercial area of the port of Colombo. In such a case,if the parties know that pratique is not granted under Regulation 6 (i) of ChapterII of the Ceylon Quarantine Regulations until a ship has entered the area withinthe breakwater and, nevertheless, expressly provide that if the ship arrives andanchors off the port lay time should commence on her doing so, they in effeotprovide that lay time should oommence notwithstanding that pratique has notbeen granted and the cargo cannot be discharged.
The genei’al rule is that lay time and demurrage run continuously in theabsence of express agreement. When once a vessel is on demurrage no excep-tions will operate to prevent demurrage continuing to be payable unless theexceptions clause in the contract is dearly worded so as to have that effect.
A
^APPEAL from a judgment of the District Court, Colombo.
Walter Jayawardene, with Neville Wijeralne, Nimal Senanayake and
Fernando, for the plaintiff-appellant. V.
V. Tennekoon, Senior Crown Counsel, with C. H. M. P. Fernando,Crown Counsel, for the defendant-respondent.
Cur. adv. wilt.
July 14, 1959. Weeeasooriya, J.—
This action relates to a claim for demurrage against the Government ofCeylon in respect of a oargo of rice conveyed from Rangoon to Colomboin the s.s. “ Padana ” owned by the plaintiff-appellant the carriage ofwhich is governed by the agreement marked “ A ”,
The s.s. “ Padana ” arrived in Colombo and anchored outside the porton the 26th August, 1953, at 7.50 a.m. and notice of readiness to dischargewas given on the same day at 8.30 a.m. On the 27th August, 1953, she
24—LX
2J. N. R 3898-1,583 (8/59).
554
WEERASOORIYA, J.—British India Steam Navigation Oo,, Ltd.
v. The Attorney-General
anchored inside the port at 5.31 p.m. and was granted pratique at6.10 p.m. The discharge of the cargo, approximately 5,114 tons, wascompleted at 1.15 a.m. on the 8th September, 1953. The stipulatedtime for discharge, calculated at an average rate of 800 tons per day interms of clause 4 (1) of the agreement, was 6 days, 9 hours and 26 minutes,and beyond this time demurrage became payable at the rate of Rs. 3,000per day, and pro-rata for any part of a day, the vessel was detained forthe purpose of unloading.
The substantial point in issue is when the lay time of 6 days, 9 hoursand 26 minutes commenced to run. The plaintiff contends that it com-menced at 8.30 a.m. on the 26th August, 1953, when notice of readinessto discharge was given while the ship was still outside the port. If theplaintiff’s contention is correct a sum of Rs. 14,460/41 would have becomepayable as demurrage. Giving credit in a sum of Rs. 12,075 paid on thataccount by the Government of Ceylon, the plaintiff seeks to recover inthis action filed against the Attorney-General the balance sum ofRs. 2,385/41.
The defence is that lay time commenced to run from 6.10 p.m. onthe 27th August, 1953, (when pratique was granted after the ship hadcome into port) and the demurrage payable on that basis is onlyRs. 10,743/75 ; that the sum of Rs. 12,075 had been paid as demurrageunder a mistake of fact in the belief that pratique was granted at 6.10 a.m.on the 27th August, 1953 ; and in the premises the Attorney-Generalprayed for a dismissal of the plaintiff’s action and counter-claimed a sumof Rs. 1,331 /25 being the amount paid in excess. At the trial, in additionto the issues based on the pleadings, an issue was framed whether in termsof the agreement “ A ” the time for discharge of cargo for assessing de-murrage commenced from 5.31 p.m. on the 27th August, 1953 (i.e.,when the ship anchored in the port). It was agreed that if this issue isanswered in the affirmative the plaintiff’s action would fail and also thatthe defendant would not be entitled to judgment in any sum inreconvention.
After trial the Additional District Judge of Colombo dismissed theplaintiff’s action and gave judgment for the defendant in the sum claimedin reconvention. From this judgment the plaintiff has appealed.
Under section 2 of the Civil Law Ordinance (Cap. 66) questions relating(inter alia) to carriage of goods by ships and demurrage are governed byEnglish law. Although the Carriage of Goods by Sea Ordinance (Cap. 71)contains certain provisions relating to the carriage of goods by sea none ofthem would appear to apply to the matters in dispute in the present case.
The agreement “ A ” is in the nature of a eharterparty entered intobetween various ship-owning companies (including the plaintiff) andcollectively referred to as the “ Conference Lines ”, on the one part, andthe Government of Ceylon, on the other part. The material portion ofclause 4 (1) of the agreement reads—
“ Provided, however, if on arrival of a cargo of rice loaded in Burmaat the port of Colombo or Galle such cargo has not been discharged atan average rate of 800 tons per day or over, with not less than 4 hatches
WEERASOORIYA, J.—British India Steam Navigation Co., Ltd.
v. The Attorney-General
555
available, otherwise pro-rata reduction, the Government shall paydemurrage to the Conference Lines at the rate of Eupees Three Thou-sand (Es. 3,000) per day and pro-rata for any part of a day the vesselis detained for unloading beyond the permissible time . . . . ”
Clause 4 (II) provides as follows—
“ The time taken for discharge for the purpose of assessing thedemurrage payable as outlined in Clause 4 (1) above to commencefrom the time the vessel arrives and anchors off or in the port ofdischarge and to continue until completion of discharge, non-weatherworking days and detention due to mechanical defects of the vessel’sgear to be excluded but Sundays and holidays included. ”
Clause 8 provides that—
“ The Act of God, perils of the sea, strikes, lock-outs, aocidents,Government prohibitions or requisitioning, all future wars or hostilitiesand other causes beyond the control of the Government or the ConferenceLines are mutually excepted throughout. ”
It may be stated that clause 4 (1) specially provides that the transportand carriage of each separate cargo of rice shall be governed by the termsand conditions of the bill of lading relating to that cargo and requiredto be issued by the ship-owner. The particular bill of lading relating tothe cargo brought in the s.s. “ Padana ” is, however, not in evidence,and the trial has proceeded on the basis that the terms governing thecarriage of the cargo are those contained in the agreement.
The evidence of Mr. de Silva, who was the Traffic Manager of the Col-ombo Port Commission during the relevant time, is that no ocean-goingvessel is permitted to enter the Colombo harbour without a pilot, that aship would wait for a pilot at a distance varying from 400 yards up to a mileor two from the breakwater, that on entering the harbour she is allocated aberth by the Master Attendant through the pilot and that in 1953 vesselsso berthed discharged their cargo into lighters which were brought along-side them. He stated that due to congestion a ship may have to anchoroutside the harbour till such time when she could be brought inside,but it also happened sometimes that a ship delayed coming in forreasons of her own.
It would appear that the limits of the port of Colombo as defined byproclamation issued under the Pilots Ordinance (Cap. 264) extend outsidethe breakwater and up to a distance of three miles. But according toMr. de Silva all loading and unloading of cargo take place within that areaof the port which is bounded by the breakwater on the seaward side andby the perimeter wall of the Customs on the land side, and is commonlyknown in shipping circles as the “ commercial area ” of the port.
It is to be noted that in clause 4 (1) of the agreement “ A ” the point ofdestination of the cargo is given as “ at the port of Colombo or Galle ”.
The law applicable as regards the commencement of lay days in a portcharterparty is stated thus in Carver on Carriage of Goode by Sea1: . . .
1 (9th edition) 916.
566WEERASOORIYA, J.—British India Steam Navigation Co., Ltd.
v. The Attorney-General
“ where the contract provides that the ship is to load or discharge at aport the lay days commence as soon as the ship is within the port, i.e.,within the port in a commercial sense, and placed at the charterer’sdisposal in a state of readiness, so far as the ship is concerned, for loadingor discharging ’ ’. This statement of the law is based on the leading case ofLeonis Steamship Company, Ltd. v. Joseph Bank, Ltd.1, To quote fromthe judgment of Kennedy, L. J., in that case: “ Just as a port mayhave one set of limits, if viewed geographically, and another for fiscal orpilotage purposes, so when it is named in a commercial document, and forcommercial purposes, the term is to be construed in a commercial sensein relation to the objects of the particular transaction … If,then, we find a charterparty naming a ‘ port ’ simply, and without furtherparticularity or qualification, as the destination for the purpose of loadingor unloading, we must construe it in regard to the ‘ arrival ’ of the shipat that destination as meaning that port in its commercial sense, that isto say, as it would be understood by persons engaged in shipping businessand in regard to the arrival of a ship there for the purposes of the charter-party. In the case of a small port, ‘ port ’ may or may not mean thewhole of the geographical port. In the case of a widely extended area,such as London, Liverpool or Hull, it certainly signifies some area whichis less than the geographical port, and which may, I think not unfitlybe called commercial area
It is clear, therefore, that if clause 4 (1) of the agreement stood withoutany qualification the lay days would have commenced to run only afterthe S. s. “ Padana ” had arrived within the area referred to in the evidenceof Mr. de Silva as the commercial area of the port of Colombo and wasthere placed at the charterer’s disposal in a state of readiness, as far asthe ship was concerned, for discharging her cargo. But it is not unusualfor express provision to be made in a charterparty that the lay days forloading or discharging should begin at some arbitrarily selected anteriorpoint of time. For example, in Horsley Line v. Roechling 2 (a Scottishcase the report of which is not available to me) the lay days were heldto have commenced before the ship arrived within the commercial limitsof the port. According to the note of that case in Carver on Carriage ofGoods by Sea3 although the charterparty required the cargo to be deliveredat the port of Savona it also specially provided that time for dischargingwas to commence on the ship being reported at the custom-house. Shearrived in Savona Boads, which were oucside the commercial limits of theport, and in accordance with the practice of the port was at once reportedat the custom-house. But owing to the crowded state of the port somedelay ensued before the ship could enter the port and still more delaybefore she was berthed where she could discharge. It was held that thecharterparty provided in clear and unambiguous terms for commencementof the lay days as soon as the ship was reported at the custom-house.
In North River Freighters, Ltd. v. H. E. President of India. 4 the charter-party provided for the ship to proceed to one safe berth at the port ofDairen in Manchuria and there load a full and complete cargo. While
(9th edition) 921,
(19S6) 2 W.L.R, 111.
1 (1908) 1 K. B. 499.* (1908) S.C. 866.
WEERASOORIYA, J.—B rilish India Steam Navigation Co., Ltd. v.
The Attorney-General
557
the charterparty contained the usual provisions for lav days to commence24 hours after notice of readiness to load had been given by the master,,it also contained a separate clause (No. 5) stating that time lost in waiting'for berth was to count as loading time. The ship arrived at Dairen inthe early morning of the 3rd June, 1951, and came to anchor in thequarantine anchorage, within the commercial limits of the port, whereshe was boarded by customs and port officials, who sealed up her radio,took away a number of the ship’s documents and banned all communica-tion with the shore. No notice was received by the ship from thecharterer’s agents (who knew of her arrival) as to the loading berth, andthe master was unable to give notice of readiness to load to the charterer’sagents until the 11th June. The ship berthed on the 16th June. Thisbeing a berth charterparty, lay time would normally not have begun torun (in the absence of express provision to the contrary) before the shiphad actually berthed. The ship-owners, however, claimed to be entitledunder clause 5 to demurrage on the basis that lay time commenced fromthe 3rd June, and the Court of Appeal in England held that the provisionsof that clause p it the risk of time wasted in waiting for a berth upon thecharterer and such time (from the 3rd June) counted as lay time.
In the present case, notwithstanding that clause 4 (1) of the agreementgives the destination of the cargo as “ at the port of Colombo or Galle ”the plaintiff relies on clause 4 (II) which specially provides that the timetaken for discharge for the purpose of assessing the demurrage payableis to commence from the time the vessel arrives and anchors “ off or in ”the port of discharge. The case for the plaintiff therefore turns on themeaning to be given to the expression “off or in
The learned trial Judge was of the view that the provision in clause 4 (II)for lay time to commence when the vessel anchored off the port of dis-charge had been made because the parties contemplated that as a resultof congestion in the port of Colombo (which is one of the two ports ofdischarge specified in clause 4 (1)) the ship for no fault of her own may becompelled to anchor off the port until a berth is available within. Heheld that lay days are calculable from the time the vessel anchored off theport of Colombo until the cargo was completely discharged. Prom thisfinding I see no reason to differ. I think that the expression “ off ..
the port of discharge ” in clause 4 (II) covers the position of the s.s.“Padana ” when it lay at anchor outside the breakwater of the Colomboharbour at 8.30 a.m. on the 26th August, 1953, the “ pert of discharge inthat context being equated to the commercial area of the port of Colomboas referred to in the evidence of Mr. de Silva.
Learned Crown Counsel submitted that there is no evidence that theship anchored off the port because of congestion within the port or othersimilar cause and that in the absence of such evidence the possibilityremained that the ship so anchored for reasons of her own. This matterwas, however, raised for the first time at the hearing of the appeal. Ifthe point was disputed at the trial I fail to understand why an appropriateissue was not framed. Although, therefore, there is no evidence (other2*J. W. It 3098 (8/59).
.558\ EEBASOORIYA, J-—British India Steam Navigation Co., Ltd. v.
The Attorney-General
'than certain hearsay evidence given by Mr. Matheson, a witness calledby the plaintiff) as to why the ship anchored off the port of Colombo I<lo not think that we should entertain the objection in appeal.
The further question that arises is whether clause 4 (II) is itself subjectto limitations or exceptions contained in any other provisions of the agree-ment. For the Crown it is contended that clause 4 (II) is subject to theexceptions contained in clause 8. The argument based on clause 8 pro-ceeds on the following lines : The s.s. “ Padana ” was granted pratiqueonly at 6.10 p.m. on the 27th August, 1953, and the period betweenanchoring off the port of Colombo and the granting of pratique shouldbe excluded from the computation of lay time because under 1 regulation6 (1) of Chapter II of the Ceylon Quarantine .Regulations (Volume III,Subsidiary Legislation of Ceylon, page 74) the cargo could not have beenlawfully discharged until the ship was admitted to pratique ; and theoperation of this regulation is a Government prohibition or a cause beyondthe control of the Government within the meaning of the exceptions inclause 8.
Clause 4 (II) provides not only for the commencement of lay time butalso that lay time as well as demurrage time, once commencing, shall runcontinuously until completion of discharge, subject to the exceptionsmentioned in the clause itself (non-weather working days and detentiondue to mechanical defects of the vessel’s gear). The general rule is thatlay time and demurrage time run continuously in the absence of expressagreement. According to Scrutton on Charter-parties 1 when once a vesselis on demurrage no exceptions will operate to prevent demurrage con-tinuing to be payable unless the exceptions clause is clearly worded so asto have that effect. The same view is expressed in Career on Carriage ofGoods by Sea 2.
It appears to me, therefore, that clause 4 (XI) was intended by the partiesto serve as a special provision for the commencement of lay time anddemurrage time and for such time running without interruption subjectonly to the exceptions specially mentioned in that clause ; and that theexcepted perils and other exceptions in clause 8 do not apply to clause4 (II). But even if I should be wrong in taking this view, I do not thinkthat the expression “ Government prohibitions ” or “ other causes beyondthe control of the Government ” in clause 8 can, in the circumstances ofthe present case, be construed as including the operation of Regulation 6(1)in Chapter II of the Ceylon Quarantine Regulations prohibiting the dis-charge of cargo from a ship prior to pratique being granted.
It would appear from the documents P15 and D2 that in the port ofColombo pratique is not granted until a ship has entered the harbour,by which I understand the area within the breakwater. I think it isreasonable to infer that this fact and also the terms of Regulation 6 (1)were known to the parties at the time they entered into the agreement,although there is no direct testimony to that effect from any wdtness.When the parties, having such knowledge, expressly provided in clause4 (II) that if the ship arrives and anchors off the port lay time should 1
1 (15th edition) 343.
– (9th edition) 375.
WEERASOORIYA, J.—British India Steam Navigation Co., Ltd. v- 559
The Attorney-Oeneral
commence on her doing so, they in effect provided that lay time shouldcommence notwithstanding that pratique has not been granted and thecargo cannot be discharged. To take a contrary view would, in myopinion, reduce to a complete nullity the provisions in olause 4 (II)relating to the commencement of lay time on the ship arrivingand anchoring off the port.
In Steamship “Induna ” Co., Ltd. v. British Phosphate Comm ssioners,The Loch Dee 1 the charterparty provided for the cargo to be dischargedat the rate of 1,500 tons a working day of twenty-four consecutive hours,but lay days were not to count and demurrage was not to accrue duringthe period of any delay or hindrance in discharging cargo from, inter alia,any cause whatsoever beyond the control of the charterers. The 1,500tons a day could not, however, be discharged without working night andday. Under an order which was in operation at the port of discharge atthe time the charterparty was entered into, but unknown to bothcharterers and ship-owners, it was illegal to discharge cargo between9 p.m. and 8 a.m. and in consequence delay was caused in dischargingThe ship-owners’ claim for demurrage was resisted by the charterers onthe ground that the order prohibiting the discharge of cargo between9 p.m. and 8 a.m. came within the exception “ any cause whatsoeverbeyond the control of the charterers ", In upholding the contention ofthe charterers Sellers, J., stated : “ If both parties or one of the partiesknew at the time of making the contract of existing circumstances whichwould or might occasion delay, other considerations would arise, but whenneither party knew, as here, I see no reason why effect shouldnotbe givento that which they have made clear by their contract. If parties arecontracting on the basis of a state of affairs known to them, or which itcan be shown they were prepared to accept, then an exception relatingto something outside then control would, no doubt, be construed to relateto some circumstances or event not so known or something exceptional orabnormal in comparison with the contemplated state of affairs. . . .
In this contract there are exceptions dealing with delay by reason of ice,epidemics, labour or political disturbances. Any one of these might ingiven circumstances be proved to have existed at the time the contractwas made, but, if the circumstances were unknown to the parties, it seemsto me that they could be relied on if they existed and caused delay whenthe vessel arrived for loading or discharge ”.
In Ciampa v. British India Steam Navigation Co., Ltd.,2 the exceptionrelied on by the ship-owners was “ restraint of princess ”, and the cir-cumstances claimed by them as bringing the case within that exceptionexisted at the time of the contract and wean known to them. Rowlatt, J.,stated : “ When facts exist which show conclusively that the ship wasinevitably doomed before the commencement of the voyage to becomesubject to a restraint, I do not think that there is a ‘restraintof princess ’ ”, In the present case, if the construction of clause 8 ascontended for by the Crown is accepted, the provisions of clause 4 (II)that in the event of the ship arriving and anchoring off the port lay timeshould commence from that time, were doomed from the very outset.
I do not think that such a construction is a reasonable one.
(1949) 1 A. E. R. 522.
11 (1915) 2 K.B. 774.
560B ASX AY AKK, C. J.—WijegoonetiUeke v. WijegoondiUeke
In my opinion the learned trial Judge was wrong in holding that theperiod between anchoring off and admission to pratique should be1 ex-cluded from the computation of lay time.
The judgment and decree appealed from are set aside. The claim inreconvention of the defendant is dismissed and judgment will be enteredfor the plaintiff as prayed for with costs in both Courts.
K.D, de Silva, J.—I agree.
Appeal allowed„