Off Hire under the New York Produce form: “Loss of Time” & “Time ...

8. In The Athena, there could be no doubt that the Master’s refusal to sail toBenghazi prevented the full working of the ship and was within the list ofspecified causes (“default of master” had been added by the parties to thestandard form). But had there been “loss of time” from that cause and, if so, howmuch “time [was] thereby lost”?9. The arbitrators held that “… all [charterers] need to do … is demonstrate that therewas … an immediate loss of time. On this last, we are satisfied that the consequence ofthe Master’s failure to proceed directly to Benghazi was a loss of time by her delayedarrival at that port. … The time was lost in relation to the service immediately requiredof her and that is sufficient.” In other words, “loss of time” in clause 15 is loss oftime in performing the service immediately required 3 . Since the “loss of time” inquestion was by way of total interruption in service (i.e. full non-working),there was no partial service to be taken into account when working out “the timethereby lost”. This was not a case of partial interruption, or reduction, of theservice (i.e. non-full working).10. The owners challenged the award, arguing that clause 15 required a ‘loss oftime in performing the charter service overall’ or ‘loss of time to the adventureoverall’ (emphasis added). This concept of loss of time ‘overall’ was notprecisely defined, but appears to mean a net prolongation of the ship’s thencurrent employment. Thus, in The Athena it was said there was no ‘overall’ lossof time because the ship did not berth at Benghazi later than she would havedone without the drifting. But if delay ‘overall’ is what is required, equally itwould be absent (or reduced) where, but for the off hire event, there wouldhave been delay at a yet later stage, e.g. completing discharge, sailing fromBenghazi, arriving or berthing at the next load port under the time charter, etc.11. Walker J. allowed the owners’ appeal, concluding that there was no “timethereby lost” and therefore no off hire 4 . He was persuaded in particular by the3On that basis, the finding that arrival at Benghazi was delayed was not necessary: duringthe ‘drifting period’, the ship should have been making for Benghazi; she fully withheld her services,making no progress towards her ordered destination; there was thus a full loss of service for 11 days.4Walker J.’s judgment is not as clear about this as it could have been, but we read him asagreeing (with the charterers and the arbitrators) that there was a “loss of time”, but reasoning thatthere was no “time thereby lost”. Hence, for example: his explanation at [27] of the formulation of thequestion of law on which leave to appeal had been granted under the 1996 Act; his conclusion at[69]-[70] that The Berge Sund did not assist the charterers because “The only question which arose in [the3

easoning of Tuckey J. in The Ira [1995] 1 Lloyd’s Rep. 103. As appears below,we respectfully believe that reasoning to be unsatisfactory. But we turn first toolder authorities.12. We start with Hogarth v. Miller [1891] AC 48. The off hire clause provided that,“In the event of loss of time from [various causes], whereby the working of the vessel isstopped for more than forty-eight consecutive hours, the payment of hire shall ceaseuntil she be again in an efficient state to resume her service.” (our emphasis). Thus,the clause required the charterer to demonstrate “loss of time”, and did so in away echoed by the first line of clause 15 of the New York Produce form 5 .13. The question that arises in The Athena was not addressed in terms (nor has itbeen since). However the House of Lords does seem to have assumed that anyinterruption to the efficient working of the ship would involve “loss of time”.Lord Halsbury, articulating the view of the majority, said at p.54, “The hirer ofthe vessel wants to use the vessel for the purpose of the adventure and he iscontemplating the possibility that by some of the causes indicated in the clause itself…the efficient working of the vessel may be stopped, and so loss of time may be incurred;and he protects himself by saying, that during such period as the working of the vesselis stopped for more than forty-eight consecutive hours, payment shall cease.” (ouremphasis).14. This understanding of the House of Lords’ decision was also that of StaughtonL.J. in The Berge Sund [1993] 2 Lloyd’s Rep. 453, on which the arbitrators in TheAthena relied. Staughton L.J., having quoted from Hogarth, said at 459 rhc that:“… whether one is considering “loss of time”, or “preventing the efficient working ofthe vessel” or “again in an efficient state”, [in] each case one has to decide whether [theship] … was in the words of Lord Halsbury “efficient to do what she was required todo” by the charterers.”Berge Sund] was whether the off-hire clause was engaged. … [It] had no concern whatever with theconsequences of an off-hire clause being engaged”; and his conclusion at [47]-[49] that Hogarth v. Millerdid not assist the charterers because, since the clause in that case was a period clause, “Nothing inwhat [Lord Halsbury] said involved any concept of net loss of time” (our emphasis).5Similarly, the clause in Tynedale Steamship Co v. Anglo-Soviet Shipping Co (1936) 54 Ll.L.Rep.341, 41 Com Cas 206 was this: “In the event of loss of time caused by [various causes] … preventing theworking of the steamer and lasting more than 24 consecutive hours, hire to cease from commencement of suchloss of time until steamer is again in efficient state to resume service …”.4

Robert Goff J.’s explanation is that in a case of partial performance during theperiod of impaired working, the charterers do “escape [some] liability”, namelyliability for hire equivalent to the extent to which they did not have full use ofthe ship “for the services immediately required of her” during that period. On thatview of the clause, it does not operate by reference to ‘knock-on consequences’(whichever way they fall out), only by reference to what was, or was not, beingdone during the period of operation of the off hire cause: if due to that causethe charterers did not have the use of the ship for the service immediatelyrequired of her, she was off hire. (The Athena is a case about ‘knock-onconsequences’, although what swayed Walker J. can be expressed as “had theship not been drifting, she would have been idle somewhere else during that period”.Walker J. allowed that to affect the off hire calculation because the time takenfor service later required of the ship was reduced by the late arrival thatresulted from the drifting. If the off hire clause is concerned solely with theservice immediately required, that should not be relevant.)19. Walker J. did not find the passage quoted above, or others in The Pythia, helpfulto the charterers in The Athena. He concluded at [65] that Robert Goff J.’sanalysis “is not one which says that a net loss of time clause is concerned only with theservice immediately required” and that “the facts in The Pythia did not require RobertGoff J to consider the question which arises in the present case”. The latter may betrue. But, in our view, there is a focus in The Pythia upon the serviceimmediately required that did not stem from the particular question fordecision or the particular facts of the case. It stemmed from a perception thatthe subject matter of clause 15 was, exclusively, the delivery of the servicerequired at the time the ship’s working was impaired. If that is right, then “thetime thereby lost” naturally refers only to a quantification of that “loss of time” – itmeans simply “the amount of such lost time” 7 and not (as Walker J. has effectivelyconcluded) “the amount of delay overall resulting from such loss of time”. In short,the conclusion that there was no off hire in The Athena cannot be justified by thefact that clause 15 is a ‘net loss of time’ clause rather than a ‘period’ clause: thatconclusion is, in truth, a conclusion that there was no “loss of time” at all, butthen, on the facts of The Athena, there would equally have been no off hireunder the clause in Hogarth or Anglo-Soviet (paragraph 12 above).7or, more simply still, just “the time so lost”, as used in the second half of clause 156

correct 9 . Whether the Vogemann rule is correct – and if so, why – thus shouldform part of the debate in The Athena.22. Finally, as regards the authorities, we come to The Ira [1995] 1 Lloyd’s Rep. 103.The charter in that case was on the New York Produce form, so by clause 21 theship was to be docked for bottom cleaning and painting (if required) at leastonce every six months and then “payment of the hire to be suspended until she isagain in proper state for the service”. The parties agreed, pursuant to clause 21,that the ship was to be drydocked at Piraeus following a discharge operationunder the charter at Ravenna. Clause 21 thus put her off hire for the duration ofthe drydocking. The charterers claimed she was also off hire, under clause 15,for the duration of the voyage from Ravenna to Piraeus for the drydocking. Asit happened, the charterers’ next employment orders, given at the end of thedrydocking, were for the ship to continue east towards Novorossiysk to load acargo.23. A sole arbitrator, and Tuckey J. on appeal, held that the ship was not off hirebetween Ravenna and Piraeus. The reason for that put forward by the ownerswas that the time spent sailing to Piraeus was not, in the event, lost tocharterers, because Piraeus was en route between Ravenna and Novorossiysk.The result seems to us to have been right, but the reason given for it by theowners, and accepted by Tuckey J., seems, with respect, doubtful.24. A better explanation of The Ira as regards clause 15 is, we suggest, that the fullworking of the ship was never prevented:(1) Extracting just the words relied on by the charterers, the off hireprovision invoked under clause 15 was that “In the event of the loss of timefrom drydocking preventing the full working of the vessel the payment of hireshall cease for the time thereby lost”.(2) The voyage from Ravenna to Piraeus was a consensual voyage. In thatcircumstance, in our view the service immediately required of the ship9We note that in New York, “loss of time” and “time thereby lost” are apparently taken to referto the net overall time lost to the charterers during the charter period, due to the off hire cause thatoperated, and as a result it is thought that Vogemann would be decided the other way: see TimeCharters, 6 th Ed., para.25.91. That is consistent with the view that, on the language of clause 15, onecannot have both Vogemann and Athena (Walker J.).8

thereby lost” and “the time so lost” just different turns of phrase conveyinga single idea?(3) On the judge’s construction the only question is whether there has beenprolongation to the voyage overall; however, in most or at least manycases, the charterer is unconcerned about whether there is delay to thecompletion of a voyage – as long as he is able to earn demurrage in themeanwhile. Take the simpler example noted in paragraph 4 above: theship, ordered to proceed to a discharge port, drifts at sea and so gets toport late; but thereby misses port congestion that would have kept herwaiting for a berth. Typically, the earlier arrival would have ensured(for time charterers) that time was running against sub-voyagecharterers or receivers. In Hogarth v Miller, Lord Halsbury explained thepurpose of the off hire clause in terms of the charterer’s desire to use theship “for the purpose of the adventure” and his desire to protect himself ifhe does not get what he wants. If that is the notion in play, does anexclusive focus upon the provision (or failure to provide or partialprovision) of the service immediately required follow? 12(4) Under most time charters, hire is paid in advance (typically monthly orfortnightly) and off hire during any one hire period is deducted fromthe next payment. On the arbitrators’ construction, it should be apparentwhether, during a particular period, there was any off hire deduction tobe made. On the judge’s construction, the parties cannot assess whetherthere is a legitimate off hire claim until the end of the “voyage overall”or the “adventure overall” (perhaps, indeed, until the end of the charterperiod). Does that have a bearing on how clause 15 should be read?(5) Finally, if Walker J’s construction is right, it will mean that clause 15 ofthe New York Produce form has a different effect than clause 11(A) of12NB This is not to suggest, on any view, that whether a ship is off hire in any particular casecan depend on the operation of voyage charters or sale arrangements ‘down the line’. The languageof the off hire clause does not refer to such matters and off hire has always been seen as operatingmore or less mechanically. It is, however, to explain why it might be argued by charterers that thefocus of the off hire clause is on whether the ship is providing, from day to day, the service for whichhire is earned, rather than on some wider notion of delay.11

the Baltime form 13 and clause 21(a) of Shelltime 4 14 . We wonder whetherthat will have been intended, but then there is different language in thethree clauses, so how far can that ultimately take the debate?30. We close with this tester:-A ship is chartered on a New York Produce form charter. In mid-ocean en routeto a discharge port, her main engine breaks down without breach of contract.She is ‘dead in the water’ for 3 days, drifting. After that she proceeds, mainengine fixed, arriving at port 2 weeks later, and some 4 days after she wouldhave arrived without the breakdown (having, whilst without her main engine,drifted further from her destination).She thereby misses port congestion that, had she arrived 4 days earlier, wouldhave kept her 2 days waiting for a berth.Under clause 15, was she off hire for (i) 3 days, or (ii) 4 days, or (iii) 2 days?Discuss (we hope the Court of Appeal will).Terence CoghlinAndrew W Baker Q.C.Julian Kenny17 th May 201313Under clause 11(A) of the Baltime form, with “default of master” added, no hire would havebeen payable “in respect of any time lost thereby during the period in which [The Athena was] unable toperform the service immediately required”. The period in question was the drifting period, all of whichwas lost. The ship’s then current employment was not prolonged because the time taken betweenarrival at Benghazi roads and berthing was reduced in consequence of the late arrival, not becausethere was no time lost during the drifting period.14Under clause 21(a), paragraph (ii) of which would already cover the “default of master” in TheAthena, the ship would have been “off-hire from the commencement of [the] loss of time until she is againready and in an efficient state to resume her service from a position not less favourable to Charterers than thatat which such loss of time commenced; provided, however, that any service given or distance made good …whilst off-hire shall be taken into account in assessing the amount to be deducted from hire”. The off-hireperiod, on that wording, would be the drifting period; and no service was given or distance madegood during that period.12