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					           Somelas Corp v AS Gerrards Rederi (The Pantelis A Lemos)
                              Pantelis A Lemos, The
                       (QBD (Comm Ct)) Commercial Court
                                 12 November 1979


                                  Where Reported

[1980] 2 Lloyd's Rep. 102

                                      Summary

Subject: Shipping

Keywords: Amendments; Carriage by sea; Charterparties; Repairs

Catchphrases: Carriage by sea; charterparty; redelivery

Abstract: O chartered the PAL to C under a NYPE form dated March 3 1972 for 54
maximum 60 months. On February 13 1978, O and C entered into an addendum
providing for O to take redelivery with damage unrepaired, but with a joint survey.
The two surveyors were to estimate, agree on the cost of the items of damage,
clarify fair wear and tear damage, stevedore damage. C were to pay O the agreed
cost within a month of receipt of survey list. C was provided with a list stating that
the cost of repair was estimated at Dfls. 349.880; and to affect the repairs, it was
necessary to clean and gas-free the PAL at a cost of Dfls. 102.800. C paid the first
sum. O claimed the second sum.
Summary: Held, (1) the addendum looked to the cost of repairing each item and not
to other ancillary matters, it was common knowledge that owners would not
necessarily carry out repairs straightaway and this was what the parties intended;
(2) the only repairs to be carried out before sailing were to be those in the context
of class and cargo, not stevedore damage; (3) the surveyors were careful to list
repair costs and segregate gas freeing costs. Judgment for C.

Judge: Goff, J.
END OF DOCUMENT

                                        Copr. (c) West 2002 No Claim to Orig. Govt. Works

FOR EDUCATIONAL USE ONLY
   *102 Somelas Corporation v. A/s Gerrards Rederi, (The 'Pantelis A. Lemos')


                    Queen's Bench Division (Commercial Court)
                                  QBD (Comm Ct)
                                    Nov. 12, 1979


                           Before Mr. Justice Robert Goff

Charter-party (Time) -- Redelivery -- Vessel to be redelivered with damages
unrepaired -- Charterers to pay agreed repairing costs -- Whether charterers also
liable for costs for 'affecting class repairs'.

By a charter dated Mar. 3, 1972, the vessel Pantelis A. Lemos formerly owned by
the plaintiffs was let to the charterers for a period of minimum 54/maximum 60
months, exact period in charterers' option.
The charter was in the New York Exchange Produce form and provided inter alia
that hire was to continue until her redelivery in like good order and condition,
ordinary wear and tear excepted, that the charterers were to be responsible for
stevedore damage and that an off hire survey was to be held for the joint account of
the parties.
The vessel was delivered in September, 1973, and the charter ran for 54 months, so
that the vessel was due to be redelivered in early Spring 1978.
On Feb. 13, 1978, the parties entered into an addendum to the charter-party which
provided inter alia that the owners were to take redelivery of the vessel with
damages unrepaired and that each party was to appoint a surveyor at the redelivery
port with instructions to make a joint survey of all the damages. The addendum
further provided that:
3. The . . . two surveyors are to estimate the cost of repair of each item of damage
and to agree between themselves on each item cost . . .
5. The surveyors are to clarify in the total list of damages what is fair wear and tear
and what is stevedore damage. Damages affecting Class or cargo to be repaired
before redelivery.
6. Charterers will not concede and Owners shall not seek any compensation for
theoretical time consumed by those repairs agreed to be for Charterer's option.
7. Charterers to pay Owners the above agreed repairing cost within one month of
receipt of list.
On Feb. 13 and 14, the vessel was surveyed at Rotterdam and on Feb. 27, the
owners and*103 charterers were provided with the survey report which provided so
far as was material:
. . . the following is a list of repairs recommended to make good stevedore damage
excluding wear and tear . . .
Repair costs
The costs for carrying out above mentioned recommended repairs . . . has been
estimated at the sum of Dfls.349,880 . . .
For affecting the above mentioned repairs it will be necessary to clean and gas free
vessel fuel oil double bottom tanks costs of which have been estimated . . . at the
sum of Dfls.102,800 . . .
There was an exchange of telexes between the parties and the charterers paid the
first of the sums in the survey report of Dfls.349,880 but declined to pay the second
contending that as a matter of construction of the addendum it was not a proper
matter to be included in the cost of repairs and in any event the matter was not
concluded by the survey report.
The owners brought an action claiming the second sum as due and owing by virtue
of the terms of the addendum and survey report made in consequence of the
addendum.
Held, by Q.B. (Com. Ct.) (ROBERT GOFF, J.), that
(1) in cll. 3 and 7, the words used showed an intention on the part of the parties that
what should be costed and paid for under the agreement was the cost of repairing
each item and the agreement therefore looked to the actual cost of repairs itself and
not to other ancillary matters (see p. 105, col. 2); it was common knowledge that
when the question of repairing such matters as stevedore damage occurred, and
these matters arose on redelivery at the end of a time charter, then although the
items of damage would be listed for the purposes of dealing with the hire account,
the owners would not necessarily carry out the repairs straightaway (see p. 105, col.
2); and this was what the parties had intended (see p. 106, col. 1);
(2) there was the clearest possible indication that the vessel should sail on her next
commitment as soon as she was free to do so, apart from carrying out repairs
affecting class or cargo operation and there was nothing to suggest that any of the
stevedore damage listed in the survey report fell into that category so that the
agreement contemplated that the repairs of the damage would not be carried out
straightaway (seep. 106, col. 1):
(3) the agreement was not intended to include any theoretical loss of time while
each item was being repaired and on the words used it could not include the costs
involved in maintaining the vessel during repairs while they were being repaired
(see p. 106, col. 2);
(4) the survey report did not decide anything but simply passed the problem to be
dealt with either by agreement between the parties or by some judicial or arbitral
decision (see p. 106, col. 2); and the surveyors did not purport to conclude this
point in that they were very careful to segregate the costs for gasfreeing from other
costs (see p. 107, col. 1);
(5) the owners failed in their claim and there would be judgment for the charterers
(see p. 107, col. 1).
This was an action by the plaintiffs, Somelas Corporation, the owners of the vessel
Pantelis A. Lemos, claiming a sum of money from the defendant A/S Gerrards
Rederi, who were the time charterers of that vessel, as due and owing under an
addendum to the charter.

Representation

Mr. Timothy Charlton (instructed by Messrs. Holman, Fenwick & Willan) for the
plaintiff owners; Mr. M. H. Potter (instructed by Messrs. Sinclair, Roche &
Temperley) for the defendant charterers.
The further facts are stated in the judgment of Mr. Justice Robert Goff.

JUDGMENT

Mr. Justice ROBERT GOFF:
In this action the plaintiffs, Somelas Corporation, who were formerly the owners of
a bulk carrier called the Pantelis A. Lemos, claim a sum of money from A/S
Gerrards Rederi, who were the time charterers of that ship, as due and owing under
an addendum to the time charter.
The matter arises in the following way. This ship was time-chartered to the
defendants under a time charter-party dated Mar. 3, 1972. The ship was then in the
course of building and the charter period was for a period of 'minimum
54/maximum 60 months, exact period in charterers' option'. The ship did not in fact
enter on her charter service until some day in September, 1973, when she was
delivered from the yard.
Under the charter, which was in the New York Produce Exchange form, there was
the familiar provision that hire was to continue--
. . . until the hour of the day of her re-delivery in like good order and condition,
ordinary wear and tear excepted.
There were also typed clauses and in particular cl. 43, the first sentence of which
provided that 'Charterers to be responsible for stevedore damages'. I should also
mention that cl. 47 includes a London arbitration clause, which has not however
been given effect to in this case.
Although the charterers had the option of continuing the charter-party for a period
of five years, they decided not to exercise their option*104 for the last six months
of the charter period and so the charter ran only for a period of 54 months, with the
effect that the ship was due to be redelivered in early Spring, 1978. When it was
anticipated that the ship was shortly due to be redelivered, the parties had to face up
to the usual problem of dealing with the state of her condition on redelivery. In cl.
37 of the charter-party there was a provision for an off-hire survey to be held for
the joint account of the parties. But what they did was to enter into an addendum to
the charter-party, dated Feb. 13, 1978, and the dispute in this case does, in fact,
arise under that addendum. This is so important that I will read it out in full.
In respect of lines 54 and 55 [-- those are the lines I have already referred to dealing
with the redelivery of the ship 'in like good order and condition, ordinary wear and
tear excepted' --] and Clause 37 [-- that is the clause I have already referred to
providing for a joint on-hire and off-hire survey --] of charter Party, the following
Agreement to apply:
1. Owners take redelivery of vessel as soon as tendered by Charterers with damages
unrepaired and after completion of redelivery survey and subject to the condition
mentioned below.
2. Notwithstanding Charter Party provision to use one surveyor, both parties will
each appoint a responsible, independent surveyor at redelivery port with
instructions to make a joint survey of all damage i.e. the surveyors are to agree
between themselves the exact list of all damage.
3. The same two surveyors are to estimate the cost of repair of each item of damage
and to agree between themselves on each item cost.
4. The surveyors to be instructed that costing to be on the basis of work done at
average North European repair yard prices i.e. neither the most expensive nor the
cheapest yard available.
5. The surveyors are to clarify in the total list of damages what is fair wear and tear
and what is stevedore damage. Damages affecting Class or cargo operation to be
repaired before redelivery.
6. Charterers will not concede and Owners shall not seek any compensation for
theoretical time consumed by those repairs agreed to be for Charterer's option.
7. Charterers to pay Owners the above agreed repairing cost within one month of
receipt of the list.
All other terms, conditions and exceptions of the above Charter Party to remain
unaltered and to apply.
Now that addendum was dated Feb. 13, 1978, and it seems that on that day and the
following day at Rotterdam, where the ship must then have been, two surveyors
appointed by the parties did indeed carry out a survey consequent upon that
addendum; and their survey report was provided to the owners and the charterers
on Feb. 27, 1978. That survey report refers to the ship and to the attendance on
board on those two days of the surveyors, at Rotterdam, for the purpose of
ascertaining the nature and extent of damage, if any, sustained during loading
and/or discharging operations, while on time charter with the defendants in this
case, and measuring the quantities of fuel oil, diesel oil and freshwater remaining
on board at the time of redelivery. After certain other introductory matters it
continues:
On examination the following damages were noted: Obviously caused during
discharging a [of] various bulk cargoes by means of grab.
In mutual agreement between Parties concerned damages which can be considered
as normal wear and tear in view of the vessel's trade has not been taken into
consideration, and the following is a list of repairs recommended to make good
stevedore damages excluding wear and tear.
There follows a list. Although this was not strictly in accordance with the
addendum, the surveyors, either because they had seen the addendum and so
interpreted it or because they had received instructions from the parties, decided
simply to set out the stevedore damage in this document and not to set out any
items which they considered to be ordinary wear and tear. There followed a list of
typical items of damage to the ship's cargo spaces resulting from stevedore damage.
They are listed under eight holds, and for each hold they list the items in relation
either to the shell, the tankplating, bulkheads or tanktops. In the case of each hold
there are listed certain items of damage to the tanktop, the list varying in length
from hold to hold. Then, at the end of it all, after noting that certain manhole cover
protection plates were missing, was the section entitled with the word 'Repaircosts',
which reads as follows:
The costs for carrying out the abovementioned recommended repairs, if carried out
by a suitable North European Shipyard have been estimated at the sum of
Dfls. 349.880, --
and then, in a separate sentence under the same heading:
*105 For affecting the abovementioned repairs it will be necessary to clean and
gasfree vessel's fuel oil double bottom tanks, costs of which have been estimated if
carried out in Northern Europe at the sum of
Dfls. 102.800, --
and one may reasonably infer that the need to carry out the gasfreeing of the
vessel's fuel oil double bottom tanks arose from the fact that it was necessary to
carry out repairs to the tanktops in all the holds.
Then, after certain other items (the cleanliness of holds, the funnelmark, and fuel
oil and diesel oil) there is this final sentence:
Survey was held without prejudice as to liability subject terms and conditions in the
covering charterparty.
After the survey report was supplied to the parties, there was an exchange of
telexes between them and the result was that the charterers paid the first of the two
sums mentioned in the survey report of Dfls. 349.880 but declined to pay the
second sum of Dfls. 102.800. This present action has been brought by the owners
claiming that sum as due and owing by virtue of the terms of the addendum and the
survey report made in consequence of that addendum.
As a matter of history I will record the fact that the ship must have sailed shortly
after this survey on her new service but her life did not last long because, on Mar.
20, 1978, she sank off the coast of South Africa. This is simply a matter of history;
I do not think it has any effect upon the terms of the contract which was entered
into between the parties under the addendum to the charter-party on Feb. 13, 1978.
Now the owners say that they are entitled to recover this sum and their case is
really a very simple one. They say that, under the terms of the addendum, the
charterers agreed to pay the owners the 'agreed repairing costs', that is the repairing
costs as agreed between the surveyors, and that, under the survey report which was
supplied, this undoubtedly was part of the 'agreed repairing costs'. It appears under
the heading of 'Repaircosts' and it is treated by the surveyors, say the owners, as
therefore forming part of the costs of the repairs which they had agreed should be
done by virtue of the stevedoring damage to the ship. They say the matter therefore
is really concluded by the survey report which was issued consequent upon the
addendum, but they say that in addition, in any event, the surveyors were not
merely entitled but bound by the terms of the addendum to include gasfreeing as
being part of the repair of the stevedore damage.
The charterers, on the other hand, dispute this. They say that as a matter of
construction of the addendum it is not a proper matter to be included in the cost of
the repairs and, in any event, they say, the matter is not concluded by the survey
report.
Now the first thing to note about the addendum is that cl. 7 provides that
'Charterers to pay Owners the above agreed repairing costs . . .'. So one has to ask
oneself: what is meant by those words? They undoubtedly refer back to cl. 3 of the
addendum which provides that--
. . . The same two surveyors are to estimate the cost of repair of each item of
damage and to agree between themselves on each item cost.
The striking thing about the words used is that they contemplate that each item
should be costed, the cost to be entered against each item being the cost of repair,
and that each item so costed was to be agreed with the consequence that the sums
so agreed were to be added up and to constitute the total of the 'above agreed
repairing costs'.
So, says Mr. Potter on behalf of the charterers, if one concentrates on the words
used they show an intention on the part of the parties that what should be costed in
this manner and paid under this agreement was the cost of repairing each item and
that the agreement therefore looks to the actual cost of repair itself and not to other
ancillary matters. In my judgment that is perfectly correct as a matter of
construction and furthermore the point is not a purely verbal one. It is common
knowledge, of course, that when the question of repairing such matters as stevedore
damage occur and these matters arise, as they frequently do, on redelivery at the
end of a time charter, then although the items of damage will be listed for the
purposes of dealing with the final hire account under the time charter nevertheless
the owners will not necessarily carry out the repairs straightaway. Indeed what they
will probably do is to wait for a convenient time for the repairs to be done; some of
them may be dealt with by the crew, but if they have got to be dealt with in a yard
then it is quite possible that the owners will wait until a convenient time when the
ship has to enter a yard for the purpose of carrying out repairs, for example, on an
annual or special survey. They will then see that this work is done at the same time
as other work, thereby saving themselves the extra cost of keeping the ship out of
service, extra port costs and so on, which otherwise would be duplicated if these
matters were dealt with immediately at the end of the voyage. Of course some
items have to be dealt with immediately if they affect the vessel's class or*106 her
seaworthiness, and no doubt those would be dealt with before the vessel entered on
her service under her next commitment. But those items apart, it is common
knowledge that owners will, if they reasonably can, put the matter off until a
convenient time having regard to the costs which might be saved.
Now, if one looks at this document it is plain that the parties had this well in mind.
The first thing to be noticed is that under cl. 5 special provision is made for
damages affecting class or seaworthiness because it provides: 'Damages affecting
Class or cargo operation to be repaired before redelivery'. That imposes an
obligation on the charterers to carry out those repairs and if they are not done then
in theory the vessel will remain on hire until they are done. The theory of the thing
is that the owners can refuse to accept redelivery until these matters are dealt with,
although in practice it may be that arrangements are made for them to be dealt with
rightaway but hire continues to be payable during the period while they are being
done. At all events special provision is made for those items whereas, apart from
such matters, cl. 1 provides that: 'Owners take redelivery of vessel as soon as
tendered by Charterers with damages unrepaired . . .' and no doubt it was
contemplated that the owners would take the ship back with other less important
items of damage unrepaired and very likely send her straight off on to her next
voyage, whatever that might be.
There is also cl. 6 of the addendum which provides (I will quote it again):
6. Charterers will not concede and Owners shall not seek any compensation for
theoretical time consumed by those repairs agreed to be for Charterer's account.
Now the interesting thing about cl. 6 is not merely that it provides that there shall
be no claim in respect of time consumed by the repairs but that the time consumed
is designated by the word 'theoretical' which shows that the parties contemplated
that time would not, in all probability, in fact be consumed in carrying out repairs
other than repairs of damage affecting class or cargo operations. So, one gets the
clearest possible indication in this document that the intention was that the ship
should sail on her next commitment as soon as she was free to do so apart from the
carrying out of repairs of damage affecting class or cargo operation. There is
nothing to suggest that any of the stevedore damage listed in this survey report fell
into that category and, therefore, this agreement contemplates that the repair of this
damage would not be carried out straightaway.
All these are matters which arise on the face of the agreement itself and are
therefore proper to be taken into account by me in deciding how to construe the
words used in this contract. It seems to me that the construction for which the
charterers contend is consistent with the general intention as revealed in the
document itself. As I read it the intention is that when it was provided that the
surveyors were to agree between themselves on each item's cost, that was looking
to the actual cost of repair of each item. It was not intended to include any
theoretical loss of time while they were repaired, and on the words used it could not
include the costs involved in maintaining the ship during repairs, while they were
being repaired. We all know that such costs do occur; quite apart from loss of time,
there are expenses such as bunkers and matters of that kind, while a ship is being
repaired. Those are not covered by the words 'agreement between themselves on
each items cost' nor, in my judgment, do those words cover the cost of work done
preparatory to the carrying out of the repairs. Such items as, for example, the cost
of entering port for the purposes of repair, port dues, dock dues and matters of that
kind would not ordinarily fall within these words; nor, in my judgment, would
gasfreeing of double bottom tanks. I reach that conclusion on the words used in
their context in this agreement. But one can see the good sense of this construction
because, since these repairs need not be carried out immediately then, if, as appears
on the face of the survey report, it is going to be necessary to gasfree the double
bottom tanks used for carrying fuel oil before repairs can be carried out, the
common sense of the matter is that the owners are likely to wait until a convenient
time when the double bottom tanks have got to be gasfreed for other purposes (for
example, for inspection either of the tanks themselves or of the heating coils, or for
adjustment of the heating coils, or for inspection of possible underwater damage)
before they incur the considerable cost of gasfreeing in order to carry out repairs to
the tanktops. This is moreover consistent with the intention, manifested in the
document itself, of not carrying out repairs of this kind immediately, but
presumably waiting until some convenient moment when time and money can be
saved. I therefore decide the point of construction of the addendum in the
charterers' favour.
Then there arises the question: Does the survey report compel me to reach any
different conclusion? The answer, in my judgment, is plainly not. The surveyors in
this case did not purport to conclude this point, even if they had the jurisdiction to
do so. They were careful when they came to list what they called the repair costs to
segregate the costs of gasfreeing from other costs, what they called 'The costs for
carrying out the abovementioned recommended*107 repairs'. They did not think it
right and proper to lump the two sums together and treat them both as simply being
the agreed cost of repair; they thought it right to segregate them and it may be that
they had some doubt as to whether or not on a true construction of the addendum
the gasfreeing costs should or should not be included in the sum to be paid by the
charterers to the owners. At all events they thought it right and proper to segregate
them. The other matter is that at the end of their survey report they stated that the
'Survey was held without prejudice as to liability and subject terms and conditions
in the covering charterparty'. So they regarded themselves as simply making an
assessment, a list of the stevedoring damage, assessing the cost of the carrying out
of those repairs and then also adding in the cost of the gasfreeing which was
necessary for the effecting of those repairs and listing that as an item which either
would or would not be for charterers' account depending upon the terms of the
addendum. It follows, in my judgment, that this survey report, whatever its status,
plainly did not decide anything with regard to the particular question which is now
before the Court. It simply posed the problem to be dealt with either by agreement
between the parties or by some judicial or arbitral decision, in whatever way was
thought right. So one is thrown back upon the addendum; and having reached the
conclusion that I have on the construction of the addendum, it follows that the
owners do not succeed in their claim and there must be judgment for the charterers.
(c) Lloyds of London Press Limited
[1980] 2 Lloyd's Rep. 102

END OF DOCUMENT

                                        Copr. (c) West 2002 No Claim to Orig. Govt. Works

				
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