Scottish Court of Session Decisions

The Moor Line, Limited, Newcastle, pursuers, brought an action in the Sheriff Court at Glasgow against the Distillers Company, Limited, defenders, for payment of £100 sterling, being demurrage incurred in the discharge of the s.s. “Zurichmoor” belonging to the pursuers, for which the defenders were alleged to be liable as endorsees of the bills of lading for the cargo in the vessel.

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On 19th May 1911 a charter-party was entered into between Messrs Walter Runciman & Company, managing owners of the “Zurichmoor” and Messrs M. Neufeld of Berlin, under which the vessel was to load a cargo of wheat and/or seed and/or grain at Kherson and Nicolaieff, and to carry it to Leith and/or Glasgow.

The charter-party was in the form known as “The 1890 Black Sea Charter-Party.” It provided, inter alia—“7. Twenty-two running days, Sundays, Good Friday, Easter Monday, Whit Monday, and Christmas Day excepted, are to be allowed the said freighters (if the steamer be not sooner despatched) for loading and unloading, and ten days on demurrage over and above the said lay-days at twenty-five pounds per running day. Lay-days at port of loading are not to count before the next (new style), unless both steamer and cargo be ready earlier. The freighters have the option of cancelling this charter if the steamer does not arrive at port of loading and be ready to load on or before midnight of 6th June next (new style), unless the steamer has been detained waiting for orders as to loading port longer than six hours, in which case the date last mentioned shall be extended so far as to cover the time the vessel was detained for orders over and above the six hours, and if by reason of such detention the vessel is prevented reaching her loading port, the charterers shall pay demurrage for each day detained over the said hours, whether the vessel is ultimately loaded or not.… 13. If the cargo cannot be discharged by reason of a strike or lock-out of any class of workmen essential to the discharge of the cargo, the days for discharging shall not count during the continuance of such strike or lock-out. A strike of the receiver's men only shall not exonerate him from any demurrage for which he may be liable under this charter, if by the use of reasonable diligence he could have obtained other suitable labour, and in case of any delay by reason of the before-mentioned causes no claim for damages shall be made by the receivers of the cargo, the owners of the ship, or by any other party under this charter. This clause also to apply to the loading of the steamer.”

In terms of the charter-party, Messrs Neufeld & Company shipped a cargo of grain in various parcels, for which they received bills of lading. These bills of lading were endorsed to the defenders. Eleven days in all were occupied in loading at Kherson and Nicolaieff. The “Zurichmoor” arrived at Leith on 4th July 1911. A strike of dock labourers was in progress but it terminated at mid-day on 12th July. The gear was hung the same afternoon and discharging began on 13th July. Discharging was completed of the Leith portion of the cargo on the evening of Friday, 21st July. The 16th July was a Sunday, and eight days were thus occupied in discharging at Leith. The said vessel then proceeded to Glasgow and discharging began there on and time to count from 25th July. The discharge was finished on 31st July. Thus twenty-six days in all were occupied in loading and discharging the vessel.

The defenders, inter alia, averred—“In consequence of the congestion following on and caused by the strike of dock labourers at Leith it was impossible to obtain the number of men necessary to work the full number of tackles, or to discharge the said cargo at the ship's fullest capacity. Further, and in consequence of said congestion, the supply of railway waggons necessary for the regular discharge of the cargo was insufficient, and the waggons when loaded were delayed in removal, owing to the same cause. There was no avoidable delay in the discharge of said cargo at Leith. If said delay at Leith had not occurred, the vessel would have arrived at Glasgow in time to discharge the balance of her cargo within the time allowed for loading and discharging, in terms of the charter-party.”

The pursuers pleaded, inter alia—“(2) The defences are irrelevant.”

The defenders pleaded, inter alia—“(2) The excess of four days over the twenty-two running days being due to delay in the discharge of the ‘Zurichmoor’ at Leith by reason of the said strike, and said delay being an exception under the charter-party, the defenders are entitled to absolvitor, with expenses.

On 19th December 1911 the Sherifi-Substitute ( Fyfe) pronounced an interlocutor in which he repelled the pursuer's second plea-in-law, allowed a proof, and on the pursuers' motion granted leave to appeal.

“ Note—As the record stands, I think the proper order in this case is to allow a proof, because there are certain facts not admitted on record, although I understand there is no real dispute, and that the whole question at issue between the parties really arises upon the relevancy pleas. That question is, in brief, whether congestion following a strike of dock labourers at Leith is within the charter-party exemptions in favour of the charterers—a cause of delay precluding a claim for demurrage.

The cargo in question was carried under the bill of lading No. 7/1 of process. But that bill of lading imports into the contract the terms of charter-party No. 7/2 of process.

Clause 7 of the charter-party allows twenty-two running days for loading and unloading, and ten days on demurrage. Read alone that clause is clear and unqualified. But there is a qualifying clause, No. 13, and the charter-party must be construed as a whole. If, therefore, clause 13 is unambiguous it qualifies clause 7.

No question arises under the first part of clause 13, because it is agreed that the delay in discharging did not arise ‘during the continuance of the strike referred to.’

The question arises alone upon the words in clause 13, ‘in case of any delay’ by reason of ‘wthe before-mentioned causes no claim for damages shall be made by the receivers of the cargo, the owner of the ship, or by any other party under this charter.’ On the face of it this case would appear to be ruled by the case of The Leonis Steamship Company, Limited, v. Rank, Limited,

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1908 (Henderson's Commercial Cases, vol. 13, p. 295), which is an authority I think I am bound to follow, although as applied to the present case it carries the exemption clause very far, and practically absolves the charterer from liability for demurrage if the delay is in any way occasioned by reason of' the strike, although that delay may occur subsequent to the strike having ended. The pursuer contends, I think rightly, that it is a very important factor in the case that the charter-party fixes the exact loading and discharging time and the exact demurrage period.

I accept the argument that clause 7 of this charter-party cannot be qualified by the exemption clause 13, unless that clause is perfectly clear and unambiguous ( Elderslie S.S. Company v. Borthwick, 1905 App. Ca. 93; Nelson Line Limited v. Nelson & Sons, Limited, 1908 App. Ca. 16), but I think clause 13 is quite clear.

One of the things to which clause 13 of the charter-party applies is a claim for damages made by the owners of the ship. The pursuers' agent drew a fine distinction between a claim for demurrage arising (as is the case here) within the ten demurrage days specified in clause 7, and some other claim of damages by the shipowner, which might have arisen, as for instance a claim for detention of the ship after the expiry of the ten demurrage days. I think that this is one of that class of refined distinctions which was rejected in the Leonis case, in which Fletcher Moulton (L. J.) said, ‘This is a business document, drawn up by business men, to be used in a business sense, and there is no room for those very fine distinctions.’

In my opinion the claim made in the present action is a claim of damages by the owners of the ship, in the sense of clause 13 of the charter-party.

Demurrage is in its nature a claim of damages, and although the last part of clause 13 does not expressly mention demurrage, I think it is covered. In other words, I am of opinion that the legal principles laid down in the cases referred to, when applied in the present case, mean that if the congestion at Leith which caused the delay in discharging the s.s. ‘Zurichmoor’ is proved by the defenders (upon whom the onus rests) to have been a reasonably direct result of the preceding strike of dock labourers at Leith, then that was delay which fell within the exemption clause 13 of the charter-party, and accordingly that the defence stated is relevant.”

The pursuers appealed, and argued—The defence was irrelevant. The last part of clause 13 of the charter-party dealt only with claims of damage. There was a clear distinction between demurrage and damages for detention. Claims for damage arose ex delicto. Demurrage, on the other hand, was purely contractual. It was the agreed-on payment or hire for the ship for a fixed period after the lay-days—Bell's Prin. 431, 432, and 434; Bell's Comm. (7th ed.), i,622; Moorsom v. Bell, 1811, 2 Campbell 616; Carver, Carriage by Sea (5th ed.), pp. 785, 855, 856; Gardiner v. Macfarlane, M'Crindell, & Company, March 20, 1889, 16 R. 658, Lord Trayner at 660, 26 S.L.R. 492; Dunlop & Sons v. Balfour, Williamson, & Company, [1892] 1 QB 507. The exemption applicable to the days on demurrage was found in the first part of clause 13, which provided that “the days for discharging” (which meant both the lay-days and the demurrage days), should not count during the continuance of a strike. If the defenders' reading of the clause were adopted, then the last part of it contradicted the first. That had the effect of making general words derogate from special. There was an absolute and unconditional obligation on the freighter to discharge a ship within the time fixed by the charter-party—Bell's Prin. 432; Postlethwaitev. Freeland, 1880, 5 A.C. 599, Lord Chancellor Selborne at 608, and Lord Blackburn at 618; Budgett & Company v. Binnington & Company, [1891] 1 QB 35; Carver ( sup. cit.), 351. The onus was therefore on the defenders. They must make it perfectly clear that they were within the exception. It would not do for them to point to a clause which might have the meaning they contended for; they must show a clause which must have such meaning— Elderslie Steamship Company v. Borthwick, [1905] AC 93; Nelson Line Limited v. Nelson & Sons, Limited, [1908] AC 16; Beal on Cardinal Rules of Legal Interpretation (2nd ed.), 208. The true meaning of the charter-party was a division of loss between the ship and the charterer. The shipowner took all the risks except that of delay caused during the ten demurrage days by the results of a strike. The case of the Leonis Steamship Company Limited v. Rank Limited, 1908, 13 Com. Cas. 295, relied on by the Sheriff, did not apply. The terms of the charter-party there clearly covered the case of delay during the demurrage days “by reason of” a strike.

Argued for defenders (respondents)—It was provided by clause 13 that the time in any way lost through a strike was not to give rise to claims of damage. The delay here was by reason of a strike— Leonis Steamship Company Limited v. Rank Limited ( sup. cit.); The “ Diamond” [1906] P. p. 282. Days on demurrage were clearly not “days for discharging.” Moreover, the pursuers' reading of clause 13 involved this, that while it protected the charterers from a claim of damages for detention by reason of a strike after the days on demurrage had expired, it gave them no protection against a claim for demurrage during the ten days. The word “demurrage” originally denoted an agreed-on payment for a specified period beyond the lay-days, but the tendency had been to extend the meaning of the word. Demurrage in the strict sense was at the present time liquidated damages for a fixed period for the detention of the ship, assessed by agreement between parties. In the popular sense it now included even unliquidated damages for detention—Maclachlan's Law

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of Merchant Shipping (5th ed.), 393 and 578; Lilly & Company v. Stevenson & Company, January 19, 1895, 22 R. 278, 32 S.L.R. 212; Little v. Stevenson & Company, June 26, 1895, 22 R. 796, 32 S.L.R. 575; Harris & Dixon v. Marcus Jacobs & Company, 1885, 15 Q.B.D. 247 (Brett (M.R.) at 251); Scrutton, Charter-Parties and Bills of Lading (6th ed.), p. 140. The last part of clause 13 did not contradict the first, but was supplementary thereto, as the first part dealt only with the days for discharging, i.e., the lay-days, and not the days on demurrage. The following cases were also referred to— Salvesen & Company v. Guy & Company, October 28, 1885, 13 R. 85, 23 S.L.R. 59; Gray v. Carr, 1871, L.R., 6 Q.B. 522; and Kish v. Cory, 1875, L.R., 10 Q.B. 553.

At advising—