Care Shipping corp v. Itex Itagrani Export SA

[1992] 1 All ER 91

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Care Shipping Corp
v Itex Itagrani Export SA (The Cebu No 2)

Court:

Judge: Lord Steyn

Subject References:
Shipping
Time charterparty
Hire
Lien for non-payment of hire
Sub-freights
Charterparty giving shipowners lien on 'all sub-freights' for non-payment of amounts due under its terms
Whether owners having lien over hire payable by sub-sub-charterers under time charter
Whether owners' lien limited to sub-freight payable under voyage charter
New York Produce Exchange form of charterparty, cl 18

Legislative References:
Finance Act 1971 - s 44(1)
Finance Act 1985 - s 59; Sch 17, para 3

Case References:
Angelakis (G & N) Shipping Co SA v Cie National Algerienne de Navigation, The Attika Hope - [1988] 1 Lloyd's Rep 439
Annangel Glory Cia Naviera SA v M Golodetz Ltd, The Annangel Glory - [1988] 1 Lloyd's Rep 45
Care Shipping Corp v Latin American Shipping Corp, The Cebu - [1983] 1 All ER 1121; [1983] QB 1005; [1983] 2 WLR 829
Federal Commerce and Navigation Ltd v Molena Alpha Inc, The Nanfri, The Benfri, The Lorfri - [1979] 1 All ER 307; [1979] AC 757; [1978] 3 WLR 991
Flint v Flemyng - (1830) 1 B & Ad 45; 109 ER 704
Inman Steamship Co Ltd v Bischoff. - (1882) 7 App Cas 670; [1881-5] All ER Rep 440
Wehner v Dene Steam Shipping Co - [1905] 2 KB 92
Welsh Irish Ferries Ltd, Re - [1986] Ch 471; [1985] 3 WLR 610

Judgment date: 6 April 1990

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Held

(1)

On its true construction the contractual lien under cl 18 of the charterparty was not limited to rights in respect of matters within the lienor's power and control but entitled the shipowners to claim by way of equitable assignment not only sub-freights due to the charterers under the sub-charterparty but also rights which the charterers themselves held as equitable assignees of sub-freights due under the sub-sub-charterparty. Accordingly, the cl 18 lien was capable of taking effect as an equitable assignment in a four-party case and gave the shipowners the right to claim sub-freights due from the sub-sub-charterers to the sub-charterers (see p 96 c d, post); dictum of Lloyd J in Care Shipping Corp v Latin American Shipping Corp, The Cebu [1983] 1 All ER 1121 at 1127-1128 followed; Re Welsh Irish Ferries Ltd [1986] Ch 471 and Annangel Glory Cia Naviera SA v M Golodetz Ltd, The Annangel Glory [1988] 1 Lloyd's Rep 45 applied.

(2)

Having regard to the fact that at the time when the parties contracted on the standard terms of the New York Produce Exchange form of charterparty, the vocabulary of the shipping trade had for many years used the term 'hire' to denote sums payable under time charters and restricted the term 'freight' to sums payable under bills of lading or voyage charterparties, the term 'sub-freights' in cl 18 of the charterparty meant remuneration earned by the charterers from their employment of the vessel by way of voyage freight and did not extend to remuneration by way of time charter hire. Accordingly, cl 18 only operated to give the shipowners a lien on sub-freights earned by a voyage charter and not sub-hire earned under a time charter. It followed that the shipowners had no lien enforceable against the sub-sub-charterers for hire payments due to the sub-charterers. The shipowners' claim would therefore be dismissed (see p 98 h to p 99 a f g, p 100 b and p 101 e, post); dictum of Lord Denning MR in Federal Commerce and Navigation Ltd v Molena Alpha Inc, The Nanfri, The Benfri, The Lorfri [1978] 3 All ER 1066 at 1076-1077 applied; Inman Steamship Co Ltd v Bischoff [1881-5] All ER Rep 440 distinguished; Care Shipping Corp v Latin American Shipping Corp, The Cebu [1983] 1 All ER 1121 not followed.