K Line Pte Ltd v. Priminds Shipping (HK) Co Ltd (The “Eternal Bliss”) – QBD (Comm Ct), 7 September 2020
NORGRAIN – DEMURRAGE – DAMAGES – LIQUIDATED DAMAGES
Please note, this award has been successfully appealed under ‘K line PTE Limited v Priminds Shipping (HK) Co Limited (the “ETERNAL BLISS”) [2021] EWCA Civ 1712’
The vessel Eternal Bliss was chartered by K-Line to Priminds. When Priminds did not discharge the vessel within the allowed laytime breach of contract was alleged as had the cargo been discharged on time, it would have been in sound condition. K-Line said it had to meet claims made that were compromised.
K-line started arbitration against Priminds claiming compensation of the claims under an implied indemnity. To which Priminds said that payment for demurrage included K-Line’s payment for breach.
K-Line’s claim was that its cargo claim liabilities were unrelated to the loss of the ship, therefore [it] was not claiming damages for detention.
An application to the High Court was made to determine whether Priminds was liable to compensate K-Line by way of damages or an indemnity for complying with the charterer’s orders to load, carry and discharge the cargo. There was a question of what demurrage was but clause 19 of the Norgrain demurrage provision, did not specify what it was or what it liquidated.
K-Line’s claim was that its cargo claim liabilities were unrelated to the loss of the ship, therefore K-Line was not claiming damages for detention. The deterioration in the cargo and the loss resulted from the ship being delayed beyond the laydays. Priminds relied on The Bonde [1991] where Potter J held that the buyer could not recover damages beyond demurrage. The court accepted that the demurrage rate was intended to be an agreed measure of the value of the ship’s lost time and not a species of damages liability. It also accepted that English law did not mean that remuneration for additional services was in the nature of a rebate on freight. The court also accepted that The Bonde was the authority in favor of Priminds.
Accordingly, were the issue free from prior consideration in the authorities, the court would say that K-Line had the better of the argument by a clear margin. After review, the court agreed that K-Line’s argument was sound and The Bonde at first, was wrongly decided.