An article in Gard News issue No. 150 provided an overview of the law regarding the commencement of laytime and the tender of a valid notice of readiness, especially the Court of Appeal's decision in THE MEXICO I.1 In a recent important High Court decision2 Mr Justice Langley addresses an issue which had been left open in THE MEXICO I, namely whether laytime can start at all when the charterparty provides for a notice to be given to trigger the start of laytime but only an invalid notice of readiness has been tendered.
Mr Justice Langley's conclusion in THE HAPPY DAY was that laytime could not start in the circumstances, even though discharge commenced and continued. Following Mustill LJ in THE MEXICO I, the judge decided that if the contract provided for the commencement of laytime to be started by a valid notice "and in no other way", then absent estoppel or the like, it was the valid notice of readiness that acted as the prescribed trigger for the running of time. If, as it was submitted by owners, the commencement and continuation of discharge was to have the effect of validation of an invalid notice or in some way amount to a notional notice given on the first available opportunity, that would be inconsistent with the reasoning of Mustill LJ rejecting the concept of an inchoate notice.
THE HAPPY DAY emphasises the distinction between a notice provision in the charterparty which is intended only to provide information and one which is the prescribed trigger for the running of time. Therefore, the charterparty must be read with this distinction in mind. If the tendering of a valid notice of readiness is the trigger for the running of time and an invalid notice of readiness is tendered then time will not start to run at all even after cargo operations commence. In THE HAPPY DAY owners were not only prevented from claiming demurrage but were, in fact, held accountable for despatch to the charterers. This result seems absurd and will definitely be perceived as an "unhappy" inequitable decision that owners will have to contend with. Gard Services' advice to shipowners is that, if there is any doubt as to the validity of a notice of readiness tendered, then a new notice of readiness should be issued promptly.
1 (1990) 1 Lloyd's Rep. 191. In THE MEXICO 1 it was held that if a notice of readiness was invalid and a nullity when given, then it was ineffective to commence laytime even if the charterers knew or ought to have known of the vessel's subsequent unreadiness. Charterers could therefore insist on the tendering of a further notice of readiness in order for laytime to commence, unless they had in the meantime waived their right to a further notice or agreed that it would not be necessary.
2 Glencore Grain Ltd. v. Flacker Shipping Ltd. (THE HAPPY DAY), not yet reported, judgment issued on 25th January 2001.