Summit Investment v BSC - 1987

Summit Investment v BSC [1987] 1 Lloyd’s Rep 230

Archaic form of words in shipping charter interpreted in light of modern circumstances

Facts

The defendants chartered a ship from the plaintiff on a New York Produce Exchange form of time charter. Clause 20 of this charter provided that the fuel used on the vessel while off hire for cooking, condensing water and for “grates and stoves” should be paid for by the plaintiff. A dispute arose between the parties as to the extent of this clause.

Issues

The majority of the arbitrators held that Clause 20 made the plaintiff liable for fuel consumed for all of the crew’s domestic purposes. However, the minority arbitrator held that the plaintiff was liable only for fuel consumed for cooking and heating. On appeal, Gatehouse J agreed with the minority arbitrator. The defendants appealed.

Decision/Outcome

The Court of Appeal observed that the charter dated from 1913 when the majority of ships were steam driven and the crew’s quarters were equipped with “grates and stoves.” However, ships were now largely motor driven and so “grates and stoves” were rare. The phrase “grates and stoves” should be interpreted in the modern age. On this basis, the interpretation proposed by the minority arbitrator had no basis in principle, commercial justice or common sense. The effect of such an interpretation would require the owners of the ship to pay for the cost of fuel used to run an air-conditioning plant when it was blowing hot but not when it was blowing cold, for instance. Therefore, the interpretation offered by the majority arbitrators was to be preferred and the appeal was allowed. Clause 20 extended the plaintiff’s liability to all fuel used for crew domestic purposes.

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