Port Line v Ben Line [1958]

Court: High Court

Facts: Port Line (C) had entered into a time charter for a vessel with Silver Line. Silver Line subsequently sold the vessel to Ben Line (D). During the sale, the vessel was requisitioned by the Ministry of Transport for two months. Port Line sought compensation from Ben Line, arguing based on the principles established in Lord Strathcona Steamship Co v Dominion Coal Co.

Issue: Whether a charterparty, which includes a time charter, can bind a third-party purchaser with notice, and whether Port Line was entitled to compensation from Ben Line.

Held: The High Court ruled against Port Line. Justice Diplock held that the principles established in Lord Strathcona Steamship Co were wrongly decided.

Key Judicial Statement: Justice Diplock: The decision in Lord Strathcona Steamship Co was incorrect as it did not account for the fact that a time charterer, unlike a demise charterer, does not hold a proprietary interest in the vessel. Therefore, the basis for enforcing an injunction, as established in Lord Strathcona Steamship Co, was absent. Even if the Strathcona case had been correctly decided, it would only entitle Port Line to an injunction and not to compensation, as the charterer did not have positive rights.

💡 Leveluplaw: This case marks a pivotal shift from the earlier ruling in Lord Strathcona Steamship Co. It clarifies that a time charterer does not have a proprietary interest in a vessel that could bind a third-party purchaser. Thus, contractual obligations under a charterparty are not enforceable against such third parties. For those involved in chartering and purchasing vessels, this case underscores the importance of understanding the scope of charterer rights and the limitations on enforcing charterparty terms against new owners.