BLANE STEAMSHIPS, LTD. v. MINISTER OF TRANSPORT.

[1951] 2 Lloyd's Rep. 155

COURT OF APPEAL.

Before Lord Justice Cohen, Lord Justice Singleton and Lord Justice Morris.

Charter-party-Frustration-Implied term -Constructive total loss-Cesser of hire -Option to purchase-Ship under time-charter from M.O.T.-Obligation upon charterers to insure-Policy moneys recoverable to be assigned to owner - Charterers given option to purchase- Grounding of ship eventually resulting in total loss-Effect upon option to purchase exercised by charterers after grounding-Provisions of charter: 7. . . . The charterers shall throughout this charter-party insure the ship and keep her insured at the charterers' own expense against all the usual marine and war risks for and on a valuation of £130,000 sterling . . . and shall assign to the owner the current policies of insurance and all moneys insured by or to become payable under the said policies and the full benefit thereof . . . 8. If the ship be lost, hire shall be paid up to and inclusive of the day of loss, or, if missing, up to and inclusive of the day last reported. Should the ship become a constructive total loss, such loss shall be deemed to have occurred on and hire under this charter-party shall cease as from the day of the casualty resulting in such loss . . . 11. . . . The charterers shall have the option to be exercised by notice in writing given to the owner not later than three months before the expiration of this charter-party to purchase the ship as she then lies for the sum of £130,000 (basic price for purchase) less depreciation at the rate of 5 per cent. per annum for the period between the date of delivery hereunder and the date of transfer of the ship to the charterers.

Grounding of ship on Sept. 5, 1950- Notice of abandonment given to underwriters by charterers on Sept. 6, notice being confirmed by M.O.T. on Sept. 8-Abandonment not accepted-Option to purchase exercised by charterers on Sept. 7-Subsequent payment by underwriters on basis of total loss-Claim by charterers for declaration that they were entitled to benefit of policy moneys-Contention by M.O.T. that option was not validly exercised by charterers in that at the time it was exercised (1) the ship was a constructive total loss; (2) the ship being to all intents and purposes incapable of further use as a ship, and the commercial purpose of the charter-party being thereby frustrated, it was to be implied that the charter-party automatically terminated - Plea by charterers that the express terms of the charter-party excluded the implication that the commercial impossibility of the further performance of the purposes of the charter-party should put an end to it-Construction of charter-party- Marine Insurance Act, 1906, Sects. 60, 61.