Reviewing the most important judgments concerning CQD and highlights the importance of collecting vital evidence
It is surprising how few modern cases there are on “Customary Quick Despatch” (CQD), an area of law, which can cause substantial disputes, especially in a rising market.
Definition – “Customary Quick Despatch”
“The charterer must load and/or discharge as fast as possible in the circumstances prevailing at the time of loading or discharging.” Charter Party Laytime Definitions 1980, as reprinted in Laytime and Demurrage. (Schofield 4th Edition page 428.)
The Case Law
- Postlethwaite v. Freeland, [1880] 5 App Cas 599.
Charterers were required to discharge a cargo “with all despatch according to the custom of the port”. Discharge of the cargo could only be effected by the use of lighters under the absolute control of one company who allowed vessels to use the lighters, strictly in the order in which they arrived at the port. The vessel was delayed 31 days as she waited her turn to use the lighters. The cause was a combination of congestion and shortage of lighters. It was held that there was no unreasonable delay and thus the shipowner should bear the delay in a CQD situation where congestion arises. - Lyle Shipping Co Ltd. v. Corporation of Cardiff, [1900] 5CC397.
The charterers were to discharge the vessel “with all despatch as customary”. The custom of the port was to discharge cargoes into railway wagons. It was customary to contract with one railway company for their supply. Due to the volume of work, the particular railway company did not supply sufficient wagons and discharge was delayed. It was held that the charterers were not liable to pay damages for detention because they followed the customary method of taking delivery. - Rodenacker v. May & Hassell Ltd., [1901] 6 CC 37.
The charter party provided that a cargo of Danzig logs should be discharged at Milwall Dock with all despatch as fast as steamer can deliver as customary. The usual method of discharge was into railway trucks, but it was possible to discharge into lighters. When the railway trucks could not be obtained, it was held the receivers had a duty to discharge into lighters.
When should a charterer be liable?
According to Mr. Justice Blackburn in Ford v. Cotesworth, [1868] 4 LR QB 127, a charterer should only be liable for failing to discharge the cargo with customary quick despatch if the cargo is not discharged within a reasonable time under the circumstances. This is also the view expressed by Lord Selborne in the House of Lords decision in Postlethwaite v. Freeland.
What does “under the circumstances” actually mean?
The difficulty is with the word, “circumstances”. It seems that “circumstances” are not the ordinary or expected circumstances, but the actual circumstances, that is, “the actual state of things at the time of discharge” (per Romer Ll in Lyle Shipping Co Ltd v. Corporation of Cardiff). To the “lay” owner, who would have calculated a normal discharge time of say, five days, a delay of say, ten days might be unacceptable. The owner may think that the delay is automatically a breach of the CQD terms. However, that delay could be within the CQD, if one looks at the circumstances (that is, the actual state of affairs) at the time of discharge. Consequently, if there is an unavoidable delay caused by unusual congestion or a strike by stevedores, owners cannot hold a charterer liable for breach of CQD terms. (Pantland Hick v. Raymond & Reid, [1893] AC 22).
The starting point
The starting point when looking at calculations for damages for detention in breach of CQD is: what were the actual circumstances present at the port of loading/discharge. In this regard, contemporaneous evidence is vital. The owner needs to ask the question: could the delay have been avoided by reasonable measures? If so, he can hold the charterer liable for damages (see Rodenacker v. May & Hassell Ltd.).
The usual method of loading/discharging
The owner has to ascertain what is the usual method of loading/discharge: what were the number of gangs available to load/discharge the cargo; what were the durations of shifts; were night-time operations available? The owner then needs to consider weather, machinery breakdowns, other relevant factors at the time of load or discharge. Thereafter, the owner must determine whether the delay could have been avoided by arranging for alterative means of discharge (for example, in Rodenacker v. May & Hassell Ltd., the delay could have been avoided if lighters had been used instead of the usual method of using railway trucks).
Reasonable steps to avoid delay
The charterer is not under an obligation to pay a great deal more than the normal method in order to procure alternative facilities. The charterer is only obliged to take reasonable steps.
Responsibility for receiver’s action
It is not sufficient for a charterer to say that it is the receiver’s fault, the charterer will be responsible for any unreasonable delay caused by his receiver (see LMLN 554, 1 February 2001 London Arbitration 2/01). In that arbitration, the Tribunal commented that: “Under ‘customary despatch terms’, although the customary time taken to load/discharge cargo was first and foremost at the owner’s risk, in certain situations an owner might claim against charterers for damages for detention if, for example, facilities were not available to deliver the cargo at the load port or to remove it from the ship at the discharge port. The receivers’ unreasonable failure to provide sufficient trucks needed to promptly discharge the cargo (if proven) would be a reason qualifying owners to claim against charterers under ‘customary despatch terms’.”
Who has the burden of proof?
The burden of proof is on the owners, which is why evidence is vital in these types of disputes. Each case will be determined on its own facts.
Calculation of the loss
Once an owner has assessed the amount of time lost, he will need to calculate the daily rate for the loss, unless there is a daily rate of “liquidated damages” in the charter.
Preservation of the evidence
The owner will need to think about appointing a protective agent in order to obtain statements (1) as to the means of loading/discharge, (2) as to the cause of the delay, and (3) as to what could have been done to prevent the cause of the delay.
For example, It might be that there was a failure to have the import tax paid or to procure the necessary import documentation. (See The Aello [1961] A.C. 135). The owners would need to obtain evidence in this regard. The alternative may be that there were no storage facilities available. If so, agents would need to investigate what alternative storage facilities would be available. They may need to liaise with port authorities to ascertain whether cargo could be discharged into lighters as temporary storage, and if so, how much that would cost and how easy it would be to do this.
Another possible factor for the delay could be because there was no transportation to remove the cargo. Again, if there were no rail cars, the owners could look at whether there would be trucks or lighters available, and if so, how much this would cost and how long it would take to arrange, whether any receivers/charterers were already doing this and had anticipated the need for this.
Without the right evidence, owner’s claim may fall apart.
Current attitudes
As stated earlier, the cases on this matter are all “antiques”, and today, where “the internet rules” and shipping is a “24/7” business, it seems likely that charterers will be more vulnerable to claims of breach of CQD terms and for damages for detention being made against them, as there are usually possibilities for arranging alternative means of storage or transportation where delays arise. However, charterers’ obligations will be limited to arranging such alternatives at reasonable costs.