Cobelfret (UK) Ltd v Austen and Butta (Sales) Pty Ltd

Cobelfret (UK) Ltd and another party appealed to the New South Wales Court of Appeal against a decision of the Commercial Division of the Supreme Court of New South Wales. The dispute concerned the interpretation of a charterparty agreement, specifically regarding the calculation of demurrage payable by the charterers, Austen and Butta (Sales) Pty Ltd, to the shipowners, Cobelfret (UK) Ltd.

The primary legal issue before the Court of Appeal was whether the charterers were entitled to deduct from the demurrage payable the costs incurred by them in performing certain stevedoring services, which the shipowners had agreed to provide under the charterparty. This involved determining the proper construction of the relevant clauses within the charterparty, particularly those relating to the provision of stevedoring and the calculation of demurrage.

The Court of Appeal, in its reasoning, focused on the plain language of the charterparty. It held that the agreement clearly stipulated that the shipowners were responsible for providing stevedoring services and that the charterers were to pay demurrage for any delays beyond the agreed laytime. The Court found no provision within the charterparty that entitled the charterers to set off the costs of performing these services against the demurrage owed. The legal principle applied was that contractual terms must be given their ordinary and natural meaning, and a party cannot unilaterally deduct costs for services they were contractually obliged to provide or pay for, unless the contract expressly permits such a deduction.

The appeal was allowed, and the orders of the Supreme Court were set aside. The Court of Appeal ordered that the charterers were liable for the full amount of demurrage as calculated by the shipowners.