Regulus v Lundin [2016] EWHC 2674 (Comm)involved a towage contract on BIMCO’s TOWCON form for the tow of Lundin’s FPSO from Tunisia to Malaysia by Regulus’ tug. Regulus asserted a claim for delay for breach of the express term of Towcon that the FPSO would be provided in ‘light ballast condition’ and Lundin counterclaimed that the slow progress of the convoy, averaging 3.54 knots was a breach of an implied obligation that the convoy would maintain an average speed of 4.5 knots. Towards the end of the voyage, Regulus diverted the convoy to Singapore so as to exercise a lien over the tow in respect of its delay claim and whilst there the two ropes were cut and Lundin entered a new towage contract to complete the voyage.
Phillips J held
1. The tow was not in ‘light ballast condition’ at the start of the voyage. The test was one of the minimum ballast required for physical safety and seaworthiness and was not expanded so that the condition of the tow must be in accordance with the requirements of the marine warranty surveyor. From departure and for the first eleven days of the voyage Lundin was in breach of this obligation but Regulus were unable to prove that the breach caused any delay to the voyage and were therefore limited to nominal damages.
- Regulus were not entitled to delay payments under the slow steaming provisions in cl. 17(a)(ii) of Towcon. The clause contemplates that the tugowner makes a decision to slow steam because it considers that the tow cannot be towed at the originally contemplated speed. Here there was no evidence that Regulus made a decision to steam slowly, or that it did so. There was no suggestion that the FPSO was incapable of being towed at 4.5 knots, merely that the tug could not average that speed using just two engines.
- Lundin’s counterclaim failed because there was no provision in Towcon to the effect that the convoy would average 4.5 knots and on the evidence there was no collateral agreement to that effect, nor was there an implied term to this effect. Towcon is a well-recognised form which provides an entirely efficacious set of terms of the towage and a term as to contractual speed is neither necessary nor obviously required.
- Regulus committed an anticipatory breach in purporting to terminate the contract at Singapore. Lundin had refused to proceed with the towage for two days prior to this, but this delay of two days was not sufficiently significant to amount to a repudiation. Regulus’s email of 23 March 2013 did, however, constitute a renunciation in that it made clear that the tug was immediately being withdrawn from service and did not amount to an effective contractual notice of termination. Regulus’ email backdated the required 48 hours notice period of cancellation under cl 16 of Towcon to before the sending of the email. A salutary warning here for a party exercising an option to terminate the contract. Terminate according to the terms of the option, otherwise your purported termination will amount to an anticipatory breach and you will be liable in damages to your contractual counterparty.