High Court rules on measure of damages for early redelivery under a time charterparty
On 23 August 2011 the Commercial Court handed down judgment on a claim brought by Star Reefers Pool Inc against JFC Group Co Ltd under two contracts of guarantee. The guarantees were in respect of a charterer’s obligations under two long-term time charterparties, which were repudiated in September 2010, at which point they had more than a year left to run. The case raised an important question as to the assessment of the owners’ damages following the charterer’s repudiation of the charterparties. On the facts of the case, at the date of the termination of the charterparties there was an available market for substitute fixtures on similar terms to the charterparties for the remaining periods. However, the owners chose not to enter into that market, but instead traded the vessels for the remaining periods on the spot market, and earned higher rates of income than they would have done had they entered into the available market at the date of the breach. The question was whether the owners were entitled to claim damages by reference to the market rates at the date of the repudiation, or whether the actual income received by the owners had to be taken into account in the assessment of damages. It was held, following the decision of Goff J in The Elena d’Amico  1 LLR 75, that the owners’ damages were to be assessed by reference to the available market at the date of the breach, and it was irrelevant that the owners had not in fact entered into the market.