Lloyd's Maritime and Commercial Law Quarterly
LOSS AND LATE REDELIVERY
Kyle Denning *
The Skyros is a standard “late redelivery under a time charterparty” case with a simple twist, yet one that raises fundamental questions about loss and the law of damages. The twist was that the owners of the vessel had sold it and were contractually obliged to deliver it to the buyer as soon as it was redelivered by the charterer. In this situation, the owners are entitled to nominal damages only. They are not worse off because of the charterer’s breach, and the reasons why that is the case are simply irrelevant. It is wrong to treat the sale of the vessel as a collateral matter and to disregard it in assessing the owners’ consequential loss. That approach does violence to the compensatory principle, and it is not supported by the authorities.
The Skyros
1 is wrongly decided. The Court of Appeal was asked to decide what damages the owner of a time-chartered vessel should receive if the vessel was redelivered late, but by then the owner had committed to selling the vessel and so they would not have chartered it during the overrun period. The right answer is nominal damages. The owner is not actually worse off because of the charterer’s breach. The Court of Appeal strayed from the philosophy of the compensatory principle and awarded the owners the market measure, the difference between the market rate and the charter rate for the overrun period. The essential reason given was that, according to the authorities, the sale was a collateral matter disregarded by the law for the purposes of assessing consequential loss. However, a close analysis of those authorities reveals no real support for that approach, but it does support the antithesis. What the owners would (or would not) have done with the vessels had they been redelivered on time should have been taken into account in order to give proper effect to the compensatory principle.
Background
Hapag-Lloyd AG (“the Charterer”) time-chartered two vessels, one from Skyros Maritime Corp and the other from Agios Minas Shipping Co (“the Owners”). In breach of contract, the Charterer redelivered both vessels late, by two and seven days respectively (although they continued to pay for each vessel at the agreed charter rate during the overrun period).
* Associate to the Hon Justice AM Stewart, Federal Court of Australia; Sessional Teaching Academic at Macquarie University, Sydney, Australia. I am very grateful, with the normal caveats, to Cara Boljevac for her helpful comments on an earlier draft of this article.
1. Skyros Maritime Corp v Hapag-Lloyd AG (The Skyros and The Agios Minas) [2025] EWCA Civ 1529 (“The Skyros CA”); rvsg [2024] EWHC 3139 (Comm); [2025] 2 Lloyd’s Rep 260 (Bright J) (“The Skyros HC”).
Loss and late redelivery
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