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Pan Ocean Shipping V. Credit Corp. Notes

BCL Law Notes > Restitution of Unjust Enrichment BCL Notes

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PAN OCEAN SHIPPING V. CREDIT CORP. FACTS The appellant company, Pan Ocean Shipping Co Ltd (Pan Ocean), is seeking to recover from the respondent company, Creditcorp Ltd (Creditcorp), an instalment of time charter hire paid by Pan Ocean as time charterers of the vessel Trident Beauty (the vessel) to Creditcorp as assignee from the disponent owner of the vessel, Trident Shipping Co Ltd (Trident), of receivables due under the charterparty, such assignment having been made as part of an arrangement under which Creditcorp, on behalf of a group of investors, made finance available to Trident. Pan Ocean is not seeking to recover the hire instalment from Trident, because it does not consider Trident worth suing. Instead, it seeks to recover the money from Creditcorp on the ground of total failure of consideration (Pan Ocean had repudiated the contract in the meanwhile), since the vessel was off hire for the whole of the period in respect of which the relevant hire instalment was paid. HOLDING LORD GOFF All this is important for present purposes, because it means that, as between shipowner and charterer, there is a contractual regime which legislates for the recovery of overpaid hire. It follows that, as a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate. Of course, if the contract is proved never to have been binding, or if the contract ceases to bind, different considerations may arise, as in the case of frustration. Here, it is true, the contract was prematurely determined by the acceptance by Pan Ocean of Trident's repudiation of the contract. But, before the date of determination of the contract, Trident's obligation under cl 18 to repay the hire instalment in question had already accrued due; and accordingly that is the relevant obligation, as between Pan Ocean and Trident, for the purposes of the present case. It follows that, in the present circumstances and indeed in most other similar circumstances, there is no basis for the charterer recovering overpaid hire from the shipowner in restitution on the ground of total failure of consideration. It is against this background that we have to consider Pan Ocean's claim now made against Creditcorp for repayment of the hire instalment paid to it as assignee of the charter hire. First, although the benefit of the contract debt had been assigned to Creditcorp, with the effect that payment to Creditcorp by Pan Ocean

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