Trans Tec Services Inc. v. The “Lyubov Orlova”

This was an appeal from a summary trial application in which the Plaintiff’s claim was dismissed. The Plaintiff had supplied bunkers to the defendant ship pursuant to a contract between the Plaintiff and the charterer. The Defendant was a sub-charterer who had paid to the Plaintiff the amounts said to be owing in respect of bunkers. The payments specified that they were for the amounts owing in respect of bunkers delivered to the defendant ship. The Plaintiff, however, applied the payments to other invoices owing to the Plaintiff by the charterer. The Plaintiff argued it was entitled to do so by the terms of its contract with the charterer. The motions Judge held, however, that the contract between the Plaintiff and charterer did not bind the Defendant and held that by retaining the payments the Plaintiff accepted the payment terms of the Defendant. On appeal, the Federal Court of Appeal agreed with the motions Judge that the Plaintiff’s conduct made it clear that it accepted the funds in full payment of the claims against the Defendant ship.