Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] UKPC 1 (12 April 1935)

Charterers hired a trawler requiring a licence to operate. When only three licences were granted for their five trawlers, they chose not to license this vessel. The Privy Council held the contract was not frustrated as the appellants' own election caused the inability to perform.

Facts

The appellants chartered the steam trawler St. Cuthbert from the respondents under a charter party. The vessel was fitted with otter trawling gear and could only operate as a trawler with such equipment. Legislation required vessels using otter trawls to obtain licences from the Minister of Fisheries.

The appellants operated five trawlers in total. When they applied for licences in March 1933, the Minister decided to grant only three licences for the appellants’ five vessels. The appellants were given the choice of which three vessels to nominate for licences. They chose three trawlers other than the St. Cuthbert, which consequently received no licence. The appellants then claimed the charter was frustrated and ceased paying hire.

Issues

The central issue was whether the charter party was frustrated by the failure to obtain a licence for the St. Cuthbert, thereby discharging the appellants from their obligation to pay hire.

Self-induced Frustration

A key question was whether frustration can be relied upon when the inability to perform results from the party’s own act or election.

Judgment

The Privy Council dismissed the appeal, holding that there was no frustration of the contract. Lord Wright, delivering the judgment, emphasised that frustration cannot be self-induced.

The Board noted that the appellants were free to select any three of their five trawlers for licensing and could have chosen the St. Cuthbert, in which case a licence would have been granted. Lord Wright stated:

The essence of ‘frustration’ is that it should not be due to the act or election of the party.

Lord Wright quoted Lord Sumner from Bank Line v Capel:

I think it is now well settled that the principle of frustration of an adventure assumes that the frustration arises without blame or fault on either side. Reliance cannot be placed on a self-induced frustration.

The Board concluded:

If it be assumed that the performance of the contract was dependent on a licence being granted, it was that election which prevented performance, and on that assumption it was the appellants’ own default which frustrated the adventure: the appellants cannot rely on their own default to excuse them from liability under the contract.

Implications

This case established the important principle that a party cannot rely on frustration to escape contractual obligations when the frustrating event results from their own choice or election. The doctrine of frustration requires that the impossibility of performance arises from circumstances beyond either party’s control.

The case also raised but did not definitively resolve the question of whether frustration can apply where the possibility of the frustrating event was known to both parties at the time of contracting but no protective clause was inserted. The judgment suggests courts may be reluctant to imply a condition discharging the contract in such circumstances.

Verdict: Appeal dismissed with costs. The appellants remained liable for the monthly hire under the charter party as the frustration was self-induced by their own election not to nominate the St. Cuthbert for a licence.

Source: Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] UKPC 1 (12 April 1935)