Lord Strathcona Steamship Co Ltd v Dominion Coal Co Ltd [1926] AC 108
Facts
A vessel was sold while subject to a time-charter arrangement. The purchaser knew of that arrangement but would not perform it as the charterer required. The charterer sought equitable relief preventing use of the ship inconsistently with the promised service. The dispute concerned whether a contractual restriction could affect a purchaser who had notice and what form of relief was available. The Privy Council considered the distinction between enforcing the charter through full specific performance and restraining inconsistent conduct, against the background of the existing contractual relationship and subsequent acquisition of the vessel.
Legal Issue
Could a purchaser with notice of an existing charter be restrained from inconsistent use of the vessel without an order compelling full specific performance of the charter?
Held
The Privy Council allowed negative injunctive protection against use of the vessel inconsistently with the existing charter arrangement, while declining to order full specific performance of the charter. The purchaser had acquired the ship with knowledge of the relevant undertaking, and the Board treated the negative obligation as capable of equitable protection in the circumstances. The decision is controversial in its treatment of contractual restrictions affecting a purchaser of a chattel. Later English authority, including Port Line v Ben Line, did not accept it as establishing a general proprietary burden enforceable through notice alone. The historical order therefore requires careful separation from any assertion that all charterparty obligations automatically follow ownership of the ship.
⭐ Legal Principle
Lord Strathcona illustrates historical negative injunctive relief concerning a vessel purchased with notice of a charter. It is not a secure basis for a general modern rule that contractual restrictions on chattels bind purchasers merely because they know of them; subsequent authority limits that proposition.
Significance
The case brings together privity, property and equitable remedies. Its principal study value lies in the disputed reach of contractual obligations against a purchaser who was not the original promisor. A negative injunction and an order compelling complete performance are also different remedies, although practical effect matters. Treat the Privy Council's historical approach and later English treatment separately. A modern problem needs an identified contractual, proprietary or other recognised basis binding the purchaser, not notice presented as a universal substitute for one.
Common exam questions about this case
Why distinguish the injunction from specific performance?
The injunction restricted inconsistent use, while specific performance would have required fulfilment of the charter's positive obligations. The Board did not grant the latter wholesale. That distinction is material, although a court must still examine whether negatively phrased relief effectively compels performance in practice.
Did notice automatically make the charter a proprietary interest?
That is not a safe general proposition. The historical decision's treatment of notice and negative obligations was controversial, and later English authority did not recognise a general rule that contracts concerning chattels bind purchasers through knowledge alone. An independent legal basis must be examined.
How should Port Line v Ben Line be used with this case?
It should be considered as later English treatment limiting the broader reading of Lord Strathcona. A lower English decision should not be described casually as overruling every Privy Council proposition, but it matters to whether the proposed notice-based principle is accepted in English law.