Balli Trading Ltd v Afalona Shipping Company Ltd (Coral)

JurisdictionEngland & Wales
JudgeLORD JUSTICE BELDAM,LORD JUSTICE STOCKER,LORD JUSTICE NOURSE
Judgment Date22 July 1992
Judgment citation (vLex)[1992] EWCA Civ J0722-5
CourtCourt of Appeal (Civil Division)
Date22 July 1992
Docket Number92/0724

[1992] EWCA Civ J0722-5

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMIRALTY COURT

(Mr. Justice Sheen)

Royal Courts of Justice

Before:

Lord Justice Nourse

Lord Justice Stocker

and

Lord Justice Beldam

92/0724

Between:
Balli Trading Limited
Respondents (Plaintiffs)
and
Afalona Shipping Company Limited
Appellants (Defendants)

MR. TIMOTHY BRENTON (instructed by Messrs Clyde & Co.) appeared on behalf of the Respondents (Plaintiffs).

MR. TIMOTHY YOUNG (instructed by Messrs Holmes Hardingham Walser Johnston Winter) appeared on behalf of the Appellants (Defendants).

LORD JUSTICE BELDAM
1

In these proceedings the plaintiff is the owner of three consignments of steel, part of a cargo shipped on board the defendant's motor vessel "Coral" in December 1990 from Durban to Trabzon. On discharge at Trabzon the steel was found to be damaged due to collapse of the stow. The plaintiff claims damages for the loss it has sustained contending that the defendant is responsible.

2

By summons dated 13th September 1991 the plaintiff applied to the Admiralty Court for summary judgment under 0.14 on the ground that the defendant had no arguable defence to its claim. The application was heard by Mr. Justice Sheen on 17th January 1992. On 3rd February he gave judgment for the plaintiff, ordering that it be at liberty to sign judgment for damages to be assessed. Against that order the defendant now appeals.

3

The m.v. "Coral" is a motor bulk carrier of 13,677 tons gross register built in 1981. She has seven holds served by seven hatches. The holds are of normal bulk carrier design with angled saddle and hopper tanks obstructing the cargo spaces. In December 1990 the m.v. "Coral" berthed in Durban to load consignments of steel products totalling just under 22,500 tonnes which consisted of flats, protected coils, protected envelopes, wire rod and a small quantity of aluminium ingots. The vessel was chartered by Gulf International Development and Investment Co. (GIDI) on the terms of a time charter in the New York Produce Exchange form dated 29th November 1990 for a voyage of about 60—70 days from Durban to the Eastern Mediterranean and Turkey. By the terms of the charterparty the Master was obliged to give authority to the charterer's agents to sign bills of lading on his behalf. In this context the owner's P. & I. Association arranged for a survey of the condition of the plaintiff's steel and its stowage. Thus the condition of the cargo and the method, equipment and stability of the stowage were contemporaneously recorded.

4

When loading was completed on 23rd December 1990, the surveyor acting for the P. & I. Association expressed himself satisfied "that all reasonable precautions were observed when handling and stowing the above consignments and that the equipment used by the stevedores was adequate". The vessel sailed the same day.

5

The vessel's first port of call was Diliskelesi, where she arrived on 22nd January 1991. There part of the cargo was discharged from holds nos. 3 and 5 in which the plaintiff's steel was stowed. The vessel sailed for Trabzon on 31st January. It is common ground that at that time the cargo was in good condition and the stow intact. The vessel berthed in Trabzon on 3rd February and on 5th started to discharge the plaintiff's steel. The vessel had encountered bad but not exceptional weather on voyage but the steel sheet packages had shifted and in both holds nos. 3 and 5 the stow had collapsed. The plaintiff's steel was damaged. Surveyors called to assess the damage were critical of the dunnage which had been used, the method of stow adopted, the placing of the cargo and lack of additional support after part of the cargo had been discharged at Diliskelesi.

6

The charter between the owners and GIDI so far as material provided by Clause 2, line 45:

"Charterers are to provide necessary dunnage and shifting boards, also any extra fittings requisite for a special trade or unusual cargo, but owners to allow them the use of any dunnage and shifting boards already aboard the vessel. Charterers to have the privilege of using shifting boards for dunnage, they making good any damage thereto".

7

And by Clause 8, line 76:

"That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship's crew and boats. The Captain (although appointed by the owners), shall be under the orders and directions of the Charterers as regards employment and agency; and charterers are to load, stow, and trim and discharge the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate's or Tally Clerk's receipts."

8

Additional typed clauses provided that the rules of the Brussels' Convention relating to bills of lading should apply if such rules were applied under local legislation.

9

The plaintiff's steel consisting of three consignments was shipped under three bills of lading in which the plaintiff's agent, Sepira Forwarding and Transport AG, Zurich, Switzerland, was named as the shipper and the consignee was to the shipper's order. Freight was prepaid. The conditions of carriage included:

"(1) All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, are herewith incorporated. The Carrier shall in no case be responsible for loss of or damage to cargo arisen prior to loading and after discharging.

(2) General Paramount Clause. The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading…as enacted in the country of shipment shall apply to this contract…".

Trades where the Hague Visby Rules apply. In trades where the International Brussels Convention of 1924 as amended by the Protocol signed at Brussels on February 23rd 1968—the Hague Visby Rules—apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in the charge of another Carrier, and to deck cargo and live animals."

10

The Hague Visby Rules were applied compulsorily to all shipments from a South African port under bill of lading by virtue of the South African Carriage of Goods by Sea Act 1986.

11

Before the learned judge the plaintiff contended that the defendant owner, having undertaken to carry the plaintiff's consignments of steel, was a bailee in whose custody the goods had been damaged, that the defendant had failed to show either that it had exercised all reasonable care of the goods or a cause of the damage for which it was not responsible. It had not shown that it was entitled to protection from liability by the terms of the bills of lading.

12

The defendant in opposition to the plaintiff's application for judgment adduced evidence from an expert, Captain Linacre. He had produced a "preliminary" report on the damage to the cargo of steel and as requested had commented upon the positive averments of fault contained in the statement of claim. In expressing his opinion on the allegations that the method of stowage was responsible for its collapse, Captain Linacre drew attention to the difficulty of stowing packaged units in the hold of a bulk carrier obstructed by sloping hopper tanks and expressed the opinion that the steel sheets were inherently very difficult to carry in a vessel of that construction and especially so as a part cargo. This difficulty, he thought, was undoubtedly a causative feature of the collapse.

13

But the defendant's main argument before the learned judge was that by the terms of the bills of lading the plaintiff had agreed that the charterer would be responsible for loading, stowing and discharging the cargo and that as the defendant had not accepted responsibility for the loading, stowage and discharge of the cargo it was not liable.

14

After reviewing the terms of the bills of lading, the learned judge held that the agreement between the owner and the charterer that the latter would be responsible for loading, stowing and discharging the cargo did not "relieve the defendant of the obligations which it had assumed when it agreed to carry the plaintiff's goods from Durban to Trabzon". He continued:

"The defendants agreed to accept on board their vessel "Coral" the plaintiff's goods referred to in the bills of lading for carriage to the port of discharge on terms which included the Hague Visby Rules. Those rules provide by Article III, rule 2 that subject to the provisions of Article IV the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. Thus the obligation imposed by Article III, rule 2 may be displaced or modified by some provision of Article IV. Nevertheless it was the defendants who undertook the obligation to carry out the operations of loading and stowing properly and carefully. The shipowners sought to discharge their obligations vicariously by contracting with the charterers to perform those functions."

15

And later he held:

"In this case the defendants sought to discharge their obligations by contracting with the charterers that the charterers would perform the function of loading and stowing the cargo at their expense. The plaintiff's goods were received on board"Coral" in apparent good order and condition and arrived at their destination in a damaged condition. Those facts raise an inference that there was a breach by the defendants of their obligations."

16

The learned judge was critical of the...

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