Daewoo Heavy Industries Ltd and Another v Klipriver Shipping Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Judge,Lord Justice Aldous |
| Judgment Date | 03 April 2003 |
| Neutral Citation | [2003] EWCA Civ 451 |
| Docket Number | Case No: 2002 1554 A3 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 April 2003 |
[2003] EWCA Civ 451
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(Mr Justice Langley)
QUEEN'S BENCH DIVISION (Commercial)
Lord Justice Aldous
Lord Justice Judge and
Lord Justice Longmore
Case No: 2002 1554 A3
NICHOLAS HAMBLEN Esq QC and ROBERT THOMAS Esq (instructed by Clyde & Co London EC3M 1JP) for the Appellants
RICHARD LORD Esq QC and LAWRENCE AKKA Esq (instructed by Hill Taylor Dickinson London EC3A 7HX & Jackson Parton London E1 8AA) for the Respondents
The question in this appeal is whether a carrier by sea, who carries cargo on deck in breach of a contract of carriage which is governed by the old Hague Rules, can take advantage of Article IV rule 5 to limit his liability for loss or damage to that cargo. Hirst J answered that question in the negative in The Chanda [1989] 2 Lloyds Rep 494; in the present case Langley J has answered the question in the affirmative [2002] EWHC 1306 (Comm), declining to follow The Chanda.
The proceedings arise out of the partial loss of and damage to a consignment of 34 new excavators carried on the Bulgarian vessel Kapitan Petko Voivoda from Korea to Turkey in September to November 2000.
The First Defendant was the charterer of the vessel. The cargo was carried pursuant to a charterparty between the First Claimant and the First Defendant and pursuant to 6 bills of lading issued by or on behalf of one or other of the Defendants.
For the purposes of the trial of preliminary issues the parties agreed a statement of assumed facts. It reads (so far as relevant) as follows:
"l. At all material times one or other of the Claimants were the owners of or otherwise entitled to sue in relation to a cargo of 34 brand new excavators …
2. The First Claimant and First Defendant concluded a contract of carriage (of the cargo) as partly evidenced in writing by a fax dated 22nd August 2000 … This contract was subject to and/or incorporated the Conline terms …
3. The First Defendant was at all material times the Charterer of the Vessel Kapitan Petko Voivoda from the Second Defendant, the owner of the Vessel, pursuant to the terms of a Charter Party in the Gencon form dated 20th July 2000 …
4. The excavators were shipped aboard the Vessel between 1st to 3rd September 2000 at Inchon in Korea in apparent good order and condition, and stowed and lashed underdeck for carriage to Istanbul.
5. Six bills of lading dated 4th September 2000 were issued in respect of the shipment. None of the bills stated that the excavators were stowed on deck.
6. The contracts of carriage contained in/evidenced by the bills of lading and the contract between the First Claimant and the First Defendant provided for carriage of the excavators to Istanbul in Turkey.
7. The vessel sailed from Inchon on 3rd September. On about 5th September the Vessel arrived at Xingang in China where 26 excavators were discharged from the Vessel then restowed on deck. The Defendants do not allege that notice of/consent to the restowage was given to/obtained from cargo interests.
8. The Vessel sailed from Xingang on 10th September and on 12th September 2000 was in the Yellow Sea bound for Zhangiang when she encountered heavy weather … On that day, at about 20:20hrs, 8 of the excavators on deck broke free of their lashings and were lost overboard. In addition other excavators stowed on deck suffered minor damage including rusting/wetting damage.
9. The loss of and damage to the excavators was caused by one or more of the following causes … :
(1) perils of the seas (within the meaning of Art IV rule 2(c) of the Hague or Hague Visby Rules);
(2) inadequate lashing at Xingang;
(3) carriage of the excavators on deck;
(4) insufficiency of packing (this applies only in relation to the damage apart from the loss of the 8 excavators overboard).
10. There is no enactment of the Hague Rules in Korea.
11. The Hague Rules have been enacted in Turkey (the precise scope of enactment is or may be in issue between the parties but this issue is not material for the determination of the preliminary issues)."
The fax dated 22nd August 2000 provided that the carriage would be "underdeck only" (number 17). The Conline terms contained a General Paramount Clause (clause 2) the effect of which on the basis of the assumed facts is that the Hague Rules (but not the Hague-Visby Rules) as enacted in Turkey applied. The bills of lading also included the Conline terms.
The relevant provisions of the Hague Rules are:-
" Article I In these Rules the following expressions have the meanings hereby assigned …
(c) "Goods" includes goods… of every kind whatsoever except …cargo which by the contract of carriage is stated as being carried on deck and is so carried.
Article II Subject to the provisions of Article VI, under every contract of carriage of goods by sea the carrier, in relation to the loading, handling, storage, carriage, custody, care and discharge of such goods shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth:
Article III
1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
(a) make the ship seaworthy;
(b) ….
(c) make the holds … and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.
2. Subject to the provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
…
6. … In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods …
Article IV
1. Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy and … to make the holds, … and all other parts of the ship in which goods are carried fit and safe for their reception, carriage, and preservation in accordance with the provisions of paragraph 1 of Article III.
Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this Article.
2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
…
(c) Perils, dangers, and accidents of the sea or other navigable waters.
…
(n) insufficiency of packing
…
5. Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding [£100] per package or unit or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
This declaration if embodied in the bill of lading shall be prima facie evidence but shall not be binding or conclusive on the carrier.
By agreement between the carrier, master, or agent of the carrier and the shipper another maximum amount than that mentioned in this paragraph may be fixed, provided that such maximum shall not be less than the figure above named.
Neither the carrier nor the ship shall be responsible in any event for loss or damage to, or in connection with, goods if the nature or value thereof has been knowingly mis-stated by the shipper in the bill of lading.
…
Article V
A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities, or to increase any of his responsibilities and obligations under this convention provided such surrender or increase shall be embodied in the bill of lading issued to the shipper.
The provisions of this convention shall not be applicable to charter parties, but if bills of lading are issued in the case of a ship under a charter party they shall comply with the terms of this convention. Nothing in these Rules shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average."
Although not relevant in the present proceedings, it is to be noted that the Hague-Visby Rules contain an exception to the application of the limitation of liability in the terms of the replacement Article IV rule 5, provided for by Article 2 of the Visby Protocol. The limitation itself appears in Article 4 rule 5(a) in substantially the same terms as rule 5 of the Hague Rules, save as to amount.
The replacement Article IV rule 5(e) reads:-
"Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage or recklessly and with knowledge that damage would probably result"
Preliminary issues were ordered to be tried in the Commercial Court in the following terms:-
1. Whether deck stowage was a breach (a) of the terms of the charterparty and (b) the bills of lading;
2. If so, on each of the following assumptions, namely
(a) deck carriage was the effective cause of the loss and/or damage;
(b) the loss and/or damage was caused by deck carriage and one or more of (i) inadequate lashing, (ii) perils of the sea, or (iii) insufficiency of packing.
Are the Defendants precluded by reason of the unauthorised deck carriage from relying on:
(a) the limitation provisions
(b) the other defences...
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