Eridania S.p.A. v Rudolf A. Oetker (Fjord Wind)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CLARKE,LORD JUSTICE WALLER,Sir Murray Stuart-Smith,SIR MURRAY STUART-SMITH |
| Judgment Date | 08 June 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0608-1 |
| Date | 08 June 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: QBCMF 98/1172 CMS 3 |
[2000] EWCA Civ J0608-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(COMMERCIAL COURT)
Mr Justice Moore-Bick
QUEEN'S BENCH DIVISION
Lord Justice Waller
Lord Justice Clarke and
Sir Murray Stuart-Smith
Case No: QBCMF 98/1172 CMS 3
Mr Steven Gee QC and Miss Vasanti Selvaratnam (instructed by Clyde & Co, London, EC3M 1JP) represented the Respondents
Mr Stephen Tomlinson QC and Mr Nicholas Hamblen QC (instructed by Richards Butler, London, EC3A 7EE) represented the Appellants
Introduction
This is an appeal from a decision of Moore-Bick J which was made on the 12 th May 1998 after a seventeen day trial and which is reported at [1999] 1 Lloyd's Rep 307. He gave judgment for the claimant cargo interests against the defendant disponent owners and owners of the motor vessel FJORD WIND in respect of loss and damage which he held were caused by the unseaworthiness of the vessel which manifested itself when the no 6 crankpin bearing on her main engine failed while she was proceeding down the River Paran� on the 1 st July 1990. She had sailed from Rosario on the 30 th June laden with a part cargo of 27,535 tonnes of Argentine soya beans in bulk. She was bound for Rio Grande do Sul where she was to complete loading before sailing to ports in Europe.
Parties and Contracts
The second defendants, who were the owners of the vessel, had chartered her to the first defendants under a time charter on the New York Produce Exchange form dated the 13 th December 1989 for the period 25 th January to 30 th April 1990, later extended to 30 th November 1990. On 31 st May 1990 the first defendants chartered her to the first plaintiffs ("Eridania") under a voyage charter on the Norgrain form for the carriage of a cargo of soya beans in bulk from berths or anchorages in the River Plate not above San Lorenzo with completion at one safe port in Brazil to a range of Spanish and Italian ports. The goods shipped at Rosario were carried under a single bill of lading signed on behalf of the master. It named the second plaintiff ("Emiliana") as shipper and showed the goods as being consigned to order. It is not necessary to refer to the third or fourth plaintiffs, although the relationship between the various interests is described by the judge at pages 310 and 311.
Voyage Charter and Bill of Lading.
The first point which arises in this appeal depends upon the true construction of the voyage charter and of the bill of lading. The charter provides, so far as relevant, as follows:
IT IS THIS DAY MUTUALLY AGREED �.
1 That the said vessel, being tight, staunch and strong and in every way fit for the voyage, shall with all convenient speed proceed to [the River Plate] � and there load �
5 On being so loaded, the vessel shall proceed to � .
35 Owners shall be bound before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy and to have her properly manned, equipped and supplied and neither the vessel nor the Master or Owners shall be or shall be held liable for any loss of or damage or delay to the cargo for causes excepted by the U.S. Carriage of Goods by Sea Act, 1936 or the Canadian Water Carriage of Goods Act, 1936.
The bill of lading was on the North American Grain Bill of Lading form designed to be used with the Norgrain charter. It was issued on behalf of the master and evidenced a contract of carriage with the owners of the vessel. By clause 1 of the "Conditions of Carriage" printed on the reverse it incorporated all the terms, conditions and exceptions of the voyage charter. It was common ground, therefore, that clause 35 of the charter, which clearly applies to the laden voyage, was effectively incorporated into the bill of lading contract. The plaintiffs say that clause 1 of the "Conditions" was also apt to incorporate clause 1 of the charter, but that clause is concerned with the approach voyage rather than the laden voyage, so that, as the judge pointed out at page 312, recognising the difficulties in the way of that argument, Mr. Gee QC quite rightly did not place it at the forefront of his submissions.
The issue between the parties under the charter is the nature of the owners' obligations as to seaworthiness. The plaintiffs' case is that by virtue of clause 1 the owners gave an absolute warranty that the vessel was seaworthy at the beginning of the approach
voyage, that the vessel was not seaworthy at that time and that that breach of warranty caused the loss because it was the same unseaworthiness which caused the subsequent breakdown of the vessel and its consequences. The owners say, on the other hand, that clause 1 must be read in the light of clause 35 and that, so construed, the owners' obligation was to exercise due diligence to make the vessel seaworthy so that the nature of the obligation at each stage was the same.
The judge rejected that argument (at page 314), but then continued as follows:
One is left, then, with the question how these two clauses are intended to operate together in practice. I do not think it follows from the conclusion I have just reached that any breach of the absolute undertaking of seaworthiness which subsequently causes damage to the cargo entitles the charterer to recover against the owner. Take the example I gave earlier of a latent defect in the hull which exists at the time the vessel sets out on the approach voyage but remains undiscoverable by due diligence until in the course of the laden voyage it gives rise to a crack which allows water to enter the cargo. It would in my judgment clearly be contrary to the intention of the parties as expressed in clause 35 that the owner should be liable in respect of the damage. On the other hand, if the crack occurred during the approach voyage and prevented the vessel from performing the voyage because of the need for repairs, I can see no reason why the owner should not be liable for any loss caused to the charterer. In my judgment clauses 1 and 35 are to be construed in this way: clause 1 governs the obligation of the shipowner in relation to seaworthiness of the vessel in respect of events occurring during the period prior to the commencement of loading, that being the point at which the cargo-carrying stage of the adventure begins. Clause 35 governs his obligation in relation to events occurring thereafter, although the fulfilment of the owner's duty will depend on what has gone on before. Although I recognise the force of the argument that it is commercially unattractive for the owner's obligation in relation to seaworthiness to vary at different stages of the adventure in that way, I think that in this case the effect of including clauses 1 and 35 is to produce that result. This may not be the tidiest arrangement from the commercial point of view, but to construe the charter in that way gives effect to all its terms and does not seem to me to produce an unworkable result. It is, perhaps, not uninteresting to note that this very situation was considered by Devlin J. in Adamastos who did not find a difference of that kind between the owner's obligations in relation to ballast voyages and cargo-carrying voyages particularly startling: see [1957] 2 Q.B. 233, 252.
On that basis, although the judge expressly recognised that it was commercially unattractive for the owners' obligations in relation to seaworthiness to vary at different stages of the adventure, he held that the obligations of the disponent owners in relation to the seaworthiness of the vessel before the approach voyage were absolute but during the cargo-carrying voyage were limited to an obligation to exercise due diligence before and at the beginning of that voyage to make her seaworthy.
That is an ingenious solution, but, as I see it, the problem with it is that it involves drawing a distinction between different obligations as to seaworthiness in respect (as the judge put it in the above passage) of events occurring before and after loading, whereas there is nothing in the charter which supports such a distinction and it seems to me that it might be difficult to work in practice. For example, it is or may be difficult to identify when the 'event' occurred depending upon what amounts to an event for this purpose.
On the other hand, the result achieved by the judge's approach in a case of this kind is in my opinion more consistent with the probable intentions of the parties than that proposed by the plaintiffs. It seems to me to be most unlikely that the parties intended liability for damage to cargo caused by unseaworthiness to be different under the charter and under the bill of lading, in circumstances where the bill of lading expressly incorporates all the terms conditions and exceptions of the charter. Yet that would be the effect of accepting the plaintiffs' construction, unless it were held that clause 1 of the charter were incorporated into the bill of lading, which I agree with the judge it was not because, in so far as it is concerned with the approach voyage, it is not germane to the loading and carriage of the cargo.
Moreover, as the judge pointed out in his latent defect example (at page 313), the effect of Mr Gee's...
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