Eridania SpA v Rudolf A Oetker ('The Fjord Wind') [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Moore-Bick J. |
| Judgment Date | 11 May 1998 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 May 1998 |
Queen's Bench Division (Commercial Court).
Moore-Bick J.
Steven Gee QC and Vasanti Selvaratnam (instructed by Clyde & Co) for the plaintiffs.
Nicholas Hamblen QC and Stephen Tomlinson QC (instructed by Richards Butler) for the defendants.
The following cases were referred to in the judgment:
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”)ELR [1957] 2 QB 233 (Devlin J); [1959] AC 133 (HL).
Antigoni, TheUNK [1991] 1 Ll Rep 209.
Assicurazioni Generali & Schenker & Co v SS Bessie Morris Co LtdELR [1892] 2 QB 652.
Bradley (F C) & Sons v Federal Steam NavigationUNK (1926) 24 Ll L Rep 446.
Brandt v Liverpool, Brazil & River Plate Steam Navigation Co LtdELR [1924] 1 KB 575.
British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London LtdELR [1912] AC 673.
Davis Contractors Ltd v Fareham Urban District CouncilELR [1956] AC 696.
Doyle v Dallas (1831) 1 Moo & Rob 48.
Embiricos v Sydney Reid & CoELR [1914] 3 KB 45.
Fyffes Group Ltd v Reefer Express Lines Pty Ltd (“The Kriti Rex”)UNK [1996] 2 Ll Rep 171.
India v NV Reederij Amsterdam (“The Amstelslot”)UNK [1963] 2 Ll Rep 223.
Kulukundis v Norwich Union Fire Insurance SocietyELR [1937] 1 KB 1.
Kuo International Oil Ltd v Daisy Shipping Co Ltd (“The Yamatogawa”)UNK [1990] 2 Ll Rep 39.
Laurizen (J) AS v Wijsmuller BV (“The Super Servant Two”)UNK [1990] 1 Ll Rep 1.
Marida Ltd v Oswal Steel (“The Bijela”)UNK [1993] 1 Ll Rep 411.
MDC Ltd v NV Zeevart Beurstraat (“The Beurstraat”)UNK [1962] 1 Ll Rep 180.
Mitsui & Co Ltd v Novorossiysk Shipping Co (“The Gudermes”)UNK [1993] 1 Ll Rep 311.
Obestain Inc v National Mineral Development Corp Ltd (“The Sanix Ace”)UNK [1987] 1 Ll Rep 465.
Ocean Tramp Tankers Corp v V/O Sovfracht (“The Eugenia”)ELR [1964] 2 QB 226.
Palmco Shipping Inc v Continental Ore Corp (“The Captain George K”)UNK [1970] 2 Ll Rep 21.
Pioneer Shipping Ltd v BTP Tioxide Ltd (“The Nema”)ELR [1982] AC 724.
Riverstone Meat Co Pty Ltd v Lancashire Shipping Co LtdELR [1961] AC 807.
Soya GmbH KG v WhiteUNK [1980] 1 Ll Rep 491.
Thompson v SmallENR (1845) 1 CB 328.
Western Sealanes Corp v Unimarine SA (“The Pythia”)UNK [1982] 2 Ll Rep 160.
Shipping — Whether disponent owners' obligation of seaworthiness was unqualified — Whether vessel was seaworthy — Whether owners had exercised due diligence as to seaworthiness — Whether voyage frustrated.
This was a claim by plaintiff cargo owners against the owners (second defendants) and time charterers (first defendants) of the Fjord Wind for the costs of transshipping and forwarding the cargo after the voyage was abandoned.
The Fjord Wind had loaded part of her intended cargo of soyabeans for shipment from Argentina to Europe and was bound for another port to complete loading when crankpin bearings failed in the main engine. The estimated time for repairs was some three months and the shipowners gave notice to the holders of the bill of lading that the voyage was frustrated. The cargo was transshipped into a substitute vessel and carried to its destination. The plaintiff cargo owners pursued claims under the voyage charter on the Norgrain form and under the Norgrain bill of lading issued under it.
The plaintiffs said that under cl. 1 of the charter the disponent owners (first defendants) gave an absolute warranty of seaworthiness at the beginning of the approach voyage, alternatively under cl. 35 they were under a duty to exercise due diligence to ensure the vessel's seaworthiness before and at the beginning of the laden voyage. Those clauses were incorporated in the bill of lading and imposed similar obligations on the vessel's registered owners (second defendants). The vessel was unseaworthy when she began her approach voyage and remained unseaworthy and that was the cause of the casualty. The crankpin bearings on the vessel were liable to fail under ordinary conditions without warning before the end of their design service life.
As a result both defendants were in breach of cl. 1 of the charter and liable for the loss whether or not due diligence had been exercised to make the ship seaworthy. Alternatively, since neither the registered owners nor the disponent owners were able to show that the unseaworthiness of the vessel did not result from a failure on their part or on the part of those for whom they were responsible to exercise due diligence, they were both liable for their failure to perform the contracts of carriage contained in both the charter and the bill of lading. The first plaintiff, therefore, as both charterer and assignee of the rights under the bill of lading was entitled to recover the full amount of the costs incurred in connection with the trans-shipment and forwarding of the cargo. If they failed on that limb of their argument the plaintiffs submitted that the effect of the casualty was not sufficient to frustrate the adventure and that the defendants were therefore in breach of contract in abandoning the voyage.
The defendants argued that cl. 1 of the charter was not incorporated in the bill of lading. The only relevant obligation in relation to seaworthiness was the qualified obligation in cl. 35. The casualty was not caused by unseaworthiness, but if it was there had not been a failure to exercise due diligence. The effect of the casualty was to frustrate the voyage.
Held, giving judgment for the plaintiff cargo owners:
1. Clause 1 governed the shipowner's obligation of seaworthiness before the commencement of loading; cl. 35 governed the obligation thereafter. Clause 35 of the charter imported the Hague Rules scheme of obligations and exemptions in relation to the carriage of cargo and owners' liability for loss, damage or delay to the cargo was intended to be governed by those terms. In so far as cl. 1 imposed a more onerous obligation it had to give way to cl. 35 in relation to the laden voyage. However cl. 1 did contain an absolute warranty of seaworthiness on the part of the shipowner when the vessel began service under the charter. (Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Shipping Co LtdELR[1959] AC 133considered).
2. In the circumstances the obligations of the disponent owners in relation to the seaworthiness of the vessel during the cargo-carrying voyage were limited to an obligation to exercise due diligence before and at the beginning of that voyage to make the vessel seaworthy. It was unnecessary, therefore, to decide whether cl. 1 of the charter was incorporated into the bill of lading since in either case the registered owners' obligations were governed by the terms of cl. 35. In the event, therefore, the disponent owners' obligations in relation to the carriage of the cargo, at least in so far as was material for present purposes, were no more or less extensive than those of the registered owners under the bill of lading. (Riverstone Meat Co Pty Ltd v Lancashire Shipping Co LtdELR[1961] AC 807applied.)
3. The vessel was unseaworthy during the laden voyage (and for that matter at the beginning of the approach voyage). There was an unusual history of repeated crankpin failures whose cause had not been identified. That meant that there was a defect, albeit unidentified, in the vessel's propulsion equipment which was liable to result in a crankpin bearing failure during the voyage without warning and with potentially disastrous consequences. A prudent owner, if he had been aware of the nature of the defect, would have taken steps to correct it rather than risk the consequences.
4. It was for the owners to show that they exercised due diligence to make the vessel seaworthy and they were unable to discharge that burden in the absence of evidence that, since the cause of the casualty remained unknown, owners had not overlooked any lines of inquiry which competent experts could reasonably be expected to have pursued. After an engine overhaul the engine builders recommended using a higher viscosity oil and an additional purifier. By not acting on those recommendations the owners failed to exercise due diligence. Also there was evidence of an increase in the temperature of the lubricating oil entering the main engine after the overhaul which would have reduced the viscosity of the oil.
5. The owners could not show that the casualty would have occurred but for their lack of diligence and the Plaintiffs' claim to recover the costs of trans-shipment and carrying the cargo to its destination succeeded.
6. Although it was unnecessary to decide the question of frustration, delay could frustrate a voyage where an unforeseen event had led to a prolongation which radically altered the adventure. The effect of delay on the cargo could lead to frustration depending on the nature and extent of the damage likely to be suffered by the cargo. In this case the effect of delay on the cargo was unpredictable but there was a significant risk of serious damage. Thus a contract for a voyage of about a month involving no appreciable risk to the cargo had been transformed into one of some five months with a significant risk of serious damage. That was sufficient to frustrate the adventure.
Moore-Bick J:
On 30 June 1990 the vessel Fjord Wind sailed from Rosario with a part cargo of 27,535 mt of Argentine soyabeans in bulk. She was bound for Rio Grande do Sul where the intention was for her to complete loading before sailing to ports in Europe. At 19.08 on 1 July as she was passing down the River Paraná there was an automatic reduction in the speed of the main engine as a result of the operation of the high temperature alarm at the thrust bearing. About 40 minutes later at 19.50 the main engine was automatically stopped following the activation of an oil mist detector alarm in the crankcase. At that time the vessel was navigating a dangerous stretch of the river and the master therefore ordered the main engine to be...
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