Meredith Jones (A.) & Company Ltd v Vangemar Shipping Company Ltd (No. 2) (Apostolis)
| Jurisdiction | England & Wales |
| Judge | Waller,Laws L JJ,Sir Christopher Staughton |
| Judgment Date | 11 July 2000 |
| Date | 11 July 2000 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Waller and Laws L JJ and Sir Christopher Staughton.
Iain Milligan QC and Richard Lord (instructed by Richards Butler) for the appellants.
Belinda Bucknall QC and Michael Coburn (instructed by Hill Taylor Dickinson) for the respondents.
The following cases were referred to in the judgment of the court:
Canadian Transport Co Ltd v Court Line LtdUNK(1939) 64 Ll L Rep 60 (CA); [1940] AC 934 (HL).
Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No. 2)UNK[1982] 1 Ll Rep 282.
Overseas Transportation Co v Mineralimportexport (The Sinoe)UNK[1971] 1 Ll Rep 514; [1972] 1 Ll Rep 201.
Ruxley Electronics & Construction Ltd v Forsyth[1995] CLC 905; [1996] AC 344.
Shipping Carriage of Goods Liability for stevedores Demurrage Fire damaged cargo and ship Cause of fire not established Cargo owners responsible for loading but not liable for damage to ship if fire caused by stevedores because contract of carriage provided for stevedore damage to be settled directly between stevedores and carrier Cargo owners liable for demurrage because they had not shown that cause of delay was beyond their control.
These were an appeal and cross-appeal from a judgment of Longmore J holding that the likely cause of a fire on board ship was a cigarette carelessly discarded by a stevedore and that the claimant cargo owner, AMJ, was liable to the defendant shipowners for the cost of repairs to the vessel and expenses incurred as a result of the fire, but not for demurrage because the fire was beyond cargo owner's control.
In 1992 there was a fire in the holds of the defendant's vessel which damaged AMJ's cargo of cotton which was being loaded at Thessalonika. In 1995 Tuckey J ([1996] 1 Ll Rep 475) held that the likely cause of the fire was welding for which the owners were responsible, rather than a stevedore's discarded cigarette for which AMJ would be responsible. The stevedores at Thessalonika were employed or organised by the port authority. The contract between the claimant and defendant, evidenced in a booking note, provided by cl. 3 that the merchant was to load the goods and that the costs of loading and stowing the goods were to be borne by the merchant. By cl. 20 stevedore damage was to be settled directly between carrier and stevedore. Tuckey J held that the welding meant that the vessel was unseaworthy within art. III, r. 1 of the Hague-Visby Rules and that the fire was caused with the actual fault or privity of the owners so that they could not rely on the art. IV, r. 2 fire exemption. The judge gave judgment for the claimant and dismissed the owners' counterclaim for damage to the ship and for demurrage. The Court of Appeal ([1997] 2 Ll Rep 241) allowed an appeal on the basis that even if welding was the cause of the fire there was no breach of art. III, r. 1 and no privity so that owners could rely on art. IV, r. 2. The owners' counterclaim was therefore remitted to the Commercial Court. Longmore J held that the likely cause of the fire was a cigarette carelessly discarded by a stevedore and that AMJ was liable to owners for the cost of repairs to the vessel and expenses incurred as a result of the fire, but not for demurrage because the delay in loading as a result of the fire was beyond the control of the merchant under cl. 3 of the booking note. The claimant appealed and the owners cross-appealed.
Held, allowing the appeal and the cross-appeal:
1. The remission to Longmore J was only to consider the owners' counterclaim in the light of the findings of Court of Appeal that AMJ failed to establish welding as the cause of the fire, and that owners had not established that the fire was caused by a stevedore's discarded cigarette, but that there remained an issue as to whether demurrage was recoverable. It was not open to Longmore J, on the Court of Appeal's findings, to hold that a discarded cigarette was the cause of the fire and that therefore the counterclaim for damage to the ship succeeded. On the findings that neither cause was established, the counterclaim for damage to the ship had to fail.
2. Neither AMJ nor the owners were vicariously liable for the acts and omissions of the stevedores at Thessalonika. Clause 3 of the booking note which provided for the merchant to tender and load the goods at his expense implied a duty on the merchant to see that the cargo was loaded and stowed with reasonable skill and care. But the provisions of cl. 20 for stevedore damage to be settled directly between the carrier and the stevedore, with the merchant's assistance if necessary, negatived that implication. If it had been established that a stevedore's cigarette was the cause of the fire, cl. 20 would have been a defence to the owners' claim for damage to the ship, contrary to the judge's view. However cl. 20 did not cover damage to a third party's goods, or a claim for demurrage even if the delay arose from damage to the ship caused by stevedores.
3. The judge was wrong to award US$155,000 as the diminution in value of the vessel. That was the cost of repairs but it was clear on the evidence that it was not economic or reasonable to repair at that cost and the diminution in value should have been assessed at no more than US$25,000 to US$50,000.
4. Since it had not been established whether the cause of the fire was the stevedores, who were under the control of AMJ by virtue of cl. 3, or something else, the claim for demurrage succeeded because AMJ could not show that the delay in loading was caused by something beyond its control.
Waller LJ: On 28 December 1992 a fire occurred in holds 5 & 4 of the Apostolis. The defendants were the owners of the vessel and we shall refer to them hereafter as the owners. As a result of the fire, the cargo of cotton being loaded into those holds was seriously damaged, the ship was seriously damaged and the ship was delayed before she could reload and set sail on 4 March 1993 for Brazil.
On 30 November 1995 Tuckey J, after five days of trial in the Commercial Court, commenced his judgment in this way:
On December 28 1992 there was a fire on board the defendants' (owners) vessel, Apostolis, which damaged the plaintiffs' (AMJ's) cargo of cotton. The contract of carriage was subject to the Hague-Visby Rules. AMJ say the fire was caused by welding carried out on deck which put owners in breach of the rules and therefore liable for their losses. Owners say the most probable cause of the fire was a discarded cigarette for which AMJ are liable and counterclaim their losses. There are issues of quantum but I have agreed to give my decision on liability before considering those. Here it is.
His conclusion was that the cause of the fire was welding being carried out to a cylindrical pulley underneath the winch platform on the masthouse between holds 4 and 5. It followed that the owners' counterclaim for damage to the ship and for demurrage failed. Tuckey J had to consider the effect of art. III, r. 1 and r. 2, and art. IV, r. 2 of the Hague-Visby Rules on the liability of the owners for the damage to the cargo. He concluded in relation to art. III, r. 1 that the vessel was unseaworthy concluding that the carrier would not be making the hold of his ship fit and safe for the preservation of an inflammable cargo when he was carrying out welding work above the hold which resulted in sparks raining into it. That conclusion rendered it unnecessary to consider art. III, r. 2 and art. IV, r. 2, but, in case he were wrong, he went on to consider the effect of those articles and concluded that AMJ (who we shall hereafter call the merchant) had established that the fire was caused with the actual fault or privity of the owners which thus made it impossible for them to rely on the art. IV, r. 2 fire exemption. The basis of Tuckey J's conclusion in this regard was that the evidence established that welding had taken place on a number of days prior to 28 December 1992 during loading and to the hold covers.
Tuckey J thereafter assessed damages at US$2,359,761.43 together with interest at US$351,594.04 and gave judgment in the merchant's favour for those sums. He further dismissed the owners' counterclaim.
The matter then went to the Court of Appeal composed of Leggatt, Morritt and Phillips L JJ. Leggatt LJ commenced his judgment in this way:
On 28 December 1992 a fire occurred aboard Apostolis. She was owned by Vangemar Shipping Co Ltd (the owners). She was in a berth alongside the quay at Salonika in Greece. The loading of bales of cotton had been suspended for the day. The charterers were A Meredith Jones & Co Ltd (AMJ). The fire damaged the cargo in No. 5 hold. AMJ say that it was caused by a spark from welding at some point above the hold, and that the owners were thereby in breach of the Hague-Visby Rules, to which the contract of carriage was subject. The owners on the other hand say that the fire was caused by a discarded cigarette for which AMJ are liable, and they counterclaim for their loss
Leggatt LJ by his judgment held (1) even if welding was the cause of the fire there was no breach of art. III, r. 1 of the Hague-Visby Rules and the owners were not liable on that ground; (2) even if welding had caused the fire there was no reliable evidence of welding having taken place at Salonika before 28 December 1992, that there was no suggestion that Captain Kavallaris (as the alter ego of the owners) knew of the welding on 28 December 1992 and that it followed that the allegation of privity against the owners must fail; (3) in a passage to which we will have to return Leggatt LJ held at the least that even if there was some welding being done to the pulley, Tuckey J was not justified in finding that welding was the cause of the fire. He, on any view, did not make any clear finding as to what was the cause, and then said this of the counterclaim:
Both counsel agreed that if the appeal were allowed...
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