Monarch Steamship Company Ltd v Karlshamns Oljefabriker (A/B)

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Porter,Lord Uthwatt,Lord Wright,Lord du Parcq,Lord Morton of Henryton
Judgment Date09 Dec 1948
Judgment citation (vLex)[1948] UKHL J1209-2
Docket NumberNo. 1.

[1948] UKHL J1209-2

House of Lords

Lord Porter

Lord Wright

Lord Uthwatt

Lord du Parcq

Lord Morton of Henryton

Monarch Steamship Company Limited
and
A/B Karlshamns Oljefabriker and Others

Upon Report from the Appellate Committee, to whom was referred the Cause Monarch Steamship Company Limited against A/B Karlshamns Oljefabriker and others, that the Committee had heard Counsel, as well on Monday the 31st day of May last, as on Tuesday the 1st, Thursday the 3d, Friday the 4th, Monday the 7th and Tuesday the 8th, days of June last, upon the Petition and Appeal of The Monarch Steamship Company Limited, having their registered office at 45 West Nile Street, Glasgow, C.1, praying, That the matter of the Interlocutors set forth in the Schedule thereto, namely, two Interlocutors of the Lord Ordinary in Scotland (Lord Sorn) of the 6th of May 1946 and the 14th of May 1946 respectively, and also an Interlocutor of the Lords of Session there of the First Division, of the 6th of December 1946, so far as therein stated to be appealed against, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Interlocutors, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of A/B Karlshamns Oljefabriker and Boyd, Jameson & Young, Writers to the Signet, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal, in the Court of Parliament of His Majesty the King assembled, That the said Interlocutors in part complained of in the said Appeal, be, and the same are hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents, the Costs incurred by them in respect of the said Appeal, other than the costs incurred by the Respondents by the inclusion in the Appendix of the transcript of any oral evidence, or of any documents, relating solely to the issues of (1) unseaworthiness or (2) knowledge on the part of the Appellants of such unseaworthiness: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants, the Costs incurred by them by the inclusion in the Appendix of such evidence or documents as aforesaid, such last-mentioned Costs to be set off against the Costs payable to the said Respondents, the amount so to be paid to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the parties entitled to the same within one calendar month from the date of the Certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary.

Lord Porter

My Lords,

1

This is an appeal from an Interlocutor pronounced by the First Division of the Court of Session on the 6th December, 1946, affirming two Interlocutors of the Lord Ordinary dated respectively the 6th and 14th May, 1946, whereby he decerned against the Appellants for payment of £21,634 7s. 4d. for breach of a contract contained in 16 bills of lading issued by the Appellants, of which the Respondents were indorsees, and for expenses.

2

The pursuers are a Swedish manufacturing firm which on the 21st April, 1939, purchased through their London agents a cargo of Manchurian soya beans from the Japanese firm Mitsui and Company. The amount purchased was 8,200 tons at the price of £8 6s. 3d. a ton or something over £68,000 in all and the goods were to be shipped on board the Appellants' vessel the British Monarch.

3

Presumably in anticipation of this contract, Mitsui and Company on the 4th April had chartered that vessel, which sailed to Rashin in fulfilment of the charter, there loaded the beans and issued 16 bills of lading on the 6th May. After loading her cargo she sailed from that port on the 12th. Before proceeding to Rashin the vessel had been on time charter to Yamashita Kisen Kaisha of Kobe under a charter party dated the 11th October, 1938. By the terms of this document the charterers had to supply the bunker coal required, and that which they furnished appears to have been of bad quality and to have affected the tubes of the vessel's boilers. Moreover the coal supplied for the voyage from Rashin was itself of poor quality, though it may be that nothing better was procurable. However this may be, undoubtedly the combination of these two factors caused great delay in the homeward voyage. Furthermore, though the Appellants did not know it, the evaporator and main condenser were out of order.

4

Under the terms of the charter party the Appellants were under contract to supply a seaworthy ship and this, by reason of the defects stated above, they failed to do. According to the finding of the Lord Ordinary she was unseaworthy on sailing from Rashin and the Appellants have accepted this finding and argued their case on that footing.

5

It was suggested to your Lordships that not only was the vessel unseaworthy on sailing but that the owners knew of that unseaworthiness. I doubt whether this contention was open to the pursuers on the pleadings and there is no sign of its consideration in the opinion of the Lord Ordinary or the Inner House. But even if it were open I do not think it has been established. It is true that the Appellants knew that there had been trouble with the boiler tubes and that their time charterers had been using bad coal, but they had been informed that the vessel had been surveyed and nothing found wrong and they always hoped that a fresh supply of coal would prove efficient or anyhow efficient enough. Moreover actual knowledge of unseaworthiness must be shown, and mere imprudence or carelessness is not knowledge. The owners must therefore be absolved from the guilt of sending their ship to sea in an unseaworthy state with knowledge of that unseaworthiness.

6

Nevertheless the defects were there and entailed a considerable prolongation of the voyage. Her speed was slow and boiler trouble occurred more than once, so that for the ship's safety she had to be diverted to Colombo and repaired there, with the result that she did not reach Port Said until the 31st August and then spent twenty-three days at that port effecting further repairs. She ought, as the Appellants admit, to have completed the voyage to Karlshamn in about 60 days, which would have brought her to her destination before the end of July, whereas she was still at Aden when war broke out on the 3rd of September.

7

Under the charter party and bills of lading Messrs Mitsui had a range of ports in the North Sea and Baltic to which they were entitled to direct the vessel, and on the 7th June they nominated Karlshamn as the port of discharge. The owners, however, did not know at that time for whom the cargo was intended and their contract was still with Mitsui and with them alone, and so remained until 23rd October. They were not even informed that Mitsui intended to deliver to the pursuers until the middle of August.

8

As a result of the outbreak of war the British Monarch was by Admiralty orders diverted to Glasgow. On this last lap of the voyage her speed was not unreasonably slow and she reached Glasgow on the 21st October. On her arrival Mitsui paid the freight and took delivery of the cargo. Two days later they transferred the bills of lading to the Respondents, who meantime had chartered three ships to carry on the beans to Karlshamn, where the Respondents intended to use them directly or indirectly for the purposes of their factory. They had expected the beans to arrive at Karlshamn before the end of July and, being short of supplies owing to their late arrival, had for lack of them to borrow some soya beans from the Swedish Government under promise to replace them on the arrival of the vessel, and needed the rest to keep their factory at work. The cost of transhipment was £22,134 7s. 4d., the sum sued for in the action, and, whatever the rights of the parties may be, it is not contended that this sum was an unreasonable amount to pay for the carriage on to Sweden at that time and in war conditions. This sum the pursuers say they were entitled to recover as damages for the Appellants' breach of contract. The argument runs as follows:—the undertaking was to carry the beans to one of a range of ports at the option of Mitsui or of those to whom they transferred the bills of lading; the option was exercised in favour of Karlshamn; the Appellants failed to carry out their obligation and accordingly the Respondents had the right to fulfil the contract themselves and to charge the Appellants with the cost of doing so; the Appellants should have delivered the beans at Karlshamn within a reasonable time, they failed to do so because of their breach of contract to provide a seaworthy ship, and the additional expense of carrying out the contract must therefore fall on them. If they had not taken so unduly long a time the British Monarch would have arrived at Karlshamn long before the outbreak of war and the hire of the three additional ships would have been unnecessary.

9

In opposition to this argument the Appellants maintain that the Respondents are not entitled to recover this or any sum. They rely in the first place upon the provisions of the charter party and the bills of lading which incorporate its terms and in particular upon the war clause attached to it, which is in the following terms:—

War Risks Clause.

"(1.) No Bills of Lading to be...

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