Naviera Mogor S.A. v Société Metallurgique de Normandie (Nogar Marin)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MUSTILL |
| Judgment Date | 15 January 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0115-5 |
| Docket Number | 88/0028 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 January 1988 |
[1988] EWCA Civ J0115-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN ORDER OF MR JUSTICE STAUGHTON
Royal Courts of Justice
The Master of The Rolls
(Sir John Donaldson)
Lord Justice Mustill
Lord Justice Nicholls
88/0028
MR DOMINIC KENDRICK, instructed by Messrs Elborne Mitchell & Co., appeared for the Appellants (Plaintiffs).
MR NICHOLAS HAMBLEN, instructed by Messrs Sinclair Roche & Temperley, appeared for the Respondents (Defendants).
This is the judgment of the court.
On 4th January 1980 the vessel "NOGAR MARIN" sailed from Caen for Tampa laden with a cargo of wire rods in coils. Although some of the coils were rusty when shipped, the ship's agents signed clean bills of lading. Upon arrival at Tampa the damage was discovered. The receivers of the cargo arrested the vessel and made a claim to which the ship owners had no answer except on quantum, since the bills had not been claused. The owners settled the claim for U.S. 86,462 and sought reimbursement from the charterers for the sum paid, together with U.S. 28,173 for cost of resisting and settling the claim. These sums were reasonably incurred. The charterers declined, and the owners commenced an arbitration which came before a panel of three commercial arbitrators sitting in London. The arbitrators rejected the claim, and an appeal against their award was dismissed by the commercial judge. The owners now appeal to this court.
The facts set out in the award of the arbitrators, supplemented by agreement during the argument before this court, may be summarised as follows.
The charterparty was made on 6th December 1979 between Naviera Mogor S.A. ("the owners") and Societe Metallurgique de Normandie ("the charterers"). It was on the Gencon form, incorporating the customary clause 2, with its wide exceptions. Clause 9 of the printed form reads:
"9. The Captain to sign Bills of Lading at such rate of freight as presented without prejudice to this Charter-party, but should the freight by Bills of Lading amount to less than the total chartered freight the difference to be paid to the Captain in cash on signing Bills of Lading". A typewritten clause 25 provided:
"25. Vessel to be responsible for the number of bundles/coils shipped, but not for the condition in which the iron is shipped".
We understand it to be common ground that the charterers were the manufacturers of the goods, who conveyed them to the quay at Caen, and shipped them for their own account. Upon arrival at the quay the goods were stored in the open, unprotected against the weather. It rained whilst they were being stored and loaded.
The master made a brief inspection of the goods before shipment. He and the chief officer stated in evidence that they thought that the cargo was in apparent good order and condition. There was no evidence as to any discussions about its condition which may have taken place between the master and "Sogena", the ship's agents at Caen. Indeed the master did not give evidence at the arbitration. Nevertheless, the arbitrators were able to find that, although he had clearly been guilty of an error of judgment, there was nothing in the evidence to indicate that he had done anything other than apply his mind to the question of whether or not the cargo was in apparent good order and condition, although he came to the wrong conclusion.
The arbitrators rejected a contention that the master had been reckless, and were satisfied that no more than negligence had been established. In the course of argument the owners took exception to the arbitrators' repeated reference to the master's negligence, on the ground that it disclosed an assusmption that the master owed a duty to the charterers to take care in the inspection of the goods and the signature of shipping documents. It may well be that the arbitrators did make some such assumption, but we beleive that on most, if not all, occasions the arbitrators were not using the word in this sense, but intended it simply to denote an error of judgment short of recklessness. Since the term has been so often employed in the award and in argument, it is convenient to follow the arbitrators in this usage, begging no questions about any contractual or other duties which may have existed.
On 31st December 1979 a mate's receipt was presented to the master for signature. There is no evidence about the circumstances, but the argument has proceeded on the assumption that the document was tendered either by the charterers themselves or by someone acting with their authority. The document, as presented, began with the words "Recu de la Metallurqique de Normandie", identified the vessel, described the cargo, stated the quantity and concluded with the date. It contained no reference to the condition of the goods. The master signed the document without addition.
On the same day two bills of lading were tendered to Sogena, the ship's agents, for signature by the charterers, or someone acting on their behalf. Whilst the circumstances were not in evidence, we also think it legitimate to assume, as the arbitrators must be taken to have assumed, that the mate's receipt was surrendered or at least shown to Sogena at the same time. This document was made out on a printed form, part of which reads:
"SHIPPED at the Port of Loading in apparent good order and condition…the goods specified above…Weight, measure, quality, quantity, condition, contents and value unknown."
To this printed form had been added in typescript the words "clean on board". It is a reasonable inference that these, and other typewritten words, were included so as to make the shipping documents conform with the requirements of the charterers' contract of sale. Sogena signed the bills of lading without qualification. The arbitrators were clearly of the view that this would not have happened if the mate's receipt had been claused.
Those are the facts upon which the questions of law fall to be decided. It is no criticism whatever of the arbitrators, who plainly took much trouble over their award, to acknowledge that a fuller account of what happened at Caen would have been welcome, in the light of issues raised on the appeal which were not canvassed during the arbitration. Since this court would wish to go to any legitimate length, on the hearing of a second-tier appeal from arbitrators on a dispute which arose eight years ago, to avoid remitting the award for further findings, we have been constrained to subject those parts of the award which touch on the legal aspects of the matter to a degree of textual scrutiny which would not ordinarily be appropriate, in order to find out how the arbitrators must have seen the story as a whole. This being so, it is appropriate to quote at some length from their reasons.
"…The Owners advanced their claim for an indemnity on two separate grounds. Firstly, they argued that the Charterers were liable to indemnify them for the consequences of presenting inaccurate cargo documents for signature. Secondly, the Owners alleged that the Charterers were obliged to indemnify them to the extent that the bill of lading imposed greater obligations on them than the charterparty did. In other words, the Owners could recover an indemnity in respect of any liability imposed on them by the bill of lading over and above that which would have existed if the claim had been brought by the Charterers under the charterparty..…
"It follows from our finding that the condition of the cargo upon outturn was essentially the same as upon loading that the master was negligent in failing to clause the mate's receipt so that clean bills of lading could not subsequently have been issued by the agents.…..
"Did negligence on the part of the master prevent the Owners from recovering an indemnity in respect of a reasonable settlement?…
"We found it unnecessary to form a concluded view as to whether or not negligence automatically precluded a right of indemnity, because in this case [we] were satisfied that the intervening negligence of the master broke the chain of causation between the Charterers' act of presenting inaccurate shipping documents and the subsequent claim by the cargo interests.…
"Although conceptually there is no difference between the torts of deceit and negligent misstatement, we were not persuaded that a court would automatically extend the public policy ratio of the Brown Jenkinson principles to a case of negligent misstatement. In any event, we were satisfied that the Owners' claim was defeated on the issue of causation; they had not established that the cargo claim was the direct consequence of the act of the Charterers' agents, the chain of causation having been broken by the master's intervening negligence.…
"The Owners did raise the argument that the Charterers could not seek to defeat the Owners' claims on the grounds of the master's negligence because since they knew about the true condition of the cargo and the discrepancy between its true condition and its description on the mate's receipt and bill of lading, it could not be said that the master was in breach of a duty owed to the Charterers. That analysis seemed to us to be flawed. Firstly, the fact that Charterers might have actual or constructive knowledge of the condition of the cargo does not mean that a master owes them no duty of care when signing documentation which will be negotiated for value to third parties. It has to be remembered that in this case the Charterers were not seeking to recover damages from the Owners for negligence on the part of the master. It is quite true that...
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