Serena Navigation Ltd v Dera Commercial Establishment [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Burton J. |
| Judgment Date | 15 May 2008 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 15 May 2008 |
Queen's Bench Division (Commercial Court).
Burton J.
Simon Rainey QC and Ruth Hosking (instructed by Holman Fenwick & Willan) for the first claimant.
Lawrence Akka and Angharad Parry (instructed by Barlow Lyde & Gilbert LLP) for the first defendant.
The following cases were referred to in the judgment:
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co LtdUNK [1957] 1 Ll Rep 79; [1959] AC 133 (HL).
Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios)ELR [1985] 1 AC 191.
Cargill International SA v CPN Tankers (Bermuda) Ltd (The OT Sonja)UNK [1993] 2 Ll Rep 435.
CMA CGM SA v Classica Shipping Co Ltd [2004] 1 CLC 468.
Comercio Transito Internationale Ltd v Lykes Bros Steamship CoUNK [1957] AMC 1188.
Datacard Corp v Air Express International CorpWLR [1984] 1 WLR 198; [1983] 2 All ER 639.
Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] CLC 374; [1998] AC 605.
Goulandris Bros Ltd v B Goldman & Sons LtdELR [1958] 1 QB 74.
Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co (Jordan) Inc (The Jordan II) [2004] 2 CLC 1172.
Linea Naviera Paramaconi SA v Abnormal Load Engineering LtdUNK [2001] 1 Ll Rep 763.
Renton (GH) & Co Ltd v Palmyra Trading Corp of PanamaELR [1957] AC 149.
Stag Line Ltd v Foscolo, Mango & Co LtdELR [1932] AC 328.
Shipping — Cargo claim — Limitation of carrier's liability — Limit calculated by reference to gross weight of goods lost or damaged — Small part of corn cargo damaged by wetting — Whole cargo required to be fumigated and treated with chemicals and transferred to pre-fumigated and disinfected silos — Further damage to cargo which acquired reputation as distressed cargo — Liability limited to gross weight of goods lost or damaged as at date of discharge/delivery — Value of cargo affected but cargo not economically damaged — Claim for consequential loss not claim in respect of economically damaged goods — Claim permitted in respect of damaged goods and for loss or damage in connection with those damaged goods, but weight of those damaged goods taken as limit — Claim to economic loss limited by reference to weight of goods physically damaged while in custody of carrier not contrary to commercial good sense — Hague-Visby Rules, art. IV, r. 5(a).
This was a preliminary issue in a counterclaim brought by the cargo owner, Dera, against the owner/carrier, Serena.
The counterclaim was brought in respect of a shipment of US corn from Louisiana to Aqaba. Dera was the lawful holder of the bill of lading, to which the carrier was party. The bill of lading incorporated the Hague-Visby Rules.
The assumed facts were that on arrival at Aqaba, after a passage through very heavy weather, a small amount of wetting damage was discovered in the holds, apparently caused by leakages through the vessel's hatch covers. The quantity of wet damaged cargo (said variously to be 7 or 12 metric tons) was segregated and disposed of. In addition, there was a further amended allegation that up to 250 tons of cargo in holds 2 and 3 had to be discharged by bulldozers, and, as a result, suffered an increased number of broken kernels.
The Jordanian authorities required the whole of the cargo to be fumigated and treated with chemicals and transferred to pre-fumigated and disinfected silos. The cargo had to be moved within the silos, and, as a result, the number of broken kernels within the cargo increased, resulting in a depreciation in value. The whole of the cargo as a result acquired a reputation in the market as a distressed cargo. A range of other expenses and liabilities was incurred by Dera in relation to the fumigation, segregation and storage of the cargo.
Dera claimed to have suffered loss and damage consisting of the market value of the cargo which was not delivered and the loss in value of the remainder. The latter claim was for US $1.55m exclusive of interest.
Serena's case was that the limit of liability under art. IV.5(a) of the Hague-Visby Rules where, as here, gross weight was the applicable test, and loss of the goods was not in issue, was by reference to the gross weight of the goods physically damaged, in this case not more than 262 tons. Dera asserted that the limit was applicable by reference to the whole cargo of 43,999.86 tons, which would more than cover the entirety of the sum claimed. Serena submitted that “goods lost or damaged” meant goods physically lost or physically damaged and that art. IV.5(a) should be construed so that the limit was by reference to the gross weight of the goods lost or damaged as at the date of discharge/delivery. Dera submitted that lost or damaged goods meant goods in respect of which the loss and damage was suffered, or included “economically damaged” goods.
Held, resolving the preliminary issue in favour of the claimant owner/ carrier:
1. It was not possible to describe the undamaged goods in this case as “economically damaged”. Their value might have been affected. There might be depression in respect of their price. The goods might be depreciated. But they could not sensibly be described as damaged. The effect on the value of the balance of the cargo was plainly consequential upon the physical damage to part of the cargo. That assisted in the conclusion that the goods by reference to which losses had been suffered consequential to the damage to the originally physically damaged goods fell into a different category from the goods originally damaged.
2. The test for when and whether goods were damaged was as at the time of discharge/delivery. If therefore it was an appropriate question to ask whether goods were “economically damaged”, then that was at the time of discharge/ delivery. In this case that would be a different measure of damage from the actual consequential economic loss sought. A claim for consequential loss was not a claim in respect of economically damaged goods.
3. All the loss or damage which was incurred after discharge was “loss or damage in connection with the goods” within the first part of art. IV.5(a). The goods in question were the goods which were damaged while in the carrier's custody in connection with which other loss (partly in respect of other, undamaged, goods) was suffered. In the circumstances the reference in the last part of the clause was to those same “goods lost or damaged”. What was permitted in art. IV.5(a) was a claim in respect of lost or damaged goods, and a claim for loss or damage in connection with those lost or damaged goods, but in the second part of the clause the weight of those lost or damaged goods was then taken as the limit. To have an entitlement to claim economic loss, but one which was limited by reference to the weight of the physical damage caused while the goods were in the custody of the carrier, was not inappropriate or contrary to commercial good sense. On the assumptions made for the purposes of the preliminary issue, the counterclaim would be limited to a gross weight of not more than 262 tons.
Burton J:
1. This has been the hearing of a preliminary issue ordered by Christopher Clarke J, at a case management conference of proceedings in which a counterclaim has been brought by the First Defendant Dera Commercial Establishment (the Cargo Owner) against Serena Navigation Ltd (the Owner/Carrier). For the purpose of this preliminary issue all that is necessary to set out, so far as the context of the proceedings is concerned, is that the counterclaim is brought in respect of a shipment of US corn from Louisiana to Aqaba, on the Limnos. The Cargo Owner is the lawful holder of the bill of lading, to which the Carrier was party. None of the terms of the bill of lading is relevant, save that it incorporates the Hague-Visby Rules.
2. The pleadings have been carried forward since the case management conference, both by amendment and otherwise, but it is common ground that the facts as now set out in the pleadings as they stand before me are to be assumed for the purposes of the determination of the preliminary issue. Save for the fact that there was some limited wet-damage to the cargo, for reasons which the Carrier does not accept would render it in breach of contract, all of the facts which are assumed for the purposes of this hearing will be in issue. But the context in which this preliminary issue has been ordered is that, if the interpretation of the Hague-Visby Rules for which the Cargo Owner contends is correct, then its claim is very substantial, while, if the Carrier's interpretation is the correct one, then the claim, even if the Carrier were liable, would be very small. I have been greatly assisted by Counsel, Mr Rainey QC and Miss Hosking for the Carrier and Mr Akka and Miss Parry for the Cargo Owner, in their submissions in respect of a point which, notwithstanding the regular international use of the Hague-Visby Rules, has not, it seems, been the subject of consideration by any court.
3. The assumed facts are that on arrival at Aqaba, after a passage through very heavy weather, a small amount of wetting damage was discovered in the holds, primarily holds 2 and 3, but also, it is alleged, to a limited extent, holds 5 and 8, apparently caused by leakages through the vessel's hatch covers. The quantity of wet damaged cargo (said variously to be 7 or 12 metric tons (“tons”)) was segregated and disposed of, though there is, by amendment, an issue (assumed in favour of the Cargo Owner, as above) as to whether some wet damaged kernels were not segregated, and were discharged along with the apparently sound cargo. In addition, there is a further amended allegation that up to 250 tons of cargo in holds 2 and 3 had to be discharged by bulldozers, and, as a result, suffered an increased number of broken kernels. The quantity said to have been physically damaged prior to or at the time of the discharge of the cargo from...
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