Sunlight Mercantile Pte Ltd and Another v Ever Lucky Shipping Co Ltd

• Judge: Chao Hick Tin JA
• Judgment Date: 21 November 2003
• Neutral Citation: [2003] SGCA 47
• Citation: [2003] SGCA 47
• Defendant Counsel: Jude Benny and Adam Abdur Rahim (Joseph Tan Jude Benny)
• Published date: 17 December 2003
• Plaintiff Counsel: R Govintharasah (Gurbani and Co)
• Date: 21 November 2003
• Docket Number: Civil Appeal No 42 of 2003
• Court: Court of Appeal (Singapore)
• Subject Matter: Exclusion clause,Whether use of these phrases in bill of lading sufficient to exclude shipowner's obligation to provide seaworthy vessel at common law,"Howsoever caused",Words and Phrases,Admiralty and Shipping,Whether exclusion clause in bill of lading sufficient to exclude shipowner's liability in failing to provide seaworthy vessel,Seaworthiness,Whether shipowner entitled to general average contribution when failed to meet obligation under common law to provide seaworthy vessel,Limitation of liabilities,Whether exclusion clause in bill of lading sufficient to exclude shipowner's liability in providing seaworthy vessel,York Antwerp Rules,Carriage of goods by sea,"Howsoever arising",General average

Delivered by Tan Lee Meng J

1. The appellants, Sunlight Mercantile Pte Ltd and Liberty Citystate Insurance Pte Ltd, who owned a cargo of timber carried on the deck of a vessel owned by the respondents, Ever Lucky Shipping Co Ltd, appealed against the trial judge’s ruling that they were obliged to contribute towards general expenses incurred by the respondents as a result of the unseaworthiness of the vessel. The respondents contended that the judge rightly held that they were entitled to such a contribution even though the general average expenses had been necessitated by the unseaworthiness of their vessel because their bills of lading contained exceptions to the effect that they were not responsible for loss or damage “howsoever arising” or “howsoever caused”. We agreed with the appellants that the exceptions in question could not be relied upon as the respondents had failed to fulfil their overriding obligation to provide a seaworthy ship at the commencement of the voyage and now set out the reasons for our decision.

A. Background

2. In September and October 1999, the appellants shipped a cargo of African round logs from three West African ports to Tuticorin, India, on board the respondents’ vessel, a bulk log carrier. The African ports were Port Owendo, Port Gentil and Bata. A total of 2,212 logs, measuring slightly more than 10,000 cubic metres, were loaded onto the vessel in the three ports. Loading of the cargo, which commenced on 28 September 1999, was completed on 26 November 1999. Twenty-one bills of lading were issued for the cargo. The bulk of the cargo was stowed in the holds. However, some 430 logs were stowed on deck and this fact was noted in the bills of lading for the deck cargo.

3. On 18 December 1999, the vessel left Port Gentil and commenced on her contractual voyage. Due to unexpected delays at Port Gentil and Port Owendo, the vessel had insufficient provisions on board and the master was directed to proceed to Cape Town to take on bunkers, provisions and fresh water. On the way to Cape Town, the vessel encountered a number of problems. She sailed at a reduced speed because her ageing hull had been fouled by seaweed and barnacles as a result of anchoring for an extended period at Port Owendo. Furthermore, on 22 and 23 December 1999, she had to stop for a while because of generator failure. Finally, on 24 December 1999, there was an explosion in her main engine crankcase. The explosion occurred without any warning signs. After the explosion, the engine could not be operated and the vessel lay adrift in the ocean.

4. The vessel was towed to Port Launda, the nearest port, and she arrived there on 28 December 1999. As she could not be repaired at that port, she was towed to Cape Town for repairs to be effected. She arrived at Cape Town on 3 March 2000 but it was difficult to obtain a repair berth and the respondents asserted that unreasonable demands were made by the port authorities for the provision of such a berth. A decision was then made to have the vessel towed all the way from Cape Town to Tuticorin, the port of discharge.

5. The respondents insisted that the cargo owners were obliged to contribute towards general average expenses because they were attempting to save the vessel and her cargo from a common danger. After negotiations between the respondents and the appellants, a general average bond was furnished by the first appellants and a general average guarantee was provided by the second appellants. The vessel arrived at Tuticorin on 14 May 2000 and the discharge of her cargo of logs was completed on 4 June 2000. On 29 June 2000, the respondents sold the vessel as the cost of sending her to a shipyard for complete repairs was too costly and would take a few months. The vessel was subsequently scrapped.

6. The respondents informed the appellants that general average expenses incurred by them totalled US$910,288.78. Under the York Antwerp Rules 1974 and/or the York Antwerp Rules 1994, US$746,967.18 was attributable to the cargo and this sum was claimed from the appellants as general average contribution or, alternatively, as damages.

7. The appellants asserted that as the respondents had failed to ensure that the vessel was seaworthy before and at the beginning of the voyage, the question of a contribution for general average expenses did not arise. The respondents retorted that even if the vessel had not been seaworthy at the commencement of the voyage, the bills of lading for the deck cargo contained exceptions that were wide enough to allow them to claim a contribution for general average expenses from the appellants.

B. The trial judge's decision

8. The trial judge noted that the issue before her was whether or not the respondents had, in the light of Rule D of the York Antwerp Rules, a right to claim a contribution towards that expenditure from the appellants. Rule D of the York-Antwerp Rules 1974, which governs rights of contribution towards general average loss and expenses, provides as follows:

Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault.

9. As for the meaning of the term “fault” in Rule D of the York-Antwerp Rules, the trial judge referred to Goulandris Brothers Ltd v Goldman & Sons Ltd [1958] 1 QB 74, where Pearson J explained that “fault” in Rule D refers to an actionable fault. For the purpose of determining whether or not there was an actionable fault in this case, much depended on whether or not the vessel was seaworthy at the commencement of the voyage and on the effect of exceptions in the bills of lading.

10. The trial judge found that the vessel was unseaworthy when she left Port Gentil for her contractual voyage because of defects in her main engine. She also found that the explosion in the main engine was not caused by a latent defect. The breach of the absolute undertaking of seaworthiness by the respondents amounted to an actionable fault that would deprive the respondents of a general average contribution from the appellants unless there was an exception in the contract of carriage that altered the position. After noting that the deck cargo was outside the scope of the Hague-Visby Rules, the trial judge added that the issue before her was one of construction of the exceptions in the bills of lading for the deck cargo. Two types of exceptions were found in the bills of lading in question. One batch of bills of lading provided as follows:

Pieces shipped on deck at Shipper’s risk; the Carrier not being responsible for loss or damage howsoever arising.

On the other hand, another batch of bills of lading contained the following slightly different words:

Logs … loaded on deck at the shipper’s … risk, expense and responsibility without liability on the part of the vessel or her owners for any loss, damage, expense or delay howsoever caused.

12. The trial judge laid great emphasis on the words “howsoever arising” in the first batch of bills of lading and the words “howsoever caused” in the second batch of bills of lading. Relying on the decision of Langley J in The Imvros [1999] 1 Lloyd’s Rep 848, she held that these words were wide enough to absolve the respondents from liability for unseaworthiness. As such, there was no actionable fault on the part of the respondents and the appellants were obliged to contribute their share of the general average expenses. The appellants, who were dissatisfied with this ruling, appealed against the...