The bulk carrier Privocean was chartered on the NYPE form (1946 edition) for a period of 5-8 months. The vessel loaded soya beans at New Orleans to be carried to China via the Panama Canal. The master insisted on a stowage plan which had holds 2 and 6 only partly loaded, and required the cargo in hold 2 to be strapped. The master's view was that if two holds were slack, one had to be strapped. The charterers argued that the costs of the extra strapping were for the owners’ account, and they deducted USD 410,000 representing the cost of the extra strapping.

Section 4(2) of the US Carriage of Goods by Sea Act (US COGSA), which was incorporated into the charter, provided: 'Neither the Carrier nor the Ship shall be responsible for loss or damage arising or resulting from: (a) Act, neglect or default of the Master, Mariner, Pilot or the Servants of the Carrier in the navigation or in the management of the Ship.'

The owners brought arbitration proceedings against the charterers claiming hire.

The charterers counterclaimed the costs of the extra strapping. They contended it was not necessary for the cargo to be strapped, and that they were under no contractual obligation to pay for unnecessary cargo fittings, which were for the owners’ account. Alternatively, the master was negligent in requiring the cargo in hold 2 to be strapped, and the master's stowage plan was in breach of the charterparty. The charterers were therefore entitled to recover the costs of the strapping as damages.

The owners argued that under cl 8 of the NYPE form the cost and responsibility for cargo operations was for the charterers' account. If the master was negligent, the owners were entitled to rely on the exemption in s 4(2)(a) of US COGSA on the basis that the negligence was 'in the management of the Ship'.

The tribunal held that the master was negligent in failing to identify a stowage plan that did not involve strapping. There was a breach of cls 8 and 83 of the charter. The stowage plan was based on incorrect information and did not have proper regard to the vessel's trim, stability and stress. The tribunal held, however, that the master's negligence was in the management of the ship, not the management of the cargo, and the owners' liability was therefore excluded by s 4(2)(a) of US COGSA.

The charterers appealed to the High Court.

Held: Appeal dismissed.

Section 4(2)(a) of US COGSA, which is in the same terms as art 4.2.a of the Hague Rules, is primarily designed with reference to cargo damage, but the parties agreed that it was applicable to the claim in this case. The key point was that 'management of the ship' has a restricted meaning and must be distinguished from 'management of the cargo' (see Gosse Millerd v Canadian Government Merchant Marine Ltd (The Canadian Highlander) (CA) (1927) 29 Ll L Rep 190; [1927] 2 KB 432; (HL) (1928) 32 Ll L Rep 91; [1929] AC 223).

The court was not persuaded that any error of law could be discerned in the tribunal's finding that the master's negligence was in the management of the ship, not the management of the cargo. Although, as Teare J noted, the editors of Scrutton regard the authorities as not being in a perfect state of harmony, and the editors of Voyage Charters had expressed some concern about one of the minor authorities, The Hector, the underlying line of determination is clear. The primary way in which the test is put is 'what is the primary nature and object of the acts which caused the loss?'. To this may be added the questions posited in Voyage Charters and The Glenochil:

(i) [Is the act] one which was done or left undone as part of the care of the cargo, or as part of the running of the ship not specifically related to the cargo?

(ii) Is the act or default which has caused loss, damage or want of care of cargo [or] want of care of the vessel indirectly affecting the cargo?

It is clear from the tribunal's findings that, subjectively, what drove the master to act as he did was a consideration of the stability of the vessel and was, hence, a care of the ship issue. Applying the relevant tests, it seems relatively clear that the primary nature and object of the acts which caused the loss were ones which related to ship management in the sense of stability, and that what was in question was not a want of care of cargo, but a want of care of the vessel which had an effect on the cargo.