On 23 March 2014, an incident happened in the early morning at the North Lamma Anchorage when the plaintiff’s barge, Floata 97, was loading containers of cargo onboard the Heung-A Singapore, resulting in damage to a number of containers and the death of a crew member onboard the Heung-A Singapore. The death resulted in an investigation by the Marine Department which was subsequently published in a report concluding that three factors contributed to the incident. First, uneven distribution of containers in the cargo hold resulted in the undue listing of the barge. Second, there was improper stowing, securing, lashing, stacking of containers. Third, there was an absence of risk assessment prior to the commencement of the cargo works.

The Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976) is given domestic effect in Hong Kong via s 12 of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance.  Shipowners have the right to limit their liability (art 1 of the LLMC 1976) in claims in respect of loss of property in direct connection with the operation of the ship (art 2 of the LLMC 1976). The LLMC 1976 provides for higher limits of liability than its predecessor, the International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 (LLMC 1957). It also imposes a very heavy burden of proof on the party seeking to break the limit. In the absence of any allegation of intent, the person challenging the right to limit under the LLMC 1976 must establish both reckless conduct and knowledge that the relevant loss would probably result from the personal act or omission of the person liable (art 4 of the LLMC 1976).

The plaintiff was granted a decree of limitation, but one Mr Cheung made the present application to set aside the decree, claiming his cargo of automobile accessories was lost when its container fell into the sea. The plaintiff opposed the application.

There were two questions before the court. First, whether the loss of the container resulted from a reckless personal act or omission of the plaintiff. Second, whether the plaintiff had actual knowledge that the loss of the container would probably result.

Held: The judge dismissed the summons.

Mr Cheung failed to identify and establish on the evidence any causative personal act or omission of the plaintiff, let alone that such act or omission was reckless. No individual within the plaintiff’s board of directors or senior management had been identified to be causative of the incident. All three contributing factors of the report pointed to the fault of the crew on board at the time of the incident. The crew members’ act or omission could not be regarded as the plaintiff’s personal act or omission as they were not part of the ‘directing mind and will’ of the plaintiff exercising its function as the owner of the Floata 97. In addition, actual fault or privity cannot be determined on an artificial basis by using constructive fault.

Furthermore, Mr Cheung bore the burden to establish sufficient prima facie grounds that the loss of his container resulted from the personal act or omission on the part of the plaintiff and with intent to cause the loss or recklessly with actual knowledge that such loss would probably result. Mr Cheung failed to satisfy the first of two requirements to break the limits on a prima facie basis. Accordingly, that spelled the end of his application.