The Bijela was chartered for carriage of cargo from Providence, US, to Kandla, India. The charterparty provided that any general average was to be settled in London according to the York-Antwerp Rules 1974.

While at Rhode Island Sound, the vessel grounded and sustained damage. The vessel was put into the port of Jamestown and could not proceed on its voyage without repairs. There were two alternatives. Either it could discharge part of its cargo into barges, return to Providence, and there discharge the rest of its cargo. It would then be able to proceed under its own power to New York, where it could undergo permanent repairs in dry dock. Or it could carry out temporary repairs where it was anchored at Jamestown, in the hope that this would be sufficient to enable it to complete the voyage to India. The shipowner elected to carry out temporary repairs in Jamestown, at a cost of USD 282,606.

After the completion of the voyage, the shipowner declared a general average loss. The initial adjusters did not allow the cost of the temporary repairs. The shipowner instructed a second firm of adjusters, who included the cost of the repairs in general average as being less than the expense which would have been incurred and allowed if the temporary repairs had not been effected, within r 14 of the York-Antwerp Rules 1974.

The cargo owners refused to pay their contributions, and the shipowner issued a writ for their recovery. Hobhouse J dismissed the claim on the ground that r 10.b of the Rules only allowed for the cost of discharging and storing cargo in respect of repairs 'necessary for the safe prosecution of the voyage'; and that, since repairs in dry dock had not been necessary, the cost of handling and storing the cargo in New York would not have been allowed in general average and there had been no saving in expense. The Court of Appeal, by a majority, dismissed the shipowner's appeal. The shipowner appealed to the House of Lords.

The shipowner argued that if temporary repairs had not been effected at Jamestown, certain expenses would have been incurred in effecting permanent repairs in New York, which would have been allowed in general average. Thus, in order to effect repairs in New York, it would first have been necessary to discharge the cargo in Providence, store the cargo during repairs, and then reload. The cost of these operations, all of which would have been allowable in general average under r 10, would have amounted to more than USD 535,000. Accordingly, the saving in expense which would have been allowed in general average if the vessel had undergone permanent repair in New York, far exceeded the actual cost of temporary repairs.

The cargo owners submitted, among other things, that on the plain meaning of r 10.b, repairs in New York were not necessary for the prosecution of the voyage. The vessel could have been (and was) repaired in Jamestown.

Held: Appeal allowed.

It is accepted that the cost of entering Jamestown, as a port of refuge, and its detention there, is allowable in general average under rr 10 and 11 of the York-Antwerp Rules 1974. The question is whether the cost of the temporary repairs should also be admitted. This depends on the second paragraph of r 14 of the York Antwerp Rules 1974:

Where temporary repairs of accidental damage are effected in order to enable the adventure to be completed, the cost of such repairs shall be admitted as general average without regard to the saving, if any, to other interest, but only up to the saving in expense which would have been incurred and allowed in general average if such repairs had not been effected there.

Rule 14 was to be applied on the assumption that the temporary repairs had not been effected, and that assumption was to be carried through when applying r 10 of the Rules.

The shipowner has shown that the cost of discharging, storing, and reloading cargo at Providence would have been allowable in general average, if repairs had been carried out in New York instead of Jamestown, since such repairs would, on that assumption, have been necessary, within the meaning of r 10.b of the York Antwerp Rules 1974, for the safe prosecution of the voyage.