JP Klausen & Co and Kitzinger & Co (the claimants) sued the Mediterranean Shipping Co SA (the defendant) for GBP 40,000 over a largely spoiled cargo of 900 cartons of hoki fish fillets. These were carried in a reefer container supplied by the defendant and carried on three of the defendant's vessels. Raised temperatures within the container caused cargo damage. The loaded container was shipped by Talley's from Nelson, NZ, to Tauranga, NZ, on the Krittika, in July 2010. It arrived in Tauranga three days later, when it was discharged and remained there for a couple of weeks. It was loaded onto the Sky Jupiter on 14 August 2010. A bill of lading was issued in Christchurch, NZ, for the remainder of the voyage from Tauranga to Bremerhaven, Germany. The parties accepted that the fish was in good condition at least until the vessel left Tauranga. The cargo was transhipped in Singapore on 29 August and arrived in Bremerhaven on the MSC Joanna. The container was discharged at Bremerhaven in October 2010.

Air entering the container's cargo chamber was not colder than the air after it had been circulated around the cargo (when it ought to have been colder). This happened three times at least on the voyage to Tauranga, but not for the 15 days while it remained there. It also happened on the day the Sky Jupiter was leaving Tauranga and on other occasions before the Sky Jupiter reached Singapore. The defrost cycle was activated manually on several occasions when the container was in Singapore. The defendant did not provide any factual evidence on this.

The claimants claimed for diminution in value of the cargo and lost profit plus some survey costs. Liability was disputed but not quantum. The claimants alleged that the defendant failed to prevent the build-up of ice in and about the infeed area under the cover of the cooling unit on the container, which caused the temperatures inside the container to rise. The defendant argued that any damage to the cargo was caused by an act or omission of the shipper or owner of the cargo within the meaning of the Hague-Visby Rules (HVR) art 4.2.i, and/or that the alleged damage was not caused with its actual fault or privity within the meaning of HVR art 4.2.q. The defendant also argued that bad stowage restricted airflow within the container, causing a rise in the temperature.

The parties accepted that cl 11.1 of the defendants' standard terms and conditions stated:

The Merchant shall inspect the container for suitability for carriage of the goods before packing it. The Merchant's use of the Container shall be prima facie evidence of it being sound and suitable for use. The carriage shall not be liable for loss of or damage to the Goods caused by amongst other things the manner in which the Goods have been packed, stowed, stuffed or secured in the Container.

The parties accepted that the HVR applied. Reference was made to arts 3.1 and 3.2. The parties disagreed over the interpretation of art 3.1.c. The defendant argued that its reference to 'refrigerating' and 'cool chambers' did not apply to containers which move on and off a vessel. The defendant accordingly argued that there was no duty as regards the containers until shipment. The claimants disagreed, and argued that art 3.1.c applied at least to the containers owned by someone in the position of the defendant.

Next, the issue of seaworthiness divided the parties. The claimant argued that the defendant breached its duty to exercise due diligence to make the vessel seaworthy because it had no adequate system in place for monitoring, preventing or moving the build-up of ice in the container. The claimant emphasised that the experts were agreed that a reasonable system would have involved manually monitoring the container temperatures twice daily. The claimant relied on the absence of documentary evidence of any system of cargo monitoring on the vessels and of witness evidence to explain this.

The defendant submitted that reasonable shipowners could differ over monitoring requirements that they put in place and that there were other reasonable monitoring regimes. The defendant pointed out that an alarm would sound if a supply and return air deviated to a significant extent and no alarms sounded in this case. The programmer of the alarm must have thought that the deviations were not significant. Further, the defendant argued that it would be surprising if a ship was rendered unseaworthy merely by lack of procedures in place to deal with the situation of a supply air temperature on one of hundreds of containers increasing above the return air temperature.

The parties also disagreed over whether the problem could be resolved even if it had been identified by monitoring. They accepted that on the leg of the voyage from Singapore to London it would not have made any difference unless it was possible to deal with it without destuffing and restuffing the cargo.

The claimants argued that once the Sky Jupiter had reached Singapore the problem could have been dealt with during the course of the transhipment by destuffing and restuffing. The defendant argued that destuffing was impossible and impractical at the Port of Singapore and provided a witness statement at the last minute for support of this position.

Furthermore, the defendant argued that given that EU regulations require 'frozen fish products to be maintained during transport in an even temperature of not more than minus 18 degrees Centigrade', it would have been too late to save the cargo, because the voyage to Singapore was sufficient for the cargo to heat to more than that. The claimants argued that since twice as much time was spent at sea sailing from Singapore to Bremerhaven as was spent sailing from Tauranga to Singapore, much of the damage would have been avoided if destuffing had happened at Singapore. Not all the fish was thrown away when the container got to Bremerhaven.

Held: Judgment for the claimants for 50 per cent of the agreed sum claimed.

It was unnecessary to decide the open legal issue on art 3.1.c. Even if the defendant was right, the obligation to keep and care for the cargo would be informed by past events, including what happened on the notionally irrelevant voyage to Tauranga.

The burden in relation to the HVR lies upon the defendant, but with seaworthiness the obligation lies on the claimants. It was for the claimants to prove causative unseaworthiness. Unseaworthiness must be judged by the standards and practices of the industry at the relevant time, provided they are reasonable, and the question was whether a prudent shipowner would go to sea without the procedures that the claimants say should be in place. The Eurasian Dream [2002] EWHC 118 (Comm), [2002] 1 Lloyd's Rep 719 was referred to.

Poor storage was the cause of the cargo heating and cl 11.2 excluded the liability for that damage. However, unseaworthiness was established in principle. The Court rejected the defendant's argument on seaworthiness because the parties' experts accepted that the discrepancy in the readings was significant and should have been noticed. Furthermore, a reasonable crew would have checked the relevant meter twice daily for discrepancies of this kind. The defendant did not provide sufficient evidence and could not fairly criticise the claimants for not producing more evidence. It would be reasonable for the crew to conclude that what had appeared three times as a problem on the way to Tauranga was no longer an issue once the vessel and container had got there. But the position was different as regards Singapore.

The problem could not have been resolved without destuffing and restuffing, which would have had to take place on shore and not onboard. Had the defendant fulfilled its duty there would in theory have been an opportunity for a destuffing in Singapore. Whether that opportunity could in practice be taken up is more difficult. Given some of the cargo was retrievable at Bremerhaven, it would not have been too late to remedy the problem by destuffing and restuffing. The Court gave no weight to the defendant's witness statement that destuffing was impossible in Singapore. It was late, scant, and unsupported by corroborative material. Crucially the claimants have had no opportunity to try and get evidence to refute the statement.

This was a very small case to be in the Commercial Court. Evidence was lacking. Thus, the Court preferred, subject to rights of the parties to apply, to take a pragmatic approach which does some violation to the law of causation and loss of a chance, and discount the damages which would have been available to the claimants had they established that it was probable that there could have been destuffing and restuffing in Singapore. The Court proposed to award half of the damages claimed but subject to the parties having liberty to apply to bring in further evidence. Had a larger amount been at stake, the Court would have adjourned the matter for further evidence to be obtained. But this would have made this case disproportionately expensive to try.