The plaintiff was the consignee of an annealing furnace carried on the defendant's vessel, the MSR No 1. The plaintiff claimed that the defendant breached its duty to ensure the safety and safe carriage of the plaintiff's cargo. The plaintiff further alleged that the master failed to exercise the duty of good seafarership in securing the cargo on the vessel as well as recklessly sailing into the path of typhoon Muifa. The defendant brought a counterclaim against the plaintiff for wrongful arrest of its vessel.

Held: The claim and counterclaim are dismissed.

The cargo, being deck cargo, was carried at the sole risk of the plaintiff. The defendant is not liable for any loss or damage to the cargo by virtue of the exclusion clauses in the bill of lading; and is not in breach of its duties as carrier and bailee.

The incident was caused by events that fall within the definition of a peril of the sea. It has long been recognised that cargo carried on deck is exposed to a higher risk of loss. For this reason, art 1.c of the Hague Rules expressly excludes from the definition of 'goods' cargo which, by the contract of carriage, is stated as being carried on deck and is so carried.

Exclusion clauses in respect of deck cargo have since been included in the bills of lading to allocate the risk of loss or damage when cargo is carried on deck and exposed to the perils of the sea. In this regard, the Supreme Court of Canada in CCR Fishing Ltd v Tomenson Inc (The 'La Pointe') [1991] 1 Lloyd’s Rep 89, held that the term 'peril' denotes that the event must be accidental or fortuitous, in the sense that it is not caused intentionally. The peril must also be 'of the sea' in the sense that the damage would not have occurred in an accident on land.

One of the most common perils of the sea include adverse weather, which encompass all types of unfavourable conditions encountered by ships during the course of their voyage, ranging from violent storms and heavy gales to strong winds, high waves, and heavy rainstorms.

It is not disputed that the vessel, while on voyage from Shanghai to Port Klang, encountered typhoon Muifa (a peril of the sea), causing some of the cargo to be lost overboard and other cargo to sustain damage.

Clause 3 of the reverse side of the bill of lading provides that the carriage of the cargo by the vessel is subject to the Hague Rules. Since art 1.c of the Hague Rules expressly excludes deck cargo from the definition of 'goods', the protection of the Hague Rules, by virtue of the Carriage of Goods by Sea Act 1950, is not afforded to the plaintiff's cargo. The exclusion of liability stated in the bill is unaffected by the protection of the Hague Rules, and is accordingly fully effective as a matter of contract.

Deck cargo has long been recognised as being subject to additional risks. The Hague and Hague-Visby Rules are intended to regulate contracts of carriage by imposing mandatory protective provisions in favour of cargo owners. Even so, the international maritime community declined to extend such protection to deck cargo. The prevailing position is that shipowners remain free to contract out of, and exclude, liability for deck cargo. Due to the inherent risks associated with deck cargo, shipowners are generally willing to carry cargo on deck only on the basis that their liability is excluded.

The evidence establishes that the defendant exercised the necessary due diligence to ensure that the cargo was sufficiently secured on the vessel before commencing the voyage. But for the unforeseeable development of typhoon Muifa, the lashing of the cargo would not have failed, resulting in some of the cargo falling into the sea and damage to the remaining cargo.

The master exhibited good seafarership in dealing with the incoming typhoon Muifa. He acted diligently and reasonably, weighing all factors based on the information available to him. Drawing on his professional experience, he decided to head to Jeju island to avoid the storm.

The vessel was seaworthy for the voyage from the port of Shanghai to Port Klang. The incident resulted from an unforeseeable and sudden development of the typhoon, which was beyond the control of the parties. Accordingly, the defendant did not breach any duty, including any duty of bailment, and was not negligent in carrying out the voyage.

The defendant's counterclaim for wrongful arrest is also without basis.