A bill of lading was issued by Dooyang Line Co Ltd (Dooyang) to the plaintiff for the shipment of 5,500 mt of ammonium sulphate (owned by the plaintiff) on board the MV Viva Ocean (owned by the defendant) from Ulsan Port, South Korea to Tawau Port, Malaysia. On arrival, the plaintiff’s agent discovered that the cargo was badly damaged. The surveyors, who were appointed by the plaintiff, concluded that the wettage was caused by seawater. The issue in this case was whether the ingress of seawater into the cargo holds was due to the vessel being unseaworthy and/or uncargoworthy, or whether it was due to perils of the sea and other defences raised by the defendant.

The plaintiff alleged that the defendant had breached two duties. The first was the duty under the contract of carriage to take reasonable care of the cargo and to deliver it in the same good order and condition as when it was shipped. The second was the duty under art 4.1 of the Hague Rules to ensure that the MV Viva Ocean was seaworthy at all times. Here the plaintiff relied on the maxim of res ipsa loquitur. The plaintiff claimed for damages for loss of value of the damaged cargo, handling and weighing charges, warehouse rental, survey fees and loss of profits.

On the first allegation, the defendant submitted that there was no contractual privity between the plaintiff and itself. There was a printed clause wherein Dooyang was described as ‘shipowner’, without a further indication of another party as a carrier, and this should therefore supersede cl 15 of the bill of lading, which provided that, if the MV Viva Ocean was not owned by Dooyong, the bill of lading would take effect only as a contract with the owner as principal made through the agency or line, which acted as agent only and would be under no personal liability whatsoever. Moreover, there was nothing in the bill of lading that indicated that it was on a time charter.

On the second allegation, the defendant denied liability for the wettage of the cargo, asserting that due diligence was exercised to make the vessel seaworthy before, at the beginning and during the voyage. It attributed the wettage to perils, dangers and accidents of the sea, act of God and other causes without the actual fault or privity of the defendant or without the fault or neglect of its agents or servants.

In the event of liability for the damage to the cargo, the defendant asserted that such liability would be limited in accordance to the terms in the bill of lading, relying on reg 11 of the Merchant Shipping (Implementation of Conventions Relating to Carriage of Good by Sea and to Liability of Shipowners and Others) Regulations 1960 (the Regulations), which applied in Sabah and Sarawak. The defendant submitted that ‘Convention country’ refers to countries so declared under the Merchant Shipping Act 1958 (UK) and ‘Convention’ under reg 9(1) therefore relates to the LLMC 1957.

The defendant made submissions on the interpretation of reg 11 of the Regulations to argue that limitation under the LLMC 1957, instead of LLMC 1976, applied. Conversely, the plaintiff’s submissions were that the defendant was not entitled to limitation under LLMC 1957, even if the absence of proof that the vessel was registered to Panama, which was not a State Party to the LLMC 1957, was discounted.

Held: Plaintiff’s claim allowed. The damage to the cargo would expose the defendant to liability subject to proof of the claim.

Privity

The judge held that the defendant and plaintiff were both parties to a contract of carriage by sea, which existed on the balance of probabilities. The construction of cl 15 would determine that there was no basis for the defendant to say that it was not privy to the contract as reflected in the bill of lading. Moreover, the defendant admitted that the ship was on time charter, did not deny that the master and crew were its servants, and did not show that it had parted with possession of the MV Viva Ocean. Accordingly, the defendant, being on a non-demise charterparty, would still be held liable for the claim, if proved. Moreover, the defendant admitted that the vessel was on time charter, but there was no evidence adduced that this was known to the plaintiff and thus there was no need to consider the nature of the charterparty. Even the misrepresentation in describing Dooyang as the ‘shipowner’ in the bill of lading would expose the defendant to liability.

Seaworthiness

The defendant failed to exercise due diligence in ensuring that the vessel was seaworthy and/or cargoworthy prior to and during the voyage, as expected of it, before and during the voyage which allowed the ingress of seawater into the cargo holds. Seaworthiness included not only the physical condition of the vessel, but also the adequacy and efficiency of the crew, stores and equipment and the suitability of the vessel to carry the cargo.

The MV Viva Ocean was not, on the balance of probabilities, seaworthy before and during the voyage. The defendant failed to prove its assertion as to how or why there was ingress of seawater into the cargo holds. The burden should be upon the defendant to prove how the cargo was damaged and that they had exercised due diligence thereby entitling them to rely on an exemption or exception under the bill of lading and/or the Hague Rules and/or tonnage limitation. As for the plaintiff, it was enough to prove the damages suffered because of the wettage of the cargo on arrival at its destination.

Defences

The judge held that the defendant was not entitled to rely on the exceptions/exemptions under the bill of lading, art 4.1 of the Hague Rules or tonnage limitation as defences. It was trite law that failure to exercise due diligence by the defendant and the absence of any admissible evidence in support of the assertions of peril of sea and/or act of God would not entitle one to rely on such exceptions/exemptions or on tonnage limitation as defences.

Tonnage Limitation

The tonnage limitation under the Regulations did not apply in this case. The MV Viva Ocean could not qualify as a foreign ship to trigger LLMC 1957. Additionally, even if reg 9(3), which applies to British ships, was relevant, the MV Viva Ocean was argued to be a Panamanian ship. Accordingly, the defendant’s tonnage computation was solely based on assumption since there was no evidence adduced of the actual tonnage of the MV Viva Ocean for reg 11 to apply.