This was an appeal by both parties from a decision of the High Court (see CMI506). On 4 February 2002, the ship Red Gold collided with an offshore oil platform (D35-QA) owned by Sarawak Shell Bhd (Shell). The Red Gold was owned by South Sumatra Richfield Marine (S) Pte Ltd (the owner) and managed and operated by Pacific Richfield Marine (S) Pte Ltd (PRM). At the time of the collision, the Red Gold was chartered to Petrokapal Sdn Bhd (Petrokapal) who had entered into a spot charter with Shell.

On 17 January 2002 Red Gold had been off hire for repairs to the main engine shaft and bow thruster. The repairs were undertaken at Sabah Shipyard in Labuan. Specialists (Rolls Royce) were contracted to repair the bow thruster. The repairs were completed by 2 February 2002 and the charter resumed at 11 am that day.

The Red Gold carried out a supply run to a number of offshore and other installations. At 3 pm on 4 February 2002, the Red Gold commenced discharging cargo to D35-QA. At 4.25 pm the Red Gold began to drift. The master was unable to correct the drift because there was a problem with the control of the bow thruster which was stuck at 30 degrees. Unsuccessful attempts were made to cut off the bow thruster and the Red Gold collided with D35-QA at 4.25pm. The chief engineer opened the sealed box containing the power card which controlled the movement of the Red Gold and discovered that the power card in respect of the bow thruster was out of its slot.

Shell commenced an in rem action for the damage to D35-QA. The owner, PRM and Petrokapal commenced an in personam action against Shell for withholding charter hire from them, for inducing a breach of Petrokapal’s contract with PRM or for wrongful interference with the contract causing loss.

The High Court heard both claims together and held, in the in rem action, that the owner was vicariously negligent for causing the collision, that Shell was not contributorily negligent and that the owner was not entitled to limit its liability for damage under s 360 of the Merchant Shipping Ordinance 1952 (equivalent to art 1 of the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships​ 1957 (LLMC 1957)).

The High Court granted judgment against Shell for the in personam claim and ordered the balance of hire to be paid.

Both parties appealed.

Held: Shell’s appeal in respect of the payment of hire is dismissed. The owner's appeal is allowed in part.

The following issues arise in the appeal. First, whether the collision was caused by the negligence of the owner in the navigation or management of the vessel. Secondly, whether Shell contributed to the collision. Thirdly, whether the owner is entitled to limit its liability under the Merchant Shipping Ordinance (LLMC 1957) due to the absence of actual fault or privity on the part of the owner. And fourthly, if the owner is entitled to limit liability, the quantum of the limitation amount.

On the first issue, the trial judge was correct in ruling that Shell had discharged the burden of proof. The trial judge was correct in ruling that the principle of res ipsa loquitur is relevant given that the collision took place in broad daylight between the Red Gold and a stationary vessel. Having discharged the burden of proof, the onus shifted to the owner to rebut the charge of negligence by showing the cause of the collision was not attributable to it.

The proximate cause of the collision was the dislodgment of the power card but no clear explanation or reason for this occurring was provided by the owner. The trial judge accepted that the dislodgment was probably caused by the vibration of the vessel. The trial judge was correct to find the owner liable in negligence as it failed to rebut the presumption of negligence. This part of the appeal is dismissed.

On the second issue, the trial judge was correct to find that Shell was not contributorily negligent. This part of the appeal is dismissed.

On the third issue, s 360 of the Merchant Shipping Ordinance 1952 (which gives effect to the LLMC 1957) provides that where a ship has, in the discharge of its cargo caused damage to any property, the owner of the ship is entitled to limit its liability for such damage (art 1.1.b) based on the tonnage of the ship (art 3) so long as such loss or damage took place without the owner’s actual fault or privity (art 1.1).

When a ship has a defect that renders it unseaworthy it is generally accepted that an owner is only disentitled from limiting liability if the owner with knowledge of, or turning a blind eye to, the facts that caused the unseaworthiness nevertheless does not remedy the defect (The Eurysthenes [1976] 2 Lloyd’s Rep 171). The standard of conduct required is that of the 'ordinary reasonable shipowner in the management and control of a vessel or a fleet of vessels' (The Lady Gwendolen [1965] 1 Lloyd’s Rep 335).

The trial judge erred in finding the owner failed to properly maintain the electrical component of the bow thruster unit. She failed to appreciate that the reason the crew did not regularly maintain the electrical box containing the cards because such maintenance required specialist care. In addition, she disregarded that, when it comes to supervision, the court must have regard to the prevailing practice among reputable shipowners (The Marrion [1984] 2 Lloyd’s Rep 1). The evidence of such practice provided by the owner was not contradicted by Shell and she should have accepted this evidence as decisive of good practice. Finally, she erred in finding that the law imposes an obligation on an owner to be innovative by introducing improvements to existing systems. The system in place satisfies what is expected of the 'ordinary reasonable shipowner'.

The trial judge erred by holding that unless the owner had in place a solution to the dislodgment of the card it was vicariously liable and consequently could not seek to limit liability. The expert evidence stated that there is no system in place to check whether cards have been dislodged. Shell’s expert witness suggested the owner should have incorporated a holding device to prevent the dislodgment of the card but conceded that this was his recommendation after the event and not something the owner ought to have incorporated as a safety device.

There was no justification for the trial judge to hold the owner personally liable for the collision. The owner had promptly and effectively dealt with the problems encountered by the Red Gold in the bow thruster unit by sending the vessel for repairs by competent specialists. She did not judge the owner by the standard of conduct of the ordinary reasonable shipowner and the misapprehension of the nature and burden which the owner had to discharge justifies appellate intervention on the facts.

Accordingly the appeal is allowed in part. The owner is liable in negligence but granted a decree limiting liability to MYR 70,668.38 with interest.