The 42 plaintiffs were the shippers of cargo on board the vessel, The Patraikos 2, formerly named MSC Carla. The vessel was owned by Chester Shipping Co Ltd (the defendant), was managed by Dioryx Maritime Corp of Athens and was time chartered for about 50 days, at the material time, to Rickmers-Line GMBH.

Prior to the commencement of the time charter, the vessel was dry docked at Rotterdam for extensive repairs and maintenance. The vessel loaded cargo (containers, steel products, and assorted machinery) at Immingham, Antwerp, Hamburg and Genoa. The vessel then sailed from Genoa to Port Said and then to Penang.

After discharging some of the cargo at Penang, the vessel left for Map Ta Phut in Thailand. While sailing in the Singapore Straits, after crossing the Phillip Channel, the vessel ran aground on the rocks of Horsburgh Lighthouse. At the time of the grounding, the crew keeping watch consisted of the second officer (Orlanda) and able-bodied seaman (Mohd). The master had left the bridge earlier.

As a result of the casualty, the owners declared general average. The plaintiffs and their underwriters executed Lloyd’s Average Bonds in favour of the defendants and surrendered their bills of lading in exchange for their cargo. One hundred and three days after the grounding, the salvage operation refloated the vessel and retrieved the cargo stored in holds 1 and 4 and discharged it onto barges. The remaining cargo was discharged at Sembawang Shipyard where the vessel was delivered and dry docked. The vessel remained at Sembawang Shipyard for three months undergoing repairs at a cost of SGD 6.5 million. Subsequently, the plaintiffs arrested the vessel, the vessel was released from arrest and sailed for Manila.

The plaintiffs pleaded they were the owners of the cargo and/or indorsees of the bills of lading. They argued that the defendants were under a duty as bailees and/or carriers for reward to take reasonable care of their cargo and to deliver it in the same good order and condition as shipped. They alleged that the defendants breached that duty as, due to the grounding, the cargo was damaged by seawater.

The plaintiffs said that the defendants breached arts 3.1 and 3.2 of the Hague Rules in that the defendants failed to exercise due diligence to make the vessel seaworthy and that they failed to properly store, carry and discharge the cargo. The defendants admitted that they were party to the contract of carriage, even though the bills of lading were issued by the charterers by reason of clause 4.2 in the bill of lading and pleaded that the contract of carriage was governed by the Hague Rules.

The defendants admitted the grounding but denied that they had breached their duties as carriers or that they failed to exercise due diligence to make the ship seaworthy. The defendants blamed the grounding solely on the negligence of the second officer, Orlanda, and relied on art 4 of the Hague Rules as their defence. The defendants also contended they were entitled to general average loss and expenditure (including salvage charges) and counterclaimed for general average contributions relying on cl 22(2) of the bills of lading.

Held: The plaintiffs’ claim allowed and the defendant’s counter claim dismissed. Orlanda was incompetent. The defendants did not check his background, training and qualifications thus the defendants failed to exercise due diligence to properly man, equip and supply the ship as required by art 3.1.b of the Hague Rules. Accordingly, the defendants are not entitled to claim the exception to liability in art 4 of the Hague Rules for the damage to the plaintiffs’ cargo resulting from the grounding.

The plaintiffs satisfied the court on the balance of probabilities that the vessel was unseaworthy under art 3.1.a of the Hague Rules. Had the bulkhead between Nos 3 and 4 holds been sound, the No 4 hold would not have been flooded by seawater after grounding. The obligations on the defendants under art 3.2 of the Hague Rules is to ‘properly and carefully load, handle, stow, keep, care for, and discharge the goods carried'. This is a continuing obligation and is not restricted to the time when the voyage commenced, unlike the obligation under art 3.1. The defendant breached this duty as the proximate cause of the damage to the plaintiffs’ cargo in holds Nos 1 and 4 was not a peril of the sea (the grounding) but seawater ingress due to corroded and leaking bulkheads. Had the bulkheads been intact, the cargo would have been preserved up to the time it was discharged.

The claim for general average loss and salvage expenses by the defendants is dismissed. The rule is to found a claim for general average requires that property was sacrificed or money expended in order to avert a danger which was common to the adventure. Here, the defendant did not act with due diligence in making the vessel cargoworthy, and in appointing Orlanda as second officer. Since the defendant cannot rely on the excepted perils in art 4 of the Hague Rules, the defendant cannot claim general average for an actionable wrong.