This is an action by the shipper (the first plaintiff) and the indorsee of a bill of lading (the second plaintiff) claiming damages in relation to the non-delivery of 1,492,213 mt of RBD palm oil in bulk which were shipped on 29 April 1993 on board the Maritime Prudence at Pasir Gudang, Johor, for delivery at Karachi, Pakistan. At the relevant time the vessel belonged to the defendant. In breach of its duties as carrier under the bill of lading, the defendant failed/refused to deliver the cargo to the first or second plaintiff at Karachi on presentation of the bill of lading. The value of the cargo is stated to be USD 611,000.

The contract of carriage, as evidenced by the bill of lading, was governed by Malaysian law and was subject to the Hague Rules. The carriage of the cargo under the bill of lading was made pursuant to the terms of a Tanker Voyage Charterparty dated 15 April 1993 made between the defendant and Devon Industries Sdn Bhd (Devon) as charterers.

In an affidavit affirmed on 4 July 1994 the defendant admitted that 'on 6 May 1993 and 11 May 1993 one Roland Ong of Devon unlawfully procured the fraudulent issuance of another set of bills of lading in respect of the same cargo', with Devon being named as the shipper. The fraudulent set of bills of lading was issued by Aquarius Shipping Agencies (Pte) Ltd, the agent of the defendant. Subsequently Devon for consideration indorsed the fraudulent bills of lading to purchasers in Karachi. Thus when the vessel arrived at Karachi on 20 May 1993 there were competing claims to the cargo. It should be mentioned that on board the vessel were also cargoes of the same nature shipped by other shippers and in respect of which fraudulent bills of lading were also issued. The cargo of the plaintiffs, as permitted under the bill of lading, was intermingled with those of the other shippers.

Proceedings were commenced in Karachi by the indorsees of the fraudulent bills of lading. On 8 July 1993, at a hearing before the High Court of Sindh, counsel for the local agent of the defendant gave an undertaking to the Court that until the next date of hearing the local agent would not issue any delivery orders in respect of the cargoes in dispute. In the meantime, also in July 1993 the first plaintiff and other shippers of goods on board the vessel instituted proceedings in Malaysia. The other shippers also caused the vessel to be arrested in Pasir Gudang. It was only released after bail bonds had been provided. On 3 May 1994 the plaintiffs instituted the present proceedings in Singapore, having failed on 2 May 1994 to obtain delivery of the goods in Pakistan on tendering the bill of lading. On 26 June 1994 the plaintiffs applied for interlocutory judgment with damages to be assessed. The Deputy Registrar heard the application and granted it on 16 November 1994. The defendant appealed against that order.

Held: Appeal dismissed.

The defendant argued that it was entitled to immunity from liability as a result of art 4.2.g of the Hague Rules because it was prohibited from delivering the goods by an injunction of the Sindh High Court. Counsel for the plaintiffs submitted that the undertaking given by the defendant's agent to the Sindh High Court did not amount to an injunctive order. He further submitted that the undertaking was voluntary and self-inflicted. The Court was prepared to assume that the undertaking given amounted to an injunctive order. However, the injunctive order was brought about by the fraudulent act of the defendant's agent in Singapore and was consented to by the defendant's agent in Pakistan. It is clear that the injunctive order was self-induced.

It was accepted by counsel for both the plaintiffs and the defendant that the issue centred on the meaning of art 4.2.g, in particular the last few words. It cannot be disputed that what happened does not come within the earlier part of art 4.2.g 'arrest or restraint of princes, rulers or people': see Finlay v The Liverpool & Great Western Steamship Co Ltd (1870) 23 Law Times 251 and Crew, Widgery & Co v Great Western Steamship Co (1887) Weekly Notes 161. Tetley on Marine Cargo Claims (3rd ed) states at 449 that 'the exception for legal process can only be employed if the carrier could not have foreseen the seizure'. For that proposition the author relied on Morrisey v SSA & J Faith 252 F Supp 54, 58 where the US court pronounced: 'The purpose of this section (article 4(2)(g)) of the Act is to excuse ships and their owners from underwriting damage sustained by unexpected delays which the owners can neither avoid, anticipate nor prevent. However, when the delay, as in the instant case, is affected by the reckless disregard of the owners for the financial security of the ship and the process is initiated by foreseeable foreclosure actions by justifiably irate creditors, we do not think that the Act can or should excuse the owner from the obligations of his duty as a common carrier.'

Dunn v Bucknall Bros [1902] 2 KB 614 illustrates the point that a shipowner could not rely on its own wrongdoing to plead the exception in art 4.2.g. There the shippers made a claim for delay in the delivery of their goods owing to an arrest of the ship during the Boer War in South Africa. The ship had loaded a general cargo at New York for South African ports, shortly after the war broke out. Some of the goods taken on board were evidently consigned to residents in the Transvaal. On its arrival at Algoa Bay the ship was arrested by a British warship and brought before a Prize Court. Part of its cargo was condemned as goods of the enemy. The ship was later released on the ground that there had been no intention to trade with the enemy. But the Prize Court held that there had been reasonable and probable cause for seizing it.

Under Malaysian law, as under the laws of countries which subscribed to this uniform law (eg the UK and Singapore), the defendant could not rely on its own wrongdoing to plead the defence in exception 4.2.g of the Hague Rules. Here, while the wrongdoing was that of the agent, it was no less the wrongdoing of defendant as it was the defendant who placed the agent in a position to carry out the wrongdoing. Vicarious liability applies. There could not be a clearer case of wrongdoing than the present: fraudulent issue of a second set of bills of lading. Exceptions such as the present are only meant to excuse a carrier for events out of its control and not to excuse it for events brought about by its own defaults.

As to limitation of liability, the Malaysian provision (s 360) is in pari materia with s 272 of the Singapore Merchant Shipping Act. Section 272(1)(d) provides: 'The owners of a ship shall not, where all or any of the following occurrences take place without their actual fault or privy: ... (d) where any loss or damage is caused to any property ... or any rights are infringed through the act or omission of any person (whether on board the ship or not) in the navigation or management of the ship ... be liable to damages beyond the following amounts ...'.

In the context of the present case, the central issue was: what is the meaning to be given to the word 'management' in the section. Does 'management' extend to cover the fraudulent issue of a second set of bills of lading? In Dobell v Steamship Rossmore Co [1895] 2 QB 408 cargo was damaged because the porthole was closed by the ship's carpenter in an imperfect manner as a result of which sea water got in during the voyage. It was argued that the damage resulted from faults or errors in navigation or in the management of the ship. Kay LJ was inclined to the view (obiter - as this was not a point he needed to decide), that the expression 'faults or errors in navigation or in the management of the said vessel' applied rather to faults or errors in sailing the vessel or in managing the sailing of the vessel, than to a matter of the kind in question in the action.

In The Glenochil [1896] P 10 the Divisional Court had to consider the same expression 'damage or loss resulting from faults or errors in navigation or in the management of the vessel'. In that case, after the arrival of the vessel at the port of destination, and during the discharge of the cargo, it became necessary to stiffen the ship. For this purpose, the engineer ran water into a ballast trunk, but negligently omitted first to ascertain the condition of the sounding-pipe and casing which had, owing to heavy weather during the voyage, become broken. The owner of the damaged goods sought to make the shipowners liable. The Court held that the shipowners were exempted from liability; their 'management' was not limited to the period during which the vessel was at sea, but extended to the period during which the cargo was being discharged.

Of course these two cases related to contractual or statutory exception clauses in bills of lading. In The Athelvictor [1945] 78 LLR 529, Pilcher J, after reviewing a whole host of bill of lading cases, held that the narrower construction placed upon these words in the bill of lading cases did not necessarily apply in the context of the Merchant Shipping Act concerning limitation of liability. In Athelvictor the negligence of the ship's personnel was in leaving sea valves open. He held that such negligence was a type of negligence which was covered by the words 'improper management of the ship'.

The expression 'navigation or management of the ship' in the Merchant Shipping Act should not be construed in quite the same narrower manner as in the bill of lading cases. Nevertheless, even giving it the wider sense advocated by Pilcher J, it cannot encompass the fraudulent or wrongful issue of a second set of bills of lading. Such an act simply has nothing to do with the management of the ship. Counsel for the defendant has not shown how such an act could be related to the 'management of the ship'.