Between 12-14 August 1992, cargo over which Taitexma Enterprise Co (the plaintiff) claimed rights as owner, consignee or endorsee was loaded in Keelung, Taiwan, onto the Panamanian-registered vessel United Sing, which then departed on 15 August for Hong Kong. However, on 16 August, the ship was stranded on rocks near Nan Pang Island in the People's Republic of China. The captain decided to abandon the vessel. Later that day, the vessel's manager, Fairweather Steamship Co Ltd (the second defendant), on behalf of the vessel's owner, Tillemont Shipping Co SA (the first defendant), sent a telefax to agents in Shantou indicating where the ship had grounded and asking them to take all necessary steps to safeguard the vessel and its cargo. The following day they faxed again, undertaking to pay all expenses incurred. The second defendant, on behalf of the first defendant, sent out a notice of abandonment to all cargo owners and consignees stating that the vessel was aground due to an error of navigation and that, because of the extensive damage to the ship, it was uneconomic to effect repairs to complete the voyage which was accordingly abandoned. The plaintiff's insurers applied for a Mareva injunction to prevent any money which the first defendant might obtain from its insurers from being remitted out of Hong Kong.

The cargo's total value was about USD 1,250,000, and the Mareva injunction that was sought was to require the first defendant to retain that sum, plus interest and costs of USD 250,000 within Hong Kong. The application for the Mareva injunction came before Kaplan J on 1 October 1992 and was granted, the defendants being ordered to retain in Hong Kong the sum of at least USD 1,500,000. The plaintiff undertook to issue a writ immediately and issue an inter partes summons that was duly filed for hearing on 9 October. However, on 2 October, the matter came before Mayo J, who, by consent, ordered the discharge of the injunction against the second defendant. The summons against the first defendant came before Stock J on 9 October, and he made an order continuing the Mareva injunction. The first defendant then sought an order to set aside the Mareva injunction on the ground that the plaintiff did not have a good arguable case.

The main thrust of the case for the plaintiff was that the first defendant had failed in its duty under arts 3.1 and 3.2 of the Hague Rules.

Held: The defendants' appeal is allowed.

There seemed to be little doubt that, on the evidence, the ship's grounding was due to the negligence of those responsible for its navigation. The question was whether that navigation error was such a wholly negligent act that the defendants had arguably failed to select properly qualified crew or had failed to provide the crew with adequate navigational equipment, thus rendering the ship 'unseaworthy' within the meaning of that words in the Hague Rules. On the one hand, it was clear that the Hague Rules exempted a shipowner from liability for an error of navigation or a 'peril of the sea'. On the other hand, it was trite law that lack of care in appointing properly qualified crew members may result in a vessel being rendered unseaworthy.

There was evidence that the captain and third officer were fully qualified, recruited from a large and reputable organisation, were experienced in handling the vessel on this particular route, and had been supplied with modern navigational equipment, up-to-date charts, and comprehensive operating instructions, particularly as regards navigation if a typhoon was threatening.

The plaintiff did not make a good arguable case against the first defendant of failing to make the vessel seaworthy or taking all reasonable steps to preserve the cargo. The Court therefore allowed the appeal and discharged the injunction on that ground.