The appellant shipped cargo described in the bill of lading as 'agrochemicals' on board the respondent’s vessel, on deck and at shipper’s risk. During the unloading operation, sparks from the agrochemicals' location were observed, followed shortly by a fire and explosion, resulting in the vessel's sinking. The respondent claimed against the appellant for losses suffered. The respondent's claim was founded inter alia on a breach of art 4.6 of the Hague Rules as applied under the Carriage of Goods by Sea Act 1950. The respondent argued that it was appellant's cargo that caused the damage. The appellant denied liability and argued that, since it had provided sufficient information to the respondent pertaining to the cargo, the latter had knowledge of, and consented to, the carriage of such 'dangerous' cargo on board. The Judge in the High Court below (see Ing Hua Fu Marine Line Sdn Bhd v Vitachem (M) Sdn Bhd [2013] 9 MLJ 825 (CMI225)) ruled in the respondent's favour.

The issues arising on appeal were: (i) whether the cargo delivered for carriage by the appellant was fundamentally so different in nature and character from the cargo which the respondent contracted to deliver so as to entitle the respondent to claim that it never consented to carry this particular cargo; and (ii) whether, on a balance of probabilities, it was the appellant's failure to provide information on the cargo which caused the vessel's loss.

Held: Appeal allowed.

Article 4.6 of the Hague Rules provides that '[g]oods of a … dangerous nature to the shipment whereof the carrier … has not consented, with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses … arising out of … such shipment.' Articles 4.2.i and 4.2.n provide that '[n]either the carrier nor the ship shall be responsible for loss or damage arising or resulting from: … (i) [a]ct or omission of the shipper or owner of the goods, his agent or representative, … (n) [i]nsufficiency of packing'. Article 4.3 provides that '[t]he shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising from any cause without the act, fault or neglect of the shipper, his agents or his servants'. Article 3.2 specifically places upon the carrier the obligations of loading, handling and stowage of cargo. The shipper and carrier's respective obligations thereunder are as follows:

1. A shipowner who consents to carry goods of a particular description contracts to perform the carriage in a manner appropriate to the goods, and thereby assumes all risks of accidents attributable to such failure. The carrier is expected to examine the cargo and be familiar with it before consenting to loading on board. The master is entitled to withhold consent either because of the cargo's nature and contents, insufficiency of packing or lack of proper stowage facilities on board. It is only when the master is satisfied on all matters relating to safe carriage that s/he should authorise the issuing of a clean bill. The master’s decision as to how and where the cargo is to be stowed is dependent on his/her knowledge of the contents and packaging. Accordingly, if the cargo is damaged notwithstanding having been carried in the accepted method of carriage, then the carrier is liable;
2. In the case of goods where even the accepted method of carriage will not eliminate accident risks, the risk is on the carrier;
3. Before the Court can conclude that a shipper has failed to disclose the cargo's dangerous nature, the cargo itself must pose a hazard of a totally different kind from those attached to the carriage of cargo described, and the shipper must have failed to notify the carrier of this particular hazard. Therefore, the shipper cannot have recourse to the carrier for any cargo damage and may be liable to indemnify the carrier under art 4.6 if the unexpected hazard posed by the cargo causes damage to the vessel (Atlantic Oil Carriers Ltd British Petroleum Co Ltd (The Atlantic Duchess) [1957] 2 Lloyd’s Rep 55);
4. In considering the appropriate method of carriage, the carrier is not expected to have the knowledge of an expert chemist but must adopt the modern practices of which it could reasonably be expected to become aware. The master is required to adopt the latest or, at the least, customary method of stowage for the particular cargo to defeat any claim of improper stowage; and
5. The carrier's knowledge includes that which the master and crew ought to have. The master's knowledge as regards the cargo's nature and contents is not limited to what the shipper notifies him/her but also includes all such information that the carrier ought to know in its capacity as a shipowner and information required by law to be known. The master is expected to inspect the cargo prior to shipment and upon issuance of a clean bill, and the carrier is deemed to have knowledge of the cargo's contents including the manner in which it has been packed prior to shipment (The Mahia (1955) 1 Lloyd’s Rep 264).

The Judge below erred in holding the appellant to be in breach. The respondent failed to provide evidence as to how the appellant's cargo would have behaved during the voyage and how, in fact, that cargo consisting of allegedly incompatible chemicals actually behaved during the voyage. In the absence of such evidence, the Judge below was wrong to rule that the cargo in the pallets was fundamentally different from the cargo tendered by the appellant, particularly in the light of the declaration that the cargo was dangerous.

To discharge the respondent's burden of proof regarding its knowledge as to the cargo's characteristics and the care with which it carries them, the respondent must lead evidence as to why the cargo was carried on deck and under canvas when the cargo was declared to be dangerous. The Judge below failed to appreciate that stowage was the carrier's legal responsibility rather than the shipper's.

The Judge below also failed to appreciate the unchallenged evidence that the respondent was familiar with the cargo's packing and must have issued the clean bill after being satisfied that the cargo was suitable for safe carriage.

The carrier's duties on matters relating to stowage are such that the carrier is not bound by the shipper's instructions on such matters. Accordingly, the Judge below erred in finding the appellant's failure to give such instructions as part of the cause. Whilst it is not unusual in practice for a carrier to follow the shipper's instructions, conditional on an indemnity by the shipper for any damage suffered, this was not the case here.

The explosion may very well have been due neither to the cargo's unusual nature nor to the carrier's shortcomings, but to simple misfortune. In such cases, the risk falls on the carrier. The failure of any senior crew member to give evidence and the absence of a suitable adjuster's report of the incident contributed to such a finding.