Decision
After carefully considering the arguments and case law both in the UK and elsewhere, the Supreme Court has rejected the appeal and found the vessel unseaworthy by virtue of a defective passage plan.
There were two issues to be determined. The first and main issue was whether, as the owners contended, the shipowner carrier’s obligation under the Hague Rules is subject to a category-based distinction between, on the one hand, a vessel’s quality of seaworthiness or navigability, and on the other, the crew’s act of navigating. The owners said that there is a distinction between seaworthiness, which concerns the attributes and equipment of the vessel, and that of the navigation and management of the vessel, which concerns how the crew operates the vessel using those attributes and equipment. The second and related issue arose in relation to the obligation of due diligence. Here, the owners said that so long as the carrier has equipped the vessel with all that is necessary for her to be safely navigated, including a competent crew, then the crew’s failure to navigate the vessel safely is not a lack of due diligence by the carrier – a distinction to the Muncaster Castle test.
The particular defect found by the admiralty judge was that neither the passage plan nor the chart contained a warning about depths being less than charted outside of the fairway. Hence “it was therefore defective or inadequate and imprudently so. A source of danger when leaving Xiamen was not clearly marked as it ought to have been.” It was also causative as the admiralty judge found that had the warning been marked, the master would have been “most unlikely” to have left the buoyed channel and that such departure was negligent and a “real and effective cause” of the grounding.
As a matter of law, a shipowner is not entitled to recover GA contributions from the owners of the cargo where the loss or expenditure was caused by its “actionable fault” which includes any causative breach of the terms of the relevant contract of carriage. All the relevant contracts of carriage contained the Hague Rules. The cargo interests asserted a breach of article III rule 1 that the owners had failed to exercise due diligence before the beginning of the voyage to make the vessel seaworthy in that the passage plan was defective.
In the Supreme Court, the owners submitted that the Hague Rules draw a clear distinction between the navigable state of the vessel and the navigation of the vessel by the master and crew. The owners said the former is the subject matter of the carrier’s duty to make the vessel seaworthy under article III rule 1, whilst the latter is subject to the “nautical fault” exception as set out in article IV rule 2(a). The owners argued that seaworthiness was to do with the first aspect, namely, the attributes of the vessel.
The Court rejected the argument that seaworthiness was subject to an “attribute” test. It recognised that the attributes of the vessel could be illustrative of unseaworthiness but they were not a prescription on seaworthiness. Additionally, it was recognised that a vessel may not be unseaworthy where the owners could expect the defect to be remedied before the vessel or cargo was put in danger. For example, open portholes could be closed.
Aspects other than attributes, such as navigational decisions, could still cause a vessel to be unseaworthy, and it was found that the defect here was not one that the owners would expect to be remedied on passage. Further, the completed passage plan was part of the documentary outfit of the vessel.
The Court did recognise that there may be cases “at the boundaries” of seaworthiness where it may be necessary to address a prior question of whether the defect or state of affairs relied upon sufficiently affects the fitness of the vessel to carry the goods safely on the contractual voyage so as to engage the doctrine of seaworthiness. In this case, the Court found that the error in the passage plan was too serious to be considered at the boundaries of seaworthiness.
On the second question, the Court effectively adopted the temporal position that matters occurring before the vessel set sail were the owners’ responsibility. The only defences were for things that were outside the owners’ orbit either because the defect in the vessel had come into being before the owners took delivery of the vessel or, as regards cargo, before taking delivery of the cargo. Such defences are available if ordinary due diligence by the owner would not subsequently put the owner on notice of the danger.
In this case, having determined that the owners were responsible for passage planning, the fact that the owners had delegated this task to the master did not allow them to avoid the consequences of the Muncaster Castle decision. The task was undertaken within their orbit and so they were liable for the negligence of an otherwise competent master in the decisions he took before the vessel set sail.
Consequences
The consequences of the decision are significant for the industry as the decision opens up avenues for consideration as to the cause of any loss at sea. If these can be attributed to aspects of negligent navigation, then it is also possible that such decisions may not have been taken if there was commentary in the passage plan. That will depend, of course, on whether it would be appropriate for such comments to be part of a passage plan but, as was recognised in the Supreme Court, passage planning is not a science. Hence, what should be included is a matter of opinion. Those who have read the guidelines to passage planning will appreciate that they are quite comprehensive. Hence, cases in which owners have previously relied on “error in navigation” defences may now be scrutinised more closely.
The Supreme Court has also recognised that there may be cases “at the boundaries of seaworthiness”, and so their ruling here would be distinguishable in such a case. In the main case cited (Aquacharm [1982] 1 WLR 119), it was the consequence of the alleged unseaworthiness that was said to be the key feature – as that involved “temporary or minor impediment” to the voyage. However, consequences flow from fault, and so it is unclear what constitutes the boundary.
Given the increase in litigation that will undoubtedly arise as a result of this decision, it is probable that these boundaries will be explored over the next years.
The judgement is available at supremecourt.uk.
Client Alert 2021-288
