DMC Category Rating: Confirmed

Facts
The Claimant was the owner of a cylindrical process vessel weighing in excess of 800 tonnes. The Defendant was a specialist heavy-lift ship operator, who had commissioned the building of a heavy-lift vessel the "Happy Ranger". The vessel was delivered by her builders to the Defendant on 16 February 1998. On 11 March 1998, prior to the vessel’s maiden voyage, the loading of the process vessel aboard the Happy Ranger commenced in Italy, pursuant to a contract of carriage concluded in October 1997 for its carriage from Italy to Saudi Arabia. During the loading operation, one of the hooks on one of the vessel’s cranes broke, causing the process vessel to fall to the quayside and suffer extensive damage.

It was established by a decision of the Court of Appeal on a preliminary issue that the carriage was on the Hague-Visby terms. Although the Claimant relied on Article III, Rule 2, (failure properly and carefully to load), its primary case was under Article III, Rule 1, alleging a failure by the Defendant to exercise due diligence to make the vessel seaworthy before and at the commencement of the voyage.

By the time of the trial, it was common ground that the vessel was at the material time unseaworthy because of a gross casting defect in the hook which broke. This could have been detected by a simple proof load test. The issue was whether the Defendant was in breach of its obligations to exercise due diligence. It was not in dispute that the vessel had been built by reputable builders and that the cranes had been tested prior to delivery of the vessel by Lloyd’s Register, a reputable classification society. The Defendant relied on these matters to assert that it had exercised all due diligence.

The Claimant advanced two principal arguments. The first was that the vessel was in the Defendant’s "orbit" for the purposes of the inception of the Article III Rule 1 duties at the time of the testing of the cranes in early February 1998 (and prior to delivery of the vessel) and that the testing had been carried out negligently. The Claimant contended that although the vessel had not been delivered into the Defendant’s possession by then, its duties under Article III Rule 1 had already incepted on account of a number of factors showing the close involvement of the Defendant by that stage. These factors included its previous involvement in a critical design feature of the vessel, the observing of the test of the cranes, the planning of the lift and the putting of its crew on board the vessel.

The second argument was that, after delivery of the vessel on 16 February 1998 (when it was common ground that the vessel was within the Defendant’s "orbit"), there was a failure to exercise due diligence (in failing to appreciate that the hook had not been tested properly so as to enable the load to be carried safely) both by the Defendant and by Lloyd’s, for whose acts it was responsible.

Judgment
The Judge rejected the first line of argument, holding that despite the involvement of the Defendant in various respects with the vessel prior to delivery date, the Article III, Rule 1 duties still did not incept prior to delivery. However, the Judge found in the Claimant’s favour on the facts on the second line of argument, holding that, in the circumstances, there was a failure on or after delivery, both by the Defendant and by Lloyd’s.

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