Ever Lucky Shipping v. Sunlight Mercantile
DMC Category Rating: Developed
This case note has been contributed by Ang & Partners, International Contributors to the website for Singapore
The vessel’s main engine broke down off the coast of southwest Africa. Ever Lucky arranged for the vessel to be towed first to Luanda, then to Cape Town, and finally to Tuticorin, where her cargo of logs was discharged and delivered.
Ever Lucky claimed general average contribution from Sunlight Mercantile, the owners of the cargo, and Liberty Citystate, the cargo insurers, for costs and expenses incurred by Ever Lucky resulting from the breakdown.
In abbreviated form, Rule A of the York Antwerp Rules 1974 provides that there is a general average act when any extraordinary sacrifice or expenditure is made for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure. Rule D provides that rights of contribution shall not be affected by the fault of one of the parties to the adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. It is undisputed that, under Rule D, if the general average sacrifice resulted from a legal wrong of the shipowners that is actionable (an "actionable fault") by the cargo interests at the time when the sacrifice was made, the shipowners would lose their right to contribution.
Sunlight Mercantile and Liberty Citystate contended that the main engine breakdown was a result of a breach of duty by Ever Lucky under Articles 3 and 4 of the Hague Rules to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage.
Ever Lucky contended that, first, they had provided a seaworthy vessel; secondly, that the unseaworthiness alleged by the cargo interests did not cause the main engine damage; and, thirdly, the main engine damage was caused by a latent defect that could not have been detected by the exercise of due diligence.
It was also in issue whether the exemption clauses in the bills of lading excluding liability for deck cargo absolved the shipowners of any actionable fault, so that their right to contribution remained intact.
2. The vessel did encounter an engine breakdown six days after the commencement of her voyage from Port Gentil (the last load port), and since there was no external intervention leading to such breakdown, the natural inference would be that the vessel was unseaworthy at the commencement of the voyage by reason of the fact that there was something wrong with it which a prudent owner would have rectified had he known of it.
3. After scrutinizing the evidence, the Court found that, on the balance of probability, there were defects in the main engine from the time the vessel left Port Gentil and, as a result of such defects, the vessel was not in a seaworthy condition at the commencement of the voyage. Even if the exact cause of the damage was not known, it was probable that this unseaworthiness contributed to it. If the Court was wrong on this finding and the cause of the damage was the fracture of the bottom end bolt of the no. 1 unit of the main engine alone (as alleged by Ever Lucky), such cause would also lead the Court to conclude that the vessel was unseaworthy at the commencement of the voyage. The crack in the bolt would have developed over many months or even years and must have been present well before the vessel left Port Gentil. Since the bolt was defective in that it had a crack that was only six days short of propagating to the critical point of causing a fracture, the vessel must have been unseaworthy at Port Gentil.
4. Before it bought the vessel, Ever Lucky knew that the vessel’s previous classification society, Lloyds Register of Shipping, required the vessel to undergo its five year special hull and machinery surveys by July 1999. A special machinery survey would include opening up all the units of the main engine, inspecting all its component parts including bottom end bolts, recommending the renewal of parts as found necessary and the taking of all clearances upon boxing up. When Ever Lucky bought the vessel, the vessel had been reclassed by International Naval Surveys Bureau ("INSB") and Ever Lucky knew that the Lloyds special machinery surveys had not been completed. An INSB surveyor who had no engineering qualifications did a periodical survey under INSB rules when the vessel was delivered to Ever Lucky, but this was not a special machinery survey.
5. With regard to cargo stowed in the holds, Article 3 of the Hague Rules imposes a duty on the carrier to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage. The duty of seaworthiness is not delegable and the shipowner is responsible for any failure to exercise due diligence on the part of those whom he has relied upon to make the vessel seaworthy. Ever Lucky failed to exercise due diligence by simply arranging for the class surveyor to survey the vessel over four or five days at the delivery port. They should have ensured that the entire engine was opened up and the parts carefully inspected as there was no history of maintenance of the engine and the previous class special surveys were overdue. They should also have arranged for a proper technical inspector.
6. Latent defect means latent to the senses, i.e. that the defect would not be discovered in spite of any other test that it may be reasonable to apply in the circumstances. The circumstances in which Ever Lucky took over the vessel were such as to require them to carry out thorough and extensive checks on the engine to ensure the seaworthiness of the vessel. If they had opened up the whole engine and applied the dye penetration test to all the bottom end bolts they would have had at least an even chance of detecting the crack in the bolt concerned. In the light of this evidence, the Court could not hold that the defect in the bolt was not discoverable by due diligence.
7. Therefore, Ever Lucky was not entitled to recover any contribution in respect of the under deck cargo.
8. With respect to the logs stowed on deck, Article 1(c) provides that the Hague Rules do not cover cargo "which by the contract of carriage is stated as being carried on deck and is so carried." The logs which were stated in the relevant bills of lading to be carried on deck and were actually stowed on deck were not covered by the Hague Rules. Under common law, a shipowner who contracts to carry goods on board his vessel impliedly undertakes that his ship is seaworthy. This is an absolute undertaking of seaworthiness. The vessel was not seaworthy at the commencement of the voyage.
9. However, the exemption clause in the bills of lading for the deck cargo provided that the shipowners were not liable for any damage however the same may have been caused. The words "however caused" were wide enough to cover unseaworthiness. Therefore, in respect of the cargo on deck, the shipowners were not at fault despite failing in their obligation to provide a seaworthy vessel, as a result of which the casualty occurred. As there was no actionable fault on their part, they were entitled to recover the general average contribution from the deck cargo.
These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.