Note: this judgement has been upheld by a majority decision of the New Zealand Court of Appeal of 9 April 2009. A note on the Court of Appeal judgment is being prepared. Editor, 25 April 2009

Background
The claim concerned the loss of containers carried on the deck of the m.v Tasman Pioneer, consequent upon a casualty that the vessel suffered on 3 May 2001, in the course of a voyage from Japan to South Korea. The carrier denied liability for the loss, principally on the grounds of Article IV Rule 2(a) of the Hague-Visby Rules, namely that the carrier was exempt from liability where the loss was caused by an act, neglect or default of the master… in the navigation or management of the ship.

Shortly after the master altered course to enter the channel at 0250hrs on 3 May, the ship lost all images on its starboard radar. It appeared that the master then tried to abort the passage through the channel. This manoeuvre was not successful and the ship struck bottom off Biro Shima with such force that her speed was immediately slowed to some 6 or 7 knots from her running speed of 15 knots. Shortly afterwards the ship took a list to port and water was discovered in the forward ballast tanks and in the forward cargo holds 1 and 2. On the orders of the master, the ship’s pumps were activated. However, the master did not alert the Japanese Coastguard, as he should have done, or seek other assistance. The ship then sailed at close to full speed for a further two hours (some 22 nautical miles), before anchoring in a sheltered bay. It was only then that the master contacted the ship managers in Greece, without, however, specifying the cause of damage or its full extent. The managers then arranged for the coastguard to be advised of the incident and for salvors to be engaged on LOF 2000. The master’s initial explanation of the casualty was that the ship had hit an unidentified floating object and he schooled the crew to adopt this explanation in the enquiry conducted by the Japanese coastguard, in the course of which the truth eventually emerged.

It was not until after 1900hrs on 3 May that the salvage tugs arrived at the casualty. By that time, by reason of the ship’s excessive trim by the head, the main deck at the forward holds was already under water. The salvors immediately commenced pumping the flooded compartments but they were not able to correct the vessel’s trim appreciably. They therefore decided to commence the discharge into barges of the containers stowed on the hatches of nos. 1 and 2 cargo holds. The cargo inside these containers, belonging to the claimants, was severely damaged by seawater. On 10 May, the ship was beached; unloading of cargo from holds 1 and 2 continued until, after temporary patching, the ship was refloated on 18 May and towed via Kanmon to the Onomichi dockyard for repairs.

Submissions
The Claimants’ submissions were that the exception of error in navigation and management of the ship was not available to the carrier in circumstance where, after a casualty, the master engages in conduct intended to conceal the time, place and circumstances of it. Such actions are not bona fide (in good faith) actions in the navigation or management of the ship. In this case, the master, knowing of the grounding damage and that the ship was taking water, nevertheless steamed at full speed for several hours; he fabricated the story of the ship having hit an unidentified object; he at no time advised the Coastguard; he failed to organise the crew in an effective pumping regime and provided false information to his managers as to the time and damage in the grounding. Such actions, the Claimants alleged, were for the ulterior purpose of trying to preserve the master’s maritime reputation and to absolve himself from the responsibility for damaging the ship by taking the short cut route to the east of Biro Shima. In so doing, he acted without regard for the safety of the ship, crew and cargo. Even if his actions came within the definition of "management" of "navigation" of the ship, the fact that the master did not act bona fide to safeguard the interests which he was bound to protect, meant that the Art.IV Rule 2(a) exception was not available to the carrier.

For the carrier it was argued that, where cargo damage arises as a result of want of care of the vessel, as long as the carrier has exercised due diligence in providing a seaworthy ship and properly manning her, it is not liable to cargo interests under Art. IV Rule 2(a) and is not vicariously liable for the master’s conduct, even where it was intentional and reckless.

Judgment
The judge found that the master should have notified the coastguard within half an hour of the casualty. Had he done so, it was highly probable that the coastguard would have recommended reducing speed and making for the nearest sheltered anchorage with a shelving bottom in case beaching were required. Further, it was likely that the coastguard would have alerted Nippon Salvage, the salvors, and that they (the salvors) would then have contacted the Tasman Pioneer, either directly or via the coastguard, to obtain further detail on the casualty. At the same time, Nippon Salvage would have commenced mobilising its crews, whilst attempting to negotiate LOF. That would have taken place within, say, an hour of the casualty occurring. Allowing an hour and a half for mobilisation, the salvors would have been ready to sail from their bases at 0530hrs on the morning of 3 May. Allowing for the time taken by the salvors to reach the casualty at the notional anchorage recommended by the coastguard, the judge concluded that all actions taken on 3 May in relation to salvage would have occurred some five or six hours earlier than they in fact did. On that basis, the salvors would have been able to save the Claimants’ on-deck cargo from being inundated.

The judge then held that the principal errors for which the master was criticised - the decision to take the channel to the east of Biro Shima and then to try and abort the transit when the radar malfunctioned, and the decision not to advise the coastguard and his owners/managers as soon as he should have done but to carry on to the point of anchoring – were, on the authority of Gosse Millard v. Canadian Government Merchant Marine Ltd. [1928] 1 KB 717, to be categorised as errors in the navigation of the ship. On that basis, the carrier would be entitled to the defence under Art.IV Rule 2(a) of the Hague-Visby Rules.

But, the judge went on to say, that was not the end of the matter. He said that there was both logic and authority for the proposition that the "act, neglect or default" of those in charge of the ship must be bona fide "in the navigation or in the management of the ship" to entitle the carrier to the Art.IV Rule 2(a) exemption. "There would seem," he said, "to be every good reason to read a good faith requirement into the Rule to entitle the carrier to qualify for the immunity from responsibility the Rule provides. That is the case irrespective of whether a lack of bona fides is seen as underpinning entitlement to the exemptions provided by the Rules or whether "navigation" or "management" which is not conducted bona fide in accordance with the master and crew’s paramount obligation to care for the ship, cargo and crew safely is so antithetical to that paramount obligation and proper seafaring practice as not to be regarded as qualifying or amounting to "navigation" or "management" under the Rules."[at p.234]

Against that background, the judge characterised both the master’s initial decision to use the passage east of Biro Shima and his subsequent attempt to abort the transit, as navigational decisions taken in good faith. He was endeavouring to save time and keep to schedule, as the ship’s managers required.

However, the master’s actions after the grounding, in particular his failure to notify promptly the coastguard and his managers of the casualty and the ship’s position and condition, and his fabrication of the story that the ship had hit an unidentified submerged object, could not have been motivated by his paramount duty to the safety of the ship, crew and cargo. All those actions, the judge said, "can only have been motivated by [the master] implementing a plan designed to absolve himself from responsibility or blame for the grounding and lend a veneer of plausibility to his falsehood."[p.240] Accordingly, the master’s actions did not amount to an "act, neglect or default" in the bona fide "navigation or in the management of the ship" and, as a result, the carrier was not entitled to the benefit of the exemption from liability set out in Art.IV Rule 2(a) of the Hague-Visby Rules.