NZ China Clays v. Tasman Orient Line
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
In what may prove to be a controversial decision, the judge held that, in a claim for cargo damage brought under a bill of lading subject to the Hague-Visby Rules, a carrier by sea was not entitled to the defence of "act, neglect or default of the master… or the servants of the carrier in the navigation or in the management of the ship" under Art.IV Rule 2(a) of those Rules, where the relevant actions taken by the master were motivated not bona fide (in good faith) by his paramount duty to the safety of the ship, crew and cargo but in furtherance of a plan designed to absolve himself from responsibility from the casualty which had occurred.
DMC Category Rating: Developed
TheTasman Pioneer was built in Japan in 1979. She was described in the judgment as a typical tween-deck, multi-purpose general cargo vessel, of some 21,115 tonnes deadweight, equipped for the carriage of containers on her fo’c’sle deck and weather deck hatch covers. She had a service speed of some 16 knots. The ship left Yokohama, Japan, in the evening of 1 May 2001, bound for Pusan in South Korea, intending to sail west along Japan’s Pacific coast and then via the Japan Inland Sea across the Korea Strait. On 2 May, the master of the Tasman Pioneer, realising that the ship was behind schedule, decided that, rather than passing west of Okino Shima, the usual route for vessels entering the Inland Sea from the south, he would shorten steaming time by some 30-40 minutes by taking the channel between the island of Biro Shima and the promontory of Kashiwa Shima, the south-western extremity of the island of Shikoku.
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.
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.
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.  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.
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