Sunlight Mercantile v. Ever Lucky Shipping (CofA)
DMC Category Rating: Developed
This Case Note was contributed by Ang & Partners, the Website’s International Contributors 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 shipowner 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.
The trial judge made the following findings:-
But 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.
Sunlight Mercantile and Liberty Insurance appealed. At the Court of Appeal, the issue was whether the exemption clauses in the bills of lading excluding liability for deck cargo absolved the shipowners from any actionable fault, so that their right to contribution remained intact.
3. Although Art.IV R.5 of the Hague Rules allows a carrier to limit its liability even where loss is caused by unseaworthiness, the court was presently dealing with the common law obligations of a shipowner and not the Hague Rules. Furthermore, the case concerned the effect of exceptions and not provisions that limit liability. A provision that seeks to limit liability is different in character from an exception.
4. As the exceptions in the bills of lading for the deck cargo were inapplicable, there was actionable fault on the part of Ever Lucky. There was, therefore, no obligation on either Sunlight Mercantile or Liberty Insurance to contribute to the general average expenses the shipowner had incurred.
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