RE: PRECISION GANTRIES PLC

OPINION

1.

I am instructed to advise Precision Gantries plc (PG). I am asked to give specific advice
on the following:
(a) To advise in relation to the liability of Martin Couch Marine plc (MCM), the carrier
under the contract of carriage and the Hague Visby Rules.
(b) To advise on the quantum of PGs claim and limitation of liability.
(c) To advise on the legal position of PG against the seller Northwood Engineering Ltd
(Northwood)
(d) To advise on any further evidence that needs to be obtained.

2.

At this stage, I am not asked to give advice on insurance. I have read the papers made
available by Instructing Solicitors listed 1-7 in the brief.
Summary Of Facts

3.

By a written or oral contract made between PG and Now Television Ltd (NTL) in 2015, PG
agreed to install camera and lighting gantries throughout NTLs studio. The contract
contained a penalty for delay for 5,000 for every week that the completion was delayed.

4.

By a second written contract made between PG and Northwood, on or about the 20 th May
2015, Northwood agreed to supply PG with 1 pack of siders for camera gantries (goods)
in exchange for the price of USD$43,000. This agreement is evidenced by the Sold Note
the date 20 th May 2015.
P

5.

Northwood obtained the Mates Receipt and PG entered into a contract for carriage of the
goods evidenced by the bill of lading dated 25 th June 2015.
P

6.

The goods were sent from Helsinki, Finland to Immingham UK on the ship the Foxwood.
The goods were packed in plastic sheets and boxed with wood for strength and support.
The goods were carried as break bulk cargo in the ships hold 2S.

7.

PG paid Northwood in advance for the goods before the arrival of the ship and paid the
freight charge 1,850 directly to MCM in advance.

8.

The goods were loaded at Helsinki on the 17 th June 2015 and shipped 25 th June 2015. On
the 30 th June 2015, when the goods were being discharged at the port in Immingham UK, it
was discovered that the goods had suffered corrosive damage and were unsuitable for use.
P

9.

PG refused to accept the damaged goods and at the time of writing this opinion, the goods
are in storage at Immingham docks.
1

Summary Of Advice
10. In my opinion, PG has the required grounds to launch a suit against MCM. PG should
launch a suit under the Hague Visby rules (referred to in the contract of carriages clause 5)
provided all the requisite evidence is gathered. PG has a strong 60-70% chance of being
successful against the carrier, MCM. Success hinges on the proving (a) the bad stowage
was the cause of the loss and damage, (b) that the ship was not seaworthy based on the
discussion to follow and therefore cannot rely on the excepted perils.
11. In relation to limitation of liability, MCM will not be able to limit its liability because the cause
of the damage does not fall on any of the exceptions and even if they did MCM cannot rely
on the exception for the reasoning in 10 (b).
12. Additionally, there is enough to also bring a claim in tort, which also has a 60-70% chance
of success provided all the necessary evidence is gathered.
13. In relation to quantum, the majority of loss is recoverable except the initial freight charge.
The total recoverable loss and damages amount to 62,668.88. MCM will not be able to
effectively limit its quantum because the sum that is sought by PG is does not exceed the
limitation.
14. In my opinion there is no redress from the seller as risk and property has passed because
of the nature of the contract and because there is no evidence that the seller was at fault.
Liability Of The Carrier Under The Carrier Contract
15.

In order for me to give my opinion on the liability of the Carrier I must establish:
a) The grounds on which PG can launch a suit;
b) Who is the carrier and the impact of the demise clause
c) Responsibilities of the carrier under the contract;
d) Is the breach covered or limited by the contract.
The Grounds On Which PG Can Launch A Suit

16.

On the facts presently before me, it is clear that the sale transaction of the goods by
Northwood to PG is operating under a simple F.O.B contract. As a result of the nature of
this type of FOB contract, it is the buyer and not the seller who ultimately enters into the
contract of carriage.

17.

Under the simple FOB contract Northwood on behalf of Precision Gantries procures the
Mates Receipt and turns it over to PG to be exchanged for the document of title or the bill
of lading from the carrier. For an example of a simple FOB contract See President of India
v Metcalfe Shipping Line [1970] 1 QB 289. PG is the original party to the contract of
carriage since they are listed under shipper and they are the original holders of the bill of
lading as the principal of the seller, who appeared to act as their agent.

18.

Alternatively, if Northwood was not acting as an agent statute provides another way for
suit. PG arranged the contract of carriage and the bill of lading clearly points out that PG
is the intended recipient of the goods. PG has also paid for the goods and freight charges.
The facts make the bill of lading a non-transferable and a non-negotiable document. This
cannot be assigned to another recipient and this is sufficient for it to be classified as a
straight bill of lading. This makes it fall outside the bill of lading meaning of the Carriage
of Goods by Sea Act 1992 (COGSA 1992) by virtue of section 1(2) (a). It is however a
seaway bill within the meaning of section 1(3) (a) & (b) of that Act because as a receipt of
the goods, it also evidences (or contains) a contract for the carriage of goods by sea and
as stated above identifies the recipient.

19.

Section 2 (1) (b) COGSA 1992 clearly outlines that PG as the consignee under the sea
way bill shall have transferred to him all rights of suit under the contract of carriage as if it
had been a party to the contract. The contract of carriage means the contract that is
contained in or evidenced by the seaway bill by virtue of S.5 (1) COGSA 1992.

20.

Based on the discussion in paragraphs 16-19, PG can sue MCM either as principal to the
contract if Northwood acted as an agent or alternatively under the transfer of rights by the
operation of section 2 (1) (b) COGSA 1992.
The Carrier And The Impact Of The Demise Clause

21.

I must now focus on the issue of the carrier. This is important for two reasons. The first
being I must know the correct entity I am suggesting that PG can sue. Where the bills are
understood to be charterer bills then the charterers are the contracting party and where
the bills are owners bills then the ship owners are the contracting party (discussed
below). Secondly, the demise clause can operate to displace the focus on the entity that
stands to be truly liable.

22.

Instructing Solicitors have mentioned in the brief that MCM are the owners of the Foxwood
and Margaret Bascombe signs on behalf of the carriers on the bill of lading. There
appears to be no dispute from their correspondence to date that they are not the owners
and carriers at present. It is likely then, that a court will interpret the bill of lading to be an
owners bill and PG have contracted with the owners and not an agent. However, the bill
of lading appears to have been signed on behalf of MCM rather than on behalf of the
ships master. Instructing Solicitors should get a witness statement from Margaret
Bascombe confirming her capacity when she signed the bill of lading. This may not be
difficult to obtain but Instructing Solicitors should still bear in mind there may be some
reluctance because it goes towards establishing liability.

23.

Clause 21 states: If the vessel is not owned or chartered by demise to the company or
line by whom this bill of lading is issued, this bill of lading shall take effect only as a
contract of carriage with the owner as principal, made through the agency of the said
company or line who acts solely as agent and shall be under no personal liability
whatsoever.

24.

On the evidence before me, there is no suggestion that this demise clause operates
because as Instructing Solicitors have stated the Foxwood is owned by MCM. However,
the clause does state or chartered by demise which from my perspective on the
evidence is unclear. It is not clear whether the ship was chartered by demise and involves
a third party. It is reasonable to assume there may be a third party involved because in
clause 4 there is significant provision for the use of sub-contractors. However clause 4 (2)
indicates that MCM will assume liability for its subcontractors.

25.

Instructing Solicitors should inquire to make clear if there is a charterparty that Mr De Wint
stated in paragraph 5 of his draft statement we arranged the carriage. If it is in existence,
Instructing Solicitors should look specifically at the incorporated charterparty (clause 22)
for any mention of demise/non-demise or any reference to it being a demise charter.
This should not be difficult to obtain from Mr De Wint.

26.

In my opinion, on the papers before me the court is likely to classify MCM as the ship
owners and contracting carriers. This is for a number of reasons and warrants a
discussion. Firstly, they were the direct parties to the contract of carriage as opposed to
acting through an agent, as evidenced by Mr De Wint in his statement at paragraph 6.

27.

Secondly, the courts will take into account the full fact matrix. In The Starsin [2004] 1 AC
715 the signature box was completed by agents of the charterers who were described
as carriers similarly Miss Bascombe appears to be acting as an agent of MCM who are
described as carriers. The interpretation of the bill will be viewed, on balance, from the
perspective of a reasonable person versed in the shipping trade. Such a person will
view the front of the document with more significance than what is in small print on the
back of the document. It is also the view of the court from the Starsin, there is a wider
need for those engaging in contractual commercial transactions to contract with the
person on the face of the document using the express words that are stated.

28.

This is why it is my opinion that the demise clause is not operating and the carrier is the
ship owner MCM. If it is the case that the vessel is owned and not chartered by demise to
MCM then the demise clause is not active. The ship would then likely be chartered by
non-demise. This means the master and crew were likely to be employees of MCM at all
material times. This means that MCM will stand to be liable where they do not have any
means of escaping or shifting liability.

29.

PG is able, therefore to launch a contractual claim against MCM if it can prove that MCM
breached the terms of the contract of carriage and that it suffered loss and damage. This
is also based on the Hague-Visby Rules not excluding liability.
Responsibilities Of MCM Under The Contract

30.

On inspection of the Mates Receipt and the Bill of Lading, it is clear to me the Hague
Visby Rules are operating and that this voyage by virtue of clause 5, falls under the
definition of port to port shipment. The top of the bill of lading clearly states port to
port. Further to this, the relevant criteria for combined transport to arise i.e. indication of
the place of receipt and/or place of delivery are absent from the bill of lading (and Mates
Receipt) and by this fact fits into the definition of Port to port shipment in clause 1.
4

31.

This means that on the issue of liability of MCM for loss and damage of the goods from
the bill of ladings terms and conditions shifts the determining point from the terms and
conditions over to the Hague Visby Rules and national law. The Hague Visby Rules are
discussed below.
Implied Duties At Common Law

32.

There are certain obligations that are implied at common law. MCM had an undertaking
that they would deliver the goods, in the same condition in which they were shipped which
were subjected to excepted perils. MCM has implied duties to carry the goods with care
and to provide a seaworthy ship that is fit for the adventure before it takes off. MCM, as
the carrier must give the goods as described in the Bill of lading to PG.

33.

By giving bad stowage to the goods, MCM cannot rely on the excepted perils and do not
fall outside the scope of liability for the damaged siders.

34.

The same duties at common law are embodied in the Hague Visby Rules and in my
opinion since clause 5 outsources the determination of liability to the Hague Visby Rules
then it would be more prudent to bring action under those rules rather than common law
duties.
Liability Under The Hague Visby Rules
Who Is The Carrier Under The Hague Visby Rules?

35.

Before I consider the responsibilities of the carrier under the Hague Visby Rules (the
Rules), I will iterate that MCM is not only likely to be the carrier under contract but also
under the Rules. Article I (a) defines carrier as the owner or charterer and on the basis of
the bill of lading and Mates receipt MCM will likely be the focus of any action brought.

36.

This is important because the Rules impose a 1-year limit within which the action should
be brought. If the action is not brought then PG will lose any claim for breach of contract
against MCM.
Do The Rules Apply In This Case?

37.

It is clear that the Rules apply to this contract. Although the bill of lading is classified as a
straight bill of lading it will still be a bill of lading for the purposes of the Hague- Visby
Rules see also Lord Binghams Judgement 17-23 in JI MacWilliam Co Inc -vMediterranean Shipping Company SA [2005] UK HL 11 (The "Rafaela S").

38.

The bill of lading was issued in Finland (a contracting state) and the carriage is from
Helsinki (a contracting state). Both Helsinki and Immingham UK are ports in two different
states. See the Carriage of Goods by Sea (Parties to Convention) Order 1985 (SI
1985/443). Further to this, as stated above, it is clear to me that this voyage falls under
port to port shipment by definition and this invokes the Rules to determine the liability of
the carrier. See Article X (a-c).

39.

As Instructing Solicitors know from the Carriage of Goods by Sea Act 1971 s1 (2) where
the Rules apply they have the full effect of law. On the front page, the bill of lading says it
incorporates the Carriers Standard Terms and Conditions. Clause 24 makes direct
indication that English law applies and that the High Court in London has jurisdiction.

40.

By virtue of clause 5 and clause 24, it is plain that the contract provides that the Rules are
to govern the contract. (See paragraphs 32-33)
What Are MCMs Obligations Under The Rules?

41.

I will also note here that the bill of lading is clean and so is the Mates receipt. MCM will
have looked at the goods in the plastic sheets and wooden box fixtures (they were not in a
closed container) and chosen not to clause the bill of lading or to put dirty remarks on
the Mates receipt. MCM would likely be estopped from disputing that the goods were
shipped in apparent good order. See Transocean Liners Reederei GmbH v Euxine
Shipping Co Lt (The Imvros) [1999] 1 Lloyds Rep 848.

42.

Under the Hague Visby Rules (HVR) the MCM has particular responsibilities and I will
deal with each of the relevant provisions in turn. Article III (1) explains that MCM is bound
before and at the beginning of the voyage to exercise due diligence.

43.

According to The Amstelslot [1963] 1 Lloyds Rep 223 the question of whether due
diligence has been exercised is one of fact. This means that the court will consider the
system that MCM goes through to achieve due diligence. However I must also stress that
it is not an absolute requirement for MCM to be duly diligent but rather to have attempted
to give due diligence see S3 COGSA 1971.
Duty To Provide A Seaworthy Ship

44.

Due diligence in the duty to provide a seaworthy ship is relevant because seaworthiness
relates to physical state of the ship, cargo worthiness and importantly the carrier must
ensure that the existence of a particular cargo on board would not endanger any other
cargo. See Northern Shipping Co. v. Deutsche Seereederei G.M.B.H. and Others (The
Kapitan Sakharov), [2000] 2 Lloyd's Rep. 255 at 263, 265 and 275. However on the facts I
do not know what type of acid it is. Instructing Solicitors should be able to obtain a ships
manifest, which will likely hold the necessary information in pre-action disclosure pursuant
to CPR 31.16.

45.

Art III 1 (c) is the obligation to make the holds fit for safe reception, carriage and
preservation. The 24 two metre siders and 12 six metre smaller versions had plastic
wrapping and boxed with wood in the middle section for strength and support. However
they were put in such an inappropriate place next to steel canisters of acid that damage
occurred under the natural (but foreseeable) circumstances of stormy weather. On
inspection, the damage to the plastic wrapping of the siders were found to have a shape
that was consistent with the tear in the metal of the canister. Although there is a lack of a
clear account in relation to how this damage actually happened, it is clear that the damage
occurred in that hold over the course of the voyage.

46.

It would be prudent to get a witness statement from the ships Mate or Captain to
determine how the cargo was packed and the cargos original position, as this is central to
the argument for bad stowage. Please ask specifically whether it was reasonable to stow
goods in this way next to acid canisters given the nature of the voyage.

47.

Based on the current evidence, in my opinion MCM may not have fulfilled its obligation to
make the holds safe before the journey set out. The obligation created by Art III (1) is an
overriding obligation such that if MCM is found to have not fulfilled their due diligence then
they will lose their immunities available under Art IV (2) see Mediterranean Freight
Services Ltd V BP Oil International Ltd (The Fiona) [1993] 1 Lloyds Rep 257. It is clear
that those obligations are likely to have been breached.

48.

This means that if they are found to breach the due diligence requirement then they will
not be able to rely on the immunities afforded to them in Art IV (2) (discussed below).

49.

Additionally, Art III 2 relates to the obligation to properly and carefully stow, care for,
keep and discharge the goods. The word carefully is taken to mean that MCM needed to
act with reasonable care. Properly means that MCM, knowing that they were carrying
acid canisters should have acted in an appropriate manner. This could have included
storing them separately or strapping down the siders. For the discussion see Albacora
SSRL v Westcott & Laurance Line [1966] 2 Lloyds Rep 53 at p.58.

50.

Art III 2 is generally taken to mean that this is a continuous obligation from tackle to tackle
on the presumption that the carrier, MCM has undertaken to load and discharge the
goods. Mr De Wint suggests in his statement at paragraph 5 that MCM were in charge of
loading and stowing but because this is not the norm, Instructing Solicitors should confirm
this by questioning Mr De Wint about his paragraph 5 and seeking out the terms of any
charterparty that may have been incorporated.

51.

On the evidence before me, I attempted to look for a pattern that suggested Art III 2 was
not fulfilled over the course of the voyage but I encountered certain facts that need
clarification. The vessel logbook indicates that on the 27 th June 2015 wind forces 8 to 9
were recorded with prolonged and heavy rolling and on the 28 th June 2015 wind force 5
was recorded.
P

52.

Upon research, the convention in modern shipping uses the beau fort scale to determine
wind force. The scale describes the wind force 8 to 9 as a strong gale. This is 1
classification below a storm. Conversely, wind force 5 is categorised as a strong breeze. I
find it curious that on the 27 th June 2015 a gale storm would be recorded yet nothing
relating to the cargos status is noted but on the 28 th June 2015 all the cargo in all the
ships holds is displace by a strong breeze. The mere fact of this inconsistency warrants
the request of the entire logbook with names of those who signed.
P

53.

The logbook would contain evidence for the question whether or not the continuous
obligation to take proper care of the cargo was carried and if this was breached then MCM
would be liable. However this would only be the case where it is confirmed that they were
taking on the responsibility of loading and discharge.
7

54.

On the second page of Mr De Wints statement at paragraph 6 the mate suggested that
the acid canisters were not stowed appropriately. Instructing Solicitors should ask Barry
Groves or Debbie Barnes to give a detailed report and witness statement on the cargo
hold that they went to inspect paying particular mind to include any pictures they may
have taken and to clarify what information they gathered about the hold by speaking to the
ships crew.

55.

In relation to finding the nature and strength of the acid I suggest firstly that the ships
manifest be obtain through pre-action disclosure. If this fails then Instructing Solicitors
should get this tested at a lab by an expert using the corroded metal siders which should
have some trace of the acid. Given the length of the voyage and the time this likely
occurred this is likely to be a powerful acid that can corrode the siders to such an extent
that they are unusable. Instructing Solicitors will no doubt be prudent in searching for the
most cost effective. It will also be useful if Instructing Solicitors can find out the exact
nature of Barry Groves Technical Manager role because this can add weight to the
report and witness statement particularly if it is a science or engineering based role.
What Limitation Might MCM Argue?

56.

MCM will seek, in defence of their claim to argue from the exhaustive list (which cannot be
increased Art III (8)) provided in the Rules. Firstly, they will likely seek to demonstrate they
have conducted due diligence because if this is proven to be done then MCM escapes
any liability resulting from unseaworthiness by virtue of Art IV (1). This is a personal
liability so MCM would be held liable if one of the stevedores, servants, agents or
subcontractors employed negligently stowed the goods.

57.

Secondly, MCM will seek to rely on the fact that there was bad weather under the perils of
sea exclusion of liability by virtue of Art IV (2) (c). This excludes liability where loss or
damage occurs as a result of the dangers and accidents that can happen at sea. However
the argument that PG is putting forward seeks to suggest that it is bad stowage rather
than perils of the sea. The weather that was encountered ranged from gale forces to a
strong breeze and this is not out of the ordinary on ship voyages. The goods should
have been and were capable of being put in a better stowage position to avoid the
damage that happened. In my opinion PG must seek to establish bad stowage by
obtaining the witness statement of the Ship Mate from whom Mr Groves was given the
information about the canisters. While the bad weather was an aggravating factor in the
damage it did not cause the damage. The causal link is the bad and inappropriate
stowage that created the environment and circumstances for the damage to occur.
Evidence of the weather conditions that were forecast on this voyage should be obtained.
If it found that this could not be foreseen then MCM may be able to rely on the exception.

58.

Thirdly, based on the response from MCMs Solicitors, MCM will rely on the issue of bad
packaging by virtue of Art III (2) (n). They will allege that PG (through Northwood)
provided cargo with insufficient packaging that was unsuitable for the voyage. Goods are
regarded as insufficiently packaged if they cannot withstand the kind of handling that the
goods are likely to undergo see Silver v Ocean Steamship [1930] 1 KB 416. There is a
significant fact that will help in the defence of the thrust of their argument. By virtue of Art
8

III (3) the carrier is required on demand to issue a bill of lading that amongst other things
contains information related to the apparent order and condition of the goods. The bill of
lading was issued by MCM and importantly it was issued clean. A clean bill of lading is
prima facie evidence that the goods including their packaging were in good condition (see
Art III (4)). Since the bill of lading is in the possession of PG, the burden of proof is open
and will be on MCM to produce evidence to dispute that fact. Additionally, Mr De Wint
stated that the way the siders were packaged were standard for goods of this nature.
Instructing Solicitors should get a statement from another reputable shipper that ships
similar goods to back up this statement.
59.

To conclude, the Rules apply for the reasons stated above and for the claim to have the
best chance of success Instructing Solicitors must gather the suggested evidence. The
operation of various parts of the Rules excluding liability will not come in to effect in this
case so long as the due diligence duties are not discharged. Provided that this is
successfully established then MCM will not be able to argue from the stand points of the
immunities laid out in Art IV (2).
Causation and tort of negligence

60.

PG can contend that the damage occurred due to negligent stowage. At common law
MCM is under an obligation to act with reasonable care when stowing the goods. PG can
only bring a claim in negligence if they owned the goods and were entitle to immediate
possession when the goods were damaged. Based on the discussion above PG was
entitled to the goods at the start, as they were the original party to the contract of carriage.
Property and right to possession passed to PG when the damage occurred and can sue in
tort. (The Aliakmon [1986] 1 AC 785 HL).

61.

It is important for this issue to obtain evidence stated above on precisely where the goods
were stowed. Then Instructing Solicitors should obtain expert evidence of good practice
on the question of stowing steel sections with acid in the context of this sea voyage and
weather conditions.

62.

On this evidence it is likely that MCM will be liable for the manner and place that the
siders were stowed. Furthermore all the cargo holds were obstructed so it would not have
mattered where the goods were stored but it would matter what they were stored next too.

63.

MCM assumes the liability of its subcontractors so even if they are able to argue this was
the fault of one of its subordinates (Art IV 2 (1)) clause 4 of the Bill of Lading places the
liability on the carrier.
Limitation of Liability and Late delivery

64.

It is also likely that MCM is to be held liable for the late delivery fees because the
circumstances were within MCMs control. The contract the PG signed with NTL had a
clause that provides if they were late in completion of the agreed service they would pay
5,000 per week. It is clear that the bad stowage resulted in damaged cargo and new
cargo had to be re-ordered.
9

65.

This is a question of remoteness and in The Achilleas [2008] UKHL 48 it was suggested
that it is not simply liability for the types of losses that were to be reasonably considered at
the time of the contract. Lord Hoffman held that there is an initial question of what the
parties are to be taken to have assumed liability for, having regard to the commercial
background of the contract. In application to this case, MCM will unlikely be able to
objectively show that it did not assume responsibility for economic loss that resulted from
damaging cargo.
Quantum Of PGs Claim

66.

I now turn my attention to the issue of quantum in relation to PGs claim. The below are
likely to be able to be claimed back from MCM provided the above causes of action are
proved.

67.

The sold note dated 20 th May 2015 values the goods at USD$ 40,000. This is mitigated by
the scrap value for the siders that Miss Barnes suggested which totals 1,200. The value
in national currency at the exchange rate 1.55 at June 2015 $40,000 = 25,768.88 less
1200 = 24, 568.88 for the damaged parts. The initial freight of 1,850 cannot be
returned in any event based on clause 13 (1) so regardless of fault or negligence this
cannot be returned. The draft statement of Peter De Wint suggests the cost in sourcing
and transporting an identical order cost 16,000 plus 2,100 in freight charges.
P

68.

Based on the discussion about the contractual delay is not too remote and PG can claim
the 20,000 penalty (5000 per week: 4 x 5000 = 20,000). The total therefore will be
62,668.88 .
U

Quantum under contract

69.

PG can sue MCM for breach of contract. The remedy for breach of contract is damages
and this is different to an indemnity so all the heads of loss above are likely to be
recovered. The damages that PG can recover have a basis in reliance loss. PG made a
contract with NTL presumably before the second contract with Northwood. PG then made
the contract of carriage with MCM relying on the delivery of the contract goods so PG
could fulfil its contract with NTL. The reliance loss method will put PG back in as good a
position as he was before the contract was made.

70.

There does not appear to be any indication in the standard terms and conditions that
govern the issue of quantum or its basis. However there are several provisions missing
from the standard terms for instance provision governing issues like stowage or loading
and discharge; 8-10, 14-15, 18, 23 and presumably more. Instructing Solicitors should
obtain the complete bill of ladings terms and Conditions. Please also question Mr De Wint
if the altering of the standard terms and conditions as they appeared accompanying the
brief was intended.

71.

Further to this, based on the reasoning above, clause 5 imposes the Rules to govern
liability. The bill of lading appears to be incomplete and in the absence of any clear way
forward I will use the Rules to address the issue of quantum.
10

Quantum under the Hague-Visby Rules

72. MCM is likely to be liable to PG. However much is calculated in relation to the goods and
for loss or damage will be limited by Article IV (5) (a) of the Rules to 666.67 units of
account per package or unit or 2 units of account per kilo of gross weight of the goods lost
or damaged, whichever is higher. I have discussed that a breach of obligations in Art III
(1) causes an overriding of immunities in Art IV (6) however these limits are applicable
regardless of the findings of liability by virtue of The Kapit a n Petro Voivoda [2003] 2
Lloyds Rep 1.
23T

23T

73.

Article IV Rule 5 (c) provides that ...where a container, pallet or similar article of transport
is used to consolidate the goods, the number of packages or units enumerated in the bill
of lading as packed in such article of transport shall be deemed the number of packages
or units

74.

Container is defined in clause 1 as a flat or pallet or similar article used however the brief
states that the goods were shipped as break bulk cargo and there fore they were not
consolidated by any form of container. As the number of units packed is not enumerated
in the bill of lading, it is likely that 2 units of account per kilo of gross weight will be used to
calculate limitation (Article IV Rule 5 (a)). The goods weighed 820 kg gross weight. The
unit of account is defined as the special drawing right as defined by the International
Monetary Fund. According to IMF archives, as at June 30 2015 this amounts to $1.12
approximately 0.72. Therefore the maximum liability is 666.67 x 1.44 x 820 which
amounts to 787,203.94. The loss suffered by PG is likely to be around 62,000. This
means that the limitation provision in the Rules will not demonstrably help MCM in
defence of the claim.

75.

Article III, rule 2, expressly says that it is subject to Article IV. In this context, in my view
this means that if MCM establishes the damage resulted solely from an insufficiency of
packing (Article IV, rule 2(n)), liability should rest with PG under Article IV, rule 6. If the
expert evidence establishes that the containers were not properly or carefully carried (due
to their location), and that this was at least a contributing factor in the loss, there will be no
recovery under Article IV, rule 6.
Legal Position Against Now Television Ltd, the Seller

76.

I now turn to consider the legal position against the seller. In Simple FOB contracts the
seller is obliged to deliver the goods to the ship nominated by PG. Delivery was completed
when the goods were put on board the Foxwood. Once it was put on board and the price
was paid, the risk flowing from the damage and loss that could happen, would be the
responsibility of the buyer not the seller. This means that in relation to the goods being
lost the seller has no rights of suit.

77.

In FOB contracts property does not pass before shipment. If the goods are unascertained
then property cannot pass until they are ascertained (s16 SOGA 1979) whereas if they
are specific or ascertained they pass on shipment (see Carlos Federspiel & Co SA v
Charles Twigg & Co Ltd [1957] 1 Lloydd 2 Rep 240). The Bill of Lading had STC PARTS
FOR PRECISION GANTRIES and they were shipped as break bulk cargo, which means
although they were in a hold they were not part of a bulk. Further to this, the Bill of Lading
was clear on the identity of the recipient and it was not made to order which would mean
that property could not pass (see The Cuidad de Pasto [1989] 1 All ER 951 ). It is clear
from the bill of lading and the Mates Receipt that these goods did not have any right of
disposal of Northwood attached to them and that they were ascertained.

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78.

Altogether this means that, the goods were unconditionally appropriated to the contract
and therefore property in the goods had passed to PG (s 18 rule 5(2) SOGA 1979).

79.

In my opinion since property and risk have passed from seller, Northwood to PG then PG
have no redress from Northwood unless there is evidence there was some defect of
service of the goods during the process from Northwoods warehouse to on-board the
Foxwood.
Further Evidence And Next Steps

80.

The further evidence to be collected are as followed:

a) A witness statement from Margaret Bascombe to confirm her
capacity in signing the Bill of lading.
b) A witness statement from the ships Mate and ships Captain to
determine how the cargo was packed, .
c) An expert evidence to determine the cargos position, as this is
central to the argument for bad stowage.
d) Determine if there was a charterparty outside the bill of lading
by questioning Mr De Wint.
e) Request the entire vessel logbook with signatures.
f) A statement from another reputable shipper that ships similar
goods to back up this statement.
g) Evidence of the weather forecast for the voyage.

81. To conclude my opinion, PG fulfils the necessary grounds for a strong suit against MCM.
The strongest way forward in my view is to launch a suit under the Hague Visby Rules. This
should be done within the year limit to avoid being time barred. There is a duty of
reasonable care giving rise to a relationship between PG and MCM and therefore (on the
facts) a successful claim in tort.
82. Instructing Solicitors should gather the evidence above but start with the issue of proving
bad stowage was the cause of the loss. This is the thrust of PGs argument and would also
be able to disable their arguments on the exception in the Hague Visby Rules. The total
recoverable loss and damages amount to 62,668.88 without interest being added (to be
assessed by the court) and the limitation does not effectively operate.
83. In my opinion there is no redress from Northwood as there is no evidence of impropriety or
fault on their part.
83. If those instructing me wish to discuss any aspect of this opinion, they should not hesitate to
telephone me in chambers.

Q. Estiones
4 Lincolns Road
London
13 th August 2015
P

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