The Makedonia

[1962] Vol.
Lloyd's Rep.
316
ADMIRALTY DIVISION Feb. 5, 6, 7, 8, 9, 12, 13, 14, 15, 16, 19, 20, 21, 22, 23, 26, Mar. 7, 1962 ____________________ THE "MAKEDONIA" Before Mr. Justice HEWSON
Unseaworthiness-Inefficiency of crew-Right of under-deck and/or on-deck cargo-owners to recover their share of salvage award from shipowners-Liability of such cargo-owners to make general average contribution-Liability of shipowners for cargo jettisoned or burned - Canadian Water Carriage of Goods Act, 1936, Art. III (1). Carriage of plaintiffs' timber in defendants' steamship Makedonia from Western Canadian ports to U.K., under bills of lading incorporating Canadian Water Carriage of Goods Act, 1936 - Bills of lading providing that general average should be paid under York/Antwerp Rules, 1950, and that English law should govern contracts - Clause 6 of bills of lading provided: . . . received, kept, carried and discharged at the sole risk of the owner of such cargo and the Carrier shall not under any circumstances of any kind whatsoever be liable for any loss of or damage or delay thereto, whether or not such loss, damage or delay may be due to the act, neglect or default of the Carrier or the master, pilot, officers, crew, stevedores . . . or other person whomsoever for whom the Carrier may be responsible, whether in the service of the Carrier or not, and whether or not the above-named vessel or any other vessel or craft in which the said cargo may be loaded was unseaworthy at the time of loading or sailing or at any other time. Makedonia unable to continue voyage under her own power when in mid-Atlantic owing to contamination of fuel oil and lack of feed water-Salvage services (towage) received - Some deck cargo jettisoned; some deck and under-deck cargo burned to provide steam for auxiliaries during towage; port of refuge expenses incurred; and salvage award under Lloyd's Form of Salvage Agreement of 44,000Claim against shipowners by plaintiffs in first action to recover their share of salvage award; and for declaration that they were not liable to make general average contribution - Similar claims against shipowners by plaintiffs in second action, and for loss of their cargo
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by jettisoning and/or burning-Counterclaim by shipowners, in second action, for declaration that they were entitled to recover general average contribution from those plaintiffs-Contention by plaintiffs that, under Art. III (1), if vessel was unseaworthy on leaving bunkering port owing to defective bunkers or contamination of fuel oil, shipowners were responsible for lack of due diligence on part of ship's engineers at beginning of that stage and were precluded from exemptions in Art. IV (2) - Meaning of "voyage" in Art. III (1)Evidence as to inefficiency of ship's engineers; and as to contamination of fuel oil by sea water during voyage. -Held, (1) (a) that, under Art. III (1), the obligation on shipowners was to exercise due diligence before and at beginning of sailing from loading port to have vessel adequately bunkered for first stage and to arrange for adequate bunkers at intermediate ports so that voyage could be performed; that that obligation as to bunkering included provision of feed water; and that shipowners performed that obligation; (b) that the equipment and machinery were satisfactory; and that immediate cause of breakdown was lack of burnable fuel oil owing to inefficiency of ship's engineers; and (c) that that breakdown caused all loss sustained by plaintiffs; (2) (a) that shipowners had failed to prove that they had exercised proper care in appointment of ship's engineers; (b) that ship's engineers were inefficient at commencement of voyage; and (c) that shipowners had failed to exercise due diligence before and at beginning of voyage properly to man their vessel; (3) that Makedonia was unseaworthy in that she was improperly manned and shipowners had failed to provide a plan of ballast and fuel system; that salvage, burning of cargo and port of refuge expenses were all occasioned by this unseaworthiness; and that shipowners were in default; (5) that shipowners were not obliged to save the cargo from physical loss because they were not liable for it (Clause 6), but, having done so, they were entitled to expect plaintiffs to pay their contribution towards general average, salvage and port of refuge expenses - Judgment for plaintiffs in first action and plaintiff owners of under-deck cargo in second action; judgment for shipowners against plaintiff owners of deck cargo in second action.
Carron Park, (1890) 15 P. 203; Gosse Millerd, Ltd. v. Canadian Government Merchant Marine, Ltd., [1929] A.C. 223; (1928) 32 Ll.L.Rep. 91; Harris (Harella), Ltd. v. Continental Express, Ltd., and Burn Transit, Ltd., [1961] 1 Lloyd's Rep. 251; Hongkong Fir, [1961] 1 Lloyd's Rep. 159; Milburn & Co. v. Jamaican Fruit Importing and Trading Company of London, [1900] 2 Q.B. 540; Moore and Another v. Lunn and Others, (1922) 11 Ll.L.Rep. 86; Muncaster Castle, [1959] 2 Lloyd's Rep. 553; Norman, [1960] 1 Lloyd's Rep. 1; Northumbrian Shipping Company, Ltd. v. E. Timm & Son, Ltd., [1939] A.C. 397; (1939) 64 Ll.L.Rep. 33; Standard Oil Company of New York v. Clan Line Steamers, Ltd., [1924] A.C. 100; (1923) 17 Ll.L.Rep. 120; Tempus Shipping Company, Ltd. v. Louis Dreyfus & Co., Ltd., [1930] 1 K.B. 699; (1930) 36 Ll.L.Rep. 159; [1931] 1 K.B. 195; (1930) 37 Ll.L.Rep. 273; [1931] A.C. 726; (1931) 40 Ll.L.Rep. 217; Vortigern, [1899] P. 140. ____________________ In this consolidated action, the plaintiff owners of cargo lately laden on board the steamship Makedonia, sued her owners for damages for breach of contract and/or duty in the loading, handling, custody, care and discharge of the plaintiffs' cargo in the defendants' vessel in 1956. The Makedonia broke down in mid-Atlantic on a voyage from Vancouver to the United Kingdom with a cargo of lumber. She had to be towed to the Azores. The first action was brought by the owners of seven parcels of timber shipped under deck, under seven bills of lading. In the second action, 46 cargo owners with 191 parcels, shipped under 191 bills of lading, both on deck and under deck, made similar claims. The plaintiffs claimed as damages, their share of a salvage award, interest and costs; a declaration that they were not liable to contribute in general average, and the cancellation of guarantees given on behalf of the plaintiffs by way of general average security. Certain of the plaintiffs in the second action also claimed for loss of cargo by jettison or burning. A further claim by them, arising out of damage to cargo by oil or water, was settled.
____________________ The following cases were referred to: Anonity, [1961] 1 Lloyd's Rep. 203; Arabert (No. 2) (Limitation), [1961] 1 Lloyd's Rep. 363; [1961] 3 W.L.R. 215; Cairnbahn, [1914] P. 25;
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The plaintiffs alleged that the breakdown was due to the defendants' failure to provide a seaworthy ship (particularly in that the officers were incompetent), and asked the Court to decide liability, the question of the amount of damages, if necessary, to be referred to the Admiralty Registrar. The defendants, while admitting that the plaintiffs had a good title to sue, and that salvage services were rendered to the ship and cargo, denied liability and counterclaimed for a declaration that they were entitled to recover general average contribution from the plaintiffs. According to the statement of claim of the plaintiffs in the first action, under seven bills of lading dated in Vancouver in January, 1956, and signed by the master or agent of the defendants' steamship Makedonia, there were shipped in good order and condition on board the vessel for carriage to London, a quantity of Douglas Fir lumber, the property of the plaintiffs. It was expressly provided by Clause 1 of the conditions printed on the reverse of the bills of lading that the bills of lading should have effect subject to the provisions of the Water Carriage of Goods Act, 1936, of the Dominion of Canada and that that Act should be deemed to be incorporated therein. Art. III (1) of the Rules contained in the Schedule to the Act provided that the carrier should be bound before and at the beginning of the voyage to exercise due diligence to make the vessel seaworthy and properly to man, equip and supply the vessel, and Art. IV (1) of the Rules provided that whenever loss or damage had resulted from unseaworthiness the burden of proving the exercise of due diligence should be on the carrier. Those plaintiffs said that, on the true construction of the Rules, the defendants were further bound to exercise due diligence to make the Makedonia seaworthy and properly to man, equip and supply her before and at the beginning of each bunkering stage of the voyage, or, alternatively, that the defendants impliedly warranted that before and at the beginning of each bunkering stage they would exercise due diligence to make the Makedonia seaworthy and properly to man, equip and supply her for that stage.
Those plaintiffs alleged that, on leaving the ports of shipment named in the bills of lading, the Makedonia was unseaworthy in the following respects: (a) There was a crack in the main condenser. Alternatively the main condenser was liable to develop a crack and developed a crack during the voyage. (b) A great number of the condenser pipes leaked or were liable to leak. (c) The evaporator leaked or was liable to leak. (d) Owing to steam wasting from the main engine packings a consumption of over 20 tons of feed water was required per day. (e) The metallic packing for the I.P. valve spindle required replacing. (f) The diameter of the spindle rod which was originally 4 in. was worn down to 358 in. (g) The boilers required internal washing and/or chipping. (h) The piping of and between double bottom tanks Nos. 1, 2 and 3 and of and between double bottom tanks Nos. 7 and 8 leaked by reason of which ballast carried in any one of these tanks Nos. 1, 2 or 3 was able to find its way into fuel oil carried in any other of these tanks and ballast carried in tank No. 8 was able to find its way into fuel oil carried in tank No. 7 (port). (i) The oil fuel feed pumps, transfer pump, feed pumps and ballast pumps were defective, with the result that on and after Feb. 11, 1956, ballast could not be pumped out of double bottom tank No. 4; on and after Feb. 13, 1956, fuel oil could not be pumped direct from double bottom tank No. 1; on and after Mar. 1, 1956, fuel oil could not be pumped from double bottom tank No. 7 starboard and, at San Pedro and/or Balboa, No. 2 double bottom tank could not be fully pumped out before oil was pumped into the tank. Alternatively, the trim of the vessel was such as to render it impossible or difficult to work the pumps. (ia) The heating coils passed through the lightening holes of the tank floors and were ineffective when the oil dropped below that level. The heating coil in No. 1 double bottom tank was ineffective to enable the oil in that tank to be pumped direct from the time of the vessel's departure from Vancouver until the oil in that tank was transferred to No. 3 double bottom tank between Feb. 13 and 27, 1956.
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(ib) Certain valves were not clearly marked so that it was possible for an engineer accidentally to open a steaming out valve when he intended to open a heating coil valve. (j) There was insufficient fresh water to feed the boilers beyond Feb. 25, 1956, when the Makedonia was in the Atlantic Ocean in an approximate position of lat. 29 32 N., long. 49 10 W. (k) The vessel had insufficient fuel oil to carry her to London. (l) The quantity of anchor cable had been reduced by reason of a previous casualty to six shackles on each anchor. (m) Deck cargo was so stowed as to cause the Makedonia to list up to 13 deg. to port and up to 10 deg. to starboard, and, on Feb. 6 and/or 22 and/or 24, 1956, to necessitate the filling up of No. 1 and/or No. 2 double bottom tanks with ballast for the stability and safety of the vessel notwithstanding that at the time of such filling one or both of the tanks still contained some quantity of fuel oil. The vessel was at all times on the voyage so tender that whenever one of her double bottom tanks was empty of fuel oil it had to be filled with ballast thereby leading to risk of contamination of fuel oil pumped in at later bunkering ports or transferred from other double bottom tanks. Those plaintiffs alleged, alternatively, that the Makedonia was not properly manned in that the chief engineer and/or the other engineers were so incompetent and/or inexperienced and/or lacking in knowledge of the vessel's pumping and piping system as to be unable to secure that when the vessel was carrying ballast water in some of her double bottom tanks and fuel oil in others the water and oil did not become intermingled, or to ascertain in time to remedy the situation that the vessel's fuel oil was or was becoming unburnable. Those plaintiffs also alleged that, on leaving Balboa, at which port the Makedonia called on Feb. 11, 1956, for the purpose of bunkering, she was unseaworthy and/or not properly equipped or supplied in that: (a) There was an insufficient quantity of sound fuel oil to enable her to reach London. (b) The fuel oil contained in one or more of double bottom tanks Nos. 1, 2 and 3 was mixed with such a quantity of salt water as to be unburnable.
(c) There was insufficient fresh water to feed the boilers beyond Feb. 25, 1956. By reason of the unseaworthiness alleged above, on and after Feb. 17, 1956, the Makedonia had difficulty in raising sufficient steam to proceed, and, on Mar. 1, 1956, finally broke down and became disabled owing to lack of steam in the Atlantic Ocean in an approximate position about 870 miles from Ponta Delgada which was the nearest port. By reason of unseaworthiness owing to her list, and the fact that she was tender her situation in the North Atlantic in winter was rendered even more perilous than it would otherwise have been. Owing to the vessel's disablement it was necessary for her to accept salvage services. By reason of her unseaworthiness owing to her having reduced her anchor cable, it was not possible for the Makedonia to be towed by a sister ship, the North Queen, which reached her on Mar. 3, 1956, with the result that it was necessary to accept the services of the Agios Georgios V which reached the Makedonia on Mar. 5, 1956, and proceeded to tow her to Ponta Delgada. The plaintiffs said that it was necessary (a) in order to raise steam in an attempt to transfer sufficient chain from the port anchor to the starboard anchor to enable the North Queen to take the Makedonia in tow, to jettison about 65 standards of timber from the latter vessel's deck cargo, and (b) in order to raise steam for her steering and generator, to burn a quantity of her deck cargo. None of those plaintiffs' cargo was jettisoned or burnt. Accordingly, those plaintiffs' cargo became liable for salvage charges and costs whereby the plaintiffs suffered loss and damage. On the arrival of the Makedonia in London, the defendants refused to release the plaintiffs' cargo without a general average deposit or a guarantee of payment of any contribution to general average which might be found due in respect of the cargo. Accordingly, on Mar. 22, 1956, a guarantee of such payment was given by or on behalf of the plaintiffs in order to obtain the release of the cargo, whereby the plaintiffs incurred expense and suffered loss and damage. Those plaintiffs claimed: (1) Judgment against the defendants and their bail for damages for breach of contract together with interest and costs.
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(2) A reference, if necessary, to the Admiralty Registrar to assess the amount of such damages. (3) A declaration that the plaintiffs were not liable to contribute any sum in respect of general average. (4) Cancellation of the guarantee given on Mar. 22, 1956. In their amended further and better particulars of the statement of claim those plaintiffs said that No. 1 double bottom tank carried fuel oil from the time of the vessel's departure from Vancouver until after her departure from Balboa when at some time between about Feb. 13 and 27, 1956, this was transferred to No. 3 double bottom tank and No. 1 double bottom tank was then ballasted. No. 2 double bottom tank contained first fuel oil and then ballast during the voyage from Vancouver to San Pedro. At San Pedro, fuel oil was pumped into the tank notwithstanding that the ballast had not been completely pumped out. Some oil was used from this tank on departure from San Pedro until about Feb. 6, 1956, when the tank was filled up with ballast. Further oil was pumped into this tank at Balboa although again the tank had not first been pumped dry so that, on leaving Balboa, the tank contained fuel oil which was shortly afterwards found to be badly contaminated by salt water. No. 3 double bottom tank contained fuel oil on the vessel's departure from Vancouver part of which was used by the time the vessel arrived at San Pedro. At San Pedro, further fuel oil was taken in the tank, part of which was used during the voyage to Balboa. At Balboa, further fuel oil was taken in the tank part or all of which was thereafter used. Thereafter at some time before Feb. 27, 1956, oil was transferred from No. 1 to No. 3 double bottom tank which was afterwards found to be badly contaminated by salt water. If the Makedonia had been in a seaworthy condition on leaving Vancouver and throughout the voyage a quantity of about 100 tons of fresh water would have been the minimum sufficient for feeding the boilers, but in the condition in which she was, resulting in a consumption of 20 tons of feed water per day before the date of her breakdown, a far greater quantity would have been required. The plaintiffs said that the fact that fresh water for the boilers ran out on Feb. 25, 1956, was evidence of its insufficiency.
If none of the fuel oil had become contaminated by salt water and the vessel had otherwise been in a seaworthy condition, a quantity of about 1350 tons would have been sufficient. The plaintiffs said that the fact that, on Mar. 1, 1956, the vessel was left with no burnable fuel oil was evidence of its insufficiency. The previous casualty referred to in the statement of claim was the breakdown of the Makedonia on Oct. 31, 1955, while bound in ballast from Japan to Vancouver, as a result of which she drifted for about 13 days in heavy weather until picked up by the salvage tug Sudbury and towed to Vancouver. If the vessel had been in a seaworthy condition, a quantity of about 700 tons of sound fuel oil would have been the minimum sufficient. If the vessel had been in a seaworthy condition, a quantity of about 50 tons of fresh water would have been the minimum sufficient for feeding the boilers, but in the condition in which she was a far greater quantity would have been required. By their defence in the first action, the defendants said that the bills of lading provided that general average should be payable according to York/Antwerp Rules, 1950. The Canadian Water Carriage of Goods Act, 1936, and the Rules scheduled thereto, further provided as follows: 3. There shall not be implied in any contract for the carriage of goods by water to which the Rules apply any absolute undertaking by the carrier of the goods to provide a seaworthy ship. SCHEDULE Article IV 1. Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied . . . 2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from, (a) act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship;
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(q) any other cause arising without the actual fault and privity of the carrier, or without the fault or neglect of the agents or servants of the carrier . . . The defendants contended that if (which was denied) the vessel was unseaworthy in any of the respects alleged, the same did not arise or result from want of due diligence on the part of the defendants their servants or agents to make the vessel seaworthy, and, accordingly, the defendants were under no liability to the plaintiffs. The defendants further alleged that the plaintiffs suffered no damage by reason of any of the alleged items of unseaworthiness. The defendants said that the vessel was at all material times fully classed, having undergone her last annual survey in December, 1955, and her last special survey in June, 1953. At no time before or at the beginning of the voyage were the defendants, their servants or agents aware of the existence of any of the alleged items nor had they any reason to suspect such existence. The defendants contended that if (which was denied) the vessel was not properly manned as alleged, that did not arise or result from want of due diligence on the part of the defendants, in that the engine-room crew were at all times qualified or apparently qualified to undertake their duties, and, accordingly, the defendants were under no liability to the plaintiffs. The defendants admitted that the vessel called at the port of Balboa for the purpose of bunkering on or about Feb. 11, 1956, but contended that the insufficiency of fuel did not arise from want of due diligence on the part of the defendants in that on leaving Balboa the fuel oil on board appeared to be sound and sufficient for the voyage, and had been obtained from reputable suppliers; on leaving Vancouver the vessel had on board 323 tons of fuel oil; she took on a further 643 tons at San Pedro, and a further 368 tons at Balboa, and, accordingly, the defendants were under no liability. The defendants said that the cause of the breakdown and towage was the bad quality of some or all of the fuel oil, which the defendants had no means of ascertaining save by user or attempted user. The defendants said, alternatively, that the fuel oil became contaminated by reason of the failure of the defendants' servants or agents properly or at all to sound and/or empty Nos. 2, 7 and 8 double bottom tanks before hunkering at San Pedro on Jan. 28, 1956,
and, in the further alternative, that the contamination was caused by the failure of the engineers in the course of the voyage to operate the vessel's pumps and cocks so as to keep sea water out of the vessel's fuel tanks. Accordingly, the defendants contended that on Art. IV (2) (a) and (q) of the Hague Rules as incorporated in the bills of lading excused them from responsibility for the breakdown and towage. The defendants also contended that if the breakdown and towage were due to any fault on their part they would rely on Rule D of the York/Antwerp Rules, 1950. By their reply, the plaintiffs in the first action said that if the defendants' servants or agents failed properly or at all to sound and/or empty Nos. 2, 7 and 8 double bottom tanks before bunkering at San Pedro on Jan. 28, 1956, whereby the fuel oil became contaminated, the Makedonia was unseaworthy and/or not properly equipped or supplied on leaving San Pedro in that: (a) The fuel oil contained in one or more of double bottom tanks Nos. 2, 7 and 8 was mixed with such a quantity of salt water as to be unburnable. (b) There was an insufficient quantity of sound fuel oil to enable her to reach London. Those plaintiffs further said that on the true construction of Rule D of the York/Antwerp Rules, 1950, the defendants were precluded by their failure to provide a seaworthy ship from claiming any contribution in general average, and contended that they were entitled to sue the defendants for the damage caused by such failure. According to the statement of claim of the plaintiffs in the second action, under 191 bills of lading dated in Vancouver on various dates in January, 1956, and signed by the master or agent of the defendants' steamship Makedonia, there were shipped in good order and condition on board the Makedonia, for carriage to ports in the United Kingdom, for reward to the defendants, numerous consignments of timber and one consignment of prime unbleached kraft. Those plaintiffs said that it was the duty of the defendants as carriers for reward and the defendants by the bills of lading expressly contracted to deliver the goods at their respective ports of discharge in the same good order and condition as they were in when shipped.
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Those plaintiffs said, alternatively, that it was expressly provided by Clause 1 of the conditions printed on the reverse of all the bills of lading that the bills of lading should have effect subject to the provisions of the Water Carriage of Goods Act, 1936, of the Dominion of Canada, and that that Act should be deemed to be incorporated therein. After referring to Art. III (1) and Art. IV (1), those plaintiffs said that Art. III (2) provided that the carrier should properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. Those plaintiffs said further that on the true construction of the Rules, the defendants were bound to exercise due diligence to make the Makedonia seaworthy and properly to man, equip and supply her before and at the beginning of each bunkering stage of the voyage, or, alternatively, that the defendants impliedly warranted that before and at the beginning of each bunkering stage they would exercise due diligence to make the Makedonia seaworthy and properly to man, equip and supply her for that stage. Those plaintiffs alleged that, on leaving the ports of shipment, the Makedonia was unseaworthy in respects (lettered "a" to "p") similar to those (lettered "a" to "m") alleged by the plaintiffs in the first action (see pp. 318 and 319 ante). The plaintiffs in the second action alleged that by reason of that unseaworthiness, on and after Feb. 17, 1956, the Makedonia had difficulty in raising sufficient steam to proceed and on Mar. 1, 1956, finally broke down and became disabled, owing to lack of steam, in the Atlantic Ocean about 870 miles from Ponta Delgada, which was the nearest port, and, by reason of her list and the fact that she was tender, her situation in the North Atlantic in winter was rendered even more perilous than it would otherwise have been. Those plaintiffs said that, owing to the vessel's disablement, it was necessary for her to accept salvage services. By reason of the unseaworthiness due to her having reduced her cable, it was not possible for the Makedonia to be towed by a sister ship, the North Queen, which reached her on Mar. 3, 1956, with the result that it was necessary to accept the services of the Agios Georgios V which reached the Makedonia on Mar. 5, 1956, and proceeded to tow her to Ponta Delgada.
Those plaintiffs also said that it was necessary (a) in order to raise steam in an attempt to transfer sufficient chain from the port anchor to the starboard anchor to enable the North Queen to take the Makedonia in tow, to jettison a quantity of timber from the latter vessel's cargo, and (b) in order to raise steam for her steering and generator, to burn a quantity of her cargo. Those plaintiffs alleged that, by reason of such jettison and burning and in breach of their duty and contracts, the defendants failed to deliver all the goods shipped, but delivered a number of consignments short of various quantities of timber whereby a number of the plaintiffs suffered loss and damage. Also those plaintiffs' goods became liable for salvage charges and costs whereby those plaintiffs suffered loss and damage. Before the arrival of the Makedonia in London on or about Mar. 21, 1956, the defendants demanded and refused to release those plaintiffs' goods without general average deposits or guarantees of payment of such contributions to general average as might be found due in respect of their goods. Accordingly, in March, 1956, guarantees of such payment were given by or on behalf of those plaintiffs in order to obtain the release of their goods. On or about Jan. 27, 1960, the defendants, by their agents, Bennett & Co., requested payment by those plaintiffs of general average contributions. Those plaintiffs said that any general average expenditure which might have been incurred was caused by the fault of the defendants in providing a vessel which was unseaworthy in the respects alleged in the statement of claim, in consequence of which those plaintiffs were not liable to pay the contributions or any part thereof, and further, that the fourth plaintiffs Les Fils de Bechara Karam were entitled to repayment by the defendants of the sum of 243 6s. 5d. paid by them on Jan. 28, 1960, as their contribution without prejudice to the ultimate determination of liability. The plaintiffs in the second action claimed: (1) Judgment against the defendants and their bail for the sums due to shortage on discharge and loss on that account with interest thereon at five per cent. per annum from the dates of discharge.
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(2) Judgment against the defendants and their bail for the sums paid on account of salvage award and costs, with interest thereon at five per cent. per annum. (3) A declaration that those plaintiffs were not liable to contribute any sum in respect of general average and in the case of the fourth plaintiffs' payment of the sum paid by way of general average contribution, with interest thereon at five per cent. per annum from Jan. 28, 1960. (4) Cancellation of the guarantees given in March, 1956. (5) A reference, if necessary, to the Admiralty Registrar assisted by merchants. In their defence in the second action, the defendants referred to the Canadian Water Carriage of Goods Act, 1936, and alleged that their obligation in relation to seaworthiness under the Rules was to exercise due diligence before and at the beginning of the voyage to render the vessel seaworthy, and for this purpose the voyage on a true construction of the Rules in each case began at the port of shipment named in the respective bills of lading. Subject to the fulfilment of that obligation, the defendants were by virtue of Art. IV (1) of the Rules under no liability for loss or damage arising or resulting from unseaworthiness. The defendants contended that if (which was denied) the vessel was unseaworthy in any of the respects there alleged, it did not arise or result from want of due diligence on the part of the defendants, their servants or agents to make the vessel seaworthy, and, accordingly, the defendants were under no liability to the plaintiffs; and further that those plaintiffs suffered no damage by reason of any of the alleged items of unseaworthiness. The defendants repeated their defence in the first action (see p. 321 ante), and further contended that if the vessel was unseaworthy in any of the respects alleged in the statement of claim, it did not arise or result from want of due diligence on the part of the defendants, their servants or agents to make the vessel seaworthy, and, accordingly, the defendants were under no liability to those plaintiffs, and, further, that those plaintiffs suffered no damage by reason of any of the alleged items of unseaworthiness. In relation to those bills of lading which covered cargo carried on deck, the defendants relied on Clause 6 printed on the
reverse of the bills of lading as exempting them from any liability for any loss or damage to such cargo, howsoever caused, and contended that they were under no liability in respect of such deck cargo. By their counterclaim, the defendants contended that arising out of or in connection with the breakdown and towage they intentionally and reasonably made or incurred extraordinary sacrifices or expenditures for the common safety for the purpose of preserving from peril the vessel and her cargo, and that, accordingly, they were entitled to claim general average contributions from the respective plaintiffs as set out in an average adjustment drawn up by Bennett & Co., dated Jan. 22, 1960. The defendants counterclaimed: (i) A declaration that they were entitled to recover general average contribution from the plaintiffs to the extent of their due proportions as set out in the adjustment of Jan. 22, 1960; (ii) Interest. By their reply and defence to counterclaim, the plaintiffs in the second action alleged that if the defendants' servants or agents failed properly or at all to sound and/or empty Nos. 2, 7 and 8 double bottom tanks before bunkering at San Pedro on Jan. 28, 1956, whereby the fuel oil became contaminated, the Makedonia was unseaworthy and/or not properly equipped or supplied on leaving San Pedro in that: (a) the fuel oil contained in one or more of double bottom tanks Nos. 2, 7 and 8 was mixed with such a quantity of salt water as to be unburnable; and (b) there was an insufficient quantity of sound fuel oil to enable her to reach London. Those plaintiffs said that on the true construction of the York/Antwerp Rules, 1950, the defendants were precluded by their failure to provide a seaworthy ship from claiming any contribution in general average, and that those plaintiffs were entitled to sue the defendants for the damage caused by such failure. Those plaintiffs said that no admission was made as to the reasonableness, amount or purpose of any sacrifice or expenditure made or incurred by the defendants, and denied that the defendants were entitled to claim general average contributions from the respective plaintiffs. Those plaintiffs alleged that if the defendants were paid the general average contributions, those plaintiffs would be
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entitled to recover an amount equivalent thereto as damages for the defendants' breaches of contract whereby in order to avoid circuity of action the defendants were not entitled to the contributions. Mr. H. V. Brandon, Q.C., and Mr. J. F. Willmer (instructed by Messrs. Clyde & Co.) appeared for the plaintiffs; Mr. R. A. MacCrindle and Mr. M. J. Mustill (instructed by Messrs. Holman, Fenwick & Willan) represented the defendants. Mr. BRANDON, for the plaintiffs, said that the breakdown of the Makedonia, an oil-fired steamship, formerly the Empire Squire, was due to contamination of oil fuel, and lack of feed water for her boilers. As a result she had to take advantage of salvage assistance in the form of towage to the Azores. An award of 44,000 against ship and cargo was made by the Lloyd's appeal arbitrator. In addition, general average sacrifices were made, and general average expenditure was incurred because of the breakdown. The general average sacrifices consisted of: (1) A jettison of part of the forward deck cargo in order to trim the ship by the stern in an effort to pump out the remains of oil fuel in the after double bottom tank. (2) The burning of cargo, mostly deck cargo, but some under deck, as fuel for the boilers so as to provide steam for the auxiliaries. The general average expenditure consisted mainly in expenses at the port of refuge, Ponta Delgada. In consequence, the cargoowners had to pay their share of the salvage award, interest and costs, and had claims made against them for general average contribution in respect of which they had given guarantees. COUNSEL said that the question for the decision of the Court was whether the breakdown of the ship was caused by the actionable fault of the defendants. COUNSEL said that the Makedonia had trouble on her previous voyage from Japan to Vancouver in ballast, when her propeller became loose in the shaft and she had to be towed into Vancouver by a salvage tug, arriving on Dec. 11, 1955. She was put in dry dock, where various repairs were carried out, including repairs to piping in the fuel tanks, and defective pumps.
COUNSEL said that it was clear from the ship's documents that, at San Pedro and Balboa, oil was introduced into No. 2 tank when it already contained salt water ballast. The vessel arrived at Balboa on Feb. 11 and sailed on Feb. 12 with 851 tons of fuel oil and 200 tons of boiler feed water. By Feb. 25, the boiler feed water was exhausted, due mainly to loss of steam from the engine packing, which resulted in a consumption of feed water of 20 tons a day. On Feb. 26, the engineers reported that the evaporator output was insufficient, and that they were using sea water for the boilers. Lack of steam stopped the engines on Feb. 29. The engines stopped finally on Mar. 1, and the vessel broke down finally in a position lat. 31 39 N., long. 42 17 W., 870 miles from Ponta Delgada. The engineers reported that they could not raise enough steam for the auxiliaries, and the master ordered the crew to cut up deck cargo as fuel. On Mar. 2, the Makedonia remained disabled and adrift. On Mar. 3, the North Queen, a sister ship, arrived and made a towage connection which broke. On Mar. 5, the turbo-electric tanker Agios Georgios V arrived and offered towage on Lloyd's Standard Form of Salvage Agreement, which was accepted. During the tow to Ponta Delgada more cargo was cut up and burned. Some repairs were carried out, and the Makedonia arrived eventually in London on Mar. 21. COUNSEL said that he put the plaintiffs' case in this way: 1. The liability for salvage and the claims for general average contribution, and the loss of cargo by jettison or burning were caused by the breakdown; 2. The breakdown itself was caused by lack of usable fuel oil and lack of feedwater; 3. Each of these deficiencies was caused by the vessel's unseaworthiness. Mr. BRANDON cited, among other authorities, E. Timm & Son, Ltd. v. Northumbrian Shipping Company, Ltd., (1937) 58 Ll.L.Rep. 45, and said that if the doctrine of bunkering stages did not apply to the present case, there must be enough bunkers for the whole voyage. One could not split bunkers without also splitting the need for due diligence at each port of call. If by voyage, it was meant the whole voyage, it was necessary to use due diligence to provide sufficient bunkers at
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the original port to go the whole voyage. It was the owners' duty to exercise reasonable foresight. Prima facie "voyage" meant the journey from the loading port to the discharging port. The shipowner could divide it into stages, but if he did, his obligations attached to successive stages. Mr. MACCRINDLE, for the defendants, handed in two amendments, alleging that the cause of the breakdown was the failure of the engineers to lubricate the engine properly, and contending that the owners had exercised due diligence in the selection of the engine-room crew. Mr. BRANDON said that he would not resist the amendments, subject to comment, and preserving his position on costs. Mr. MACCRINDLE submitted that there were three questions for decision: (1) Was the vessel unseaworthy? (2) If so, did the unseaworthiness cause the loss-the towage to the Azores and the expenses at the port of refuge? (3) If so, did the owners fail, both before and at the beginning of the voyage, to exercise due diligence to make her seaworthy? The defendants' case was that the answers to these questions should be in the negative. In only the third question was the burden of proof on the defendants, and that involved the construction of a number of contracts contained in the bills of lading. These contracts contained certain clauses. Some of them set out in extenso, and others incorporated by reference. Among these latter were the Hague Rules, Art. IV (1), of which contended COUNSEL, held the key to the legal issue. Because of Art. IV (1), if he had exercised due diligence in making the ship seaworthy before and at the beginning of the voyage, he was not liable for unseaworthiness. The alleged physical defects in the ship fell into three classes: (1) Water or steam; (2) fuel; (3) stability and pumps. The first and third classes did not, in COUNSEL'S submission, cause the breakdown. The real cause was the contamination of fuel due to the negligence of those on board. It was the defendants' case that the ship was physically seaworthy. If they were wrong on that point, they contended that they had exercised due diligence by ordering the repairs carried out at Vancouver.
On the question of unseaworthiness through the alleged incompetence of the crew, COUNSEL argued that the Makedonia was one of the simplest types of ship to operate. No special knowledge was required, and there was no suggestion that the engine-room was undermanned, or that the engineers were physically unfit for their duties. The debacle on this voyage was caused by several acts of negligence by one or more of the engineers. In COUNSEL'S submission the question of competence had to be approached in the same way as an action for physical unseaworthiness. One had to find not only incompetence, but that incompetence caused the casualty. Continuing his argument on the exercise of due diligence in the selection of crew, COUNSEL submitted that a shipowner's position was more favourable under a Hague Rules contract than under common law, and that he was not liable if ordinary care had been taken to make the ship seaworthy. COUNSEL said that if his Lordship were to form the view that inadequate standards had been exercised, he would ask his Lordship to say in terms what more could have been done, not only for the guidance of the Makedonia's owner, but for all other shipowners as well. COUNSEL said that different considerations applied to deck cargo to which the Hague Rules did not apply. The parties were at liberty to contract in whatever terms they wished as to obligations and exceptions. Clause 6 of the bill of lading laid down that the goods were carried at sole risk of the owner and that the carrier was not liable for anything in relation to deck cargo, unless it amounted to a breach of contract. COUNSEL said that the argument against him was that while Clause 6 was perfectly adequate in relation to claims for physical damage to deck cargo-now abandoned- it was not adequate to protect him from the claim that the cargo-owner had suffered, or would suffer pecuniary damage if he had to pay general average or salvage. His answer was: (1) The clause on the true construction was wide enough to cover that sort of damage; and (2) even if
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it was only restricted to physical loss or damage, that was not enough in the circumstances to defeat the counterclaim for general average. Mr. BRANDON said that his case rested on four main propositions: (1) The plaintiffs' claims arose out of the breakdown of the vessel which, he thought, was not disputed; (2) The breakdown was caused by (a) lack of feed water, which was disputed; and (b) lack of burnable fuel, which was conceded, though there was disagreement as to whether that was due to contamination at Balboa, or successive contaminations after leaving Balboa. (3) Both these deficiencies were caused by unseaworthiness, which was wholly disputed. (4) In relation to under-deck cargo claims, the defendants had failed to prove that due diligence was exercised in respect of seaworthiness, which was also wholly disputed. This was a case, said COUNSEL, where a ship which should have had plenty of feed water and bunkers to reach London from Balboa without replenishment, broke down for want of both before she got even half-way. The material facts were, or ought to have been, within the knowledge of the defendants and those employed by them, yet apart from the chief engineer, whose evidence was unreliable, not a single witness had been called from the ship to say what did happen or did not happen. The burden of proof lay on the defendants to show, if unseaworthiness in any respect was proved, that they had exercised all normal and reasonable care to prevent that unseaworthiness. The principle that due diligence must be exercised applied, COUNSEL submitted, not only to the physical condition of the ship involving repairs and maintenance, but equally to the task of manning the ship properly. The main heads of unseaworthiness were: Improper manning of the engine-room, water in No. 2 tank on leaving Balboa, and leakages in the main engine packings. COUNSEL submitted that the engineers were grossly inefficient, and that not
enough time had been given to their selection. All the sources of information available should have been used. Of the engine repairs carried out at Vancouver, COUNSEL submitted that if they were inadequate, then due diligence could not have been exercised. Opening his submissions on law, Mr. BRANDON said that the first question was the doctrine of stages in relation to the Hague Rules. The true basis of the common-law doctrine of stages, he submitted, was contained in three propositions. 1. The ship must be seaworthy at the commencement of the voyage. 2. So far as bunkers were concerned, the requirements could be complied with in two ways: (a) by having enough bunkers for the whole voyage at the loading port; or (b) by having enough bunkers at the loading port for the first stage, and taking on enough further bunkers for each sucessive stage. 3. If the carrier chose to comply with the requirement in the second way, the ship's initial seaworthiness was conditional on sufficient bunkers being taken at subsequent bunkering ports. If the condition was fulfilled, the ship was seaworthy at the commencement of the voyage. If not fulfilled, the effect was retrospective and the ship was not seaworthy at the commencement of the voyage. For instance, a surveyor might give a certificate of seaworthiness for the voyage subject to the ship doing something at the next port. If the condition was performed, then retrospectively the ship was seaworthy right from the start. Conversely, if the condition was not performed, the ship was not seaworthy. (The Vortigern, [1899] P. 140.) COUNSEL submitted that where words in the Hague Rules had been the subject of previous decisions they should be interpreted in the same way. Common law involved a concept of conditional seaworthiness, and an implied warranty of seaworthiness at the beginning of the voyage. It was the plaintiffs' case that the ship did not have enough bunkers at the loading port for the voyage and, that prima facie the ship was unseaworthy. This could be rebutted by the provision of
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sufficient bunkers at successive stages. In the present case the owners had failed to do this, by the mix-up of bunkers at Balboa. Mr. MacCrindle's submission that Clause 6 of the bill of lading was wide enough to cover pecuniary and physical loss or damage made it essential to determine the true construction of the clause. COUNSEL put forward six possible heads of damage: Physical loss of cargo by jettison; physical damage to cargo by oil or water; salvage liability due to the need for towage; liability to contribute to general average in respect of port of refuge expenses; incurring of expenses in transhipment and oncarrying cargo, due to the ship being so badly damaged as to justify the carrier in abandoning the voyage; loss by delay, e.g., loss of market. COUNSEL submitted that the clause covered only physical loss or damage and pecuniary loss caused by delay. It was significant in construing the clause, that the words "or delay" should have been added. If the previous words had been sufficient to cover pecuniary loss, why were the words "or delay" added? The clause, as a whole, did not extend to pecuniary liability. Therefore, it did not extend either to general average or to matters of salvage. Mr. MACCRINDLE said that it was true that that common-law warranty attached at the commencement of the voyage, but the effect of the doctrine of stages was to impose recurring obligations. There was no doctrine of conditional or retrospective unseaworthiness. To suggest that the owners, who had done all that the law required of them before leaving Vancouver, should by subsequent events be deemed not to have done all that was required of them was to impose on a commercial contract of affreightment a doctrine of such subtlety that it would take some understanding in Lincoln's Inn or the House of Lords itself. COUNSEL said that there were express words in the Hague Rules which said that he was not liable for unseaworthiness at any stage, if at the beginning of the voyage he exercised due diligence. Judgment was reserved.
JUDGMENT Mr. Justice HEWSON: In this judgment, I am dealing with two actions which were consolidated, No. 1 action, Folio 64, 1957, No. 625, and the second action, Folio 110 of 1961, No. 1326. In the first action, the plaintiffs are the owners of seven parcels of timber under seven bills of lading; in the second action, the plaintiffs are the owners of 191 parcels of timber under 191 bills of lading. All the cargo was shipped early in 1956 in the Makedonia at Vancouver and other Western Canadian ports in the vicinity of Vancouver, for carriage to United Kingdom ports. All the cargo in the first action was carried under deck. Of the cargo in the second action, some was carried under deck and some was carried on deck. The Makedonia is a single screw steamship of just over 7000 tons gross, fitted with triple expansion engines of 2500 i.h.p. She was originally a coal burner and was converted to oil burning in Naples, in 1949. Briefly, the claims arise in the following circumstances. In the course of the voyage from Western Canadian ports to the United Kingdom, the Makedonia broke down in mid-Atlantic in an approximate position lat. 31 39 N., long. 42 17 W., about 870 miles to the southward and westward of the Azores. It is alleged that she broke down as a result of two causes, firstly, contamination of oil fuel and, secondly, the lack of feed water, that is fresh water, for the boilers. As a result of this breakdown she was entirely immobilized and had to take salvage assistance under Lloyd's Standard Form of Salvage Agreement to the Azores, for which an award of 44,000 was made against the ship and the cargo. The plaintiff owners in these actions have had to pay their respective shares of the award, interest and costs, and there are also claims against the plaintiffs for general average contributions, in respect of which guarantees have been given by them except in the case of one plaintiff, who has paid his contribution. The general average sacrifices come under two heads: firstly, the jettisoning of some forward deck cargo which was made to trim the vessel by the stern in an effort to pump the remains of fuel oil in No. 7 double
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bottom tank; secondly, the burning of some of the timber both from on deck and under deck as fuel to provide steam for the auxiliaries during the towage to the Azores. There is also general average expenditure, which is chiefly in respect of, if not entirely in respect of, the expenses of the port of refuge. Now, the port of refuge was Ponta Delgada in the Azores. The plaintiffs in No. 1 action claim to recover as damages from the defendants their share of the salvage award, interest and costs which they paid and also for a declaration that they are not liable to make a general average contribution, and they ask for a cancellation of the guarantees they have given. In the second action, the plaintiffs make similar claims with the addition that certain of them also claim for the loss of some of the cargo by reason of jettisoning and burning. There were other small claims by some of the plaintiffs for damage to cargo by oil and/or water, but I am told that these have been disposed of by settlement. In the second action, there is a counterclaim by the defendants for a declaration that they are entitled to recover general average contribution from the plaintiffs to the extent of their contributions as set out in the adjustment. The adjustment is dated Jan. 22, 1960. There are certain admissions in these actions and they are as follows: that the plaintiffs have a good title to sue; that the goods mentioned in the statement of claim alleged to have been shipped in good order and condition were so shipped; that salvage services were rendered to the ship and cargo and that an award of 44,000 was made, and that the plaintiffs have paid their respective shares; as to general average, the adjustment is agreed. These documents show that claims have been made for the plaintiffs' share. All the plaintiffs' parcels were carried under similar bills of lading and all parcels were shipped at Canadian West Coast ports. Clause 1 in the bill of lading is the clause paramount which, so far as these parcels are concerned, incorporates the Water Carriage of Goods Act, 1936, of the Dominion of Canada into the contracts of carriage, and the effect of this is, therefore, that the Hague Rules apply to the under-deck cargo and do not apply to the deck cargo. That is conceded. The deck cargo is specially provided for by Clause 6 of the bill of lading, and I will deal with that in due course.
Clause 18 of the bill of lading-when I say "bill of lading", I mean all bills of lading - provides that general average should be paid according to the York/Antwerp Rules of 1950, and Clause 21 that, subject to Clause 1, the paramount clause, and Clause 18, the bill of lading, no matter where issued, shall be construed and governed by English law as if the vessel sailed under the English flag. Now, Sect. 3 of the Canadian Act of 1936 provides that there shall not be implied in any contract for the carriage of goods by water to which the rules apply, any absolute undertaking of the carrier of the goods to provide a seaworthy ship. The rules referred to are those contained in the schedule to the Act which, with some slight differences which are immaterial to this case, are the same as those contained in the schedule to the English Carriage of Goods by Sea Act, 1924. Art. III (1) of the schedule provides that the carrier shall be bound before and at the beginning of the voyage to exercise due diligence: among other things, to make the ship seaworthy and properly man, equip and supply the ship. Art. IV (1) provides that neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and secure that the ship is properly manned, equipped, supplied and so on, in accordance with the provisions of Art. III (1). Art. IV (1) also provides that whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this section. In Art. IV (2): neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from many things, including the act, neglect or default of the master or others in the navigation or management of the ship. Now, it is beyond dispute that, on Mar. 1, 1956, when in the North Atlantic in the position to which I have already referred, the Makedonia was unable to continue her voyage under her own power and had to take salvage assistance. She was towed to Ponta Delgada and the liability for salvage, general average contribution, and loss of cargo by jettisoning and/or burning were caused by, and stemmed from, this breakdown.
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Before proceeding to the consideration of whether the breakdown was caused by actionable fault on the part of the defendant shipowners, I propose to decide firstly what "voyage" under Art. III (1) means. There has been much argument about it. Mr. Brandon submitted that the Hague Rules substituted, for the absolute warranty of seaworthiness at each bunkering stage at common law, a qualified obligation upon the owners to exercise due diligence to make her seaworthy at each bunkering port. If she was unseaworthy on leaving any bunkering port through defective bunkers being shipped there or through loading good fuel oil into tanks already containing sea water, thereby contaminating the fuel and making it unburnable, the owners are responsible for the lack of due diligence on the part of the engineers at the beginning of that stage and they cannot, therefore, rely on the exceptions in Art. IV (2). There is no decision on what is meant or implied by "voyage" in Art. III (1) of the Hague Rules. I have already referred to the common law and I shall make some further reference to it. At common law, the voyage was, where necessary to the shipowner, divided into a series of stages, but that was in relation to the warranty of seaworthiness; it did not alter the definition of "voyage". There may have been several stages, but there was only one voyage. Mr. Brandon argued that, at common law, if insufficient bunkers were taken at any intermediate bunkering port the effect was retrospective and the ship was not seaworthy at the beginning of the voyage. In support of this, he referred me to The Vortigern, [1899] P. 140. At p. 155 of that report, Lord Justice A. L. Smith, in effect, said that if the shipowner, from the necessity of the case, divided the voyage into stages to bunker, he did not by so doing abandon the warranty of seaworthiness which attached at the commencement of the voyage and therefore the existing warranty (which I, myself, shall call the original warranty) was extended to the beginning of each stage. I see no essential difference between what Lord Justice A. L. Smith said in The Vortigern, sup., and what Lord Wright said in Northumbrian Shipping Company, Ltd. v. E. Timm & Son, Ltd., [1939] A.C. 397; (1939) 64 Ll.L.Rep. 33. Lord Wright said (ibid., at pp. 404 and 38 of the respective reports): . . . Thus the warranty of seaworthiness is sub-divided in respect of bunkers.
Instead of a single obligation to make the vessel seaworthy in this respect, which must be satisfied once for all at the commencement of the voyage, there is substituted a recurring obligation at each bunkering port . . . In the Northumbrian Shipping Company case, sup., Sect. 6 of the earlier Canadian Water Carriage of Goods Act-the Act of 1910-applied. This section provided that if the shipowner exercised due diligence to make the ship in all respects seaworthy and properly manned, and so on, he should not be responsible for any loss resulting from faults or errors in the navigation of the ship. The House of Lords held that that qualified obligation referred to by Mr. Brandon applied to the owners at each bunkering stage, that is, the owners to exercise due diligence regarding bunkers at each stage. Has the different wording of the Hague Rules or the Rules of the later Canadian Act of 1936 altered the position? Mr. Brandon argued that the importation of the words "before and at the beginning of the voyage" has added nothing and that the words are simply declaratory of the law as it was at the time or up to the time the Rules were formulated. In my view, the position in this country before the 1924 Act was clear without any further words. Mr. Brandon argued that "seaworthy at the beginning of the voyage" had already been defined by a long line of cases and therefore the qualified obligation to use due diligence of seaworthiness at each stage should be read into the words. Now I recall that the Hague Rules were the outcome of international conference, and that the words in an English statute should be given their plain meaning subject to any particular meaning which our Courts have, in former times imputed to them, as was done by the House of Lords in Gosse Millerd, Ltd. v. Canadian Government Merchant Marine, Ltd., [1929] A.C. 223; (1928) 32 Ll.L.Rep. 91-in respect of the words, "management of the ship". That, as I see it, is construing the meaning of a phrase or a set of words; it is not the application of a doctrine. I see no obligation to read into the word "voyage" a doctrine of stages, but a necessity to define the word itself. The word does not appear in the earlier Canadian Act of 1910. "Voyage" in this context means what it has always meant: the contractual voyage from the port of loading to the port of discharge as declared
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in the appropriate bill of lading. The rule says "voyage" without any qualification such as "any declared stage thereof". In my view, the obligation on the shipowner was to exercise due diligence before and at the beginning of sailing from the loading port to have the vessel adequately bunkered for the first stage to San Pedro and to arrange for adequate bunkers of a proper kind at San Pedro and other selected intermediate ports on the voyage so that the contractual voyage might be performed. Provided he did that, in my view, he fulfilled his obligation in that respect. I find that the shipowner exercised due diligence to ensure sufficient and proper bunkers at each stage of the voyage. Had some of the fuel not become contaminated by sea water and become unburnable I am satisfied that the Makedonia would have been able to complete her contractual voyage. On this voyage not only did she exhaust her usable fuel oil on Mar. 1, 1956, but on Feb. 25, 1956, she exhausted her supply of fresh water. Mr. Brandon submitted that in considering bunkering, fresh water should also be taken into account: it is no good putting a fire under an empty kettle. As a general proposition I agree. The same foresight and the same diligence should be exercised by owners with regard to water for boilers as with fuel for the furnaces. In considering reasonable provision of water for boilers regard must be had to the type of boilers and their daily consumption; they must have regard to such matters as to whether there is a condenser, and its condition, and an evaporator and its condition. In this ship there were fitted three Scotch boilers which were capable in an emergency of running on a salt-water feed, and I find that the daily average consumption of fresh water for all purposes in the Makedonia was about eight tons. When she left her last intermediate port, at Balboa, she had taken in there 200 tons of fresh water. I have no reason to believe that she was completely out of fresh water on her arrival at Balboa, and I find, on the probabilities, that she left Balboa with her capacity of fresh water, which was about 250 tons which, as far as could reasonably have been foreseen, was ample for the voyage to London. Now, I have had considerable evidence from surveyors and those qualified to speak on these matters as to the use of salt water in Scotch boilers. Mr. Rolland, who was called by the plaintiffs on one point only,
which had nothing to do with this question, informed me that 30 years ago Scotch boilers were fairly common and that many companies ran them on salt water only. Mr. Leach, who was one of the experts called on behalf of the defendants, and who was fully examined and cross-examined on this matter, told me that in an emergency he had himself used salt water in the boilers at sea, though he was far from recommending its general use. He said that in ordinary circumstances he would not expect a ship of the type of the Makedonia-she is an Empire type-to use salt water in the boilers; nevertheless, she could voyage safely on it for about six weeks, provided there was a normal consumption of water in the boilers. If, because of an abnormal leakage of steam or loss of water, the consumption was increased from eight tons to about 20 tons per day then scaling would occur fairly rapidly and her safe voyaging period would be considerably reduced. With the rapid scaling the fuel consumption would increase, and increase from the normal average of 24 tons a day in this ship to a maximum of about 30 tons per day. As the consumption of fuel rose so would there be a loss of speed in the ship owing to the reduced generation of steam because of the scaling on the tubing. He said that such usage of salt water in the boilers would call for care, namely, to see that the density in the boilers did not exceed what he called four over 32. This, he said, could be achieved by blowing down two or three or four times a day. The British Standards Institution recommendation was to blow down at four over 32. That recommendation advised that the density must not exceed four over 32 because at higher densities you might get crystalization of common salt and of other salts which dissolve in water. While using salt water in the boilers of the Makedonia from Feb. 26 until Mar. 9, which is two days before her arrival at Ponta Delgada, the density never exceeded 314 over 32. The salinity did not rise as high as four over 32, so it appears as if the engineers blew down as often as necessary over the period of about 13 days. It is quite true that during those 13 days the vessel was not steaming. She was either adrift as a hulk in the Atlantic or being towed towards the Azores, and in such circumstances the consumption of water was nothing like as high as it would have been if she had been
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steaming. Nevertheless, the engineers seem to have known what to do in such circumstances. Mr. Leach's view, which I accept, was that if the vessel was half-way across the Atlantic and ran out of fresh water with very little fuel left, her best course was to use sea water and conserve her fuel rather than to expend it on the evaporator. I have little doubt, after considering all the evidence I have heard on the use of salt water in the circumstances I have had to consider, that the Makedonia could have completed her voyage to the United Kingdom using salt water provided she had had sufficient burnable fuel on board. Now, in the course of this somewhat lengthy hearing I have considered what course the vessel was on after leaving the Windward Passage. She was apparently on a course to pass fairly close to the Azores. In such circumstances, it would have been more prudent for her to call there and replenish her fresh water. Even if there had been no fuel trouble she might well have done so; she could certainly have reached the Azores on salt water if only she had had sufficient burnable fuel. In those circumstances there would have been no need for towage assistance. It is perfectly true that the master of the vessel entered in his log-book, or someone entered in the deck log-book, on Feb. 28, 1956, that is, three days after running out of fresh water and two days before the final expenditure of burnable fuel oil: For reasons of safety of the vessel, the cargo and those on board I am heading to Azores in view of the condition of the boilers and of the fuel oil. But, on Mar. 11, which was the day of the ship's arrival at Ponta Delgada, there is entered in the log-book, which is signed by the master: The cause of the Makedonia towage and the arrival at this port is the quantity of 369 tons of fuel oil taken at Balboa and the impotence [sic] of the competent persons to know in time that the fuel oil could not burn, so that vessel may have proceeded by her own power. I think that for "impotence" one should read "inability". Two days after he had run out of fresh water he sent a cable to his owners in London which I shall read:
. . . HAVE HEAVY WEATHER AND SERIOUS TROUBLES WITH FUEL AND FEED WATER STOP TANK THREE APPROXIMATE QUANTITY200 TONS MIXED WITH SEA WATER SUSPECT FROM PIPE LEAKING TANK ONE STOP ONLY CLEAN FUEL FOR CONSUMPTION150 TONS TANK SEVEN STOP SUFFICIENT QUANTITY FUEL MIXED WITH BALLAST AFTER TRANSFER PUMP HAVE BEEN UNABLE DRAINING MORE FUEL AND FORCED FILLING THESE TANKS WITH BALLAST FOR VESSELS STABILITY STOP . . . In particular, I underline the next and final sentence: . . . FEED WATER CONSUMPTION OWING STEAM WASTING FROM MAIN ENGINE PACKINGS OVER 20 TONS DAILY STOP
SUGGEST IMPERATIVE PROCEED AZORES FOR FUEL AND FRESH WATER PLEASE INSTRUCT.
I have no doubt that there was an abnormal consumption of fresh water after leaving Balboa; the consumption rose to about 20 tons per day and the evidence of that is in the wireless message I have just read. The question I have to answer is not whether she might have called at the Azores for fresh water, but whether the lack of it caused or materially contributed to the towage, and I find that it did not for the reasons I have already given. Now, during the course of the hearing, many matters were investigated, and properly so, and I should make some mention of them before I pass on to the matters which, in my view, really are important. Among the matters investigated were the state of the condenser, the evaporator and the heating coils. They were commented upon and their condition was thoroughly investigated by the plaintiffs. As to the leakage in the condenser, Mr. Foster, the surveyor who was called by the plaintiffs, agreed that any leakage from the condenser in this case could be ignored. As to the evaporator I have no convincing evidence that it was unserviceable, and the heating coils I find are immaterial in this case. The condition of the various pumps in the ship was properly investigated and examined. As the case proceeded, the number of pumps that really called for comment was gradually reduced, and I was left with three; the general service pump, which at some later stage of the case I was told was completely disconnected from the ballast and fuel lines, was not material.
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The ballast pump, which was overhauled at Vancouver, had a pretty thorough overhaul. Three months later it required attention on the River Tyne, but I have no reason to find it was not functioning on the voyage and in any event, if it were not, it is not really material to this case so long as the transfer pump was working properly. I find that the transfer pump worked satisfactorily throughout the whole of the material time. A considerable amount of time has been spent on the fact that there was an excessive leakage of steam between Balboa and the final breakdown. In fact, the abnormal consumption of fresh water continued, though at a rather reduced rate (15 tons a day), even after leaving Ponta Delgada. This was, among other things, caused by the scoring of the I.P. valve rod and the insufficiency of the packing in it and, as I find, in the piston rod packings. These packings were opened up at Vancouver before the ship sailed on her contractual voyage. The main engine H.P. and I.P. piston rod packings and the H.P., I.P. and L.P. valve packings were found to be in a most deteriorated condition-I quote from the report. Something was done about it, but what was done is not altogether clear. The chief engineer reported the condition as bad on arrival at Vancouver after crossing the Pacific, but he never concerned himself about the renewal of packings once he had reported it. He left it to the repairers-he told me so. This may have some bearing upon another aspect of this case which I shall have to consider later. I conclude that there was a certain amount of cobbling of these packings at Vancouver which was satisfactory enough for a short while, but that during the voyage such repairing as was done at Vancouver became less effective, causing some leakage in several packings in varying degrees. But even so, this does not, in my view, account for all the abnormal consumption of fresh water. It is highly probable that after leaving Balboa and before the breakdown in the Atlantic, and also after the departure of the Makedonia from Ponta Delgada on Mar. 14, some mistakes were made in the pumping of the fresh water, some of which went overboard. In my view, it was the lack of usable fuel oil which was the immediate cause of the breakdown. How did this come about? I must go briefly into the history of the voyage. On Jan. 21, 1956, the Makedonia left
Vancouver for the United Kingdom ports, laden with 8738 tons, chiefly of timber, and general cargo. She then had a draught of about 26 ft. 8 in. forward and 26 ft. 10 in. aft. She left with the declared intention of bunkering at San Pedro and Colon, but in fact that second bunkering port was changed and she bunkered at Balboa. She had 123 tons of fuel oil in No. 1, which is an undivided tank. She had about 140 tons in No. 3, which is a divided tank, and about 60 tons in the settling tank. Nos. 2, 7 and possibly 8 were ballasted. No. 6 tank, which I think has been referred to sometimes in this case (not by Counsel) as No. 4, contained fresh water. The voyage to San Pedro, a distance of about 1200 miles, was uneventful, and when she arrived there on Jan. 28, 1956, she had used oil from No. 3; the oil in No. 1 had not been touchedwhen I say No. 3 I mean No. 3 and settling tanks. At San Pedro she took on board 643 tons of fuel oil and she left San Pedro on the next day, Jan. 29. It was disposed as follows: No. 1 still with 123 tons of Vancouver oil; No. 2 with about 200 tons of fuel oil. The capacity of that tank is not less than 248 tons. According to a report made by Mr. Eleftheriou, who was one of the engineer superintendents sent out by the defendants to investigate matters in the Makedonia at Ponta Delgada, it was reported to him that it was impossible to pump out the remaining water ballast from No. 2 at San Pedro, so there was already some indeterminate amount of sea water in that tank when she left with fuel in it on Jan. 29. I do not think it was a large amount. In No. 3, there was also 200 tons, and the capacity of that tank is not less than 223 tons. In No. 7, there was 180 tons-again short of capacity; in No. 8, 60 tons, almost full; there was also some in the settling tank. Upon leaving San Pedro, this vessel had a 5 deg. list to starboard, and, during the passage to Balboa, the consumption of fuel and water was normal. Small lists are recorded on some days during the passage to Balboa. On Feb. 6, it is recorded that instructions were given for No. 2 tank to be filled for the stability of the vessel. Again I must refer, as I was so often during the hearing, to Mr. Eleftheriou's report, and he reports that it was claimed on one day, which was not specified, by the engine-room crew that the fuel oil in No. 2 could not be pumped out completely and the
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master ordered this to be pressed up due to the vessel's list of 13 deg. The log-books, to which I shall have to make further reference in this case, were not well kept and at times I suspect that they did not record all that occurred in this ship. I find it was on this day, namely, Feb. 6, 1956, that, because of the list, a considerable amount of slack oil could not be pumped out and the tank was pressed up with sea water. After this, there is no reference in the log-books to a list for the remainder of the passage to Balboa. On Feb. 11, 1956, she arrived at Balboa to bunker and, on this day, according to the fair log, when at anchor off Balboa, instructions were given to pump out the ballast in No. 2 and No. 4 and have them filled with oil. Now, No. 4 is not intended for oil; it is not fitted with heating coils and it is purely a ballast tank, so I am uncertain what is meant by No. 4. I am told it appears as No. 4 in the original, but it is just one more mystery in a case where many of the facts are obscure. The account in the log-book for Feb. 11 continues: when the pumping of No. 2 was completed she took a list of 10 deg. to starboard. I find that on this day, No. 2 was not completely pumped out, and I shall deal with this later. On the passage from San Pedro to Balboa, no oil had been worked from No. 1, but it had been worked from Nos. 2, 3, 7 and 8, all of which were slack on arrival at Balboa. It is little wonder, therefore, that the ship listed first one way and then the other on her passage. It is agreed by the witnesses called in this case that the proper way to work fuel tanks in a timber ship, which is prone to be tender, is to use the bunkers from one tank at a time to avoid slack tanks. As soon as one is exhausted it should be ballasted while they begin to draw fuel from the next tank. Mr. Eleftheriou said in the witness-box that he would expect competent engineers to see to the proper use of these tanks. It is quite obvious to me that these tanks were worked in the worst possible way. When the Makedonia arrived in Balboa, as I find, with about 60 tons of mixed water and fuel in No. 2, oil was taken, and, on Feb. 12, she left with ample oil for the last stage of her voyage. She left with about 864 tons: 123 tons in No. 1, the oil which had originally been put in at Vancouver, and 203 tons in No. 2. Mr. Eleftheriou dealt with the bunker situation in his report to which I have already referred and when questioned about it he
agreed that the remainder in the tank, namely, some 32 to some 37 tons, was ballast water. There were 215 tons in No. 3, about 200 in No. 7 and 60 tons in No. 8, and also fuel oil in the settling tanks. The situation on leaving Balboa was as follows: that the oil run into No. 1 at Vancouver was still untouched; that the oil in Nos. 2, 3, 7 and 8 contained a mixture of San Pedro and Balboa oil; No. 2 of course also contained sea water. After passing through the Panama Canal course was set across the Caribbean Sea for the Mona Passage. She left Colon on Feb. 13, 1956, and encountered heavy weather during the next few days. There were high head seas, sometimes described as mountainous, and strong head winds. The result was that on Feb. 16, the master gave up the attempt to make for the Mona Passage and decided to make for the Windward Passage, apparently to bring the wind and sea from ahead to broad on his starboard side to assist him in making better headway. I have, after considering the evidence in the log-books and after hearing the evidence of the surveyors, come to the conclusion that, by Feb. 17, oil and water in No. 2 became emulsified and that thereafter those on board the Makedonia were unable to obtain burnable oil from this tank. The record of the use of oil from the double bottom tanks is incomplete. As I have already said, no proper records were kept. This, in my view, was a grave reflection on the engineers. There were no systematic soundings of the fresh water or fuel tanks, and little confidence can be placed in such records as were kept, and little confidence can really be placed in such messages as were sent. The experts, with such facts as are available, have been unable to agree upon the order in which these tanks were worked. Mr. Eleftheriou, who investigated the matter, as I have said, on arrival at Ponta Delgada, said in his report that during the passage from Balboa to the Azores there were many manoeuvres of the tanks; the drawing and filling of different tanks which he was unable to ascertain. The chief engineer, who gave evidence in this case, could remember very little that was helpful. In the course of that last stage of the voyage, oil was used from No. 1 and apparently gave full satisfaction; some was used from No. 8, some from No. 3 and some
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from No. 7. It may well be, too, that before the emulsification was established, oil from No. 2 was also burned. At some stage during that part of the voyage, while ballasting No. 1 to increase the stability of the vessel, probably on Feb. 22, when the vessel listed 13 deg. to port, the valves of Nos. 2 and 3 tanks were opened and sea water was run or taken into them as well as into No. 1. It is suggested on the strength of a message sent on Mar. 1, that No. 7 port valve was also open. This message reads: . . . SEVEN PORT NO GOOD THREE PORT NO GOOD NOW TRY THREE STARBOARD . . . Previous cables to which I have been referred indicated that oil had been worked at some stage from No. 7- that is a message which was sent on Feb. 27, the message which I have already read, in which it says that "only clean fuel of 150 tons" was in No. 7. The valve to No. 7 port may well have been open and, as time went on and as oil was used from it, they were unable any further to cope with the water in No. 7 port. I have come to the conclusion that I have no reason whatever to believe that any of the oil shipped at Vancouver or San Pedro was contaminated; there is no evidence to that effect, and such surveyors as gave their opinions in the matter thought it highly unlikely. Certain it is that the oil in No. 1 shipped at Vancouver was not contaminated. Many matters have been investigated, as I have already said, and I have come to the conclusion that there is no reason for me to believe that any relevant pipes or bulkheads through or between these fuel tanks were leaking. The chief engineer saw water coming from the air pipes on both sides of Nos. 2 and 3 on the day orders were given to ballast No. 1. There is nothing in the log-books about it and nothing of this was said to Mr. Eleftheriou who tried to find the cause of all the trouble. Mr. Eleftheriou said that it was impossible to get straightforward answers from the engineers and I have come to the conclusion that the engineers were trying to hide the truth. The only trustworthy evidence the chief engineer gave was as to the seeing of this water coming up out of the air vents on both sides of Nos. 2 and 3. I believe his account of that. I have found that No. 2 was already unusable when this flooding occurred. The chief engineer went so far as to say that the master saw
this water coming out of the air vents, but unfortunately in this case I have not seen the master. There is nothing in any log-book about the flooding and no reference to it in any message nor in the report to Mr. Eleftheriou. Though at first sight this may appear somewhat extraordinary it is not extraordinary in this ship. There are many things in this ship that are not accounted for. The chief engineer probably felt he was safe in saying what he saw because he was not in the engine-room at the time it occurred. It is unfortunate, as I have said, that in this case I have not seen the master of the ship, nor have I had any signed statement from him to explain many things, though it is fair to say that neither he nor the chief engineer nor the second engineer are now employed by the defendants. Now, the duty, under Art. III (1) (b), is on the carrier to exercise due diligence before and at the beginning of the voyage properly, among other things, to man the ship. The parcels of cargo were shipped at different ports within the Vancouver area, not all from Vancouver, and the duty upon the carrier attached in relation to each parcel at the place of loading. The circumstances were not appreciably different at one place or the other. There is no question of shortage of fuel between these places, and no question that the vessel was unable to get from the one to the other; they are all near to each other, and I do not think I shall be doing any injustice in this particular case if I take the beginning of the voyage at Vancouver. I must ask myself: Was the ship properly manned when she left it and had due diligence been exercised by the owners in regard to manning? The plaintiffs have pressed upon me, not without reason, that this vessel was not properly manned, and, if they succeed upon that, I must ask myself: Did it cause the loss or appreciably contribute to it? In such circumstances, a consideration of the efficiency or the inefficiency of those on board is called fornay, shrieked for. In my view, "efficiency" is a better word in this connection than "competence". "Efficiency" was used by Lord Atkinson in Standard Oil Company of New York v. Clan Line Steamers, Ltd., [1924] A.C. 100; (1923) 17 Ll.L.Rep. 120. That, of course, is a limitation case. Lord Atkinson said (ibid., at pp. 120 and 125 of the respective reports):
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It is not disputed, I think, that a ship may be rendered unseaworthy by the inefficiency of the master who commands her. Does not that principle apply where the master's inefficiency consists, whatever his general efficiency may be, in his ignorance as to how his ship may, owing to the peculiarities of her structure, behave in circumstances likely to be met with on an ordinary ocean voyage? There cannot be any difference in principle, I think, between disabling want of skill and disabling want of knowledge. Each equally renders the master unfit and unqualified to command, and therefore makes the ship he commands unseaworthy. And the owner who withholds from the master the necessary information should, in all reason, be as responsible for the result of the master's ignorance as if he deprived the latter of the general skill and efficiency he presumably possessed. In the Clan Line case, sup., the limited knowledge of the master was considered. The special information as to stability which was available to the owners had not been supplied by them to the master and the result was a disabling want of knowledge in the master. In considering efficiency, the matters to be considered, in my view, are not limited to a disabling want of skill and a disabling want of knowledge. A man may be well qualified and hold the highest grade in certificates of competency and yet have a disabling lack of will and inclination to use his skill and knowledge so that they are well nigh useless to him. Such a man may be unable efficiently to use the skill and knowledge which he has through drunken habits or through ill-health. Mr. MacCrindle has submitted that a lack of application in the use of skill and knowledge is not within the ambit of "competence", though in certain cases he would be prepared to accede that drunkenness and physical unfitness might be. This is a matter to which I have given considerable thought and I can see no real difference between those two, that is, drunkenness or physical unfitness on the one hand and a disabling lack of will to use the skill and knowledge on the other. The reason why I can see no distinction is that the result is the same, or may be. As I have said, there were many things of importance in the engine-room department, and in the deck department too for that matter, which are wholly unexplained or
wholly unsatisfactorily explained. Mr. Brandon listed them in the course of his address. I do not propose to mention them all. He referred to two matters before the beginning of the voyage, namely, the loss of oil on two occasions before leaving Vancouver during what are described as the unballasting operations. Let us now come to the contractual voyage. At San Pedro there was no satisfactory explanation of the failure to pump out No. 2 and putting oil into that tank already containing some water. Similarly, on Feb. 6, 1956, no proper explanation has been given why they were again unable to pump fuel oil out completely before ballast was pumped in. The reason for both these failures may have been the listing of the ship through the improper working of the tanks, something which should not have occurred and which efficient engineers should have been able to avoid. There is abundant evidence in this case that slack tanks were allowed in this tender ship. On arrival at Balboa on Feb. 11, there were no less than four slack fuel tanks. Again, at Balboa, oil was run into No. 2, in which a considerable amount of water, about 35 tons, was also present, a mixture which later, as I have already found, became an unburnable emulsion. Further, while running oil into No. 2 it was allowed to overflow and spill over the deck, and some of it went overboard. That is recorded in the deck log-book on Feb. 12. Further, at some time on the voyage, oil fuel had been pumped into the starboard deep tank. It is so stated in Buckland & Young, Ltd.'s report, dated July 30. It is further stated "that the blank flanges normally fitted when cargo is carried had not been fitted". After leaving Balboa on the final leg of the voyage, no soundings of the freshwater tanks were taken; no interest was shown in the situation. In cross-examination, the chief engineer denied any knowledge of running out of fresh water at all and admitted that he had no idea they were running out of it. There were no routine soundings of fuel tanks, no record kept; so little information was available that an expert like Mr. Eleftheriou, who boarded the vessel, and other experts who have examined all available records, are unable to say with any precision how these tanks were worked. On Feb. 22, there was a gross mis-manipulation of valves with the result that a large amount of the oil in the ship became contaminated - I have referred to the
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details already. Little progress was made by the vessel after Feb. 28, though the weather was good and it was on that day that the master decided to make for the Azores. On Mar. 1, no usable fuel was left. Now, this is a shocking history of sheer inefficiency, a succession of negligent acts amounting, in my opinion, to a state of inefficiency far beyond casual negligence. Mr. Eleftheriou, who voyaged in the ship from Ponta Delgada to the United Kingdom, gave it as his opinion to me that the chief engineer was not fit to remain in charge of the engine-room; he doubted his capabilities to lead his staff; he was tired and he lacked power. In his report, that is, Mr. Eleftheriou's report to his owners, he considered that the chief engineer, the second engineer and the third engineer were all unfit for their appointments. This is an opinion from which he never wavered. On Mar. 14, 1956, the day the Makedonia left Ponta Delgada for London, he sent a cable to his owners, which is No. 66 in the bundle. The end of the message reads: . . . REQUIRED ARRIVAL LONDON CHIEF SECOND ONE
THIRD ENGINEERS CHIEF ONE SECOND OFFICERS STOP IMPOSSIBLE WORK WITH STOP . . .
In his report, which was made soon after his arrival in the United Kingdom, he said that they were unfit for their appointments. Now, this was drastic action for a comparatively young superintendent to take. It was the kind of action he had never taken before. It is the kind of action that a young man might well hesitate to take. Yet he took it and he has never deviated from his opinion. It is quite true, and I must have it much in mind, that you cannot convert casual negligence into inefficiency by simply substituting one word for another. There is a wide gulf between the two and it must be crossed before casual negligence becomes inefficiency sufficient to support a charge of improper manning. After reviewing all the circumstances of this unhappy voyage. I conclude that this chief engineer and his second engineer, upon whom rested the real responsibility for matters concerning the engine-room, were inefficient. This inefficiency was the direct cause of the contamination of fuel at Balboa and the subsequent contamination of the fuel in the tanks to which I have made ample reference already. There is a high probability that the valves
of these tanks, that is, of Nos. 2, 3 and 7 port had been left open ever since the loading at Balboa. It is remarkable that, if it were so, as is very probable, these facts were never noticed by either the chief engineer or the second engineer. It was this lack of burnable fuel oil which caused the breakdown which, in turn, caused all the loss sustained or likely to be sustained by the plaintiffs. But that is not the end of the matter. These engineers were engaged in August, 1955. A Captain Emiris, who is the port captain to several Greek shipowners in Piraeus, engaged the material part of this crew; in fact, nearly all of them. When engaging the engineers, he was approached by two men who applied for the position of chief engineer. He selected Mr. Krokidais because he had more years of sea service than the other applicant. He looked at the seamen's books, upon which in effect he made his selection. Krokidais did not produce that seaman's book in Court. He said he had just got a new one, in 1961, and he handed the old one, or his previous one, to some official of the Ministry of Merchant Shipping in Greece. It may be that such a handing back of a used book is required by the Greek authorities: it is certainly not the case in this country, for such a book is a continuous record of a man's service at sea and therefore of value to him. The book contains a list of the names of the ships and their voyages and the capacity in those ships in which the holder of the book served; it gives the dates of signing on and the dates of signing off each ship, and space is provided for remarks upon the ability and conduct of the holder. Captain Emiris said, when asked about this matter, that unless a man had seriously misconducted himself he would get a good discharge in his book and, if it were not very serious, nothing to the man's detriment would be written in, so as not to prejudice his future career. I was surprised, and I am still surprised, that Mr. Krokidais did not either produce his older seaman's book or that he, or someone on his behalf, did not produce a certified copy of his previous seaman's book. I have seen no seaman's book of any member of the crew, nor certified copies. Apparently, Captain Emiris was satisfied with what he saw, although it is by no means certain that he even looked at the seaman's book of the chief engineer. Within five minutes Emiris engaged him.
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Captain Emiris told me that his practice was to 'phone previous employers if they resided in Piraeus, and their practice was never to give a confidential report but simply to say "nothing against him". It is not clear whether Captain Emiris even followed that practice on this occasion. If he did, it seems to me to be a most unsatisfactory way of appointing men to responsible positions such as chief and second engineer, men who, even in tramps in this present day, are in charge of a considerable amount of very valuable machinery which is essential to the successful completion of any voyage. The certificate of competency is taken by all who have given evidence on this point before me as being proof of technical ability, but all these experts laid stress in varying degrees upon the desirability of a proper interview, an interview in which to assess the applicant himself. Naturally, the length of the interview depends to a large extent upon both the interviewer and the interviewed and no hard and fast rule can be laid down. Written references are not so important as a report from previous employers. If there are no written references then reports from previous employers become very important. There are many matters to be taken into account, such as evidence that the man served for a considerable time in one ship or served the same owners in different ships for a considerable time. The man so placed is in a position different from one whose employment has been one voyage, one owner, and so on. I had no reliable evidence as to Mr. Krokidais's record as a chief engineer. He told me that he had served as such in several ships, but he did not tell me for how long in each ship, nor has anybody else. He told me that his last ship before the Makedonia was a Liberty ship and he left her-he was not sure whether it was 1953, 1954 or 1955. He said that he had been idle for two or three months before joining the Makedonia. I have no evidence as to what he was doing immediately before this period of idleness. The whole situation is unsatisfactory. He told me that Captain Emiris did not ask him any special questions; he did not recall that Captain Emiris even looked at his seaman's book- he may not of course remember that after these years. But I am left in this situation, that there is a high probability that the engagement of Krokidais as chief engineer of the Makedonia was carried out in the most perfunctory manner, as were those of
all the other engineers. I confess to surprise when Captain Emiris told me that he took the same time to engage a greaser as a chief engineer-about five minutes. I have been referred by Mr. MacCrindle to several cases on incompetence or inefficiency of the master and crew. I have been referred to Moore and Another v. Lunn and Others, (1922) 11 Ll.L.Rep. 86, where it was found that the defendants did not fail in due diligence to man their ship. I have been referred to a more recent case, The Hongkong Fir, [1961] 1 Lloyd's Rep. 159, where the defendants failed to exercise due diligence in that respect. But these and other similar cases are not very helpful. I must decide this case on its own merits and upon its own facts. In my view, the least that should be done is to ensure a careful inspection of the seaman's book, to study the history of the applicant and to question him about it and the reasons why he left his former ships; if, for example, he appears to have sailed one voyage, one owner. The certificate ought to be sighted-the certificate might have been suspended. Inquiry should be made of previous owners and, if the report says "nothing against him", to press for fuller information. I cannot imagine anything more damning than a report from a previous owner that he had "nothing against him." If nothing confidential is forthcoming the man should be interviewed until the interviewer is reasonably satisfied about him and, if he is not satisfied, he should reject him. Such important appointments to such responsible positions call for a proper interviewing and a proper inquiry. I am left completely unsatisfied that the necessary steps were taken and the necessary inquiries made to discover the record and competence of this chief engineer. In the course of the argument, I was referred to The Norman, [1960] 1 Lloyd's Rep. 1 (H.L.), and also to The Anonity, [1961] 1 Lloyd's Rep. 203. These are both limitation cases, where it is for the plaintiffs to satisfy the Court that they have done all that could reasonably be expected in the particular circumstances. I am not going into the principle enunciated in The Norman, sup., and The Anonity, sup.; suffice it to say that I see no reason why the principle enunciated in those cases should not apply in such a case as the present. If the chief engineer and the second engineer are found to be inefficient in the sense in which I have used the word
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it is for the employers to show that they have exercised proper care in their appointment. I am left far from satisfied that they did so. It was on this contractual voyage that the engineers were put to the test of their efficiency, and the owners to the test as to whether they had reasonably assured themselves that the engineers were able to operate efficiently the common ballast and fuel lines in the ship, especially when laden with timber and in a tender condition. The lay-out of the piping in this ship, to an efficient engineer, was, as Mr. Leach said, comparatively simple and should have presented no problems. "A plan of the piping," he said, "was not really essential; engineers found out these things as they went along," or some such words. Apparently it presented some problems to these engineers, and I have dealt sufficiently with that already. In 1949, the Makedonia was converted from coal to oil burning at Naples and such a conversion presented certain problems to the surveyor to the classification society concerned. It is unnecessary to go into them; they are in one of the bundles before me. The only plan produced of the piping system is one made by the repairers who carried out the conversion at Naples. In it a general service pump is shown, but no ballast pump, although I am assured and have so found that one was fitted. A blank flange is shown in this plan in a place in which it was not placed. Most of the explanations of the plan are in Italian; the engineers were Greek. Whether they understood Italian or not I do not know. No satisfactory evidence has, in any event, been produced to me whether there was this or any other plan of the piping system placed on board the ship. The defendants have not satisfied me that there was a proper, understandable plan on board, nor again have they satisfied me that, if there had been one, it would have made no difference. The third engineer, Mr. Giatropoulos, had previously served in this ship at intervals over a total period of four or five years. According to the evidence, he is still employed by these defendants. He has not been called, though I should have thought that Mr. Giatropoulos would have been familiar with the piping system and would also have been able to say whether or not the other engineers made themselves familiar with it or if they ever understood it. Mr. Giatropoulos, like many other
absentees in this case, could have told me much, but, unassisted by him, I am left to grope. Little use was made of the common ballast and fuel system by these engineers before the vessel left Vancouver. On the first voyage, namely, from Greece to Japan, the vessel carried an ore cargo and there was no need for ballast. On the second voyage, from Japan across the Pacific to Vancouver, there was no fuel in the double bottom; that was carried in the deep tank. This was the first voyage, namely, from Vancouver to the United Kingdom, in which they had to use fuel from the double bottom tanks and then ballast the double bottoms in turn in order to maintain stability in a timber-laden ship. They made a mess of it and continued to make a mess of it until the final breakdown, the final breakdown through lack of burnable fuel. They were inefficient, as I find they were, on this voyage, and I must ask myself: were they inefficient at the beginning of the voyage? It is an inefficiency which first displayed itself at San Pedro and it continued thereafter with increasing effect during the remainder of the voyage in the ways which I have outlined. I find that these engineers were inefficient in this ship at the beginning of the contractual voyage. If they were inefficient in the ways I have described when the effects of their inefficiency were shown, they must have been inefficient with regard to those matters before. I find that this vessel was improperly manned because of inefficiency, and that the owners failed to exercise due diligence in that respect before and at the beginning of the voyage. They failed to exercise due diligence to see that these men were properly instructed or experienced in the use of oil and ballast lines in a timber-laden ship and they failed to provide them with a proper plan to assist them so to do. I think that I have said enough about liability for the underdeck cargo. The Hague Rules apply. I find the ship was unseaworthy through improper manning and lack of a proper plan of the ballast and fuel system, and that the salvage, the burning of the cargo, and the port of refuge expenses, were all occasioned by this unseaworthiness and the carriers are in default. Therefore the plaintiffs in No. 1 action, and in No. 2 action as far as it relates to under-deck cargo, succeed.
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Now I must turn to another part of this case, the deck cargo. It is agreed that its carriage is not within the Hague Rules; it is covered by Clause 6 of the bill of lading. By Clause 6 of the bill of lading the deck cargo is . . . received, kept, carried and discharged at the sole risk of the owner of such cargo and the Carrier shall not under any circumstances of any kind whatsoever be liable for any loss of or damage or delay thereto, whether or not such loss, damage or delay may be due to the act, neglect or default of the Carrier or the master, pilot, officers, crew, stevedores . . . or other person whomsoever for whom the Carrier may be responsible, whether in the service of the Carrier or not, and whether or not the above-named vessel or any other vessel or craft in which the said cargo may be loaded was unseaworthy at the time of loading or sailing or at any other time. It is conceded by Mr. Brandon that such a clause is adequate to protect the carrier in relation to the physical damage, the burning and jettisoning, but that it is inapt to protect the carrier in regard to pecuniary loss, salvage and port of refuge expenses. On this there has been much argument, some very ingenious. Mr. MacCrindle submits that a true construction of this clause is wide enough to cover pecuniary loss. In the course of his argument he referred me to The Cairnbahn, [1914] P. 25. That was a case under the wording of Sect. 1 of the Maritime Conventions Act, 1911, where damage or loss is caused to vessels, their cargoes or freight. Lord Sumner said (ibid., at p. 32): . . . Though damage may be caused to a vessel, loss cannot be . . . Loss is caused to the owners . . . and damage is caused to them too when the vessel is damaged. . . . His view was that that wording regulated the rights and liabilities between the parties in fault and it extended to pecuniary prejudice. He was of the opinion also that reference in it to vessels' cargoes and freight was only a figurative way of referring to the "persons interested in" them. Mr. Justice Warrington, in the same case (ibid., at p. 34), also referred to the personification of the vessel, as showing that in one context it meant those interested in her cargo and freight and in another those in law answerable for the conduct of those in charge of her. I was
also referred to The Arabert (No. 2) (Limitation), [1961] 1 Lloyd's Rep. 363; [1961] 3 W.L.R. 215, which was another limitation case. In both those cases the Court was dealing with a ship and not with a cargo under a bill of lading. In the latter case, the late Lord Merriman, P., was of the opinion that in Sect. 503 (1) (ii) of the Merchant Shipping Act, 1894, the word "of" after "loss" had crept in per incuriam. That may be, but here, in Clause 6, I deal with plain words, words of exception in favour of the carrier. In my view - and Mr. Brandon has strongly urged it upon me-these words should be construed strictly, and I see no reason in these circumstances why I should assume that "of" after "loss" has crept in by mistake. It is, as Mr. MacCrindle has very fairly said, a matter of first impression and my first impression is that it does not extend to pecuniary loss. If it were meant to, the carrier could, and should have said so, and he did not. However, Mr. MacCrindle goes further and argues that, even if Clause 6 is restricted to the physical loss, that is not enough, not enough in these circumstances as a defence to his counterclaim for general average. The owner is put to a general average sacrifice and expense to avert loss and is, in English law, entitled to recover contribution in respect of it from the parties unless he is guilty of actionable fault. Now, the towage and the port of refuge expenses were undertaken for the common benefit. Although Mr. MacCrindle did not actually say so, the loss averted was the total immobilization of both ship and cargo, with of course the prospect of ultimate loss. Unless towage was given, the cargo was already lost in one sense to the cargo-owners. So far as this deck cargo was concerned the shipowner was not liable for its loss or damage and, in such circumstances, the expenditure was not made solely for his benefit; that is to say, the shipowner's benefit, but for the cargo-owners as well. In support of his contention, Mr. MacCrindle referred me to several cases. I will just mention some of them: Milburn & Co. v. Jamaican Fruit Importing and Trading Company of London, [1900] 2 Q.B. 540; and The Carron Park, (1890) 15 P. 203. In particular, he referred me to Tempus Shipping Company, Ltd. v. Louis Dreyfus & Co., Ltd., which went through all the Courts up to the House of Lords.
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He referred me first to the report of the proceedings in the Court of first instance, before Mr. Justice Wright, as he then was ([1930] 1 K.B. 699; (1930) 36 Ll.L.Rep. 159). In that case, a serious fire broke out in the bunkers and damaged some of the grain cargo, as a result of which the ship went to a port of refuge. The fires in the bunkers were still burning, and it was properly decided that some grain should be discharged into lighters. This was done and, as a result of it, the shipowner claimed for general average contribution. The Court found that the ship was unseaworthy and there was no fault or privity on the part of the owners. The owners contended, among other things, that the words of Sect. 502 of the Merchant Shipping Act, 1894, justified their claim. Let me read the relevant words: The owner of a British sea-going ship, or any share therein, shall not be liable to make good to any extent whatever any loss or damage happening without his actual fault or privity in the following cases; namely,(i.) Where any goods, merchandise, or other things whatsoever taken in or put on board his ship are lost or damaged by reason of fire on board the ship . . . Sub-s. (ii.) deals with gold and other precious things and is not material to this case, nor was it material in the Tempus case, sup. Mr. Justice Wright (ibid., at pp. 707 and 168 of the respective reports) held that that section was a shield for the shipowner against claims and not a sword to justify claims by him against the cargo-owners. The case went to the Court of Appeal ([1931] 1 K.B. 195; (1930) 37 Ll.L.Rep. 273). Lords Justices Greer and Slesser held that Sect. 502 of the Merchant Shipping Act, 1894, created for the carrier an immunity from liability in respect of the cargo and, therefore, the sacrifice not being made solely for his own benefit the cargo-owners should pay contribution. Lord Justice Scrutton dissented, and upheld Mr. Justice Wright. It is not surprising, in those circumstances, that the case went to the House of Lords ([1931] A.C. 726; (1931) 40 Ll.L.Rep. 217). The House of Lords held that by virtue of the section which relieved the plaintiffs from liability for loss of or damage to the cargo, they were entitled to general average
contribution. Viscount Dunedin (ibid., at pp. 738 and 221 of the respective reports) was at first minded to follow Mr. Justice Wright and Lord Justice Scrutton, but he finally came to the conclusion that the decision in The Carron Park, sup., and Milburn & Co. v. Jamaican Fruit Importing and Trading Company of London, sup., turned entirely upon the question whether the shipowner had committed an actionable wrong. Lord Atkin said that as a matter of principle he was unable to see any distinction in the context between a contractual exception and a statutory exception. Mr. MacCrindle concluded that part of his argument by submitting that in the Tempus case, sup., Clause 6 of this bill of lading would also have been a complete answer. Mr. Brandon submitted that Mr. MacCrindle had misinterpreted the ratio decidendi in the Tempus case, sup., in the House of Lords. The whole of Sect. 502, Mr. Brandon says, must be looked at. It gives the widest form of exemption from liability in the event of one or other of two specified events. In such circumstances, that wide form of exemption from liability was wide enough to cover, among other things, salvage and general average as well as actual physical loss. Now, I repeat that the exemption, which is total, arises only when the loss or damage to the goods has in fact occurred. That must be so under the relevant section of the Act. The loss of or damage to the goods by fire in the Tempus case, sup., was a condition precedent to the statutory exemption from liability to make good any loss or damage occurring or arising from or out of the fire. That was the relevant part of the Tempus case, sup., which was considered by their Lordships. They were considering Sect. 502 in its entirety and the expenses incurred in order to save the ship and cargo from further peril once the peril had attached-once the fire had occurred. Viscount Dunedin is quoted (ibid., at pp. 734 and 219 of the respective reports) as follows: The second question, whether the ship could demand a general average contribution under the circumstances of the case, is not dealt with by direct authority. But there is a body of decided authority on several propositions, and the question is how that general authority is to be applied to this case. That the expenditure here was of the class which gives
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rise to a claim for general average contribution is not denied. It was incurred in order to save the ship and cargo from the further peril from fire. . . . Now, there is no doubt that the circumstances in the Tempus case, sup., were different from those in the present case. In this present case, the shipowners, as I see it, were averting a physical loss for which they would not have been liable. The owners of the cargo had already been deprived of their cargo by immobilization, a state of affairs which could be remedied by towing the floating hulk to a place of safety, and this is what the shipowners did. It is quite true that physical loss only is referred to in Clause 6, but under the same clause the cargo is carried at the sole risk of its owners. The shipowners were not obliged to save the cargo from physical loss because they were not liable for it, but having done so it seems to me that they are entitled to expect the cargo-owners to pay their contribution towards the extraordinary expense incurred in taking it to a place of safety. Mr. Brandon submitted that if Clause 6 was the complete answer to that part of his claim in respect of deck cargo, the salvage, which was the major part of the extraordinary expenditure, was not general average. In this present case, the salvage was performed under Lloyd's Standard Form of Salvage Agreement. It was signed in London on Mar. 12, 1956, between representatives of the owners of the respective ships. It was agreed between the owners of the Makedonia on their own behalf and on behalf of the cargo and freight and the owners of the salving ship, called the contractors, that the contractors would use their best endeavours to salve. Clause 5 of the agreement provided that, pending completion of security, the contractor had a maritime lien on the property salved. By Clause 13, the person signing the agreement on behalf of the property to be salved entered into the agreement as agent for the vessel, her cargo and freight and the respective owners thereof, and bound each (but not the one for the other or himself personally) to the due performance thereof. No objection was taken to this agreement by the deck cargoowners so far as I am aware, and by their actions, or lack of action, they have ratified it. Each interest, therefore, under this standard form of agreement incurred a liability to
the salvor on its own account, and the ship could not be made liable to the salvors for more than her proper share. The action taken by the shipowner was taken for the common benefit of all interests although, as I say, he was only responsible for his own share; he was not obliged to take this action as far as the cargo was concerned for he was exempt from liability for physical loss or damage or delay to it. It seems to me that you cannot alter the merits of the situation by changing the words which describe it. This was salvage payable under contract for which each party was liable for its own share to the salvor. I repeat that the shipowner was not under any obligation in this matter because he was not responsible for the loss of this cargo. But having taken this action on behalf of all, each to pay their share, they should, in my view, pay their share, whatever you may call it. As to the port of refuge expenses, they were a necessary expense in the circumstances and it follows from what I have said that each interest should pay its own share of those expenses. In those circumstances, I am not going to construe the New Jason Clause, which is another clause, Clause 3 of the bill of lading. If it were necessary for me to decide it, I should be inclined to say it had no reference to deck cargo at all. It follows from what I have said that, in the second action, so far as the deck cargo is concerned, the plaintiffs fail and that the defendants succeed in their counterclaim. What about costs? Mr. BRANDON: I think it might be convenient if I dealt first of all with the order which I submit is required in each of the actions. Though it is a consolidated action, your Lordship might think it would be convenient to deal with the claim to relief in each action separately. Mr. Justice HEWSON: Yes, I think so. Mr. BRANDON: There are different plaintiffs involved and there may be different considerations involved not only on the award, but as regards costs. I was going to submit, first of all, with regard to the first action, that that action is concerned with under-deck cargo only. The amount involved in it for salvage and general average is estimated at about 1300. I ask in that action for the following relief: (1) judgment for the amount of the salvage liability incurred by the plaintiffs with interest at five per cent.; (2) a reference to
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the Admiralty Registrar to assess the amount; (3) a declaration that these plaintiffs are not liable to contribute in general average. There is a prayer for a further item of relief, which is the cancellation of the agreement or guarantee-I am not at all sure that that is needed if we have a declaration. I think that is the order that is usually made. That covers the first action. In the second action your Lordship will have to make a different order in respect of the under-deck cargo on the one hand and the deck cargo on the other. As far as the under-deck cargo is concerned I ask for (1) judgment for the amount of (a) the salvage liability incurred by the plaintiffs; (b) loss or damage sustained through the burning of goods; (c) the general average contribution already paid by any particular plaintiffthere is only one plaintiff who has done that-with interest on those amounts at five per cent. Then the other two items of relief, (2) and (3), would be the same as in the first action, that is a reference and a declaration. It is for my friend to ask your Lordship for what order he wants for the deck cargo, but I apprehend that he will want a declaration that the plaintiffs are liable to contribute in general average in respect of the deck cargo. Mr. MACCRINDLE: Broadly speaking I am in agreement with the order proposed by my learned friend. As far as my counterclaim in the second action is concerned in respect of the deck cargo, that is to say, the counterclaim for general average, I would ask for the declaration as prayed, together with interest, that is to say, that the declaration should say that I should be entitled to interest on the amount. Now, it is only on the question of interest that I desire to say anything in relation to the order my learned friend has asked your Lordship for. My learned friend has asked for five per cent. One thing is clear, I suppose, and that is that whatever rate your Lordship decides upon for my learned friend your Lordship will allow me. As far as the actual rate is concerned I would press your Lordship to say four per cent. It is a matter for your Lordship's discretion. If these proceedings had been in the Commercial List I think that virtually the standard practice there is to say four per cent. Mr. Justice HEWSON: It is a standard practice before the Admiralty Registrar, but that is a different thing. That is the
rate the Registrar gives on damages as a result of a reference. I think that is right, Mr. Brandon? Mr. BRANDON: I think it has been held that the interest is part of the damages, whereas in the Court it is awarded in personam by statute. Mr. MACCRINDLE: There are really two points here: first of all, what is the rate, and secondly, from when is it going to run? In so far as my learned friend or I are seeking to claim a declaration in respect of a sum which has been expended, I apprehend that the rate would apply from the time of the expenditure. Mr. Justice HEWSON: I was thinking of the one lone wolf who has paid. He had the use of his money until the date of his expenditure. The rest of the others have not paid. Mr. MACCRINDLE: As far as any of us are claiming in respect of expenditure, it applies from the date of the expenditure. As far as there are other claims, claims for damages in relation to the burning of cargo, I suppose the interest would run from the date of the accrual of the cause of action, which would be the date of burning. Your Lordship might feel disposed to take a blunt instrument and say from Jan. 1 something, because it would be extremely complicated if we have to split up the various things and say: "Interest on this from such and such a date, and interest on that from such and such a date". Mr. Justice HEWSON: You may take a mean from the 1st to the 6th. Mr. MACCRINDLE: To leave it entirely to your Lordship would be simpler. The alternative is that we go through these things and your Lordship decrees in respect of each the date in respect of which any interest should run. We can do that, but it would be rather a large order. Your Lordship will hear my learned friend on that. We are content if your Lordship chooses to take a blunt instrument, and if not perhaps I should have to be heard on each separate item. Mr. Justice HEWSON: The blunt instrument arises in regard to the question of costs, I think. Mr. MACCRINDLE: It will arise there. On the question of the rate, which is really the only material thing, I submit that there is no reason to depart from what would be the normal, in my submission, and that is four per cent.
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Mr. Justice HEWSON: Is four per cent. realistic? Mr. MACCRINDLE: This is always a point which is taken, and generally speaking the answer which I think is given by the Courts is that you take the rough with the smooth. Sometimes the rate is two per cent. and he wins, and sometimes it is seven per cent. and he loses. The Courts cannot vary as the banks do, and people must have a normal so that they will know what to expect, and four per cent. is usually taken as the normal. In my submission, one does not know where anybody has obtained their finance; there are so many imponderables that I suggest one must fix some sort of rate and I suggest that four per cent. is about right. There is nothing more I can say upon that. People say you can only borrow at six per cent. and therefore it would be unrealistic, but one has to fix a standard and one would require exceptional reasons for departing from the standard. Mr. Justice HEWSON: There is some authority where the Court made an award of such interest as seemed equitable or proper in the circumstances. Mr. MACCRINDLE: I would not dispute that at all; if your Lordship felt that 10 per cent. was right your Lordship could award it, but it would be a startling innovation, if I may say so. Mr. BRANDON: I am surprised to hear that four per cent. is the standard, since in The Muncaster Castle, [1959] 2 Lloyd's Rep. 553, five per cent. was awarded. That particular decision of the House of Lords was cited to Mr. Justice Paull in a case called L. Harris (Harella), Ltd. v. Continental Express, Ltd., and Burn Transit, Ltd., [1961] 1 Lloyd's Rep. 251-I was not in it, but my instructing solicitors were, and his Lordship entered judgment for the plaintiffs for the sum of 1255 5s. 2d. at a rate of interest of five per cent. Mr. Justice HEWSON: What was the date of the occurrence in The Muncaster Castle, sup.? Mr. BRANDON: The goods were shipped on May 7, 1953; sea water was discovered in the hold on July 16; it was the summer of 1953 when the goods ought to have been delivered in good order and condition. Mr. MACCRINDLE: I believe it is right to say that in the Muncaster Castle case it was not argued, but in fact agreed there should be a rate of five per cent.
Mr. Justice HEWSON: That shows there are some of your learned friends who take a view slightly different from the one you have submitted. Mr. MACCRINDLE: If we were put to this, one could find I am certain 99 cases at four per cent. to one case at five per cent., although that is a sweeping statement, I know. Mr. BRANDON: The point of these cases is that they show recent cases in which the matter has certainly been argued. The fact that it was brought before the House of Lords is, in a sense, stronger than if it were argued, because it means that people were readily submitting to something which was a normal practice. The law is very conservative and four per cent. has been common for a long time and in the highest tribunal it has been recognized. I do not pretend it is anything other than a matter for your Lordship's discretion. As to the date from which it should run, I do not think it will make very much difference if your Lordship takes any date in March, 1955: your Lordship may like to take the date when the goods should have arrived at their destination if there had not been a breakdown? Mr. Justice HEWSON: Yes, that would have been the date of delivery, I should think. Mr. BRANDON: Yes, somewhere about the middle of March; if this ship had not broken down she should have arrived in London a week earlier than she did. If your Lordship took Mar. 15, I would be perfectly happy. This is for damage; I take it the salvage would be from the date we paid the sum to the salvor. Mr. MACCRINDLE: Apr. 1 was about when delivery ought to have been made in London; some of it would have gone elsewhere. Mr. BRANDON: In my submission, the date on which the goods should have arrived in London is the proper date to take because by that time we should have had our goods and instead of that they were at the bottom of the Atlantic. Mr. Justice HEWSON: If I accept Mr. MacCrindle's suggestion of Apr. 1 and accept your suggestion of five per cent., what then? Mr. BRANDON: If your Lordship pleases. I will deal with my friend's application for interest. I do not entirely follow it. He is not claiming any sum of money. What
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he is claiming is a declaration that he is entitled to what he says he is entitled to. That includes advances and disbursements and if any more interest is awarded it would be interest on interest. If your Lordship looks at p. 345 of the average adjustment, there is a summary of the apportionment of the general average for the separate cargo and interest. Mr. Justice HEWSON: Does he say what interest he is allowing you? Mr. MACCRINDLE: He says the amount. Mr. BRANDON: That is interest attaching to payment on account. The interest is allowed under the York/Antwerp Rules and is fixed by the Rules. Anybody who has expended money gets interest on the money they have expended. Anybody who has advanced money as a banker gets interest, and people who have given credit get it. This adjustment is dated Jan. 22, 1960. Mr. Justice HEWSON: Some seem to have paid something and some do not seem to have paid anything. Mr. BRANDON: That is because of credits for jettisoning or burning and that is commission and interest on their credits. In this particular cargo, the owners made general average sacrifices; they have been credited with them in the general account and also credited with commission and interest on their credits and those are the figures you see there. Every question of interest and commission by the date of the adjustment is taken care of in the adjustment. With regard to the interest since that date, the date of the adjustment is Jan. 22, 1960, and no question of further interest could arise. Mr. MACCRINDLE: I do not ask for anything from that date. I should be content to limit the declaration I am asking for to a declaration that I am entitled to this general average, taking the cargo together with interest and contribution. Mr. BRANDON: It takes a long time for an adjustment to be drawn up and it may be that your Lordship would consider some reasonable time ought to be allowed. Mr. MACCRINDLE: We have been out of our money which your Lordship has held we are entitled to. Mr. Justice HEWSON: You have been out of your money for a long time, Mr. MacCrindle: you mean port charges, and so on?
Mr. MACCRINDLE: We spent the money; we are entitled to contribution, and therefore we have been out of whatever the contribution is since the date of our expenditure, probably at or about the time we were at Ponta Delgada. That is all taken into account in the adjustment and therefore what the adjusters have done is what your Lordship would have done if your Lordship had been sitting on Jan. 27, 1961. Mr. Justice HEWSON: You want it from that time at five per cent.? Mr. MACCRINDLE: Yes, my Lord-your Lordship has said five per cent. I suggest that if your Lordship were to limit my declaration in that way that would solve the problem. Mr. Justice HEWSON: There will be a declaration in respect of the deck cargo that the plaintiffs are liable for the contributions as set out in the statements together with interest thereon from Jan. 22. Mr. BRANDON: It does involve interest on interest to that extent, which is not allowed by the statute, but it may be argued that you can have interest on the amount of a judgment which includes interest. Mr. Justice HEWSON: There is so little in it; is it worth complicating it any more than it is? Mr. BRANDON: No, my Lord, if your Lordship makes a declaration that they are entitled to interest at five per cent. on the amounts due in the average adjustment, such interest to run from Jan. 22, 1960. Mr. Justice HEWSON: Yes, I think that makes it as simple as we can make it. Mr. BRANDON: Our interest will be from Apr. 1 for the damage and from the date of the salvage or the general average in the case of the other. With regard to costs, I told your Lordship that the first action involved 1300, all for under-deck cargo and salvage. I think it will be convenient if I gave to your Lordship the figures in the second action as well. As far as the second action is concerned, the under-deck, salvage and general average comes to round about 25,000 and the burning comes to about another 1500, making a total in respect of under-deck cargo of about 26,500. As regards the on-deck cargo, the salvage and general average comes to about 3000, and the jettisoning and burning comes to about
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7800, so those two together come to about 10,800-I do not pretend that those figures are right to more than the nearest 50 or 100. We have succeeded as to the whole of the 1300 in the first action, and, as to the 26,500 or thereabouts in the second action, we have failed as to the balance of 10,800. With regard to what we have failed on, the jettisoning and burning, 7800, no time has been taken up in the trial at all on that but some time has been taken up on the salvage and general average matter. In the first place, I submit that I am entitled to the whole of the costs in the first action? Mr. Justice HEWSON: What do you say about the first action, Mr. MacCrindle? Mr. MACCRINDLE: I would prefer, unless your Lordship directs me otherwise, to deal with the costs of the two actions under one submission. Mr. Justice HEWSON: Mr. Brandon has wholly succeeded in the first action? Mr. MACCRINDLE: Yes, he has more or less succeeded on his claim in the second action, having abandoned part of his claim in the second action. He has succeeded in the result. Mr. Justice HEWSON: I think I had better hear you, Mr. Brandon. Mr. BRANDON: I would draw your Lordship's attention to the dates here because it is important. The first action was brought on Mar. 8, 1957, and that action proceeded with pleadings and discovery for a long time before the second action, which was brought on Apr. 20, 1961, was ever begun. Every issue which has been determined and discussed in this case other than the sole issue of law on Clause 6 of the deck cargo bill of lading was raised by the first action; the second action was merely hitched on at a later stage; it covered a great many parcels. The result of the second action was bound to be the same as the first. I can, therefore, say from an interlocutory point of view and from the point of view of all costs up to the hearing that all the spade-work was involved in the first action. As regards the hearing, we have succeeded on the facts. It is true that we have not proved all the allegations of unseaworthiness which were made, but your Lordship has on several occasions let forth observations that the allegations were reasonably made, and on the defendants' documents we had to sweep our net wide. In my submission, every allegation of fact
as to unseaworthiness was a two-edged point. It was all bound up in the question of incompetence. You could not decide the question of incompetence without deciding the question why the pumps or apparatus did not work, and all those facts would have to be gone into on the allegation of incompetence on which we have succeeded. It was impossible to do anything other than to plead and fight it in the way we did and therefore the fact that your Lordship has not found for us on all the allegations of unseaworthiness in my submission should not make any difference. We have had to investigate all the documents and facts. There are two points of law on which we have failed. One was the question of stages and some time was taken up in arguing about that-not a great deal because there was not a great deal of authority with which to take up time. Then the deck cargo point has taken up a considerable period of time. Your Lordship may think that that has taken up two or three days. If your Lordship were minded not to allow us the whole of the costs of the hearing, in my submission the right way would be to disallow such a number of days as were taken up on the matters on which we have failed. We have only failed on certain points of law which were argued. There were 16 hearing days and one day of judgment. I think the one day for judgment can be taken out because that would be necessary in any event. As far as the evidence is concerned, that has not been prolonged in any way by the argument concerning the deck cargo. That argument was purely one of law. In my submission, that is the only part of the costs your Lordship should make any special order about. As far as interlocutory matters are concerned up to the date of the hearing, that would be substantially the same whether deck cargo was involved or not. Sometimes learned Judges are urged to make a very blunt order like one-half or two-thirds, but this operates very unfairly in actions where the extra expense is at the hearing-it is not during the preparation of the case-and if you use a blunt instrument it could operate extremely unjustly, and, therefore, I ask your Lordship to say that we should have the costs of both actions up to the date of the hearing. With regard to the hearing itself, I ask your Lordship to allow us the whole of the costs except such days as you think were taken up in dealing with the issues of law on which we have failed. It is always difficult to say how much time
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has been spent on technical issues, but your Lordship has a pretty good idea on these subjects. I suggest that about two days were spent on those, and at the most, three. Mr. MACCRINDLE: I have a little to say on this, but I would preface what I have to say by saying, first of all, that rather than ask your Lordship to split up your Lordship's order on costs and say: "So much on the claim and so much on the counterclaim", involving two sets of taxation, I would be disposed to urge your Lordship to make one single order on which there would be one single taxation, and I think that my learned friend is asking for very much the same thing because his way of dealing with it involves that. Having said that, it is of course possible for your Lordship to make separate orders and it is frequently done. One never knows what it means and what effect it has, but it involves two taxations and that is, on the whole, undesirable. There are various types of action and the problem of costs differs from action to action. It is certainly the case, where you get the sort of action where the plaintiff makes a claim which is disputed and there is substantially one big issue, that if the plaintiff succeeds on that issue, the fact that he has failed on side issues will not normally deprive him of his costs. This case was a case in which, from the start of the pleadings right through to about the middle of the action, all the paper and most of the evidence was taken up with a very large number of separate items and allegations of physical unseaworthiness, and we were taken for days through Mr. Foster and Mr. Leach and Mr. Eleftheriou, all of whom were really called on the question of physical seaworthiness and not of competence, and we were taken through condensers and evaporators and valves and one thing and another. The allegations in the pleadings of physical unseaworthiness go from (a) down to (p)-I went through them many times. On those allegations my learned friend has failed. It is no answer, with respect, for my learned friend to say that these were all relevant on the question of competence because the first answer to that is that in fact it is not so; the question of the condenser, the evaporator, the leaks in the piping, and so on, has nothing to do with it. Mr. Justice HEWSON: There were certain matters on the evaporator, and that was chiefly because it had never been made clear on your documents what was wrong anyway.
Mr. MACCRINDLE: The effect of your Lordship's judgment on the evaporator is that there was no evidence that it was unserviceable. It is one thing to say that an allegation is a proper allegation to make, and I have never sought to say that any allegation my learned friend made was extravagant; but he who alleges must prove, and, if he does not prove, he must pay the costs of the issues on which he has failed, and I suggest to your Lordship that as far as the great bulk of these allegations of unseaworthiness on which my learned friend has failed are concerned, it is right, when your Lordship is considering your order as to costs, that I should have the costs of the time taken up on those issues. From start to finish we have said that the immediate cause of the disaster was what your Lordship has held, namely, a mix-up in the manipulation of the valves affecting the fuel oil. We have said that the vessel was physically seaworthy on leaving Vancouver and that these many allegations of unseaworthiness were unfounded, and your Lordship has found in our favour on it. Your Lordship has also found in our favour on the doctrine of law and all my learned friend can say is this: that, first of all, he has substantially won on the under-deck cargo, on the question of competence and due diligence. That, with respect, is not enough in a case where both sides have had to call expensive expert witnesses to deal with the question of physical seaworthiness. It is really not the case that most of these allegations redound on the question of competency. Most of them do not, and it would be possible to go through them one by one. What I am asking your Lordship for at the end of it all is this (as I said at the outset): to make one order on costs. I would be disposed to agree that I would be putting my case too highly to ask your Lordship to make no order as to costs. Therefore, the order which I would submit your Lordship should make would be an order to the effect that my learned friend gets a portion, and the sole question is, what portion? There are various ways of testing it. One of them is not to look at how much money was involved. It could have been 1,000,000 for the on-deck and 412d. for the under-deck. In such limited experience as I have, I have never heard it suggested, in the case of an order such as my learned friend asks for, that one should split the costs not only
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horizontally, but vertically. If your Lordship is going to make an order declaring a fraction, in my submission, that should go through from start to finish and that there is no ground for separating the interlocutory stage from the hearing stage of an action. There are, I suppose, two possible approaches: first of all, to sharpen the instrument and try to divide the issues in terms of time. That is difficult. The other approach is to look at the various issues and see which I have won on and which my friend has won on. That is difficult because it involves the counting of heads, as it were. The one thing I would urge your Lordship to do is to say that whatever fraction of his costs my friend gets it should run straight through from start to finish. I submit that as I have won really on the issues of law, that is to say, on the stages and general average and deck cargo questions, and having, with respect, substantially won on the physical issues of fact, on the condensers and the evaporators and the pumpsMr. Justice HEWSON: I say this so that you may have it in mind, but you see, when a case like that is pleaded they are starting from such documents as are available from your side; there is nothing of their own, and if the contents of the documents is ambiguous or opens wide fields of investigation, they are justified in pleading it as widely as possible, as I see it, and to challenge the matter as far as they may in examinationin-chief. They must do that. A lot of it may prove to be abortive in the end, but, "Did they act reasonably in the circumstances?" seems to me to be one of the issues. Mr. MACCRINDLE: Yes, and at the end of the day, however reasonably they acted, did they satisfy your Lordship that these allegations they made were well-founded? And of the two points the latter is the more important, in my submission. It is one thing to say a pleader is reasonable: if he is not his action can be struck out; but it is another thing to say that, however reasonable, he may gamble and if he fails he may nevertheless win on costs, because every pleader gambles when he makes an allegation. If at the end of the day his hopes are dashed and he cannot prove it, in my submission, he cannot come to the Court and say: "It is true we have failed, but after all, we were not unreasonable at having a stab at it and we might have won".
Mr. Justice HEWSON: The point is, how long does he go on with it when he has his answers from the witness-box? One by one certain points dropped out, and every now and again Mr. Brandon said: "I am not going to pursue that", and it passed out of the picture. Can you point to any occasion when Mr. Brandon acted unreasonably during the course of the action? Mr. MACCRINDLE: It is difficult to deal with the matter as to whether he was reasonable in putting forward these allegations. Bits dropped off his claim from day to day. It took a good deal of examining of Mr. Foster and Mr. Leach before others were dropped, but we were still left arguing about pumps and packings. Mr. Justice HEWSON: He kept it open, so to speak. Mr. MACCRINDLE: My learned friend is the soul of reasonableness, but when he gambled, as he did in this case, from (a) to (p), it may have been a reasonable gamble, but all his horses did not cross the finishing line, and when your Lordship is considering this I submit that the fair order here is that the plaintiffs should not have more than half their costs of the whole thing from beginning to end. Mr. Justice HEWSON: I think that an ultimate fraction is the most convenient way to do it. I have not tried to think out the time involved in the stages and the various points of law in this case-it is the law which takes up the time because one has to cite cases. By and large, so far as the law was concerned that was not a waste. Mr. MACCRINDLE: I must not harangue your Lordship; it is really a question of deciding what fraction. Mr. Justice HEWSON: One wants to get as near to what is fair as one can and that is why these discussions are most helpful. Mr. BRANDON: My friend says that your Lordship should not split the hearing from the interlocutory proceedings. It would be quite unjust if the interlocutory part were in any way increased by these other matters. As to the question of hearing matters which have not ultimately succeeded, what is a cargo-owner to do in a case like this? He has to accept the ship's documents, as any carrier has to. He has to put in everything so that it cannot be said he is taking the other side by surprise and the
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first time it is said arises at the trial. It is awkward in a case where you have somebody who did not know how to use the pumps, or did not know how to work the condenser, or did not know how to work the evaporator-the cargo-owner is in a complete dilemma. He can only say: "One of these things must have happened; I cannot say which one it was until your witnesses have given evidence and described the situation". How can we do more than say to the Court: "Our cargo suffered this loss; all these things went wrong; there must be a full inquiry and on one or other ground we are entitled to succeed", and your Lordship has held on one ground, but not on another that we are entitled to succeed. How can it be said that we are not entitled to our costs? Now, on the question of the fraction, my learned friend has suggested what I would describe as an exceedingly vulgar fraction of one-half. If your Lordship were minded to deal with the thing in fractions, I would respectfully submit that you ought to have regard to the amounts involved. If, quite bluntly, the total amount involved is 37,000, as to which we have succeeded as to 26,000 or a bit more-which is something between two-thirds and three-quarters of the amount involvedto make a plaintiff get only half his costs when he has succeeded as to that sort of fraction of the amount involved would be totally unjust, in my submission. If you get only threequarters of what you claim you get your costs in personal injury cases, unless a payment is made into Court or an admission made as to part of the case. Mr. Justice HEWSON: That is when there is no counterclaim. Mr. BRANDON: It is a very artificial counterclaim here, with great respect. I claim a declaration that I am not liable in general average, and he claims a declaration that I am liable in general average. Technically, that is a counterclaim, but after all, your declaration that I am liable in general average does not add anything to your refusal of the claim that I am not liable. You may say that a counterclaim in a personal injury action is that he is not liable for the plaintiff's injury. Your Lordship will not have failed to notice that there is not a counterclaim in the first action. That shows how much importance my learned friend attached to the counterclaim. If your Lordship were minded to take account of fractions, I would ask your Lordship to bear in mind the relevant issues
on which I have succeeded and failed and to take account of the interlocutory proceedings which for the most part have been wholly unaffected by the matters on which I have failed. This matter of costs it is easy to regard as an adjunct of the trial and a rather tiresome feature, but those instructing me and their clients regard this as being just as important from the point of view of justice being done as the result of the action itself and they feel strongly about rough and ready orders which are not just in this case, and, therefore, I respectfully ask your Lordship carefully to consider what is truly just in this case. Mr. Justice HEWSON: I think that the proper order as regards costs in this case is: up to the date of the hearing the plaintiffs get their costs of both actions; as to the hearing, the defendants will pay three-quarters of the costs of the plaintiffs. Mr. BRANDON: I take it that "hearing" for that purpose includes the brief on the hearing? Mr. Justice HEWSON: Yes; that is not interlocutory; that is part of the hearing. Mr. BRANDON: It is delivered before the hearing. Mr. Justice HEWSON: No, it is not part of the interlocutory work. Is there anything else? Mr. MACCRINDLE: No, I do not think so, my Lord. Mr. Justice HEWSON: I would like to say that I am very grateful to you both for all the assistance you have given me.

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[1962] Vol.

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Lloyd's Rep. The "Makedonia" Friday, Mar. 9, 1962 ____________________

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