facts are as explained in the assignment task

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Facts:
The facts are as explained in the assignment task.
Issues:
A)
The first issue to be considered is whether the Carriage of Goods by Sea Act 1991 (Cwlth) (hereafter
‘the Act (1991)’) is applicable in the circumstances. There is an effort in the documentation between
charterers of the vessel to impose a choice of law and jurisdiction clause; to be governed by English
law, and disputes to be submitted to the High Court of Justice in England and Wales. The issue of
whether this clause can be incorporated into the bill of lading, and its propriety, will need to be examined
against the Act (1991).
B)
The second issue to be considered is what rights KTT has under the contract of carriage, and which
party KTT should pursue for any loss or damage. KTT has sought advice on whether it can sue the
shipowner; however, there are a number of contracting parties between KTT and the shipowner.
C)
The third issue to consider is whether the carrier is liable for damages, or whether an exemption exists
which limits the carrier’s liability. The damages KTT is seeking relate to losses from burned coffee
beans, which were a result of a fire on board the South Sea during passage. The circumstances around
the fire will need to be examined against the responsibilities and exemptions of the carrier outlined in
the relevant legislation.
Rules or relevant laws:
A)
Relevant to the application of the Act (1991):
S.11(1) states:
“All parties to: (a) a sea carriage document relating to the carriage of goods from any place in
Australia to any place outside Australia…Are taken to have intended to contract according to the
laws in force at the place of shipment”.
S.11(2) states:
“An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to:
…(b) preclude or limit the jurisdiction of a court in the Commonwealth or of a State or Territory
in respect of a bill of lading”
Sch.1A art.1(g) states:
“A sea carriage document means: (i) A bill of lading…”
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Art.5 states:
“The provision of these Rules shall not be applicable to charter parties, but if negotiable sea
carriage documents are issued in the case of a ship under a charter party they shall comply with
the terms of these Rules.”
Baughen (2015, p.78) notes where a general incorporation clause is used, such as ‘incorporating all
terms and conditions of the charter party’, only the primary clauses germane to the contract of carriage
will be incorporated. Arbitration and jurisdiction clauses are not incorporated into a bill of lading unless
they are specifically worded as such. Where a clause is incorporated, and considered germane to
carriage of goods, it may not have any effect because its wording does not cover a bill of lading context.
This analysis cites the UK House of Lords case of TW Thomas & Co ltd vs Portsea Steamship Co Ltd
[1912] AC1. The judgement from L.C. Lord Loreburn included:
“The bill of lading itself is the primary document to be considered…The arbitration clause is not
one that governs shipment or carriage or delivery or the terms upon which delivery is to be made
or taken”
Lord Atkinson made the following statement:
“That when it is sought to introduce into a document like a bill of lading…a clause…not germane
to the receipt, carriage or delivery of cargo or the payment of freight…this should be done by
distinct and specific words”
The precedent is expanded upon in the UK Court of Appeal decision for The Annefield [1971] 1
Lloyd’s Rep. 1, in which Lord Denning MR stated:
“I would say that a clause which is directly germane to the subject-matter of the bill of lading…
can and should be incorporated into the bill of lading contract… But if the clause is one which is
not thus directly germane, it should not be incorporated into the bill of lading contract unless it
is done explicitly in clear words either in the bill of lading or in the charter party.”
B)
State and Territory Sea-Carriage Documents Acts:
“provide that indorsement of a negotiable bill of lading transfers to the endorsee the rights and
liabilities under the contract of carriage, and the ‘contract of carriage’ is defined as being ‘the
contract contained in or evidenced by’ the bill of lading.” (Davies and Dickey 2016, p.331)
S.1A, Art.1(1)(a) of the Act (1991) states:
“Carrier includes the ship owner or the charterer who enters into a contract of carriage with a
shipper”
Davies and Dickey (2016, p.352) note the definition of the ‘carrier’ can be unclear under the Act (1991)
where there is both a shipowner and a time charterer, and all circumstances arising from the facts and
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documents of the particular case need to be considered in order to identify the carrier. In coming to this
position, they cite multiple Australian cases which concluded different relationships between the
shipper and the charterer or shipowner.
Davies and Dickey (2016, p.274) observe the carrier does not include those who are not parties to the
contract of carriage, consistent with the doctrine of privity. Citing the case of J Gadsden Pty Ltd v
Australian Coastal Shipping Commission [1977] 1 NSWLR 575, action for damages was brought
against the shipowner, who was found not to be a party to the contract of carriage evidenced by the bill
of lading and was not the ‘carrier’ for the purposes of the Hague Visby rules.
Questions of authority arise where the delineation is less clear, Davies and Dickey (2016, p.353) cite
the case of Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 870, as a
contract of carriage between charterer of the vessel and shipper, noting the bills of lading were signed
by an employee of the charterer, disregarding a the presence of ‘for master’ on the documents. The case
of BHP Trading Asia Ltd vs Oceaname Shipping Ltd [1996] 67 FCR 211 is cited where an authorised
agent for the master signing the bills of lading evidenced a contract of carriage between shipowner and
shipper, despite the documentation bearing the charterers imprint.
The United Kingdom case of “Starsin”, Owners of cargo & Ors v. “Starsin”, Owners and/or demise
charterers of [2003] UKHL 12 is noteworthy. The House of Lords ruled the charterer was the carrier,
not the shipowner, in circumstances where both sides of the bills of lading differed and agents for the
charterer had signed the bills on behalf of the charterer as ‘carrier’.
C)
Sch.1A art.3(1) of the Act (1991) states:
The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to
(a) Make the ship seaworthy. (b) properly man, equip and supply the ship. C) make the holds,
refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit
and safe for their reception, carriage and preservation.
Art.3(2) states:
Subject to provisions of Article 4, the carrier shall properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried.
Art.4(1) states:
Neither a carrier nor the ship shall be liable for loss or damage arising or resulting from
unseaworthiness unless caused by a want of due diligence on the part of the carrier to make the
ship seaworthy.
Art.4(2) states:
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting
from…(b) Fire, unless caused by the actual fault or privity of the carrier.
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Davies and Dickey (2016, p.253) note to establish a cargo claim in Australia, a plaintiff must positively
identify negligence of the defendant carrier that constitutes a breach of Art.3(2) of the Act (1991),
following which the defendant carrier can seek defence under Art.4(2).
To define seaworthiness, Davies and Dickey (2016, p. 253) quote judgement from Great China Metal
Industries Co Ltd v Malaysia International Shipping Corp Berhad [1998] 196 CLR 161:
“Seaworthiness is…no single standard of fitness which a vessel must meet…it must be in a fit
state as to repairs, equipment and crew…nor is the standard of fitness unchanging. The standard
can and does rise with improved knowledge.”
The UK Appeal Court case of Glencore Energy UK Ltd & Glencore Ltd v Freeport Holdings Ltd [2019]
EWCA Civ 388 (The ‘Lady M’) is considered noteworthy. The court held a shipowner was entitled to
the exemption of Art.4(2)(b) of the Hague Visby rules in the event a fire deliberately lit by a member
of the crew of a vessel.
Application:
A)
The Act (1991) is explicit in both the circumstances in which it is to be applied and what jurisdictions
have competence to hear cases.
S.11 of the Act (1991) states all parties to a sea carriage document intend to contract under the laws of
the place of shipment; being Melbourne, Australia in the case of KTT’s contract of carriage. S.5 of the
Act (1991) states this position applies to bills of lading issues under charter parties; as is the case with
KTT, who holds a bill of lading issued under a voyage charter party.
The attempted incorporation of a choice of law clause and jurisdiction clause in the bill of lading is also
brought into conflict with S.11 of the Act (1991) which states any agreement has no effect so far as it
purports to preclude or limit either the applicability of the law at the place of shipment or the jurisdiction
of a court in the Commonwealth or a State or Territory.
Secondary to the application of a statute, KTT’s bills of lading included no specific wording relating to
a choice of law or jurisdiction; common law establishes these areas are not considered germane to the
subject matter of the bill of lading to warrant incorporation through a general clause. Further, it’s noted
the original charter party documentation only refers to the charter party when discussing choice of law
and jurisdiction, without any reference to bills of lading issued under the charter party.
B)
At the time of the cargo being damaged by fire, KTT was the holder of the endorsed bills of lading, and
under the Goods Act 1958 (Vic), ss92, 94, is entitled to the rights and liabilities of the contract of
carriage; being the contract contained in or evidenced by the bills of lading. As established under point
a) the rights and liabilities are those identified in the Act (1991).
The Act (1991) provides the identity of the carrier could be either a shipowner or a charterer. As per
Davies and Dickey’s consideration the matter, the particular facts and documents of the case need to be
taken into account to identify the carrier. Considering the bill of lading, the document is a standard form
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document with the logo of TMT on the face. The documents were signed by an authorised agent for
TMT; however, noted signature is ‘for and on behalf of the master’.
Applying the doctrine of privity, it is the writer’s opinion SSS did not ‘enter into a contract of carriage
with the shipper’ as per S.1A, Art.1(1)(a) of the Act (1991), as SSS is not identified in, nor is it a party
to the contract of carriage as evidenced by the bills of lading between TMT and KTT. Considering the
question of where the authority stems from in the signature on the bills of lading. It is the writer’s
opinion the authority which SSPL signed the bill of lading was that bestowed by TMT upon SSPL as
its agent. SSPL as an agent of TMT has no authority to sign on behalf of SSS when signing ‘on behalf
of the master’, noting the clause included in the charter party between TMT and PS, and that between
PS and SSS, which states ‘for the purposes of signing bills of lading, the master is to be regarded as the
servant of the charterer’.
C)
The rights KTT is entitled to under the Act (1991) include that TMT, as the carrier, shall properly and
carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. In following the
established approach to a cargo claim, damage to KTT’s cargo of coffee beans as a result of fire
potentially lit by a member of crew is, prima facie, negligent in respect to Art.3(2) of the Act (1991),
and KTT has grounds to pursue the carrier for losses.
Under the Act (1991), TMT as the carrier is entitled to exemption of responsibility for damage arising
or resulting from fire, unless caused by the actual fault or privity of the carrier. It’s the writer’s opinion
the fire aboard the SSS was not a result of the master or crew undertaking their roles on behalf of the
carrier, and in responding to the fire, the master acted in accordance with the safety procedure on board.
It is the writer’s opinion that the circumstances outlined do not amount to fault or privity of the carrier
but amount to barratrous conduct of an individual member of the crew; i.e. done with intent to cause
damage or recklessly and with knowledge that damage would probably result.
The judgement in the Lady M [2019], in circumstances with strong similarities to this case, came to the
position that while a crew member deliberately lighting a fire may amount to barratrous conduct, the
carrier was still entitled to the exemption damage caused by fire under Art.4(2)(b) of the Hague-Visby
rules; identical in wording to the Australian modification in the Act (1991).
The only way the writer can foresee KTT being successful in any damage claim as a result of fire in the
circumstances outlined, is if there was reason to believe the vessel was not seaworthy at the beginning
of the journey, by want of due diligence. There is no evidence in the surveyor’s report to suggest there
was a deficiency in the firefighting system; however, it may warrant further questioning, for example
as to whether there was a sufficient quantity of CO2 on board at the time of departure.
In considering what role mental health may play in fitness of the crew with regard to seaworthiness,
noting the understandings of impacts of mental health are constantly developing, and judgement in the
Great China Metals [1998] case argues seaworthiness standards should also improve with greater
knowledge. The writer considers it unlikely one could argue due diligence on behalf of a carrier is able
to identify barratrous intent stemming from a mental health condition, and any effort to exercise due
diligence may be in breach of other areas of law such as the Disability Discrimination Act 1992 (Cwlth).
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Conclusion:
A)
While TMT was engaged under a voyage charter party including exclusive jurisdiction and choice of
law clauses, it’s the writer’s opinion the issuing of a bill of lading under this charter party brings the
contract of carriage under the regulation of the Act (1991), and any legal action should be brought before
an Australian court. It is the writers opinion that any attempt to incorporate a choice of law and exclusive
jurisdiction clause into the bill of lading is made ineffective by S.11(2) of the Act (1991), and
secondarily, is not consistent with the common law position on the incorporation of terms of a charter
party into bills of lading, when made by way of a general clause.
B)
Under the Goods Act 1958 (Vic), KTT is entitled to the rights outlined in the Act (1991) as the holder
of endorsed bills of lading. It is the writer’s opinion the bills of lading evidence a contract of carriage
between KTT and TMT, noting it was TMT who was engaged by the shipper, the documentation bears
the markings of TMT, and was signed by an agent of TMT. It is the writer’s opinion SSS should not be
pursued for damages as it doesn’t likely satisfy the definition of ‘carrier’ in the Act (1991), under the
doctrine of privity and based on the facts and documents of this case. It is the writer’s opinion TMT
best fits the definition of carrier under the Act (1991), and any damages would need to be sought from
TMT.
C)
KTT may be able to make a prima facie claim of negligence under Art.3(2) of the Act (1991), and peruse
TMT for damages; however, it’s the writers opinion TMT would be entitled to exemption from
responsibility under Art.4(2)(b) of the Act (1991) and not liable for damages. While the loss was
reported to be a result of barratrous conduct from a member of the vessel’s crew, a foreign court has
held this would not be considered to be a fault or privity of the carrier, and an Australian court may be
inclined to make a similar finding.
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Reference list:
Aitkins. R, Lord, R & Bools, M 2016, Bills of Lading, 2nd edn, Informa Law from Routledge, London,
Pg. 193. Accessed from Books.google.com.au on 13 April 2020.
Baughen, S 2015, Shipping Law, 6th edn, Routlege, London, Pg. 78.
Davies, M & Dickey, A 2016, Shipping Law, 4th edn, Lawbook Co., New South Wales.
Carriage of Goods by Sea Act 1991(Cwlth), retrieved from
www.legislation.gov.au/Details/C2011C00070
Disability Discrimination Act 1992 (Cwlth), retrieved from
www.legislation.gov.au/details/c2016c00763
Glencore Energy UK Ltd & Anor v Freeport Holdings Ltd [2019] EWCA Civ 388 (The ‘Lady M’);
retrieved from http://www.bailii.org/ew/cases/EWCA/Civ/2019/388.html on 14 April 2020.
Goods Act 1958 (Vic), retrieved from www.legislation.vic.gov.au/in-force/acts/goods-act-1958/112
Margetson, N 2018 ‘Glencore Energy UK Ltd and Glencore Ltd versus Freeport Holdings Ltd (Lady
M)’, European Journal of Commercial Contract Law, vol 10, no 1, pp. 5-6.
Merkin, R & Flannery L 2020. Merkin and Flannery on the Arbitration Act 1996. Informa Law from
Routledge, London. Accessed from Books.google.com.au on 13 April 2020.
Merkin, R (Ed.) 2000, Privity of Contract: The Impact of the Contracts (Right of Third Parties) Act
1999, Informa Law from Routledge, London, Pg. 143. Accessed from Books.google.com.au on 18
April 2020.
“Starsin”, Owners of cargo & Ors v. “Starsin”, Owners and/or demise charterers of [2003] UKHL 12;
retrieved from http://www.bailii.org/uk/cases/UKHL/2003/12.html
Tweeddale, A 2002, ‘Cases: Incorporation of Arbitration Clauses’, Arbitration-London, vol 68, no 1,
pp.48-56.
TW Thomas & Co ltd vs Portsea Steamship Co Ltd [1912] AC1. (The ‘Portsmouth’); retrieved from
https://www.casemine.com/judgement/uk/5a8ff8c860d03e7f57ecd556 on 11 April 2020.