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Burns Philp (South Sea) Company Ltd v Marine Pacific Ltd [1979] FJLawRp 36; [1979] 25 FLR 57 (16 January 1979)

[1979] 25 FLR 57

SUPREME COURT OF FIJI

Civil Jurisdiction

BURNS PHILP (SOUTH SEA) COMPANY LIMITED

-v-

MARINE PACIFIC LIMITED

[SUPREME COURT, (Mishra J.) 16th January 1979)]

(Contract for Carriage of Goods by Sea - deck cargo lost at sea - excluded by Bill of Lading).

G.P. Shankar for Plaintiff
H. Lateef for Defendant

Plaintiff, a dealer in merchandise sued the defendant an inter island carrier of goods for damages in respect of goods lost at sea while being carried from Suva to Labasa on defendant's barge. Except for some oil the cargo was carried on deck. The barge was towed by the vessel "Mooea", leaving Suva at 5 p.m. on 14 June 1977. At 5 a.m. on 15 June the barge was observed to be listing, its stern almost level with the water. Examination showed the bulwark on the deck was broken and some goods, including fuel drums were missing. Two holes in the barge were open-there was a great quantity of water inside. Plaintiff claimed a breach of contractual duty by defendant in failing to ensure cargo was properly secured. Defendant denied this and claimed the benefit of an exclusion clause stamped on the Bill of Lading, viz

"....... cargo carried on deck at shipper's risk without responsibility for loss or damage howsoever caused."

The Bill of Lading stated 'inter alia' that it "shall have effect subject to the ..... rules in the schedule in the Sea Carriage of Goods Ordinance Cap. 207 as applied by the said Ordinance."

The Bill of Lading condition 26 stated:

"All goods shipped as deck cargo to be carried at owner's risk".

The definition of "goods" in the Rules is wide enough to include the plaintiffs' goods; but the definition continues

"....... except ..... cargo which by the contract is stated as being carried."

Referring to the Rules, the Court held that "goods" therefore must not only be so carried, but must also be stated in the bill of lading as being so carried.

Having regard to the exclusion clause supra, defendant argued the plaintiff could not recover. Plaintiff submitted that the clause was not sufficient to exclude negligence.

Held: Liability for negligence if any, and in the absence of fundamental breach (not alleged) was covered by the exclusion clause in relation to the deck cargo.

Judgment for the defendant.

(Upheld on appeal.)

Cases referred to:

John Carter v. Hanson Haulage (1965) 1 All E.R. 113
Hunt and Winterbotham (West of England) Ltd. v. B.R.S. (Parcels) Ltd. (1962) 2 W.L.R. 172.
Alderslade v. Hendon Laundry, Ltd. (1945) 1 All E.R. 244
Produce Meats v. Borthwick (1964) N.Z.L.R. 700
Price and Co. v. Union Lighterage Co. [1904] UKLawRpKQB 12; (1904) 1 K.B. 412
Joseph Travers & Sons Ltd. v. Cooper (1915) 1 KB. 73
Svenska Traktor Akt v. Maritime Agencies (Southampton) Ltd. [1877] UKLawRpKQB 35; (1953) 2 Q.B.D 295

MISHRA, J:

JUDGMENT

Plaintiff is a dealer in merchandise and defendant is an inter-island carrier of goods. Plaintiff's claim is in respect of goods lost at sea while being carried by the defendant from Suva to Labasa.

The main facts are not in dispute. The goods in question were loaded on the defendant's barge "G.M.10" at Suva between 14th and 15th June 1977. Other goods belonging to other shippers were also on it. Among the goods were several 44 gallon drums of fuel.

Inside the barge is a built-in tank into which some oil had been pumped, to be pumped out at Labasa. The rest of the cargo was carried on deck. The barge left Suva at 5 p.m. towed by the vessel "Mooea". They steamed all night. At 2.30 a.m. near Levuka light house Emose, the Captain, handed over to one Lepper and went down to his cabin. Lepper sent for him at 5 a.m. He examined the barge with the help of his binoculars. It seemed to be tilting to one side, its stern being almost level with the water. He steamed about three miles off his course and went inside the reef near Rukuruku in order to inspect the barge closely. There they went to the barge and found that part of the bulwark surrounding the deck had been broken and some of the goods were missing. Fuel drums had come loose from ropes and some were gone. Two holes in the barge were open and a great deal of water had gone inside. Pins which keep the lids in place had come off and were hanging near the lids.

Water was pumped out of the barge and the, remaining deck cargo properly secured. The "Mooea" and the barge left Ovalau the next day at 7 a.m. for Labasa with the remaining cargo.

Defendant admits that plaintiffs goods listed in the statement of claim were lost at sea.

Plaintiff alleges breach of contractual duty in defendant's part in failing to ensure that the cargo in question was properly secured for such a voyage and also in failing to deliver that cargo at Labasa. They further allege breach of duty under the Sea Carriage of Goods Ordinance.

Defendant denies these allegations and claims the protection of an exclusion clause inserted by them in the bill of lading. This clause stamped on the bill of lading which bears signatures of both parties is in following terms:

"Carried on deck at shipper's risk without responsibility for loss or damage howsoever caused."

I will first deal with the issue of whether or not the Sea Carriage of Goods Ordinance applies to the goods in question. Parties have by agreement put in a sample printed bill of lading which contains defendant's general conditions of carriage. At the end it contains an express statement, as it is required by section 4 of the Sea Carriage of Goods Ordinance to do, that it "shall have effect subject to the provisions of the rules in the schedule in the Sea Carriage of Goods Ordinance Cap. 207, as applied by the said Ordinance". The rules contained in the schedule to the Ordinance, therefore, must apply unless it can be (shown that there is something in the contract of carriage which places plaintiffs goods outside the operation of those rules. Condition 26 of the bill of lading states-

"26. All goods shipped as deck cargo to be carried at Owner's risk."

Such a stipulation in the general conditions would, as a rule, be without effect and Article III of the Rules which defines responsibilities and liabilities of the parties would still apply by virtue of rule 8 of that Article. The Rules define "goods" as follows:

"'goods' includes goods, wares, merchandise, and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried;"

To escape that operation of the Rules the goods in question must not only be carried on deck but must also be stated in the bill of lading as being so carried. As Pilcher J. said in Svenska Traktor Akt. v. Maritime Agencies (Southampton) Ltd. [1877] UKLawRpKQB 35; (1953) 2 Q.B.D. 295 at 300:

"The policy of the Carriage of Goods by Sea Act, 1924 was to regulate the relationship between the shipowner and the owner of goods along well-known lines. In excluding form the definition of 'goods', the carriage of which was subject to the Act, cargo carried on deck and stated to be so carried, the intention of the Act was, in my view, to leave the shipowner free to carry deck cargo on his own conditions, and unaffected by the obligations imposed on him by the Act in any case in which he would, apart from the Act, have been entitled to carry such cargo on signed it will full notice of it. This was done before the goods were taken to the wharf. According to Drala, plaintiff's shipping clerk, the two parties have dealt with each other for a considerable time and the plaintiff was fully aware of the exclusion clause. Unlike most ticket cases where the weaker party-has little choice or say in the matter, the parties here are both large business firms and were dealing on equal terms. Both knew that the goods would be carried on the deck of an open barge towed by a steamer."

How should then this clause be construed? Learned counsel for the defendant submits that the working of the exclusion clause is unambiguous and wide enough to cover everything including negligence. In any case, says he, there is no evidence of negligence on defendant's part. Plaintiffs counsel, on the other hand, contends that in a contract such as this negligence must be specifically stated in the clause if loss through negligence is to be excluded. General words, however wide, says he, cannot be sufficient to cover negligence which he maintains must be inferred from the evidence adduced.

It is important, I think, to determine first what exactly defendant undertook to do. He is a common carrier and he contracted to carry plaintiffs' goods to Labasa. He, however, excluded strict liabilities that the law imposes upon the common carrier under the Sea Carriage of Goods Ordinance by stating on the bill of lading that the goods would be carried on deck and, in fact, carrying them in that manner. Plaintiff cannot, therefore, demand from him the almost absolute liability that is imposed upon him under that Ordinance. To hold the contrary would be to deprive the exclusion clause of all significance.

I do not, however, accept defendant's contention that he can never be liable, no matter how the goods are lost. If, for instance, there was such a misperformance as to destroy the whole core of the contract, the exclusion clause would not avail the defendant. If, to take an example instead of carrying the goods to Labasa he had carried them to Rotuma and lost them en route, he would be liable. So would he if he had gone outside the constract [sic] and sold the goods for profit.

Was there such a misperformance as to amount to a fundamental breach of contract? No such breach has specifically been, pleaded though there is a general allegation of failure to deliver the goods at Labasa. What is specifically pleaded is negligent performance of the contract.

Can failure to deliver the goods at Labasa itself amount to a fundamental breach which would destroy the whole contract? Where a common carrier is an "insurer" in the eyes of law, as he would be under the Sea Carriage of Goods Ordinance, it might. Here, however, the contract excludes the operation of that Ordinance and the parties specifically agree that the cargo be carried on deck at the shippers' risk. In the absence of such agreement a common carrier may not stow cargo on deck (See Halsbury's Laws of England 3rd Edn. Vol. 35 p. 394). By the agreement the shipper accepts risks which would normally be excluded in case of a common carrier. In this case in my view, the dictum of Davies L.J. in John Carter v. Hanson Haulage (1965) 1 All E.R. 113 at 123) which was not a case of Carriage of Goods by Sea would apply with equal force-

"In the first place, it is obvious that mere non-delivery cannot amount to a fundamental breach; otherwise the clause could never apply. For non-delivery connotes loss and vice versa."

This would also appear to be the effect of the decision in Hunt and Winterbotham (West of England) Ltd. v. B.R.S. (Parcels) Ltd. (1962) 2 W.L.R. 172 where the Court held that the plaintiff had to prove a fundamental breach and could not merely rely on non-delivery.

In the instant case there is nothing in the evidence to show that the defendant deviated from the contract. On the contrary it shows that endeavour was made to perform the contract as envisaged by the parties. The loss must be attributed either to careless performance of the contract as claimed by the plaintiff or causes falling outside negligence as contended by the defendant. Had there been any deliberate, as opposed to careless, act on defendant's part causing the loss it might have amounted to a fundamental breach but no such act is suggested by plaintiff's evidence.

I must, therefore, hold that there was no fundamental breach of the contract on the part of the defendant. Had there been such a breach the words "loss or damage howsoever caused" would have afforded the defendant no protection. What then is the position in the absence of such a breach? Is the wording of the clause wide enough to include negligence or must it be confined to causes other than negligence?

The principle to be applied was stated by Lord Greene in Alderslade v. Hendon Laundry, Ltd. (1945) 1 All E.R. 244 at 245):

"The effect of those authorities can I think be stated as follows: where the head of damage in respect of which limitation of liability is sought to be imposed by such a clause is one which rests on negligence and nothing else, the clause must be construed as extending to that head of damage, because if it were not so construed it would lack subject-matter. Where, on the other hand, the head of damage may be based on some ground other than that of negligence, the general principle is that the clause must be confined to loss occurring through that other cause to the exclusion of loss arising through negligence. The reason for that is that is a contracting party wishes in such a case to limit his liability in respect of negligence, he must do so in clear terms, and in the absence of such clear terms the clause is to be construed as relating to a different kind of liability and not to liability based on negligence. A common illustration of the principle is to be found in the case of common carriers. A common carrier is, to use a common expression though it may not be quite accurate, an insurer, and his liability in respect of articles entrusted to him is not necessarily based on negligence at all. Accordingly, if a common carrier wishes to limit his liability for lost articles and does not make it quite clear that he is desiring to limit it in respect of his liability for negligence, then the clause will be construed as only extending to his liability on grounds other than negligence. But if, on the other hand, the carrier, not being a common carrier and being only under an obligation to take reasonable care, makes use of that clause, then unless it is construed so as to cover the case of negligence there would be no content for it at all."

Hendon Laundry was not a case of carriage of goods and the exemption clause there was held to exclude liability for negligence.

The instant case is a case of carriage of goods by a common carrier. He has, however, effectively excluded his liability as an "insurer" by excluding the operation of the Sea Carriage of Goods Ordinance. He has contracted to carry goods on deck where goods may not normally be carried by a common carrier without the shipper's consent. He has also stated on the bill of lading that fire goods are so carried. The shipper has not only consented to goods being so carried but has accepted the exclusion clause by signing immediately underneath. For purposes of these goods he must, in my view, be treated as "a carrier only under an obligation to take reasonable care".

As North P., while discussing the effect to an exclusion clause on relieving the defendant from liability for negligence, said in Produce Meats v. Borthwick (1964) N.Z.L.R. 700 at 702:

"The principles of law which require to be applied in considering the first question are well enough understood. The difficulty lies in applying them to the facts of a particular case."

No authority has been referred to in the instant case where the effect of such an exclusion clause fell to be considered in relation to goods carried on deck outside the scope of the Sea Carriage of Goods Ordinance or similar legislation. It seems illogical that the liability of a common carrier in relation to such goods should remain unchanged. In Price and Co. v. Union Lighterage Co. [1904] UKLawRpKQB 12; (1904) 1 K.B. 412 where goods loaded on a barge were lost through the negligence of the defendant the Court of Appeal held that an exclusion clause exempting the defendant from liability "for any loss of or damage to goods which can be covered by insurance" was in general terms not expressely [sic] relating to negligence and did not, therefore, cover loss attributable to negligence. The defendant was held liable. In the later case of Joseph Travers & Sons Ltd. v Cooper (1915) 1 K.B. 73 the exclusion clause exempted the barge owner from liability "for any damage to goods however caused which can be covered by insurance". The Court of Appeal, by a majority, held that the words "however caused" relieved the defendant from liability for damage caused by the negligence of his servant.

Both these cases were decided before the Hague Rules, now incorporated into the Sea Carriage of Goods Ordinance, came into force. These Rules were designed to regulate the common law relationship between the shipper and the carrier. The Rules specifically exclude from their operation goods stated to be carried on deck and in fact so carried. In respect of such goods the carrier is not an "insurer" and is required only to show reasonable care. In such a case, in my view, the words "howsoever caused" will, in the absence of any fundamental breach, cover the negligence of the defendant's servants.

The evidence before me, on which both the parties rely, shows that, when the barge left Suva, the drums and other goods were tied down by ropes and covered with tarpaulin. I accept that it was in the rough seas near Nasilai that drums came loose and caused damage to the bulwark. They also dislodged the pins that kept the lids to the two holes in place. The coming loose of the drums in rough weather was the main cause of the loss of and damage to goods. The evidence discloses no fundamental breach of contract on the part of the defendant and to hold him responsible for such loss to deck cargo would be to impose upon him the liability of an "insurer" and deprive the exclusion clause of all its content. Plaintiffs counsel submits that Condition 5 at the back of the bill of lading shows the essential nature of the contract. That condition follows the Rules under the Sea Carriage of Goods Ordinance and would normally apply to all cargo except deck cargo which has been expressly covered by the exclusion clause in this case.

I, therefore, hold that the plaintiff's claim, cannot succeed. It is dismissed with costs which will be taxed in default of agreement.

Judgment for the Defendant.