National Trading Corporation Ltd v Hugget [1999] FijiLawRp 20; [1999] 45 FLR 41 (19 February 1999)

[1999] 45 FLR 41

HIGH COURT OF FIJI ISLANDS

NATIONAL TRADING CORPORATION LTD

v

STUART HUGGET &
CARPENTERS FIJI LIMITED MBF

[HIGH COURT, 1999 (Pathik J) 19 February]

Appellate Jurisdiction

Admiralty- demise charter party- implied warranty by charterer that vessel seaworthy.

A group of anti nuclear protestors including a well-known Suva architect and a prominent Senator chartered a vessel to sail to the Tuamotu Archipelago to protest against French nuclear testing at Mururoa. Unfortunately the vessel broke down and the party never reached their destination instead drifting at sea for some days before finally being rescued. The owners of the vessel refused to pay for essential repairs. On appeal the High Court HELD: that it was an implied term of the charter party that the vessel was seaworthy which it plainly was not and that accordingly the cost of the repairs was properly the responsibility of the owner.
 
Cases cited:
 

Cohn v. Davidson & Anr  (1877) 2 QBD 455

Dixon v. Sadler  (1841) 5 M & W 405

Jessie Hedley (Pauper) v. Pinkney & Sons Steamship Co. Ltd.

            (1894) AC 222

Kopitoff v. Wilson & Ors  (1876) 1 QBD 377

Steel et.al v The State Line Steamship Company (1877) 3 App Cas.72
 
Appeal to the High Court from the Magistrates’ Court.
 
G.P. Lala for the Appellant
P.I. Knight for the First Respondent
H. Lateef for the Second Respondent
 
Pathik J:
 
The appellant (Third Party) has appealed against the ‘whole of the findings, order, judgment or decision’ herein against the appellant from the judgment delivered on 10 March 1998. The learned Magistrate gave judgment in favour of the second respondent (the original plaintiff - R2) with costs and also ordered that the first respondent (RI) be indemnified by the appellant for the sum claimed with costs.
 
Background facts
 
The facts are amply set out in the Decision or Judgment of the learned Magistrate and for ease of reference, in so far as it is material to this Appeal, they are as follows:
 

“In September 1995, the “the M.V. Kaunitoni” (the vessel) sailed from Fiji bound for Muroroa. Her passengers consisted of a group of anti-nuclear protestors both local and international.

 

Unfortunately the “M.V. Kaunitoni” did not reach her destination. Her engine broke down on route. The protestors were stranded on the drifting vessel in the middle of the Pacific Ocean. Following a dramatic rescue, she was towed to the Cook Islands for engine repairs.

 

The repair works were carried out by the plaintiff at the defendant’s request. The plaintiff claims against him for the balance of the costs of the said repairs amounting to $11,805.99.

 

Mr. Hugget alleges that the 3rd party, (Natco), is liable to indemnify him against the plaintiff’s claim.

 

Natco owns the “M.V. Kaunitoni”. At the time of the breakdown, the vessel was the subject of a charter party Agreement (the agreement) between Natco and Mr. Hugget, Adi Tabakaucoro and Ms Costello, (charterers). The charterers had hired the vessel specifically for the protest voyage. The charter party agreement contains the terms and conditions of hire”.
 
Grounds of Appeal
 
The following are the Grounds of Appeal:
 

1.                THAT the learned trial Magistrate failed to properly and correctly interpret the meaning and effect of the charter party Deed, and/or failed to appreciate or hold that the contract for repairs was entered into by the first Respondent with Carptrac without any authority express or implied from the Appellant and therefore the Court was wrong in not holding that the Appellant was not liable to indemnify the first Respondent.

 

2.                THAT the learned trial Magistrate was -
 

(a)     wrong in holding that the damage done to the vessel arose out of fair wear and tear;

 

(b)     wrong in not holding that the 1st Respondent was not entitled to any indemnity under $40,000.00 in terms of the charter party;

 

(c)     wrong in holding that Appellant was liable to indemnify the 1st Respondent when the Appellant had nothing to do with the causation giving rise to claim by the Carptrac nor was the appellant party to the contract for repairs.

 

(d)     wrong in not holding that the 1st Respondent was not an agent of the appellant and had no authority to incur liability and seek indemnity from the appellant.

 

3.                THAT the learned trial Magistrate’s judgment or decision is inconsistent in that the Court held that “engine was damaged” and later in the judgment held that the damage was by reason of fair, wear and tear.

 

4.       THAT the learned trial Magistrate relied on irrelevant matters and failed to rely on the relevant material, namely the charter party Deed.

 
Issue on Appeal
 
In short the main issue for the Court’s determination is whether the learned Magistrate was correct in ordering that the defendant be indemnified by the Third Party for cost of repairs carried out by the second respondent.
 
Appellant’s submission
 
Mr. Lala submitted that the appellant is not liable to indemnify the first respondent for cost of repair works carried out by the second respondent on the vessel; that R1 did not act as agent of the appellant in having the repair work carried out and in fact there was no request made to the appellant to have the work done.
 
Mr. Lala further argued that upon a true construction of the clauses in the Charter no authority could be implied in law for R1 to carry out repairs and to seek indemnity from the Third Party. He says that the vessel was at R1’s risk and he was solely liable for any breakdown and its repair costs. He says that R1 could not have acted as the agent of the appellant to authorise repairs. He submits that the Third Party should have been contacted first.
 
It is further argued by him that the vessel was seaworthy and fit to undertake the voyage and that is evident from the Survey Certificate dated 22 August 1996 issued to the appellant by the Fiji Marine Board.
 
Mr. Lala submits that the learned Magistrate’s finding that the damage was done to the vessel ‘by reason of fair wear and tear’ is not supported by ‘first hand admissible evidence’.
 
Reference was made to Clauses 12, 18 and 5 of the Charter which Mr. Lala says are clear and they manifest the intention of the parties.
 
Counsel submitted that the learned Magistrate was wrong in finding that there was a breach of warranty. He said that the vessel was fit for the voyage which it took. He says that the warranty did not guarantee an unforeseeable and unknown risk taking into account that the Third Party had certain repairs done to the vessel by R2 before the Charter and before the Marine Certificate was obtained.
 
First respondent’s submission
 
It is Mr. Knight’s submission that the ship owners (the appellant) by virtue of the provisions of the Demise Charter (the “Charter”), coupled with the evidence and an express or implied warranty of `additional seaworthiness’ are liable to pay the expenses incurred by the first Respondent.
 
Second respondent’s submission
 
Mr. H. Lateef stated that the issue is between the appellant and the first respondent and therefore he has no submission to make.
 
Consideration of the issue
 
A careful consideration has been given by me to all the submissions made by counsel for the respective parties. I have also considered the evidence tendered in this case.
 
In this Appeal the appellant does not agree with the learned Magistrate’s decision that the first respondent be indemnified by it for the repair costs payable to the second respondent as claimed by it.
 
Essentially the learned Magistrate found ‘that the engine damage that caused the “M.V. Kaunitoni” (“the vessel”) to breakdown was damages resulting from fair wear and tear’ and ‘that Natco did warranty that the vessel was seaworthy and fit for charter’. There are other findings such as that: ‘the Marine Board Survey Certificate did not certify the vessel’s (engine’s) seaworthiness. It merely pertained to certification of safety equipment’, and ‘that Natco approved the course of action taken by the defendant including approval of the repairs carried out by the plaintiff’.
 
I do not find anything wrong in the above findings including the finding that the Third Party “approved the course of action taken by the defendant including approval of the repairs carried out by the plaintiff”. I agree with these findings which are based on evidence before the Magistrate and do not consider that they ought to be disturbed in any way. The learned Magistrate was in a better position than the appellate Court to make the findings of fact having heard and seen the witnesses and having observed their demeanour in the witness box.
 
I am of the view that there is a point of law involved in this case. There was no reference to any case law on the issues in the lower court. Bearing in mind the facts the crucial factor which will decide as to who should be liable to pay for the repairs depends entirely on the interpretation which one gives to the clauses in the Charter executed by the appellant and the first respondent and in particular the clauses to which reference was made by Mr. Knight and Mr. Lala and argued on; they are clauses 5,10, 11, 12 and 18 and they read as follows in so far as they are material:
 

“5.     The Charterers shall at their own expense maintain the vessel throughout the period of hiring in a thoroughly efficient state in hull, machinery and equipment (fair wear and tear only excepted) in accordance with good maintenance practice and shall make good all damage thereto other than damage resulting from fair wear and tear.....

 

10.     The Charterers shall have no authority to bind the owners by any contract whatsoever, including contracts for the carriage of goods or performance of services or for the repair, maintenance, provisioning or supply of the vessel, .....

 

11.     The owners shall be under no liability whatsoever for any loss, damage or delay of whatsoever kind and whensoever arising or for any injury to or death of any person whomsoever, unless caused by personal want of due diligence on the part of the owners or their manager prior to delivery in making the vessel seaworthy and fitted for the charter service.

 

12.     The Charterers shall indemnify the owners against all and any liabilities and claims of whatsoever nature and howsoever arising in connection with the vessel, including but not limited to any damages, fines, charges, taxes or other impositions salvage or general average for which the owners may incur liability or which may be claimed against the owners or imposed upon the vessel at any time during the period of hiring.

 

18.     The vessel shall be redelivered on the expiration of this charter in the same order and condition as when delivered to the Charterers (fair wear and tear only excepted) at port in Suva on or before expiration of charter.”
 
In a nutshell, it is Mr. Lala’s argument that the clauses in the Charter particularly the ones referred to hereabove completely absolve the appellant from all liability and that the finding by the learned Magistrate that there was “fair wear and tear” was wrong on the evidence before her.
 
In view of the authorities which I shall consider hereafter and on the facts as found, Mr. Lala’s arguments do not hold any water.
 
Application of law to facts
 
What is charterparty?
 
This was a ‘demise charterparty’ and it is headed as such being one of the three categories of charterparties in shipping law. The other two being ‘voyage charterparties’ and ‘time charterparties’.
 
A ship or vessel can be hired out and a contract for the hire of a ship is called a ‘charterparty’. The ship that is hired is said to be ‘chartered’ and the hirer is the ‘charterer’. They are leases of ships.
 
In a demise charterparty the charterer takes over all the responsibilities for the vessel and I emphasise that this is subject to the Charterparty agreement. Under clause 24 it is stated that “this Charterparty contains the whole agreement of the parties and no variation shall be effective unless made in writing and signed by the parties hereto”. He employs a crew and provisions, bunkers and runs the ship as his own as long as the demise charter lasts. In this case R1 had his own crew and captain.
 
Seaworthiness - implied warranty
 
The Charterparty provides in said clause 11 that the owners shall exercise due diligence to render the vessel seaworthy before delivery when it states therein that they are under “no liability whatsoever ..... unless caused by personal want of due diligence on the part of the owners or their manager prior to delivery in making the vessel seaworthy and fitted for the charter service”.
 
The owners knew what the purpose of the hiring was. The vessel broke down en route because of its unseaworthiness at the time of delivery and the charterers could not reach their destination and the whole purpose of hiring was defeated.
 
On this aspect there is the further clause 18 which required the vessel to be redelivered in the same order and condition ‘fair wear and tear only excepted’.
 
The responsibilities of the parties are set out in the said clauses 5 and 11: In my view they provide an express warranty that the vessel has to be seaworthy at the time of delivery for the voyage that she has to undertake.
 
Thus the liability of either party will depend on whether the appellant (the owners) made the vessel seaworthy and fitted for the charter service than this will exempt the owners from any liability but liability will accrue to the charterers.
 
The learned Magistrate correctly found on the evidence before her that there was a warranty of seaworthiness. The House of Lords in Steel et.al v The State Lines Steamship Company (1877) 3 App Cas.72 held, inter alia, that “there was an implied engagement to supply a seaworthy ship”. The Lord Chancellor in his judgment on the meaning of the word `seaworthy’ in this context stated thus:
 

By “seaworthy”, my Lords, I do not desire to point to any technical meaning of the term, but to express that the ship should be in a condition to encounter whatever perils of the sea a ship of that kind, and laden in that way, may be fairly expected to encounter in crossing the Atlantic. My Lords, if there were no authority upon the question, it appears to me that it would be scarcely possible to arrive at any other conclusion than that this is the meaning of the contract.
 
In regard to ‘seaworthiness’, for the principles applicable to this appeal, I would like to refer to the following passage from the judgment of Lord Blackburn in Steel (supra) at p86 which I consider apt:
 

“I take it my Lords, to be quite clear, both in England and in Scotland, that where there is a contract to carry goods in a ship, whether that contract is in the shape of a bill of lading, or any other form, there is a duty on the part of the person who furnishes or supplies that ship, or that ship’s room, unless something be stipulated which should prevent it, that the ship shall be fit for its purpose. That is generally expressed by saying that it shall be seaworthy; and I think also in marine contracts, contracts for sea carriage, that is what is properly called a “warranty,” not merely that they should do their best to make the ship fit, but that the ship should really be fit. I think it is impossible to read the opinion of Lord Tenterden, as early as the first edition of Abbott on Shipping, at the very beginning of this century, of Lord Ellenborough, following him, and of Baron Parke, also in the case of Gibson v. Small (4 H.L.C 353), without seeing that these three great masters of marine law all concurred in that; and their opinions are spread over a period of about forty or fifty years. I think therefore, that it may be fairly said that it is clear that there is such a warranty or such an obligation in the case of contract to carry on board ship. (emphasis added)   

 
Lord Blackburn in Steel at p.87 (ibid) goes on to say and this is pertinent:
 

“In the case of Kopitoff v. Wilson, where I had directed the jury that there was an obligation, I did certainly conceive the law to be, that the shipowner in such a case warranted the fitness of his ship when she sailed, and not merely that he had loyally, honestly, and bona fide endeavoured to make her fit.”
 
It was stated in Kopitoff v Wilson & Ors  (1876) 1 QBD 377 (in the headnote) that ‘in every contract for the conveyance of merchandise by sea there is, in the absence of express provision to the contrary, an implied warranty by the shipowner that his vessel is seaworthy’. I would say that this statement of principle in the present appeal is the one that should be applied on the facts and circumstances of this case despite the fact that there was no question of conveyance of merchandise in this case.
 
Also Parke B. in the case of Dixon v. Sadler  (1841) 5 M & W 405 at 414 (E.R Vol 151 p.172) (approved in Jessie Hedley (Pauper) v. Pinkney & Sons Steamship Company Limited (1894) A.C. (H.L.) 222 at 227) defined seaworthiness of a vessel thus:

 

“..... it is clearly established that there is an implied warranty that the vessel shall be seaworthy, by which it is meant that she shall lie in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured, at the time of sailing upon it”.
 
To counter the argument as to seaworthiness, Mr. Lala relied upon the said Marine Survey Certificate but he eventually agreed that this does not prove seaworthiness. In this regard the Plaintiff’s second witness (PW2) (the Naval Architect) stated that this Certificate does not check the engine of the ship, it only ensures that safety equipment such as life jackets, pumps, safety doors etc. are present in the vessel.
 
Furthermore, according to Cohn v. Davidson & Anor  (1877) 2 QBD 455, the condition of seaworthiness is broken although the ship may be in a present state of fitness at the moment of sailing if by reason of a latent defect or internal weakness existing at that time she will be rendered unfit in the future for the due completion of her voyage. In this respect I refer to the headnote to Cohn (supra) which I consider is applicable to the facts of this case. The headnote reads:

 

“The implied warranty of seaworthiness into which the owner of a ship enters with the owner of her cargo, attaches at the time when the perils of the intended voyage commence, that is, when she sets sail with the cargo on board for her port of destination; and this warranty is broken if she is then unfit to encounter these perils, although she may have been seaworthy whilst lying in the port of loading, and also at the times of starting from her anchorage for and arriving at the place of loading appointed by the charterer, and of commencing to take on board her cargo.”

 
The facts of the case are (the headnote continues):

 

“The defendants were the owners of a vessel, and chartered her for a voyage to D., from the port of S., where she was then lying in a seaworthy condition. Pursuant to the terms of the charterparty, and by the orders of the plaintiff, the vessel proceeded to a wharf situate in the port of S. and there loaded on board a cargo of cement belonging to the plaintiff. At the time when she commenced taking in the cargo she was seaworthy; but by the time of setting sail on her voyage she had from some unknown cause become unseaworthy. The defendants were not guilty of negligence in sending her to sea in the condition in which she then was. Soon after starting from S. she began to leak; but the wind being fair for the voyage to D., the master resolved to keep his course for D., and he was not guilty of any negligence in not returning to S. The vessel did not reach D., but foundered at sea, and the plaintiff’s cargo of cement was totally lost:-

 

It was held:

 

that the warranty of seaworthiness implied by law upon entering into the charterparty had been broken, and that the plaintiff was entitled to recover the value of the cargo shipped by him on board the vessel.”
 
In the case before me PW2 gave evidence that the cause of the engine breakdown was overheating of the engine and the normal cause of overheating is failure of water circulation and thus concluded that blockage of water pipes had occurred. The chamber also cracked because it was too old and he also stated that the engine was very old which was probably the original engine of the ship which was built in 1973. This he said could amount to fair wear and tear. The witness also stated that looking at the engine one could not be sure whether the owners complied with one of the important requirements to maintain an engine that is installation of ‘zincs’ inside the engine to keep it from corroding.
 
It is therefore clear from the evidence that the appellant had failed in its common law duty and duty under the Charter (contract) with the charterers to provide a seaworthy vessel to encounter the perils of the voyage as a result whereof the vessel broke down thus frustrating the object of the Charter namely, to reach Morurua Island.
 
Conclusion
 
To sum up, the law as I have stated above is this, that there is an implied warranty of seaworthiness in a situation such as the present. The case law to which I have made reference support this proposition. There is no provision in the Charter excluding or limiting the implied warranty of seaworthiness, if anything, as I have already said the said clauses 5 and 11, on my interpretation of them on the authorities require the vessel to have been seaworthy before delivery. InThe Cargo ex Laertes  (1877) 12 P 187 at 190 Butt J said:
 

“No doubt the ordinary rule is that, at the commencement of the voyage, there is an implied warranty that the ship is seaworthy, not that the owner will use his best endeavours to make her so, but that she is in fact seaworthy. (emphasis added)
 
In the case before me, on the evidence, whatever repair work was alleged to have been done to the vessel prior to delivery is an insufficient reason, in the light of the law as to warranty of seaworthiness, to absolve the appellant from liability. Evidently the fault in the engine which caused the break-down existed when the vessel started and therefore she was not seaworthy for the voyage.
 
Even if a case of ‘wear and tear’ was not made out it was still incumbent on the appellant/owners to provide a seaworthy vessel. In this context I conclude with the following words from the judgment of Lord O’Hagan in Steel(supra) at p 84 when he said:
 

“.....I have no doubt myself that the words of exception which are contained in the bill of lading in no degree denude the shipowner in this case from the liability so created”.
 
In the outcome, taking the whole of the evidence and interpreting the relevant clauses in the Charter as the learned Magistrate did and considering the authorities, I find that the vessel was unseaworthy at the time she sailed to encounter the perils of the voyage and that the damage that was caused was as a consequence of her being unfit hence there was a breach of the implied warranty of seaworthiness.
 
The appeal therefore fails and is dismissed with costs to be taxed if not agreed.
 
(Appeal dismissed).