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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> "Starsin", Owners of cargo & Ors v. "Starsin", Owners and/or demise charterers of [2003] UKHL 12 (13 March 2003) URL: http://www.bailii.org/uk/cases/UKHL/2003/12.html Cite as: [2003] 1 CLC 921, [2003] UKHL 12, 2003 AMC 913, [2003] 1 Lloyd's Rep 571, [2003] 2 WLR 711, [2003] 1 All ER (Comm) 625, [2004] 1 AC 715, [2003] 2 All ER 785, [2003] 1 LLR 571 |
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Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions
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OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions ON THURSDAY 13 MARCH 2003 The Appellate Committee comprised: Lord Bingham of Cornhill Lord Steyn Lord Hoffmann Lord Hobhouse of Woodborough Lord Millett HOUSE OF LORDSOPINIONS OF THE LORDS OF APPEAL FOR JUDGMENTIN THE CAUSEOwners of cargo lately laden on board the ship or vessel "Starsin" and others (Original Respondents and Cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original Appellants and Cross-respondents) and two other actions[2003] UKHL 12LORD BINGHAM OF CORNHILL My Lords, 1. On 8 December 1995 the vessel Starsin sailed from the Far East bound for ports in Western Europe. Among other cargoes the vessel carried a number of parcels of timber and plywood the condition of which deteriorated progressively and seriously during the voyage because they had been negligently stowed before the voyage began. These parcels were carried pursuant to contracts of carriage contained in or evidenced by a series of transferable bills of lading of which the respondents, on different dates, became the holders. It is convenient to describe the respondents as "the cargo owners". They made claims for damage to the cargo against the appellants, the owners and demise charterers of the vessel, between whom it is unnecessary to distinguish and to whom I shall refer as "the shipowner". The vessel was, at the time of this voyage, on time-charter by the shipowner to Continental Pacific Shipping ("CPS"), which at the time operated a liner service between the Far East and Western Europe, but which has since become insolvent. This appeal by the shipowner and the cross-appeal by the cargo owners raise questions which, compendiously expressed, are whether the shipowner is liable to the cargo owners under these bill of lading contracts and, if not, whether it is liable to any of the cargo owners to any (and if so, what) extent in tort. 2. The facts are well summarised in the judgments of Colman J sitting in the Commercial Court ([2000] 1 Lloyd's Rep 85) and the Court of Appeal ([2001] 1 Lloyd's Rep 437, [2001] EWCA Civ 56) and those summaries need not be repeated. It is enough to note that the various parcels of timber and plywood were shipped on board the vessel at 3 ports in Malaysia for carriage to Antwerp and Avonmouth under 17 bills of lading of which each of the 4 cargo owners (Makros Hout BV, Homburg Houtimport BV, Fetim BV and Hunter Timber Ltd) became the holders of 2 or more. Save in certain respects, specifically mentioned below (paragraph 38), it is unnecessary to distinguish between the various cargo owners. There were some differences between the various bills, but these differences are not material to any issue arising on the appeals. It is convenient to confine my description to a single bill, one of the Makros Hout bills, which I shall call "the bill" and treat as generally representative of all the bills sued upon. 3. The bill was in familiar form. It had 2 sides, a face and a reverse. On its face, the bill contained in its top left-hand corner a box with the heading "Shipper" into which the name and address of the shipper under the bill was typed. Below that box was the heading "Consigneee", and here was typed "To order of Hongkong Bank Malaysia Berhad". Below that was a box ("Notify address") into which the name and address of Makros Hout were typed. Below that was the heading "Vessel" and in that box was typed "MV Starsin V.CP144", the latter abbreviation standing (it appears) for "Voyage Continental Pacific No 144". The ports of loading and final destination were typed into boxes provided to contain that information. On the top right-hand corner of the face of the bill was the bold heading "Liner Bill of Lading" with a notation making abbreviated reference to the ports of loading and discharge. Below that, much more prominent than any other entry on the face of the bill, was a logo and the printed words "Continental Pacific Shipping". Below the entries so far described, also on the face of the bill, particulars were typed in, as supplied by the shipper, of the marks, numbers of packages, description, weight and measurement of the goods. Below these particulars a box was provided for details of freight and charges to be entered, and "Freight prepaid" was typed in. To the right of this box was a printed statement to this effect:
4. Below this statement were boxes providing for details (which were inserted) of the place where freight was to be paid, the number of original bills, the description of the particular bill and the place and date of issue of the bill. Lastly, in the bottom right-hand corner of the bill was a box with the printed heading "Signature". In that box there was typed "As Agent for Continental Pacific Shipping (The Carrier)", below which words was a rubber stamp ("United Pansar Sdn Bhd"), that being a company which acted as port agent for CPS at Kuching (the port of loading under the bill), and across the box were what appear to be 2 manuscript signatures. 5. On the reverse of the bill was a prominent printed heading "Company's Standard Conditions", below which 35 conditions were set out, in 2 dense columns, in print which was very small but just legible by a painstaking and persistent reader. Particular reliance was placed on conditions 1 (the definitions clause), 33 (the identity of carrier clause) and 35 (the demise clause). In some of the bills certain of the conditions became garbled in the printing, giving rise to obvious errors of spelling, punctuation, grammar and meaning, but I do not think it is in doubt that these 3 conditions should be treated as reading, in all the bills, as follows:
'shipper' includes the consignees, the receiver, and the owner of the goods, also the endorser and the holder of the Bill of Lading, also the endorsee and the holder of the Bill of Lading (b)'receiver' includes the consignee and the owner of the goods, also the endorsee and the holder of the Bill of Lading (c)'Carrier' means the party on whose behalf this Bill of Lading has been signed
Reliance was also placed in argument on condition 5 of the printed conditions, but it is convenient to defer quotation of that condition until later in this opinion (see paragraph 20 below). The first issue 6. The first and most crucial issue between the parties on these appeals is whether the contracts to carry these various parcels of cargo were made by or on behalf of the shipowner, as the cargo owners contend, or by or on behalf of CPS, the charterers of the vessel, as the shipowner contends. Put another way, the question is whether these were shipowner's bills or charterer's bills. Colman J held that they were charterer's bills and that CPS was the contractual carrier: [2001] 1 Lloyd's Rep 85. On appeal, the Court of Appeal was divided: [2001] 1 Lloyd's Rep 437. Rix LJ agreed with the trial judge. But Sir Andrew Morritt V-C and Chadwick LJ held that they were shipowner's bills and that the shipowner was the contractual carrier, entitling the cargo owners to sue in contract for any recoverable loss they had suffered. 7. In submitting that these bill of lading contracts should be understood as having been made with CPS, Mr Gee QC for the shipowner relied above all on the form of signature on the face of the bill: the port agents signed expressly "As Agent for Continental Pacific Shipping (The Carrier)". Thus the contract was made on behalf of CPS as the party undertaking to carry the goods. The "Carrier" was defined in condition 1(c) to mean "the party on whose behalf this Bill of Lading has been signed", namely CPS. If there was inconsistency between that unambiguous statement of CPS's role just above the signature and general descriptions elsewhere in the text, the former should be regarded as the "dominating factor" and as of "preponderant importance": Universal Steam Navigation Company Ltd v James McKelvie and Company [1923] AC 492, per Lord Shaw of Dunfermline at p.499, per Lord Sumner at p.500. Words which the parties have themselves chosen and written into the contract should have greater effect than printed standard terms: Glynn v Margetson & Co [1893] AC 351. 8. In submitting that these were shipowner's and not charterer's bills, as the Court of Appeal majority had held, Mr Milligan QC for the cargo owners relied on a number of features of the bill clearly indicating that it was intended to take effect as a contract entered into by the shipowner. Provision was made on the face for signature by the master of the vessel, a strong although not conclusive pointer towards an owner's bill: Wehner v Dene Steam Shipping Co [1905] 2 KB 92 at 98; The Rewia [1991] 2 Lloyd's Rep 325 at 333. The attestation clause made reference to all the stipulations of the bill "on both pages, whether written, printed, stamped or otherwise incorporated". Conditions 33 and 35 in particular, but also other conditions in the bill such as conditions 16 and 17, were intended to make plain that the contract of carriage was made with the owner (or demise charterer) of the vessel, with whom sole liability should rest to the exclusion of any liability falling on the charterer or any agent. Thus Mr Milligan submitted that on a proper construction of the whole of the bill the shipowner should be held to be the contracting party, perhaps by regarding the shipowner as the disclosed but unnamed principal of CPS, perhaps by construing the contract as made with the shipowner as well as CPS, perhaps because the description of CPS as carrier was unauthorised by CPS and so ineffective. There is in my opinion no evidence to show that CPS contracted as agent for the shipowner as disclosed but unnamed principal, and the terms of the signature are inconsistent with that suggestion. There is, again, nothing to suggest dual liability in CPS and the shipowner; the standard conditions are expressed in the singular throughout, with no provision that the singular shall include the plural. There is no evidence to show that the port agent lacked authority to sign in the terms it did. But the problem of construction remains. 9. When construing a commercial document in the ordinary way the task of the court is to ascertain and give effect to the intentions of the contracting parties. Here, the task is to ascertain who, on one side, the contracting party was. But a similar approach is appropriate. Mr Milligan urged that the House should not seize on a single canon of construction and give it effect to the exclusion of all others. I am sure that warning is salutary. But there are a number of rules, some of very long standing, which give valuable guidance. 10. First is the rule to which Lord Halsbury alluded in Glynn v Margetson & Co [1893] AC 351 at 359, "that a business sense will be given to business documents". The business sense is that which businessmen, in the course of their ordinary dealings, would give the document. It is likely to be a reasonably straightforward sense since, as Lord Mansfield famously observed (Hamilton v Mendes (1761) 2 Burr 1198 at 1214, 97 ER 787 at 795),
In the present case, the suggestion that CPS contracted jointly on its own behalf and on behalf of the shipowner loses credibility when one notes that this possibility, although not objectionable in legal principle, first occurred to a member of the Court of Appeal during argument: [2001] 1 Lloyd's Rep 437 at 452, para 75. 11. Secondly, it is common sense that greater weight should attach to terms which the particular contracting parties have chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contracting parties have never addressed their minds. It is unnecessary to quote the classical statement of this rule by Lord Ellenborough in Robertson v French (1803) 4 East 130 at 136; 102 ER 779 at 782, cited with approval by Lord Halsbury in Glynn v Margetson [1893] AC 351 at 358 and by Scrutton LJ in In re an Arbitration between L Sutro & Co and Heilbut, Symons & Co [1917] 2 KB 348 at 361-2. 12. Thirdly, it has long been recognised by very distinguished commercial judges that to seek perfect consistency and economy of draftsmanship in a complex form of contract which has evolved over many years is to pursue a chimera: see, for example, Simond v Boydell (1779) 1 Dougl 268; 99 ER 175; James Nelson & Sons Ltd v Nelson Line (Liverpool) Ltd [1908] AC 16 at 20-21; Hillas & Co Ltd v Arcos Ltd (1932) 43 Ll. L. Rep 359 at 367; Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240 at 245. The court must of course construe the whole instrument before it in its factual context, and cannot ignore the terms of the contract. But it must seek to give effect to the contract as intended, so as not to frustrate the reasonable expectations of businessmen. If an obviously inappropriate form is used, its language must be adapted to apply to the particular case: The Okehampton [1913] P 173 at 180, per Hamilton LJ. 13. Fourthly,
This observation is, I suggest, particularly pertinent where the issue is one which, like that now under consideration, has been the subject of repeated litigation over the years in cases which have included The Berkshire [1974] 1 Lloyd's Rep 185; The Venezuela [1980] 1 Lloyd's Rep 393; The Rewia [1991] 2 Lloyd's Rep 325; MB Pyramid Sound MV v Briese Schiffahrts GmbH (The Ines) [1995] 2 Lloyd's Rep 144; Sunrise Maritime Inc v Uvisco Ltd (The Hector) [1998] 2 Lloyd's Rep 287; and Fetim BV v Oceanspeed Shipping Ltd (The Flecha) [1999] 1 Lloyd's Rep 612. In his accomplished extempore judgment in the last of these cases, on a form of bill and on facts indistinguishable from the present, Moore-Bick J concluded that the contract of carriage was made with the owners of the vessel and not with CPS, a decision which Colman J declined to follow in the present case. 14. It is plain, for reasons which Mr Milligan gave, that the bill was drafted to express or evidence a contract between the shipper (and any transferee of the bill) and the owner of the vessel. Conditions 33 and 35 so state. The provision for signature by the master of the vessel so indicates. But a very cursory glance at the face of the bill is enough to show that the master has not signed the bill. It has instead been signed by agents for CPS which is described as "The Carrier". I question whether anyone engaged in maritime trade could doubt the meaning of "carrier", a term of old and familiar meaning, but any such doubt would be quickly resolved by resort to the first condition overleaf in which the term is defined to mean the party on whose behalf the bill of lading has been signed, that is, the party contracting to carry the goods. 15. I can well understand that a shipper or transferee of a bill of lading would recognise the need to consult the detailed conditions on the reverse of the bill in any one of numerous contingencies which might arise and for which those conditions make provision. He would appreciate that the rights and obligations of the parties under the contract are regulated by those detailed conditions. But I have great difficulty in accepting that a shipper or transferee of a bill of lading would expect to have to resort to the detailed conditions on the reverse of the bill (and to persevere in trying to read the conditions until reaching conditions 33 and 35) in order to discover who he was contracting with. And I have even greater difficulty in accepting that he would expect to do so when the bill of lading contains, on its face, an apparently clear and unambiguous statement of who the carrier is. 16. I am fortified in adopting this view of market practice by noting that, although it was not adopted by Moore-Bick J in The Flecha [1999] 1 Lloyd's Rep 612, it was adopted by Rix J in The Hector [1998] 2 Lloyd's Rep 287 (in which there was, as here, an identity of carrier clause but not, as here, a demise clause), it was adopted by Colman J in the present case ([2000] 1 Lloyd's Rep 85 at 93) and it was adopted by Rix LJ in his persuasive dissent on this point in the present case ([2001] 1 Lloyd's Rep 437 at 451). I am further fortified in taking this view of market practice by noting its adoption (since 1994) in the ICC Uniform Customs and Practice for Documentary Credits. This now provides, in Article 23(a) that
appears on its face to indicate the name of the carrier and to have been signed or otherwise authenticated by: -the carrier or a named agent for or on behalf of the carrier, or -the master or a named agent for or on behalf of the master. Any signature or authentication of the carrier or master must be identified as carrier or master, as the case may be. An agent signing or authenticating for the carrier or master must also indicate the name and the capacity of the party, i.e. carrier or master, on whose behalf that agent is acting ". Article 23(v) makes plain that banks will not examine terms and conditions on the back of the bill of lading. The ICC's Position Paper No 4 reiterates that the name of the carrier must appear as such on the front of the bill and that banks will not examine the contents of the terms and conditions of carriage. In Documentary Credits (3rd edn, 2001) at pp 175-176, Jack, Malek and Quest confirm, citing National Bank of Egypt v Hannevig's Bank (1919) 3 LDAB 213 and British Imex Industries Ltd v Midland Bank Ltd [1958] 1 QB 542, that the general practice of banks is not to examine the small print on the back of the bill. It is of course true, as Mr Milligan pointed out, that these provisions govern relations between issuing bank and beneficiary, not shipper or consignee and carrier. But it would be very surprising, and also (in my opinion) very unsatisfactory, if a practice accepted in one field were not accepted in another so closely related. 17. I would note, lastly on this point, that the decision of the Court of Appeal majority has not earned the approval of some academic commentators expert in this field. Professor Debattista (Lloyd's List, 21 February 2001, p.5 "Is the end in sight for chartering demise clauses?") opined that the dissenting judgment of Rix LJ and its robust market sense were to be preferred to the opinion of the Court of Appeal majority. The authors of "Contracts for the Carriage of Goods by Land Sea and Air" (LLP, ed Yates, service issue 21, 31 December 2001, p.1-380, para 1.6.4.2.25.1) similarly suggest that
18. I agree with these opinions and would hold, in agreement with Colman J and Rix LJ, and for essentially the reasons which they gave, that the bill contained or evidenced a contract of carriage made with CPS as carrier. The second issue 19. The second issue arising in these appeals is whether, assuming CPS to be the contractual carrier under these contracts of carriage, the terms of the contracts are effective to protect the shipowner against liability to the cargo owners. The answer must turn on the terms and applicability of clause 5 of the printed conditions on the reverse of the bills, which is headed "IMMUNITIES". There are some differences between the fine detail of this provision in the Homburg bills as compared with the other bills, but it is not suggested that these are of legal significance. I shall continue to treat the bill (as defined above) as representative. 20. As it appears in the bill, clause 5 is a very lengthy provision and most of it is irrelevant for present purposes. So far as relevant the clause reads as follows:
In thus setting out the text I have inserted numbers, which do not appear in the original, for ease of reference. I have also inserted an asterisk in square brackets in the middle of part (2), which similarly does not appear in the original. |
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21. It is plain that the printing of this clause leaves something to be desired. For example, some punctuation is missing and the word "over" in the last sentence should obviously read "were". It is also plain, and common ground, that there is some omission at the point where I have inserted the asterisk in square brackets. Colman J resolved this problem by interpolating "(who)": [2000] 1 Lloyd's Rep 85 at 98. Rix LJ made the same interpolation, as did Sir Andrew Morritt V-C, although the latter set out the clause somewhat differently: [2001] 1 Lloyd's Rep 437 at 460, 476. Argument was addressed to the House, not addressed to the courts below, on the correctness of this interpolation. While the answer to this problem is not decisive in these appeals, it is as well to resolve how the clause should be read before construing it. 22. While acknowledging that there was no justification for inserting "who" other than a need to correct an obvious grammatical solecism, Mr Milligan urged that, since it was not the function of the courts to make or re-write the parties' contracts, the interpolation to be made should be the least intrusive reasonably possible to make sense of the clause. Mr Gee contended (a) that it was clear what words have been omitted, and (b) that the omission was explained by the phenomenon, technically known as homoeoteleuton, where one sentence contains a word which closed the preceding sentence and the transcriber's eye has wandered from one to the other, leading to the entire omission of the whole passage lying between them. As to (a), Mr Gee contended that the missing words were "acting as aforesaid and for the purpose of all the foregoing provisions of this clause the Carrier ." These are the words to be found in the Conline bill of lading form, on which clause 5 as quoted above has been closely modelled, although with some additions, deletions and changes of language. It is a form of bill in very wide use, and was the subject of judicial consideration in A M Satterthwaite & Co Ltd v New Zealand Shipping Co Ltd (The Eurymedon) [1975] AC 154 at 165 and Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd (The New York Star) [1981] 1 WLR 138. After the square brackets the clause again picks up the language of the Conline bill. As to (b), Mr Gee submitted that the transcriber's eye had wandered from "Carrier" immediately before the square brackets to the same word at the end of the suggested interpolation. 23. I take it to be clear in principle that the court should not interpolate words into a written instrument, of whatever nature, unless it is clear both that words have been omitted and what those omitted words were: see Re Hargraves' Trusts, Leach v Leach [1937] 2 All ER 545 at 547-548, see per Farwell J; In re Murray, decd. Martins Bank Ltd v Dill [1955] Ch 69 at 79-80, per Evershed MR; In re Neeld, decd. Carpenter v Inigo-Jones [1960] Ch 455 at 464-465, per Cross J; [1962] Ch 643 at 677-678, per Upjohn LJ; In re Riley's Will Trusts. Riley v Riley [1962] 1 WLR 344 at 348-349, per Buckley J. In the present case there is agreed to be an omission. It is also plain, in my opinion, for the reasons which Mr Gee gave, what words were omitted and how they came to be omitted. I would accordingly construe the clause as if the words "acting as aforesaid and for the purpose of all the foregoing provisions of this clause the Carrier" appeared in place of the square brackets I have inserted. 24. It is now necessary to construe the clause to decide the extent (if any) of the protection it affords the shipowner. For this purpose the relevant part of the clause (as quoted above) must be construed as a whole, notwithstanding the convenience of breaking it down into its constituent numbered parts. Part (1) on its face confers wide-ranging immunity on any servant, agent or independent contractor of the carrier, in the course of his employment by the carrier, against any liability to the shipper resulting from (among other things) negligent damage to the goods. It is not suggested that the cargo owners are in any different position from the shippers. Colman J interpreted this provision as a covenant not to sue, enforceable by injunction, such as was considered in Nippon Yusen Kaisha v International Import and Export Co Ltd (The Elbe Maru) [1978] 1 Lloyd's Rep 206: [2000] 1 Lloyd's Rep 85 at 99-100. All three members of the Court of Appeal agreed with him; [2001] 1 Lloyd's Rep 437 at p 461, para 116; p 471, para 169; p 476, para 201. Given this unanimity of opinion, one is reluctant to disagree. But it is in my judgment impossible to spell a covenant not to sue out of the language of this clause, as the Court of Appeal found it to be in Gore v Van Der Lann [1967] 2 QB 31. The language construed in The Elbe Maru (above) was strikingly different. 25. Part (2) has two obvious purposes. The first is to extend to every servant, agent or independent contractor of the carrier acting as such every right and every exemption, defence and immunity available to the carrier. The second is to establish that the carrier is for purposes of all the foregoing provisions of the clause acting on behalf of all such servants, agents and independent contractors. The intention, plainly, is to fill the lacuna exposed in Adler v Dickson [1955] 1 QB 158 and to achieve the contractual solution based on agency which was presciently described by Lord Reid in Midland Silicones Ltd v Scruttons Ltd [1962] AC 446 at 474 and which was held to be effective in The Eurymedon [1975] AC 154 and The New York Star [1981] 1 WLR 138. It is unnecessary to repeat, but it is helpful to bear in mind, the very clear account of the historical background to Himalaya clauses provided by Lord Goff of Chieveley, giving the judgment of the Privy Council, in The Mahkutai [1996] AC 650 at pp 658-665. 26. Part (3) again has two purposes. The first is to underline that such servants, agents and independent contractors are to be treated as parties to the contract. The second is to make plain that such servants, agents and independent contractors are only parties to the contract to a limited extent ("to this extent"): that is, while "acting as aforesaid" and for the purpose of asserting the rights, exemptions, defences and immunities already referred to. 27. Part (4) is an addition to the standard wording of the Conline bill. But it appears to be a straightforward indemnity provision, and it gives rise to no problem in these appeals. 28. A number of points were raised on the construction of this clause. The first was whether, assuming that CPS was the contractual carrier, the shipowner was an independent contractor. The judge held that it was ([2000] 1 Lloyd's Rep 85 at 99):
29. Rix and Chadwick LJJ and Sir Andrew Morritt V-C agreed: [2001] 1 Lloyd's Rep 437 at 461, para 113; p.471, para 166; pp.475-476, paras 198-201. 1 also agree. The judge, as I respectfully think, correctly analysed the role of an independent contractor and correctly held that, on the present facts, the shipowner fell within it. 30. The second question is whether the protection available to servants, agents and independent contractors under part (1) was by virtue of part (2) limited to the protection (to use a compendious term) available to the carrier under part (2). The judge held that the protection was so limited: [2000] 1 Lloyd's Rep 85 at 99-100. All three members of the Court of Appeal agreed: [2001] 1 Lloyd's Rep 437 at pp.461-2, paras 114-117; p.471, para 171; p.476, para 201. There are to my mind two insuperable objections to this construction. First, part (1) is expressed in unqualified (and, if it is relevant, emphatic) language: "in any circumstances whatsoever be under any liability whatsoever". Secondly, part (2) is prefaced by the words "without prejudice to the generality of the provisions in this Bill of Lading". This is the classical formula used by a draftsman to make plain that what follows is not to be understood as restricting the effect of some other provision or provisions. So, since part (1) is a provision in the bill, part (2) is not to be understood as restricting it. That seems to me a compelling reason for not understanding part (1) in any sense more restricted than its ordinary meaning would suggest. I would not regard it as an objection to this construction that part (2) appeared to be unnecessary, given the incidence of repetition and surplusage in instruments of this kind and the number of different jurisdictions in which the clause might fall to be construed. Some weight was attached in the courts below to the words "to this extent" in part (3), but I have indicated my understanding of these words in paragraph 26 above and I do not think they help the cargo owners. 31. Account must however be taken of the Hague Rules, which were expressly stipulated to be the basis of this contract of carriage by clause 2 on the reverse of the bill. The Hague Rules impose certain duties on the carrier, notably the duties in article III rules 1 and 2:
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.
32. Article IV provides various grounds of exoneration and provides a provisional financial limitation applicable to claims for loss or damage to goods. Article III rule 8 provides
33. The cargo owners rely on this last rule to support their contention that part (1) must be understood to limit the protection of servants, agents and independent contractors of the carrier to the protection available to the carrier, since otherwise the exemption would fall foul of this rule. The counter-argument was that "carrier" is defined in article I(a) to include "the owner or the charterer who enters into a contract of carriage with a shipper" and that the party which had entered into a contract of carriage with the shipper on the present facts was CPS, not the shipowner. Therefore, it was said, there was no reason why the liability of the shipowner should not be excluded altogether. Until a late stage I was inclined to accept this counter-argument as correct, but I am ultimately persuaded that it is not, for a reason which did not, I think, loom large in the courts below or in argument before the House. 34. The Himalaya clause itself, and the undoubted artificiality of the reasoning relied on to uphold it in The Eurymedon [1975] AC 154 and The New York Star [1981] 1 WLR 138, were a deft and commercially-inspired response to technical English rules of contract, particularly those governing privity and consideration: per Lord Goff in The Pioneer Container [1994] 2 AC 324 at 335 and The Mahkutai [1996] AC 650 at 664-665. In both The Eurymedon and The New York Star the problem arose because there was no contract between the cargo owner and the stevedore made in the ordinary way by a mutual exchange of promises: the stevedore had never promised to do anything. The problem was overcome by holding, in effect, that a bilateral contract came into existence upon the performance by the stevedore of stevedoring services, the stevedore thereupon becoming entitled to the benefit of the Himalaya clause exemption provided by the carrier acting as agent of the stevedore. In this situation the question whether the stevedore had itself become party to a contract of carriage could scarcely arise, since on no showing could it be said to have done so. The present case however is factually different, because the act performed to bring any contract into existence between the shipowner and the cargo owners is the carrying of the goods. The question is whether that factual difference gives rise to a legal difference, whether (in short) the resulting contract is properly to be regarded for Hague Rules purposes as a contract of carriage and the shipowner as entering into it with a shipper. I have not found these to be easy questions, but I conclude that to answer them negatively would be to elevate form over substance and to invest what is essentially a legal device with a wholly disproportionate legal significance. If the act performance of which brings a contract into existence between the shipowner and the cargo owners is the carrying of the cargo owners' goods it would seem to me anomalous to give the shipowner the benefit of clause 5 but take no account of article III rule 8 of the Hague Rules which were incorporated into the contract by clause 2 (where they were described as the "BASIS OF CONTRACT"). Thus the shipowner is not protected by an exemption provision invalidated by article III rule 8. Since the object of joining third parties to the contract was only to give them the benefit of the contractual exemption, that object was (in the case of the shipowner) frustrated. But since the object of joining third parties (here the shipowner) to the contract was only to give the shipowner the benefit of the contractual exemption, the shipowner did not become subject to the positive obligations laid on the carrier by article III rules 1 and 2 of the Hague Rules, and this was not suggested. 35. I would accordingly resolve this second issue in favour of the cargo owners, reaching the same destination as the Court of Appeal but by a different route. This makes it necessary to consider the third major issue in the case, which is whether the cargo owners (other than Makros Hout) have a tort claim maintainable against the shipowner. The third issue 36. In Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd (The Aliakmon) [1986] AC 785 at 809, Lord Brandon of Oakbrook, in an opinion with which all members of the House agreed, said:
37. The issue between the present parties concerned not the correctness of this principle, but its application to the facts of the present case, which were very economically summarised by Rix LJ ([2001] 1 Lloyd's Rep 437 at 453, para 78 as follows:
38. Makros Hout had already obtained title to their goods before damage to those goods occurred. Thus they were owners when the damage occurred and their cause of action became complete. It follows that, the second issue having been answered in favour of the cargo owners, the shipowner has no defence to a claim in tort by Makros Hout. Another cargo owner, Hunter Timber, was unable to show when it acquired title to the goods and so was unable to show that it was the owner of the goods consigned to it when its cause of action arose. For the purpose of the ensuing discussion the claims of these two cargo owners must be excluded. 39. The Court of Appeal was unanimous in rejecting the judge's conclusion that because the damage was progressive each exacerbation of pre-existing damage gave rise to a new cause of action exercisable by the owner of the goods at that time, thus permitting an allocation of causes of action to different shippers and consignees and an apportionment of the resulting damage. Rix LJ ([2001] 1 Lloyd's Rep 437 at 457, para 96) said
40. At that time neither Fetim nor Homburg were cargo owners. Rix LJ regarded Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 as applying to a special and exceptional situation: pp 457-459, paras 99-105. Chadwick LJ reached the same conclusion (p 464, para 132), as did Sir Andrew Morritt V-C (p.476, para 204). I would for my part also reach that conclusion, for all the reasons given by Rix LJ in paragraphs 77-107 of his judgment, at pages 453-459, which I am content to adopt as my own. 41. I would therefore dismiss the cargo owners' cross-appeal. But I would allow the shipowner's appeal, save in the case of Makros Hout, the judgment in whose favour must stand. I would invite the parties to make written submissions on costs in the House and in the courts below. LORD STEYN My Lords, 42. In 1995, while the Starsin was on time charter to Continental Pacific Shipping Limited ("CPS"), bills of lading on CPS' liner form were issued for the carriage of 17 parcels of timber and plywood. The carriage was between ports in Malaysia and Antwerp/Avonmouth. The cargoes were damaged. Receivers sued the owners for breach of contract, or alternatively in tort in the event that the bills of lading were charterers' bills. 43. On this appeal the central issues are:
I. The Identity of the Carrier. 44. The issue was whether the bills of lading were charterers' or owners' bills. The terms of each of the 17 bills reveal inconsistent provisions. CPS were the charterers. The signature box on the face or front of a specimen bill of lading prominently carried a signature "As Agent for Continental Pacific Shipping (The Carrier)." The face of the bill of lading contained essential commercial provisions such as the identity of the shippers, the name of the vessel and a description of the cargo, as well as a reference to the contract of carriage, the latter being set out in the box commencing with the word "Shipped." Clause 1(c) is consistent with what appears on the face of the bill of lading: it provides that the "carrier" is "the party on whose behalf this bill of lading has been signed." So far the document is in harmony. But tucked away in barely legible tiny print on the back of the bill of lading are two clauses which contradict the contractual position revealed by the face of the bill. Clause 33 provides that the contract evidenced by the bill of lading was "between the merchant and the owner of the vessel named herein (or substitute)." Clause 35, a demise clause, provides that the bill of lading shall only take effect as a contract of carriage "with the owners or demise charterers." 45. How is the problem to be addressed? For my part there is only one principled answer. It must be approached objectively in the way in which a reasonable person, versed in the shipping trade, would read the bill. The reasonable expectations of such a person must be decisive. In my view he would give greater weight to words specially chosen, such as the words which appear above the signature, rather than standard form printed conditions. Moreover, I have no doubt that in any event he would, as between provisions on the face of the bill and those on the reverse side of the bill, give predominant effect to those on the face of the bill. Given the speed at which international trade is transacted, there is little time for examining the impact of barely legible printed conditions at the time of the issue of the bill of lading. In order to find out who the carrier is it makes business common sense for a shipper to turn to the face of the bill, and in particular to the signature box, rather than clauses at the bottom of column two of the reverse side of the bill. 46. Taking advantage of their knowledge of the way in which the market works two commercial judges - Colman J and Rix LJ in the Court of Appeal - adopted the mercantile view. The majority in the Court of Appeal - Morritt V-C and Chadwick LJ - in effect gave preponderant effect to the boilerplate clauses on the back of the bill. In my view it would have an adverse effect on international trade if the latter approach prevails. Professor Debattista (Is the end in sight for chartering demise clauses?, Lloyds List, Wednesday 21 February 2001, 5) rightly warned that the effect of the judgment of the majority would be to create traps for the unwary: see also the criticism of the majority judgments by Professor Gaskell and others in Contracts for the Carriage of Goods by Land, Sea and Air, LLP, ed. Yates, as updated by service issue No. 21, dated 31 December 2001, para 1.6.4.2.25.1, and by Dr Girvin and Professor Bennett in English Maritime Law 2000, [2002] LMCLQ, at 84-87. As Rix LJ observed, commercial certainty and indeed honesty is promoted by giving greater effect to the front of the bill of lading. 47. This conclusion is reinforced by the ICC Uniform Customs and Practice for Documentary Credits: 1993 revision in force as of January 1, 1994. Article 23(a) reads as follows:
In paragraph v. it is expressly stated that banks will not examine the contents of terms and conditions on the back of the bill: see further Position Paper No. 4: UCP 500Transport documents articles. At the very least this material suggests that, faced with the need for prompt decisions in international trade, this is how parties involved in such a transaction would view the bill of lading. It demonstrates how far removed from the real world of commerce the technical approach advocated by the cargo owners in this case is. Moreover, insofar as there is a choice between two competing interpretations, this material strongly suggests that the best interpretation is to give predominant effect to the face of the bill. 48. It follows that in my judgment the ruling of the majority on the identity of the carrier point cannot stand. I would also hold that the ex tempore judgment in Fetim BV v Oceanspeed Shipping Limited (The Flecha) [1999] 1 Lloyd's Rep 612 was wrong. 49. Counsel for the cargo owners raised an alternative argument. He argued that words like "The Carrier," "For the Carrier," and "As Carrier," can be treated as adding the personal liability of CPS rather than excluding the liability of the owners. This is a question of interpretation. Counsel for the owners showed convincingly that the bill of lading contemplated a single carrier. It is only necessary to mention specifically that the completed signature box, as well as the definition clause, points to a single carrier. I would reject this alternative argument. 50. I conclude that CPS was the sole carrier under the bill of lading. The owners were not parties to the contract of carriage and are not liable under the bill of lading contracts. Their potential liability in tort must now be considered. II. The Himalaya Clause. 51. The issue whether the owners are protected from liability in tort by the Himalaya clause now arises. 52. The owners rely in particular on that part of clause 5 of the bills of lading which Lord Bingham has recited and labelled part (1). The owners contend that part (1) confers on them a general exemption from liability. |
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53. Before this question of construction can be considered a preliminary issue must be examined. As Lord Bingham has pointed out by reference to the Himalaya clause contained in the Conline bill of lading form some words have been left out of clause 5: see the clauses in New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154 and Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York Star) [1981] 1 WLR 138. The deletion was plainly a mistake. In these circumstances the court should, in order to give effect to the reasonable expectations of the parties, fill the gap by inserting what had been omitted. What falls to be construed is the clause so reconstructed. 54. The result is that it cannot be argued that part (1) is flawed by reason of a lack of agency or authority. Accordingly part (1) must take effect in accordance with the terms of clause 5 as reconstructed. 55. For my part the language of part (1), contextually considered, is capable of one interpretation only. The shipowners are clearly "independent contractors." It is not capable of being read as a mere covenant not to sue. In categorical language part (1) confers on the shipowners a general exemption from liability. 56. The various attempts by the cargo owners to argue that part (1) is "not clear enough" are on examination at variance with the benign advance heralded by The Eurymedon, carried forward by The New York Star [1981] 1 WLR 138 and reaffirmed in The Mahkutai [1996] AC 650. In The New York Star Lord Wilberforce commended a wide interpretation of the reasoning in The Eurymedon. He said at 144:
In The Mahkutai, supra, Lord Goff of Chieveley observed about The Eurymedon (at 664E):
When in ITO Ltd v Mida Electronics Inc 28 DLR (4th) 641 the Supreme Court of Canada followed The Eurymedon, McIntyre J commented (at 667):
This is the approach which should be adopted in the case before the House. 57. In my view the arguments of the cargo owners are of the very type which Lord Wilberforce warned against. I would respectfully also echo an extra-judicial statement by of Lord Goff of Chieveley in Commercial Contracts and the Commercial Court (1984) LMCLQ 382, 391:
This is a particularly apposite observation in regard to the ground-breaking development in The Eurymedon. The difficulties created in international trade by the doctrines of privity of contract and consideration had to be overcome. Those doctrines obstructed the process of giving effect to the reasonable expectations of parties. Fortunately, as was pointed out in ITO, at 667, by McIntyre J, "one of the virtues of the common law is that it has never let pure logic get in the way of common sense and practical necessity when a desirable result is sought to be achieved." The desired result was to give businessmen the freedom to make arrangements for the allocation of risks as they thought right. The decisions in The Eurymedon, and The New York Star, were taken in the context of classical English contract law. It is true that this result can now be achieved more simply and directly by a combination of the Carriage of Goods by Sea Act 1992 and the Contracts (Rights of Third Parties) Act 1999. Nevertheless, the plain objective of the decisions in The Eurymedon and The New York Star was to enable businessmen to make sensible and just commercial arrangements, and thereby further international trade. Legal policy favours the furtherance of international trade. Commercial men must be given the utmost liberty of contracting. They must be left free to decide on the allocate commercial risks. In my view there can be no good reason to set at naught on an interpretative basis the allocation of risk in the Himalaya clause. 58. That brings me to the question of the impact of the incorporated Hague Rules on clause 5. Clause 2 (described as the "Basis of Contract") incorporated the Hague Rules. This neutral fact tells us nothing about the impact of the Hague Rules on the Himalaya clause. That depends on the proper construction of the relevant Hague Rules. Of course, the ship owner will not be entitled to rely on the Himalaya clause if it offends the Hague Rules. The question is whether the exemption in favour of the ship owners in fact is in conflict with the Hague Rules. 59. I turn to the critical provisions of the Hague Rules. Article III rule 8 of the Hague Rules. This provision reads as follows:
The critical question is whether the exemption in the Himalaya clause is contained in a contract of carriage. "Contract of carriage" is a well understood term: it refers to a contractual undertaking for the carriage of goods. It contemplates the usual incidents of such a contract, with the customary executory obligations. Next one has to consider the status of the exemption. In law it is a separate and independent contract. It contains no executory obligations. It merely confers a general exemption on the owners. Is it nevertheless to be treated as "a contract of carriage" within the meaning of article III rule 8? While this is a difficult question I have come to the conclusion that the answer ought to be No. Despite the fact that it comes into existence by the rendering of service by the vessel I am on balance of the view that in its natural and ordinary meaning "a contract of carriage" under article III rule 8 contemplates a contract with the usual incidents and executory obligations of a contract of carriage. In other words, it envisages a contract for the carriage of goods. Focusing simply on article III rule 8 I incline to the view that the exemption is not contained in a contract of carriage. 60. One cannot, however, construe article III rule 8 in isolation. Article III rules 1 and 2 of the Hague Rules are relevant. They read as follows:
Once one has concluded that the exemption is contained in a contract of carriage that must hold good for all the provisions of the Hague Rules including the obligation to make the ship seaworthy, etc. That would indeed be a curious and implausible result flowing from a contract for an exemption clause. It would mean that the cargo owners of damaged parcels on the Starsin would in principle have had contractual remedies not on the bill of lading but on the Himalaya contract. That cannot be right. This factor reinforces my interpretation of article III rule 8. I would therefore hold that in the Hague Rules a contract of carriage means an agreement to carry and not an agreement simply for an exemption albeit that the consideration for the promise involves performance by the vessel. 61. I have noted the reasoning based on the words in para (3) that the independent contractor "shall to this extent be deemed to be [a party] to the contract contained in or evidenced by this Bill of Lading". For my part this places a weight on those words which they will not bear. 62. For my part this result is in no way anomalous. It is loyal to the rationale of the advance in the rationality of English law achieved in The Eurymedon and The New York Star. It results in a readily predictable scheme, viz all claims in contract and tort have to be channelled to the charterers. That gives effect to what the parties intended to achieve. It has the merit of being a just decision achieved without in any way straining the Hague Rules. I would hold that the exemption contained in part (1) of clause 5 protects the owners against any liability in tort. 63. Regretfully, and in the spirit of accepting that one must not be too confident that one is right, I consider it appropriate to record my disagreement with the majority on this issue. III. Tort. 64. This issue falls away. Given that it has been fully argued I accept, however, that the House should express a view on it. It is well established that a claim in negligence for damage to property is only maintainable by a person who had either the legal ownership of or a possessory title to the property at the time when the damage occurred: Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd (The Aliakmon) [1986] AC 785. Accepting this principle, the cargo owners argue that they meet its requirements. Rix LJ convincingly demonstrated the fallacy in the argument. He said (at 459, cols 1-2):
I am in full agreement with the judgment of Rix LJ in this respect. The exception in respect of Makros Hout, which Rix LJ mentions in paragraph 108 of his judgment, arises because Makros Hout obtained title before the voyage began. IV. Conclusion. 65. I would allow the appeal. LORD HOFFMANN My Lords, 66. The appellants ("the shipowners") are respectively the owners and demise charterers of the bulk carrier Starsin. On 3 October 1995 they time-chartered the vessel to Continental Pacific Shipping ("CPS") for one trip, estimated 65/85 days. On 8 December 1995 the vessel began a voyage from Malaysia to Europe carrying a number of consignments of timber and plywood which had been shipped under separate bills of lading. On arrival in January 1996 it was found that 17 consignments had been damaged by fresh water; some of the cargo had been wet when loaded and negligent stowage had caused condensation which affected those and other consignments during the course of the voyage. The holders of the bills of lading ("the cargo owners") sue the shipowners for breach of the contracts of carriage contained in or evidenced by the bills of lading and in tort for negligence in stowing the goods. 67. Whether the shipowners are liable in contract depends upon whether they were parties to the contract of carriage made with the shippers and evidenced by the bills of lading. The time charter provided in clauses 8 and 33 that CPS should be entitled to require the master to sign bills of lading on behalf of the shipowners or authorise their agents to sign bills of lading on behalf of the master who would in turn be contracting on behalf of the shipowners. So there is no doubt that CPS had authority to cause a contract of carriage to be created between the shipowners and the shippers. But the question is whether they did so. 68. The port agents who signed the bills of lading used printed forms headed "Liner Bill of Lading" and bearing the name and logo of CPS. The printed text, if one reads it through carefully, shows that the forms were meant to be used by a master signing on behalf of the owners. The form has printed on the front "In witness whereof the Master of the said Vessel has signed the number of original Bills of Lading stated below". Then there is a box for the place and date of issue and, below that, another box for a signature. The form does not say expressly on whose behalf the master is signing but the master is the servant of the shipowner and unless he is authorised by the charterers to sign on their behalf and clearly does so the bill of lading will be construed as having been signed on behalf of the shipowner: see The Rewia [1991] 2 Lloyd's Rep 325, per Leggatt LJ at p. 333. 69. The impression that the forms are meant to be used as owner's bills is confirmed by a reading of the small print on the back. Clause 33, headed "Identity of Carrier" says in terms that the contract evidenced by the bill of lading is between the cargo owner and "the Owner of the Vessel named herein", that only the shipowner is to be liable for any breach of the contract of carriage, that the "Line, Company or Agents" which has executed the bill of lading "is not a principal in the transaction" and that "the said Line, Company or Agents shall not be under any liability arising out of the contract of carriage". 70. Much the same ground is covered by clause 35, which has no heading but is known as the demise clause. It says that if the vessel is not owned by the company or line by whom the bill of lading is issued "(as may be the case notwithstanding anything that appears to the contrary)" the bill of lading shall take effect only as a contract of carriage with the shipowners. It appears from an article in the Law Quarterly Review by Lord Roskill ((1990) 106 LQR 403-406) that this clause was devised to deal with conditions in the Second World War, when requisitioned ships on time charter were frequently operated by commercial liner companies which issued their own bills of lading. As the law then stood, only an owner or demise charterer could limit liability under sections 502 and 503 of the Merchant Shipping Act 1894. The words quoted above in brackets were, as Lord Roskill said, to "to put the bill of lading holder on express notice of the possibility that the ship concerned was chartered." The rest of the clause was to make it clear that in such case the owner was the carrier. Conformably with this purpose, the demise clause appears originally to have been printed on the front or "business" side of the bill of lading: see The Berkshire [1974] 1 Lloyd's Rep 185. One question in this appeal is the extent to which it remains efficacious for this purpose after its migration to the small print on the back. 71. The forms, therefore, were printed for use as owner's bills. But the port agents signed them, in the signature boxes on the front of the documents, "As Agent for Continental Pacific Shipping (The Carrier)" or "As Agents for the Carrier Continental Pacific Shipping" or "As Agents for Continental Pacific Shipping as Carrier". That meant, in my opinion, that anyone reading only the front of the document would think that CPS was the party assuming liability as carrier. He might have been slightly puzzled by the statement that the bill of lading had been signed by the master when it evidently had not. He may well have reflected that people often use forms which have in some respects to be adapted for the particular circumstances without deleting the inconsistent parts: see The Okehampton [1913] P. 173. But the reasonable reader of the front of the bill of lading would have had no doubt that CPS, and only CPS, was accepting liability as carrier. "Carrier" is a technical term familiar to anyone who has to deal with a bill of lading. The bill of lading evidences a contract of carriage and "carrier" is the name given to one of the parties to such a contract. As it happens, that is what condition 1(c) on the back of these bills of lading says. But that is what a reasonable reader would have thought it meant even without looking at the back. It is what Article I(a) of the Hague Rules says it means. In The Flecha [1999] 1 Lloyd's Rep. 612 Moore-Bick J., faced with a similar Continental Pacific Shipping bill of lading signed "as agents for Continental Pacific Shipping as carriers" said that the term "carrier" was being used "loosely" and that this was "not unusual or surprising". I can well imagine that a timber merchant in Kuching might say over coffee that his goods were being carried by Continental Pacific Shipping without knowing or caring whether the particular vessel was owned, demise chartered or on time charter. But such loose usage of a critical expression in the bill of lading itself does seem to me surprising. 72. On the other hand, a reader who turned the bill over and read the printed conditions might lose confidence in his initial impression. The identity of carrier and demise clauses would suggest deeper waters in which it might be necessary to resolve the apparent conflict between the form of signature and the other printed provisions of the bill of lading which show that it was meant for use as an owner's bill. 73. How is this conflict to be resolved? The interpretation of a legal document involves ascertaining what meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed. A written contract is addressed to the parties; a public document like a statute is addressed to the public at large; a patent specification is addressed to persons skilled in the relevant art, and so on. 74. To whom is a bill of lading addressed? It evidences a contract of carriage but it is also a document of title, drafted with a view to being transferred to third parties either absolutely or by way of security for advances to finance the underlying transaction. It is common general knowledge that such advances are frequently made by letter of credit and that the bill of lading is ordinarily one of the documents which must be presented to the bank before payment can be obtained. The reasonable reader of the bill of lading will therefore know that it is addressed not only to the shipper and consignee named on the bill but to a potentially wide class of third parties including banks which have issued letters of credit. 75. Since a bill of lading is a legal document, the merchant or banker to whom it is addressed will know that on some questions of interpretation he will need to consult a lawyer. But he will also expect to be able to find out certain essential things for himself. These will include the identity of the carrier. The normal bill of lading recognises this distinction by having some of its terms written or printed on the front, where the businessman or banker can readily find them without a lawyer at his elbow, and the mass of other clauses printed at the back. Of course there will be cases in which the information provided on the front will be too obscure to provide the businessman or banker with the information he expects. In such a case, he may have to ask his lawyer to see whether the question can be elucidated by plunging into the small print at the back, or, if he is a banker offered the bill of lading pursuant to a letter of credit, he may simply reject it on the ground that he cannot be expected to puzzle out the answer by reference to other parts of the document. On the other hand, if the information is clearly stated on the front, the reasonable merchant or banker would go no further. The banker, for example, will accept the bill of lading when tendered against a letter of credit as having been issued by the named carrier without examining the terms on the back. 76. As it is common general knowledge that a bill of lading is addressed to merchants and bankers as well as lawyers, the meaning which it would be given by such persons will usually also determine the meaning it would be given by any other reasonable person, including the court. The reasonable reader would not think that the bill of lading could have been intended to mean one thing to the merchant or banker and something different to the lawyer or judge. 77. The proposition that bankers do not examine the contractual terms on the back of a bill of lading has long been common general knowledge and for many years the courts have said that they were not expected to do so: see Scrutton LJ in National Bank of Egypt v Hannevig's Bank (1919) 3 LDAB 213, 214 and Salmon J. in British Imex Industries Ltd v Midland Bank Ltd [1958] 1 QB 542, 551-552. In more recent times, bankers have issued public statements to this effect in the form of the ICC Uniform Customs and Practice for Documentary Credits. Article 23 of the edition which was in force when these bills of lading were issued (UCP 500) provides that if a credit calls for a bill of lading, banks will accept a document which
78. Article 23(a)(v) states that banks will not examine the contents of the terms and conditions of carriage, that is to say, the terms printed on the back. The position is stated even more clearly in the ICC Position Paper No. 4, published on 1 September 1994 to clarify Article 23(a)(i):
79. Mr Milligan QC, who appeared for the cargo owners, said that Article 23 of UCP 500 was irrelevant because it only specified the conditions upon which a bank would accept a bill of lading as conforming to the terms of a letter of credit. That had nothing to do with the interpretation of the bill of lading as between the parties (or alleged parties) to the contract of carriage. I do not agree. It is true that the purpose of Article 23, when UCP 500 has been incorporated into the terms of a letter of credit, is to specify what will count as a conforming bill of lading. But what it also shows is that, if the conditions for identifying the carrier have been satisfied, the bank will treat the document as having identified that party as the carrier. In other words, Article 23 and the Position Paper show that if a document bears upon its face the words "ABC Co Ltd as agent for XYZ Shipping, carrier [signature]" the bank will treat it as meaning that XYZ Shipping is the carrier. Since it is common general knowledge that banks almost invariable issue letters of credit on the terms of UCP 500, those terms will be part of the background available to the reasonable reader seeking to ascertain the meaning of the bill of lading. He will know that a bank, one of the potential addressees which anyone issuing a bill of lading must have in mind, would accept it as meaning that the person named on the front as the carrier was indeed the carrier. And the reasonable reader will not think that the bill of lading could have been intended to have one meaning to a bank and another to a consignee or assignee. 80. For this purpose it does not matter whether port agents in Malaysia are likely to have heard of UCP 500. Their knowledge and views on these matters are irrelevant because, unlike UCP 500, they are not reasonably available to everyone in the class of persons to whom the document was addressed. Nor does it matter that, as appears to have been the case here, the same port agents issued other bills in different and non-conforming form: this too is not something which the reasonable addressee of these bills could be expected to know and therefore not admissible background. The construction given to the bill of lading must be objective and uniform and, in the case of the identity of the carrier, determined by an unequivocal statement on the face of the document. |
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81. Thus it seems to me that in the present case the reasons for treating the words on the front of the bill of lading as determinative and overriding the identity of carrier and demise clauses go well beyond the general common sense rules of construction which give "preponderant importance" to the terms of the signature over the body of the document (see Universal Steam Navigation Co. Ltd v James McKelvie and Co [1923] AC 492, 500) or to written additions over boilerplate print (see Glynn v Margetson & Co [1893] AC 351). 82. I respectfully think that where the majority judgments of Sir Andrew Morritt V-C and Chadwick LJ in the Court of Appeal went wrong is that they conscientiously set about trying, as lawyers naturally would, to construe the bill of lading as a whole. In fact the reasonable reader of a bill of lading does not construe it as a whole. For some things he goes no further than what it says on the front. If the words there are reasonably sufficient to communicate the information in question, he does not trouble with the back. It is only if the information on the front is insufficient, or the questions which concern the reader relate to matters which do not ordinarily appear on the front, that he turns to the back. And then he calls in his lawyers to construe the document as a whole. 83. For similar reasons, I think that The Flecha [1999] 1 Lloyd's Rep. 612 was wrongly decided. Moore-Bick J, as an experienced shipping lawyer, was so conscious of the presence of the identity of carrier and demise clauses on the back of the bill of lading that could not imagine that they could be overridden by a port agent's stamp and signature on the front. He said that the term "carrier" on the front was used loosely but I think that what he really meant was that it must have been a mistake. If one were construing the document as a whole, giving equal weight to all its clauses, one might possibly conclude that it was a mistake: compare Mannai Investment Co. Ltd v Eagle Star Life Assurance Co. Ltd [1997] AC 749. But the bill of lading is addressed, among others, to persons who will try if possible to identify the carrier simply by what it says on the front. What The Flecha and the majority decision in the Court of Appeal did was to drive a wedge between the reasonable perception of a bank taking up the bill and the construction which would later be given to the bill by a court in litigation, perhaps involving the same bank. This does not seem to me commercially fair. 84. Mr Milligan argued that in the alternative that the description of CPS as carrier in the signature box was not inconsistent with the shipowners being parties to the contract of carriage. In Fred. Drughorn Limited v Rederiaktiebologet Transatlantic [1919] AC 203 the House of Lords held that a charterparty which described one of the parties as "charterer" was not inconsistent with his being agent for an undisclosed principal who also assumed the rights and duties of charterer. So, in this case, Mr Milligan said that the description of CPS as "carrier" was not inconsistent with giving effect to the demise clause under which CPS were deemed to be agents for the shipowners. They were disclosed agents (the agency being disclosed by the demise clause) for an unnamed principal. 85. This might be a powerful argument if the bill of lading were a different kind of document. But, for the reasons which I have given, I think that if the carrier is plainly identified by the language on the front of the document, one never gets to the demise clause on the back. The language on the front simply takes priority and no attempt at reconciliation is required. Mr Milligan also submitted that CPS may have contracted both for themselves and the shipowners, the latter being unnamed or undisclosed principals. Rix LJ, who appears to have floated this theory in the Court of Appeal, said that it might be considered "novel and inconsistent with the settled expectation of the shipping trade". He would know this better than I, but I do not think that any reasonable merchant or banker who might be assumed to be the notional reader of this bill of lading would imagine that there was more than one carrier or that the carrier was anyone other than CPS. 86. It follows that in my judgment the appellants were not parties to the contract of carriage and are therefore not liable in contract. 87. Are they liable in tort? There is no dispute that the damage to the cargo was caused by the negligence of their servants employed on the vessel. The case has been argued on the basis that the shipowners owed the normal duty of care to the cargo owners on the ground that it was foreseeable that bad stowage would damage their goods. The existence of that duty could be reinforced by the fact that the shipowners were bailees or sub-bailees of the goods. 88. But a person who sues for damage to goods must show that he had title to the goods at the time the damage occurred. Otherwise he has suffered economic damage rather than physical damage to his property: he has paid for goods which were damaged and therefore worth less at the time that he acquired title. Such loss cannot be recovered in an action for negligence: The Aliakmon [1986] AC 785. 89. In the present case, only Makros Hout had obtained title before the voyage began. Prima facie, therefore, they are entitled to sue. The other cargo owners obtained title from the shippers at various stages during the voyage. The judge held that notwithstanding that the negligent act was the stowage at the commencement of the voyage and that, once the voyage had begun, progressive damage to the cargo was inevitable, the other cargo owners could recover for the proportion of the damage which had been caused to their consignments after they had obtained title. 90. My Lords, in agreement with the Court of Appeal, I think that this was to treat the progress of the damage as creating new causes of action which accrued per diem in diem. But in my opinion there was a single cause of action which accrued to the persons who owned the cargo at the time when the negligent stowage caused it any significant damage. That cause of action comprised all damage caused by the negligent stowage, even if some of that damage did not manifest itself until after they had parted with ownership. As significant damage was suffered by all the cargo before title passed to the cargo owners (other than Makros Hout), they have no cause of action in tort. 91. The respondents relied upon the decision of the House of Lords in Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127. But that was an unusual case in which the cause of the damage (digging coal under ground) was not a wrongful act. It gave rise to a cause of action only in so far as it let down some part of the surface. So there was no unifying element in the cause of action such as, in this case, is provided by the negligent stowage. Each letting down of the surface was a separate cause of action. In the present case, all damage caused by the negligent stowage is a single cause of action which is complete once any significant damage has occurred. 92. That means that only Makrous Hout have a prima facie claim in negligence. But the shipowners say that even that claim is excluded by an exemption clause on the back of the bill of lading, namely condition 5, known as the Himalaya clause after the decision in Adler v Dickson (The Himalaya) [1955] 1 QB 158. As sub-bailees, they may also have been entitled to rely on any terms of bailment contained in the contract between them and the charterers as bailees, i.e. the charterparty: see The Pioneer Container [1994] 2 AC 324. But no reliance has been placed by either side on those terms. The argument has turned entirely upon the effect of the Himalaya clause. The relevant provisions are quoted in the speech of my noble and learned friend Lord Bingham of Cornhill and I shall adopt his numbering of the relevant parts. 93. A Himalaya clause in a contract of carriage is designed to create contractual relations between the shipper and any third parties whom the carrier may employ to discharge his obligations. It does so without infringing the English doctrines of privity of contract and consideration, which, until the Contracts (Rights of Third Parties) Act 1999, prevented third parties from claiming benefits under contracts. The way it works is this. The shipper makes an agreement through the agency of the carrier with the third party servant or contractor. Such third parties may have authorised the carrier in advance to contract on their behalf or they may afterwards ratify the agreement. The terms of the agreement are that if such a third party renders any services for the benefit of the cargo owner in the course of his employment by the carrier, he will be entitled to the exemptions and immunities set out in the clause. At that stage, the agreement is not a contract. The third party makes no promise to the shipper to render any services and, until he has actually rendered them, no contract has come into effect. It is the act of rendering the services which provides the consideration and brings into existence a binding contract under which the third party is entitled to the exemptions and immunities. The efficaciousness of the clause to achieve these results has been affirmed by the decision of the Privy Council in The Eurymedon [1975] AC 154. The theory of the agreement which becomes enforceable conditionally upon the act providing consideration was developed by Sir Garfield Barwick CJ in his dissenting judgment in the High Court of Australia in Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty Ltd (The New York Star) (1978) 139 CLR 231 and adopted by the Privy Council when it affirmed his judgment on appeal: see The New York Star [1981] 1 WLR 138. 94. The first question is whether this version of the clause created the necessary agency. I agree with my noble and learned friend Lord Bingham of Cornhill that words have been omitted because of a common copyist's error and that it is possible to identify the substance of the missing words. The clause ought therefore to be read as if it contained them. They make it clear that the carrier acts as agent to contract for the exemptions in parts (1) and (2). I do not think that there is any contradiction between the somewhat sophisticated technique of construction which has to be applied to restore clause 5 to its intended form and the more rough and ready approach used to decide who is the carrier. The latter is, as I have said, a question which the reasonable merchant or banker would expect to be able to decide for himself. On the construction of condition 5, he would undoubtedly want to consult a lawyer. For similar reasons, I do not think that it is relevant that the Himalaya clause is preceded by a separate and verbose sentence purporting to confer upon the carrier a series of immunities of which some are probably in conflict with the Hague Rules and others unnecessary. 95. The next question is the nature of the exemption conferred by part (1). It confers immunities upon the carrier's servants, agents or independent contractors. I agree with Colman J. and the unanimous Court of Appeal, for the reasons they gave, that the shipowners were independent contractors to carry the goods for the charterers. The cargo owners no longer contest this point. The condition then says that no such servants, agents and independent contractors "shall in any circumstances whatsoever be under any liability whatsoever to the shipper". That seems reasonably clear. It appears to exempt them from any liability. But Colman J. and all the members of the Court of Appeal agreed that it did not. Why not? 96. First it was said that part (1) is not a contract between the shipper and a third party. It is a covenant with the carrier, enforceable only by the carrier, by which the shipper promises that neither he nor his successors in title will sue the third party. The way to enforce it is for the carrier to obtain an injunction prohibiting the shipper from suing the third party: see The Elbe Maru [1978] 1 Lloyd's Rep. 206. In the Court of Appeal, Chadwick LJ ( at p. 471) made his position on this point very clear: "The starting point", he said, "is to appreciate that [part (1)] has effect only as an agreement between the shipper and the carrier." He referred to the words of part (3) ("all such persons shall to this extent be deemed to be parties to the contract contained in or evidenced by this Bill of Lading") and said that the words which he italicised showed that the agency mechanism was to apply only to part (2). 97. I have two difficulties about this argument. The first is that, read as a whole, the Himalaya clause makes it clear that the carrier contracts as agent for the third party in respect of both parts (1) and (2). The agency mechanism is not in my opinion created by part (3); it is created by the words in part (2) -
98. Part (3) has a different function which was in my opinion correctly identified by Beattie J. in his judgment at first instance in The Eurymedon [1971] 2 Lloyd's Rep. 399, 409:
99. The purpose of deeming the third party to be party to the bill of lading to that extent is to ensure that the exemption clause is enforceable against subsequent assignees. As part of the bill of lading it will be enforceable under the Carriage of Goods by Sea Act 1992 or possibly the common law rule that the consignee is bound by his acceptance of the bill of lading and request for delivery of the goods: see The Eurymedon [1975] AC 154, 168. 100. It may be that Colman J. and the Court of Appeal were misled because they were not given the words which had dropped out of the clause. But even without them I would have decided that the agency covered both parts (1) and (2). That is because in my opinion, and I understand it to be that of all your Lordships, part (1) simply cannot be read as a covenant not to sue. It does not say that the shipper is not to sue the third party. It says that he shall not be under any liability. A similar point arose in Gore v Van Der Lann [1967] 2 QB 31, in which the plaintiff contracted with the Liverpool Corporation that their bus drivers would not be liable to her for any damage however caused. The Corporation did not purport to contract as agent for the drivers and when the plaintiff sued a driver it was conceded that he could not rely upon the exemption: see Midland Silicones Ltd v Scruttons Ltd [1962] AC 446. But the Corporation intervened to claim that the contract was a covenant not to sue the drivers which they could enforce. The Court of Appeal rejected this argument, saying that the agreement could not be construed as containing such a covenant. So it seems to me that part (1) is either a contract of exemption between shipper and third party or it is wholly ineffective. In my opinion it was the former. 101. The second argument is that if the first part of the clause means what it appears to say, cases like the The Eurymedon [1975] AC 154, The New York Star [1981] 1 WLR 138 and The Mahkutai [1996] AC 650 would have been decided on different grounds or at any rate argued differently by the eminent counsel who appeared in them. This kind of argument is always rather speculative - one seldom knows exactly why some point was not taken - and a close examination of those three cases does not make it any stronger. When The Eurymedon was decided at first instance in New Zealand ([1971] 2 Lloyd's Rep. 399) Beattie J. had no doubt (at p. 408) that the first part of the clause meant what it said:
102. Beattie J. noted that the first pleaded defence was simply that the defendants (in that case, stevedores) were not liable because the work was done in the course of their employment. The second defence pleaded a package limitation and the third the time bar under the Hague Rules. The judge noted that all three defences depended upon showing that the agency mechanism succeeded in creating contractual relations between the defendants and the shipper and that if that worked, the time bar would be enough to defeat the action. But he observed in passing that -
103. In other words, the only answers which Beattie J. could see to a complete exemption under the Himalaya clause were (1) the agency mechanism did not work or (2) the contract created by the agency mechanism was a contract of carriage, so that the exemption was struck down by Article III.8 of the Hague Rules. Since the decisions of the Privy Council in The Eurymedon and The New York Star it is clear that in principle the agency mechanism can work and I have already explained why I think it works for part (1) of this clause. That leaves the question of whether the purported exemption would be struck down by the Hague Rules. I shall come back to that point later. 104. In the New Zealand Court of Appeal, Turner P. summarised the issue as follows:
105. Perry J. clearly held the same view, because he remarked:
106. The New Zealand Court of Appeal allowed the appeal on the ground that they did not think that the agency mechanism worked. They could not find any consideration moving from the stevedores. So they did not consider the point which Beattie J. said would arise if the agency did work but there had been no time bar, namely whether the contract was subject to the Hague Rules. 107. In the Privy Council it was recognised, as it had been by Beattie J., that if the agency mechanism worked, the time bar would be enough to enable the appellants to succeed. So nothing was said about the potential effect of the exempting part of the clause. 108. In The New York Star [1981] 1 WLR 138 there was a general exemption clause and a separate time bar. The stevedores recognised that there was a strong argument that the doctrine of fundamental breach might prevent the exemption clause from applying to the facts. The stevedores had handed over the goods to a thief without requiring production of the bill of lading. (Compare Sze Hai Tong Bank Ltd v Rambler Cycle Co. Ltd [1959] AC 576.) In the Privy Council Mr Gleeson QC, for the stevedores, included reliance upon the "general exclusion provisions" as an alternative at the end of his printed case (paragraph 20) but his stronger argument, upon which he succeeded, was based on the time bar. So there was no discussion of the issues which arise in this case. 109. The Himalaya clause in The Mahkutai [1996] AC 650 was said by Rix LJ (at p. 461) to be similar but not identical. It was similar in that it had words similar to part (2), although in a somewhat narrower form. But it was different in that it did not have part (1) at all. Instead, it had what was plainly a covenant not to sue in a form similar to that in the The Elbe Maru [1978] 1 Lloyd's Rep. 206. There was no general exemption clause. This difference seems to me rather important and makes it less surprising that the case contains no discussion of the effect of a general exemption clause. It is true that Lord Goff of Chieveley said ([1996] AC 650, 666) that the function of a Himalaya clause was -
110. But this dictum is clearly addressed to the clause used in the case. I do not think it would be fair to treat it as laying down that this was the only function of any Himalaya clause. 111. The third argument is from redundancy. The second part of the clause says that servants and independent contractors are to have the same protection as the carrier. So, it is said, if the first part exempted the independent contractor from all liability whatever, he would not need the protection of the second part. This argument was accepted by Colman J. ([2000] 1 Lloyd's Rep. at p. 99) and by Rix LJ and Sir Andrew Morritt V-C in the Court of Appeal ([2001] 1 Lloyd's Rep. at pp. 462, 476). 112. My Lords, I seldom find arguments from redundancy very compelling and I think that in the case of a Himalaya clause they carry little weight. I do not think it surprising that when the clause was drafted (probably after Adler v Dickson (The Himalaya) [1955] 1 QB 158) the draftsman thought it might be prudent to wear belt as well as braces. In the legal climate of that time such prudence would have been justified. Exemption clauses were under threat from extensions of the fundamental breach doctrine and the draftsman might have thought that if the exemption in part (1) failed, the third party should at least be able to fall back upon the exemptions and time limits available to the carrier. That is what happened in The New York Star [1981] 1 WLR 138. 113. That brings me to the fourth argument, which is that the complete exemption conferred by part (1) is cut down by Article III.8 of the Hague Rules, which provides that any clause in a contract of carriage relieving "the carrier or the ship" from liability for negligence shall be null and void. I confess that on this point my opinions have fluctuated but in the end I have been persuaded that the reasoning of Lord Hobhouse of Woodborough is correct and that Article III.8 does have this effect. 114. Putting the argument in my own words, it seems to me to run as follows. I do not think that the collateral contract between shipper and independent contractor is a "contract of carriage" so as to attract the application of the Hague Rules. But part (3) says that the independent contractor "shall to this extent be deemed to be parties to the contract contained in or evidenced by this Bill of Lading". That means, as I said earlier, that he is a party only for the purpose of taking the benefit of the exemption clause against the shipper and any transferee of the bill of lading. But, for that purpose only, the provisions of the bill of lading, insofar as they are relevant, apply to him. The only provision which has been suggested as relevant in the present case is Article III.8, which applies by virtue of the paramountcy provision in part (2). That does apply to exemption clauses and restricts their effect. I think that this argument was also accepted by Colman J. ([2000] 1 Lloyd's Rep. 85, 100) and Rix L.J. ([2001] 1 Lloyd's Rep. 437, 462). 115. I think that such a construction is in accordance with the general policy of the Hague Rules, which was to provide an acceptable balance in distributing the risks of loss and damage between carrier and cargo owners. The rules are intended to preserve the common law remedies which cargo owners would have in English law for loss of or damage to the cargo in the circumstances there specified. Of course they do have this effect anyway in relation to the contractual carrier, the charterer. But the preservation of these remedies must also be considered in relation to the procedures available for enforcement. By section 20(2)(g) of the Supreme Court Act 1981 the High Court has admiralty jurisdiction in respect of claims for loss of or damage to goods carried in a ship (which may, as in this case, be a claim in tort) and by section 20(2)(h) it has jurisdiction in respect of any claim arising out of any agreement relating to the carriage of goods in a ship. Jurisdiction may be founded by the arrest of the ship, which will also provide security for the claim. Without the right to these enforcement procedures, a cargo claim against a foreign carrier would in many cases be unenforceable. But by section 21(4)(i), the action in rem may be brought against the ship only if the person who would have been liable in personam was at the time when the action was brought the beneficial owner or charterer by demise. 116. It follows that in the case of goods carried under a bill of lading issued by a time charterer, the liability in personam of the time charterer will not enable the cargo owner to arrest the ship. He may do so only if the shipowner is also liable in tort. But such liability will not exist if the time charterer is able to stipulate for complete exemption on the part of the owner. The remedy which the Hague Rules were intended to preserve may in such cases be unenforceable. 117. I would therefore make the orders proposed by my noble and learned friend Lord Bingham of Cornhill. LORD HOBHOUSE OF WOODBOROUGH My Lords,118. The Appellants are companies respectively registered in Liberia and Singapore. At all material times, the former was the owner and the latter the demise charterer of the motor vessel Starsin. No distinction has been drawn between them and I will refer to them simply as the shipowners. The Starsin was a bulk carrier of about 27,000 tons deadweight capacity. She flew the flag of St Vincent and the Grenadines. She had 5 holds and 9 hatches and was crewed by Ukrainian officers and men. 119. On 3 October 1995, the shipowners time-chartered the Starsin to a company called Continental Pacific Shipping Ltd of Douglas in the Isle of Man. The timecharter was expressly governed by English law. The NYPE form was used. The duration of the charter was to be one timecharter trip (estimate 65/85 days). Under this form of timecharter, the ship remains in the possession of the shipowners and the master and crew remain the shipowners' servants (cl.26). The timecharter contained a number of clauses dealing expressly with the issuing of bills of lading: "the Captain ... is to sign bills of lading for cargo as presented in conformity with Mate's or Tally Clerk's receipts" (cl.8); "the Master to authorise, if required, the Charterers or their Agents to sign bills of lading on his behalf, provided in conformity with Mate's Receipts" (cl.33). As regards the terms of the bills of lading, the timecharter stipulated that certain clauses were both to be deemed to be incorporated in the timecharter and to be included in all bills of lading issued under the timecharter. Clause 56 provided:
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120. This was the charter party under which the vessel was operating when she called at various Malaysian ports in the following year and loaded various consignments of timber and timber products. It appears that at some ports some timber was loaded which had been wetted by rain before shipment. It was loaded nevertheless, notwithstanding the fact that the presence in the holds of wet cargo loaded at earlier ports might make the vessel unfit (ie, unseaworthy) for the carriage of timber to be loaded at a later port (Hague Rules, Art.3 r.1) and/or the loading of wet timber might constitute a breach of duty properly to care for consignments loaded earlier (Art.3 r.2). Clean shipped on board bills of lading were however issued. But the cargo was in any case improperly stowed, without sufficient dunnage to separate the consignments, enable the cargo and the holds to be adequately ventilated and to protect the cargo from being wetted by ship and cargo sweat (ie, condensation). After loading at the various ports, the vessel set out on her voyage to Northern Europe on 8 December 1996. She arrived off Antwerp on about 19 January 1997 and discharged her cargo at ports which included Rotterdam and Avonmouth. Some 17 consignments out-turned seriously damaged by fresh water. It is these consignments which form the subject matter of these actions. The actions were commenced in the Admiralty jurisdiction of the High Court, two in rem, and a third in personam. The shipowners entered appearances in all actions. The charterers although they were sued as well did not appear and have taken no part in the actions. Your Lordships were told that they were now insolvent but it does not follow that this has any relevance having regard to the terms of the timecharter. 121. The claimants were various merchants who had acquired the title to the relevant consignments and to whom the relevant bills of lading had been endorsed. They were the 'notify parties' at the relevant discharge ports but not the consignees named in the bills of lading. The consignees were either 'order' or the sellers' bankers through whom the documents were to be negotiated. All the bills of lading issued for the voyage to Europe were on the forms used by 'Continental Pacific Shipping', a trading name which does not distinguish between the charterers and their sister company Continental Pacific Shipping NV of Antwerp. This ambiguity cannot be resolved by reference to the bills of lading themselves, only by having regard to other documents, eg the timecharter. Assuming that the usual practice was followed, the shippers' agents would have purchased these forms from stationers or the port agents at the various loading ports. They do not all have exactly the same wording; they contain a considerable number of mis-prints and omissions, not the same ones at every port. None of these defects and variations are material until I get to the 'Himalaya' clause issue and I will ignore them. Thus, the bill of lading forms included, besides the "Basis of Contract" clause (clause 2) contractually incorporating the Hague Rules, to which I will come later, the following:
122. On the front of the form, the heading is "Liner Bill of Lading No. "; there is a flag or logo and the words "Continental Pacific Shipping". At the foot there is a box saying "Signature". The front and back of the form are therefore unequivocal. The front is to be signed by or on behalf of the Master, that is to say, on behalf of the employer of the master, the shipowner (or possibly a demise charterer of the vessel). The definition in clause 1(c) confirms this and in no way detracts from it. Finally, clause 33 expressly provides that the contract evidenced by the bill of lading is to be with the owner of the vessel to the exclusion of anyone else. Clause 35 stipulates for the same outcome. All this is incontrovertible. First Question: On whose behalf were the bills of lading signed and issued?123. The complications in the present case arise from the fact that, whereas, for a large majority of the consignments shipped on the Starsin, the bills of lading were signed by the port agents simply "as agents", the bills of lading for the consignments the subject of these actions were signed by the port agents as agents "for The Carrier Continental Pacific Shipping" or "for Continental Pacific Shipping (The Carrier)" or "Continental Pacific Shipping As Carrier". For the first of these versions, it appears that all the words are typed; in the second and third, it appears that a rubber stamp was used. Hence the first question raised on the appeal. Are the shipowners liable in contract on these bills of lading, so signed? Colman J and Rix LJ held that they were not but the majority in the Court of Appeal, Morritt V-C and Chadwick LJ, held that they were. No point was taken on the claimants' title to sue on the bills of lading under the Carriage of Goods by Sea Act 1992 (the successor of the Bills of Lading Act 1855). No other contractual claim was made by the claimants against the shipowners at the trial. But, if the claimants could establish this contractual cause of action, they would, by virtue of the 1992 Act, not need to prove what damage had been caused at what stage of the ocean voyage. 124. The rival arguments were essentially very short. The claimants, through Mr Milligan QC, argued that there was no necessary contradiction between words of description on the front and the unequivocal provisions of clause 33 and that clause 33 should be applied, as should clause 35. They further submitted that if there was any inconsistency it could be resolved by reading the signature as still being for the master and merely lengthening the chain of agency; the local agents signed as agents for the timecharterers who were to |