529. The Albazero [1977] AC 774

rule that title in damaged goods unnecessary for locus standi where owners sued by charterers restricted by the House of Lords

The Facts

The sister ship of this vessel which was arrested by the charterers, the Albacruz, sank in the North Atlantic on 14 January 1970 and was totally lost with its cargo of 15 000 long tons of crude oil.

The charterers had entered into a 5 year time charter under the Shelltime B [1963] form as modified in respect of the Albacruz.

The charterers were one of three subsidiaries in a group of companies. The other two subsidiaries involved were Courtage who acted as agents for the charterers and Raffinerie Belge de Petroles SA (RBP), the indorsees of the bills of lading.

Charterers had bought the cargo under a bulk purchase agreement from Esso and had on-sold to RBP, CIF Antwerp.

The cargo was supplied by an Esso subsidiary, Creole, who shipped the cargo under bills of lading which recorded the charterers as consignees.

Creole sent the bills of lading by airmail to Courtage who endorsed them generally as agents for the charterers. Courtage then posted the bills to RBP who received them 1 day after the vessel had sunk.

The cargo was insured under an open cargo policy for the benefit of the group of companies of whom the charterers and RBP were subsidiaries.

RBP duly paid the charterers and the charterers duly paid Esso for the oil. Cargo underwriters indemnified the group of companies for the loss

The bills of lading were subject to the Hague Rules.

Although RBP as holders of the bills of lading would have been able to claim from the ship owners, they failed to do so within the 1 year time limit.

Charterers then claimed against the owners on the charterparty which did not contain a 1 year time bar.

Owners, who were represented by Mustill QC, took a point that title had passed to RBP at the time of the loss and that charterers had no locus to sue.

Charterers, who were represented by Hobhouse QC and Andrew Longmore, argued that title had not passed, but even if it had, House of Lords’ authority, Dunlop v Lambert, had ruled that title in the goods was not required where there was a contract between the parties which could make the owners liable for cargo losses.

Findings

Brandon J, after an exhaustive review of the authorities, found that the rule in Dunlop v Lambert was good law and held in favour of the charterers/cargo underwriters.

Roskill LJ in a meticulous and illuminating judgment carried out an even fuller review of the authorities.

Although he doubted the necessity of the rule in Dunlop v Lambert in view of the developments of law in the law of tort and bills of lading which provided the indorsees with a remedy which did not exist at the time the early cases relied on in Dunlop v Lambert, in particular, Davis and Jordan v James (1770) a judgment by Lord Mansfield himself, he considered himself bound by precedent to allow the claim and to confirm the judgment of Brandon J.

Interestingly, he pointed out the comparative novelty of time charters which began with the inception of steam which allowed the parties to accurately predict the length of voyages and the earning capacity of vessels.

Lord Diplock, in a typically laconic judgment, undertook an historical overview of the development of the law and emphasized the effect of Lickbarrow v Mason (1787) which held that the bill of lading was a negotiable instrument which could pass title to its holder making it unnecessary to provide a remedy for the charterers to sue on behalf of consignees after charterers had parted with their title and before the damage occurred.

Lord Diplock’s solution was a compromise: he was unwilling to wholly disturb the rule which had become so entrenched but he held as follows:

The complications, anomalies and injustices that might arise from the coexistence in different parties of rights of suit to recover, under separate contracts of carriage which impose different obligations upon the parties to them, a loss which a party to one of those contracts alone has sustained, supply compelling reasons why the rule in Dunlop v Lambert should not be extended to cases where there are two contracts with the carrier covering the same carriage and under one of them there is privity of contract between the person who actually sustains the loss and the carrier by whose breach of that contract it was caused”.

In effect, he held that the charter party governed and that the ordinary principle of compensation applied. As the charterers had suffered no loss they were not entitled to damages.

Commentary

This case, itself an important milestone, provides useful evidence of the development of the law of carriage by sea.

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