59. Elder Dempster & Co and Others v Paterson, Zochonis & Co. Ltd [1922] 12 Ll.l Rep 69; [1922] 13 Ll.l Rep 513; [1924] 18 Ll.l Rep 319

Charterers’ bills – owners entitled to exemption in bills of lading – seaworthiness

The facts

Casks of palm oil were shipped from West Africa to Hull in a ship with a single hold without tween decks. The casks were laden with bags of palm kernels which crushed the casks causing most of the oil to be lost or damaged.

The bill of lading contained an exemption “for any damage [to the goods shipped] arising from other goods by stowage or contact with the goods shipped hereunder”.

Evidence was lead that, ordinarily, ships engaging in moving palm oil from West Africa were equipped with permanent or temporary tween decks. The facility of an extra deck prevented damage to the lowest cargo by carrying a substantial portion of the weight.

Although these bills were signed by the master, it was common cause that the charterers were liable on the bills.

The shippers claimed that the damage was caused by the unseaworthiness of the vessel and not bad stowage and that the exemption did therefore not protect the charterers.

The owners were sued in tort and they claimed to be entitled to the same exemption as the charterers.

Findings

Court of first instance (Rowlatt J) found that the damage was caused by the unseaworthiness of the vessel and it was therefore not necessary for him to decide on the extension of the charterers’ exemption to the shipowners.

The majority of the Court of Appeal (Bankes and Eve LJJ – Scrutton LJ dissenting) endorsed the finding of the court of first instance.

Scrutton LJ was of the view that the damage was caused by bad stowage as there was nothing wrong with the vessel. There would have been no damage to the casks without the heavy cargo placed on top of them.

The House of Lords (save for Viscount Finlay) agreed with Scrutton LJ. Viscount Finlay held that the damage was caused by unseaworthiness.

The Lords who delivered speeches (Cave, Finlay and Sumner) all thought that it was self evident that the shipowners as the charterers’ agents were entitled to the charterers’ protection provided for in the bills of lading. Viscount Cave agreed with Scrutton LJ that an agent is entitled to the same protection as his principal.

Lord Sumner considered that the owners might be entitled to the exemption on the basis of bailment or that the shipowners were the agents of the charterers and on that account entitled to the exemptions in the contract. He favoured the argument on bailment.

Commentary

This heavily cited case was referred to without criticism as recently as in the Starsin.

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