England and Wales High Court (Commercial Court) Decisions

Trade Green Shipping Inc v. Securitas Bremer Allgermeine Versicherungs A.G. [2000] EWHC Commercial 104 (9th May, 2000)

IN THE HIGH COURT OF JUSTICE 1997 FOLIO No.184
QUEEN'SBENCH DIVISION
COMMERCIAL COURT

THE HONOURABLE MR JUSTICE MOORE-BICK

BETWEEN

TRADE GREEN SHIPPING INC

Plaintiff

and

SECURITAS BREMER ALLGEMEINE VERSICHERUNGS A.G.

First Defendant

and

THE GRAIN BOARD OF IRAQ

Second Defendant

"TRADE GREEN"

Defendant

JUDGMENT

_________________________________

Miss Poonam Melwani instructed by Stephenson Harwood appeared for the claimant.

1. Mr. Steven Berry instructed by Holmes Hardingham Walser Johnston Winter appeared for the first defendant.

2. Pursuant to the Practice Statement issued by the Master of the Rolls on 9th July 1990 I hereby certify that the attached text records my judgment in this matter and direct that no further record or transcript of the same need be made.

3.  The Hon. Mr. Justice Moore-Bick

1. The first plaintiffs are the owners of the vessel Trade Green which carried a cargo of rice in bags from Bangkok to Aqaba between April and May 1993 under a bill of lading which provided for General Average to be adjusted in London in accordance with the York-Antwerp Rules 1974. On 8^th May 1993 while the vessel was discharging at Aqaba fire broke out in the engine room. The vessel was removed from the berth on the instructions of the Port Authority by two tugs with a third tug on stand-by and taken under tow to an anchorage outside the port while the fire was brought under control by the crew using the vessel's own fire-fighting systems. The vessel was then drifting at the anchorage without power. She was towed back into berth early in the evening of the following day in order to complete discharging. In due course the owners were presented by the Port Authority with a bill for the use of the tugs which amounted in all to JD254,400, equivalent to approximately US$375,000. The level of charges reflects the fact that in the eyes of the Port Authority the tugs had provided salvage services to the vessel. That invoice was duly settled by the owners before the vessel left Aqaba.
2. The defendants do not admit that the fire endangered both the ship and the cargo remaining on board, but it was common ground that I should make that assumption for the purposes of determining the preliminary issues. In any event, the master declared General Average and in due course an adjustment was prepared in which, among other things, the charges levied by the Port Authority for the services of the tugs were allowed in general average. In the notes to the adjustment the adjustors made the comment that there was some doubt whether the shift from the berth was carried out for the common safety. However, they considered it unnecessary to make further enquiries at Aqaba because in their view the charges for the services of the tugs were incurred as a consequence of the order to leave the berth and were port charges which could properly be allowed under Rule XI(b) of the York-Antwerp Rules. The adjustment having been prepared on this basis, the sum of US$253,725.16 was calculated as representing the cargo's proportion of general average expenditure.
3. This action has been brought by the owners to recover from the first defendants as holders of the bill of lading the sum due in respect of cargo's contribution in general average. The second defendants are sued as guarantors of the cargo's proportion of general average, but the proceedings have not been served on them. On 28^th January 2000 Morison J. ordered the trial of four preliminary issues, namely,

1. Whether there was a detention/detention within the port within the meaning of Rule XI(b) of the York-Antwerp Rules 1974 and if so, what was the period of detention;

2. Whether the tug towage expenses claimed in this action are "port charges" within the meaning of Rule XI(b);

3. Whether, in order to claim the tug towage expenses as port charges under Rule XI(b), it is necessary to establish that the tug towage expenses were intentionally and reasonably incurred for the common safety for the purposes of preserving from peril the ship and the cargo within the meaning of Rule A of the York-Antwerp Rules;

4. Whether the fire and/or the general average and salvage charges claimed in this action were incurred during the period of the maritime adventure and if not, whether this precludes the claim for general average and salvage charges.

This matter now comes before me on the trial of those issues.

4. I was informed at the outset of the hearing that it was common ground that the charges in question had been incurred during the period of the maritime adventure and that issue 4 should be determined accordingly. I am sure that was right. Although there was considerable argument about whether the voyage had come to an end for the purposes of the Rules before the fire broke out, I think that there can be no doubt that the common maritime adventure had not. That did not come to an end until the cargo had all been discharged from the ship.
5. Rule XI of the York-Antwerp Rules is headed

"Wages and Maintenance of Crew and other Expenses bearing up for and in a Port of Refuge etc.".

The parts of Rule XI(b) that are material for present purposes provide as follows:

"When a ship shall have entered or been detained in any port or place in consequence of accident, sacrifice or other extraordinary circumstances which render that necessary for the common safety, or to enable damage to the ship caused by sacrifice or accident to be repaired, if the repairs were necessary for the safe prosecution of the voyage, the wages and maintenance of the master, officers and crew reasonably incurred during the extra period of detention in such port or place until the ship shall or should have been made ready to proceed upon her voyage, shall be admitted in general average.

. . . . . . . . . . . . . . . . . . . .

Port charges incurred during the extra period of detention shall likewise be admitted as general average except such charges as are incurred solely by reason of repairs not allowable in general average."

6. Miss Poonam Melwani for the owners submitted that the Trade Green was "detained" at Aqaba within the meaning of Rule XI(b) for the period between the outbreak of fire and the time at which she returned to berth because during that period discharging operations were interrupted and it was not until the vessel had returned to berth that she was, in the words of the Rule, "ready to proceed upon her voyage". Accordingly, the whole of that period of interruption to cargo handling operations represented the "extra period of detention" in respect of which wages, maintenance and port charges were to be allowed in general average and the tug charges were "port charges" within the meaning of the Rule. Mr. Stephen Berry for the cargo owners submitted that the "voyage" within the meaning of the Rules had ended when the vessel berthed on her arrival at Aqaba and that there was no detention of the kind contemplated by Rule XI(b). He resisted the suggestion that tug charges of the kind levied in this case could properly be regarded as port charges for these purposes.

Was there a detention?

7. As became clear in the course of argument, one of the central issues between the parties was whether the word "detention" in Rule XI(b) bears the meaning which the owners sought to put on it. One of the unusual features of this case is that, even assuming that the fire endangered both ship and cargo, it has not so far been suggested that it was necessary to move the ship away from the berth in order to extinguish it. Indeed, I have been asked to assume for present purposes that it was not, and in fact it seems likely that the ship was in less danger at the berth, where assistance from the shore could probably be summoned without difficulty if necessary, than she was at the anchorage. This is not a case, therefore, in which the steps which gave rise to the tug expenses were taken by the master to preserve the property involved in the common adventure or to enable the vessel to complete the voyage, whatever meaning is given to either of those expressions.
8. Mr. Berry submitted that the expression "detained in any port or place" in Rule XI(b) must be read as a whole and in conjunction with the words "which render that necessary for the common safety". He submitted that in this context "detention" has an essentially geographical meaning and that Rule XI(b) is directed to a situation in which the vessel is prevented by the dictates of common safety from immediately continuing her progress to her final destination. Hence his submission that the voyage to which the Rules refer is completed once the vessel reaches berth at her port of discharge. In other words he submitted that the reference to detention is concerned only with the vessel's physical movements and is not apt to cover interruption to ordinary cargo handling operations at the port of discharge.
9. In order to resolve this question I think it is necessary to pay careful consideration to scope and object of Rule XI. Rule XI is the counterpart of Rule X which deals with expenses of entering and leaving a port of refuge and handling and storing cargo, fuel and stores. Rule XI deals with other kinds of expenses incurred as a result of making for and entering a port of refuge which are not themselves covered by Rule X. It is quite true that Rule XI refers to "any port or place" and that that expression is capable of including the port of discharge, but I think it is apparent from the language of these two Rules as a whole that they are concerned with the consequences of an unexpected interruption of the vessel's progress towards her destination rather than any interference with routine cargo operations once she has reached it. In particular, the phrases "when she shall have sailed thence with her original cargo" in Rule X(a), "when the ship does not proceed on her original voyage" in Rule X(c), and "until the ship shall or should have been made ready to proceed upon her voyage" in Rule XI(b) all point strongly to that conclusion.
10. Miss Melwani's response to this argument was that references in the Rules to the "voyage" are intended to denote the whole of the operation involved in the carriage of cargo by sea from the moment when the first parcel is loaded until the moment when the last parcel is discharged. In other words, she submitted that the "voyage" is the same as the "common maritime adventure" and that the use of the different expressions can be explained by the development of the Rules in a piecemeal fashion over a period of many years. In my view the word "voyage" is capable of bearing different meanings in different contexts and it is therefore necessary to examine the particular way in which it is used in the Rules. However, the suggestion that the use of these two different expressions is simply the result of inadvertence on the part of those who framed successive editions of the Rules does not in my view do them justice. From the Glasgow Resolutions of 1860 to the York-Antwerp Rules 1974 one finds the words "voyage" and "adventure" being used in a manner which suggests that they are intended to refer to quite different concepts. (For the earliest formulations see Glasgow Resolution No.9, York Rules (1864), Rules VIII and X and York-Antwerp Rules (1877), Rules VIII and X). Indeed, I think that has become clearer as the later formulations of the Rules have become more elaborate: compare, for example, the different uses of the words "adventure" and "voyage" in lettered Rules A, C, D and G and numbered Rules VI, X, XI, XIV, XVI. Throughout the successive editions of the Rules "voyage" has been used in a way which naturally refers to the passage of the vessel from her first loading port to her final discharging port; "adventure" has been used in a way which naturally describes the common enterprise represented by the carriage of goods by sea in which ship and cargo are both involved.
11. In support of his argument Mr. Berry drew my attention to the case of The Whitecross Wire and Iron Company Ltd v Savill (1882) 8 Q.B.D. 653 which in some respects bears a striking similarity to the present case. After the vessel had arrived at its destination and had discharged most of its cargo a fire broke out in the hold. Water pumped into the hold to extinguish the fire caused damage to the plaintiff's cargo and the plaintiff therefore sought to recover from the owners of the vessel a contribution in general average. One argument advanced by the defendants was that the voyage had ended, and the common adventure had therefore terminated, before the fire broke out and that they were therefore not liable to make any contribution in general average. Lord Coleridge dismissed the argument on the grounds that although the voyage might have come to an end, while cargo remained on board the maritime adventure had not and the owners remained liable to contribute in general average to a sacrifice made to avert a common peril. The court was concerned in that case with the application of the general principles of maritime law rather than the current version of the York-Antwerp Rules, but there is no reason to think that in this respect there was any significant difference between them. Miss Melwani submitted that it was not necessary for the court in that case to decide whether the voyage had already ended when the fire broke out provided it was satisfied that the common maritime adventure had not terminated. That, of course, is correct, but the owners' argument depended on the proposition that the adventure had ended when the voyage ended and it was clearly not one to which the court assented. Moreover, the judgment of Lord Coleridge lends some support to the conclusion that at that date a distinction could properly be drawn between the voyage and the common maritime adventure.
12. The leading commentary on this area of the law, Lowndes & Rudolf, The Law of General Average and The York-Antwerp Rules, (12^th ed. Wilson & Cooke) explains the origin of the expression "necessary for the safe prosecution of the voyage" as follows (in the commentary on Rule X(b) ):

"[This expression] is a notable example of the occasions where those who supported completion of the adventure as the basis of general average prevailed over those who supported the common safety concept.

. . . . . . . . . . a vessel may lose her propeller at sea and thereby be rendered unfit to encounter the ordinary perils of the sea. A resort to a port of refuge will be justified for the "common safety", but once within a port where repairs can be effected, safety will have been attained and some alternative expression is required if (as was intended by the early framers of the Rules) general average allowances are to continue. The alternative expression chosen was "necessary for the safe prosecution of the voyage", and it merely provides for a situation in port which, if the ship were at sea, would endanger the "common safety". "

In the same way, when the vessel is berthed at her final port of discharge she has reached a place of safety, at least so far as the perils of the sea passage are concerned, even though the adventure is not finally over until the whole of the cargo has been discharged. While the adventure persists it is still possible for a general average sacrifice to be made for the common safety in accordance with the principles embodied in Rule A, as indeed occurred in the Whitecross case, but it does not follow that expenses incurred for reasons unconnected with the common safety in order to enable the cargo to be discharged are to be allowed. Expenses of that kind could only be allowed if they fell within one of the numbered rules, but if that had been intended it would have been easy for the draughtsman to have used the expression "for the completion of the adventure" in Rule XI(b) rather than referring to the "safe prosecution of the voyage". Since in many respects Rules X and XI involve a departure from the basic principles of general average embodied in the lettered Rules, I can see no grounds for construing them more generously than the natural meaning of the words used would indicate.

13. The possibility that a distinction should be drawn in this context between "the voyage" and "the adventure" does not receive much prominence in Lowndes & Rudolf. In paragraph 11.26 the editors say that "the voyage" in the first paragraph of Rule XI(b) is the voyage which is the common maritime adventure, but in footnote 28 they qualify that to some extent with the comment that "the adventure continues until discharge is completed, even if the voyage ends earlier", referring to the Whitecross case. Nonetheless, in my opinion the language of the Rules and the principles which underlie them all point to the conclusion that Rule XI(b) is only intended to apply to the detention of the ship in the course of her voyage, that is, to situations in which the common safety requires that for the time being she should not proceed on her passage towards her port of discharge. I can see nothing to suggest that it is intended to have any application once the voyage has been completed and she has berthed at her port of discharge. Read in that way it is unnecessary to give the word "detention" an extended meaning of the kind suggested by the owners in the present case. The fact that the owners are unable to recover the towage charges under Rule XI(b) in the present case does not seem to me to be anomalous. If they had been incurred to preserve the ship and cargo from the common peril they would be recoverable under Rule A. As it is, it is difficult to see that they were in any sense incurred for the common benefit since the vessel was already at her discharging berth and was capable of extinguishing the fire without leaving it. It seems likely, these expenses were incurred only because the Port Authority was worried about the risk to the shore installations, or perhaps about the possibility that the berth might be obstructed if the vessel were to sink. At any rate, shifting the vessel away from the berth did not promote the completion of the common adventure in any way. For these reasons I have reached the conclusion that the ship was not detained at Aqaba within the meaning of Rule XI(b) and that for that reason alone these charges are not allowable in general average.
14. This makes it unnecessary for me to deal with the other points raised by Mr. Berry in the course of his submissions, but since they were fully argued, I think it right to express my views on them shortly.

"Port or place"

15. The first concerns the meaning of the expression "port or place" in Rule XI(b). Mr. Berry submitted that a "place" must be in the nature of a port and did not included an anchorage of the kind at which the Trade Green lay while the fire was being extinguished. In their commentary on Rule X(a) where the same words appear the editors of Lowndes & Rudolf refer to a passage in the judgment of Scrutton L.J. in Humber Conservancy Board v Federated Coal & Shipping Co. (1927) 29 Ll. Rep. 177, 179 in which it is said that "place" must be interpreted as a locality having some or many of the characteristics of a port. Mr. Berry relied on that decision and similar expressions of opinion in Hull Dock Co. v Priestly (1832) 4 B. & Ad. 187, Tennant v Swansea Harbour Trustees (1886) 3 T.L.R. 128 and Humber Conservancy Board v Federated Coal & Shipping Co. Ltd (1927) 29 Ll.L.R. 177. However, it is necessary to bear in mind that all those cases were concerned with the construction of statutory provisions relating to the imposition of charges on vessels or cargoes. The precise subject matter differs from case to case, but given the particular context in which the question arose in each case it is not difficult to see why references to a "place" should have been construed in that way. The subject matter of the York-Antwerp Rules is very different, however. The phrase as found in Rule X(a) is "port or place of refuge" and it is followed by the words

"in consequence of accident, sacrifice or other extraordinary circumstances which render that necessary for the common safety".

I would agree with the comment in paragraph 10.34 of Lowndes & Rudolf that any place which provides the shelter needed for the common safety would fall within these words.

"Port charges"

16. The second point concerns the meaning of "port charges". The adjusters took the view that the tug charges were port charges incurred within the extra period of detention. Miss Melwani submitted that they were right to do so because the expression "port charges" is apt to cover any charges incurred by a vessel during a period of detention, but I am unable to accept that submission.
17. The Rules themselves contain no definition of "port charges" and the ambit of the expression does not appear to have been considered in any of the authorities. One is therefore thrown back on the language of Rule XI(b) itself and the context provided by Rules X and XI as a whole. Under Rule X the expenses of entering and leaving a port of refuge are to be allowed in general average when an accident, sacrifice or other extraordinary circumstances render that necessary for the common safety. Rule XI appears to be designed to extend the same treatment to other expenses which will inevitably be incurred as a result of the need to make use of a port of refuge, primarily the additional cost of wages and maintenance of the crew and the consumption of stores and fuel. In this context I think that the natural meaning of the expression "port charges" in Rule XI(b) is apt to include any charges which the vessel would ordinarily incur as a necessary consequence of entering or staying at the port in question. That would obviously include standard charges and levies of all kinds and may also extend to charges for standard services such as garbage removal which may or may not be optional but would be regarded as ordinary expenses of being in port. It is unnecessary to decide that point in the present case, but I note that this is the view put forward by the editors of Lowndes & Rudolf at paragraph 11.32. Ordinary tug charges for assisting the vessel into and out of the port might well fall within Rule XI(b), therefore, but it is much more difficult to bring the towage charges in the present case within it. They were not ordinary charges which any vessel using the port could expect to incur and apart from the fact that they were levied by the Port Authority bore little similarity to port charges in the accepted sense. I do not think that Rule XI(b) can be construed so as to cover all sums charged by the Port Authority regardless of the circumstances; in my view it is much more limited in its scope. It is true that in the present case the services of the tugs and the charges for those services were imposed on the vessel by the Port Authority, but they were imposed in response to an unusual situation and were not imposed in the common interests of the ship and cargo. In these circumstances I do not think that they can properly be regarded as port charges within the meaning of Rule XI(b).

"The extra period of detention"

18. Finally, Mr. Berry submitted that the towage charges in the present case were not in any event incurred during the extra period of detention so as to come within Rule XI(b). He submitted that the "extra period of detention" for this purpose is the period after the time at which the vessel would otherwise have been ready to leave the port in order to proceed on her voyage and since the vessel would in any event have remained at Aqaba for some time in order to discharge her cargo, the towage charges were not incurred during any extra period of detention in that sense.
19. This issue is in my view closely linked to the question of detention. If as Miss Melwani submitted, the vessel was detained at Aqaba and the period of detention was limited to the time from the outbreak of fire until her eventual return to the berth, there might be some force in the argument that the charges were incurred during the extra period of detention. However, for the reasons I have already given I do not think that was the case. I think Mr. Berry was right in submitting that the "extra period of detention" in Rule XI(b) is the period during which the vessel is detained after she would otherwise have been ready to leave the port. In the case of a vessel which is detained in a port of call for the common safety that period will begin when she would, but for the accident, have been ready to continue her voyage. In the case of a ship which has entered a port of refuge for the common safety, that period will begin as soon as she enters the port: see Lowndes & Rudolf, paragraph 11.28. In the present case, however, there was no such detention. If, as I think is the case, Rule XI(b) merely extends only to the ordinary expenses of being in port, the Rule works perfectly well when construed in this way. The fact that it would not produce the desired result for the owners in the present case is mainly due to the fact that the charges which they seek to have allowed in general average are not port charges of a routine nature at all.
20. I therefore answer the questions raised by the preliminary issues as follows: