Scottish Court of Session Decisions

This was an action of damages at the instance of Thomas Henderson and others, owners of the s. s. “California” of Barrow, against Lloyd's Register of British and Foreign Shipping, and the trustees thereof as representing that association.

The s.s. “California,” one of the transatlantic fleet of the Anchor Line Company, was an iron screw steamer of 3287 tons gross, and 2096 net register. She had two decks and an awning deck, and two engines of 1047 horse-power nominal, and was built for the owners in 1871–72.

Lloyd's association surveyed and classified British and foreign ships, and published classified lists of such ships from year to year, and had places of business in England, Scotland, and Ireland. They published rules and regulations from time to time, and had no deed or articles of association other than these.

Before the “California” was built, and with a view to her classification in the register, the plans for her construction were submitted to the committee of the association for approval. They compliedineveryrespect with the rules for the building of iron awning-decked steamers, including the rule (§ 43) that “In these awning-decked vessels there must be scuppers and ports at the main deck, through the side, to discharge water and combings, and hatches as fitted to a weather deck;” and after being examined, the plans were passed and approved by the committee. The construction of the vessel proceeded under the special survey of one of the surveyors, and in terms of the rules of the association. On 18th June 1872 she was classed and entered in the register book as an iron screw awning-decked steamer of the highest class, marked as built under special survey, and with the character “100 Al, subject to periodical survey.” A certificate of classification to that effect was issued by the defenders.

It was averred by the pursuers—(Cond. 6) By the then existing rules of said association, which formed the contract between the pursuers and the defenders' association under which the foresaid special survey and classification were made, the defenders' association became bound to retain the “California” in the class assigned to her in their register, and to let her appear as holding that class in the printed copies of their register, which are published and circulated by them annually, “so long as on annual and periodical special surveys” she was “found to be in a fit and efficient condition to carry dry and perishable cargoes to and from all parts of the world.” The vessel stood in the annual lists from 1872 to 1876 as of the classification beforementioned; but the pursuers stated that notwithstanding their compliance with the rules as to surveys, and the thorough repair and efficiency of the steamer, her classification was expunged from the register in January 1877, and also from the printed copies thereof for 1877 in which she appeared as a ship which had been deprived of her class in consequence of non-compliance with the rules. It was averred (Cond. 9) “The expunging of the “California's” classification from said register, and the publication and circulation of the copies of said register for 1877, in which she is represented as having been deprived of her classification as aforesaid, were illegal and unwarrantable violations of the contract between the pursuers and the defenders, under which the “California” was registered. When the “California's” classification was expunged as aforesaid, there was still a considerable period to run before another annual survey required to be made upon her by said rules, and the next periodical special survey of her will not fall due until June 1880. (Cond. 10) When said ship was classified (in June 1872) as aforesaid, the rules of the defenders' association as to the building and classification of iron steamships, including awning-decked vessels, were those which had been published by the association under date 1st July 1869. They required no load-line to be fixed for or marked on any awning-decked ships; and upon the faith of these and the other rules of said association then in force the pursuers contracted with the defenders' association as aforesaid.”

In 1873 and 1874 the committee of Lloyd's issued regulations in regard to awning-decked ships, providing that there should be scuppers and ports for the discharge of water, &c., and with reference to a load-line on such vessels, and on 8th December 1875 they issued this circular:—(No. 340) “Withreference to the notices numbered 305 and 314, issued by the committee of the society in February and August 1873, calling attention to the conditions under which awning-decked vessels are classed in the register book, I am directed in forwarding to you copies of these notices, to acquaint you that the committee having become aware that the condition, on classification, that the ports and scuppers at the main deck must remain open for the discharge of water continues to be contravened, have resolved that in all cases of awning-decked vessels classed in the register book a load-line shall be determined on for them, to be marked on the ship's sides, and recorded in the register book and on the certificate of classification. Under these circumstances, I am to request you will submit to me for the committee's consideration the load-line you suggest for adoption

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in the case of your iron screw steamer. I have to add that in every instance of non-compliance with this requirement within six months of the date hereof, the character of the vessel will be expunged from the register book.”

Lloyd's rules and regulations, published in April 1876, contained the following under the head of “awning-decked vessels” (sec. 43):—“The plans of such vessels and a maximum load line must be submitted to the committee for approval; and the load-line thus sanctioned is to be inserted in the certificate and in the register book and on the ship's sides. Awning-decked vessels loaded to a greater draught of water than such maximum load-line will thereby lose their character in the register book.” The words “and on the ship's sides” in the regulation here quoted were new. About a month after the regulations for 1876 were published the “California” underwent her first periodical survey, and Lloyd's did not then fix or mark a load-line for her, certifying her as in a complete state of repair and efficiency.

In 1876 a circular (No. 354) was issued by Lloyd's, calling attention to the fact that the requirement of the circular (No. 340) as to the load—line above quoted had not been complied with, and subsequently in January 1877 another circular was issued, which stated, inter alia, that “in the absence of a reply thereto ( i.e. to the circular of 8th December 1875), the committee feel it to be out of their power to continue the character of the vessel in the register book, and that unless a satisfactory reply be received prior to the reprinting of the book in April next, the vessel's character will be expunged therefrom by a red line.” That circular, it was averred by the pursuers, gave the owners of awning-decked vessels till April 1877 to mark a load-line on their ships; but from a marking against her, in red, in the register book printed for the year 1877 it appeared that the “California” was deprived of her classification in January 1877. The marking was as follows, “1.77,” and was explained by a foot-note to the following effect:—“A red line, with date under it, in this column indicates that the class was withdrawn from non-compliance at that date with the society's rules.”

The pursuers averred that the circular of December 1875 was ultra vires of the committee of Lloyds, and they disputed their right to apply a load-line at all to the “California,” or to expunge her classification for non-compliance with it. They also said they had contracted with Lloyd's on the faith of the old rules as in force in June 1872. The circulars noticed above were not, it was alleged, applicable to the “California,” for her ports and scuppers had not been closed. Again, the provision as to a load-line on awning-decked ships was not retrospective, and could not affect the steamer, so that no load-line was ever fixed by the rules for her. The committee had not, it was said, the right to apply their load-line rule to the “California,” nor to strike her out of the register, and by illegally doing so had caused loss and damage to her owners such as was represented by the sum sued for.

The defenders, on the other hand, alleged that theirs was a private unincorporated society, with no trade or business of its own, merely an association for the purpose of getting a faithful and accurate classification of the merchant shipping of the United Kingdom and of foreign vessels frequenting British ports, the register thus made being annually printed for the use of the subscribers. The “California's” classification was not obtained for a term of years, and neither Lloyd's nor anyone acting for them had entered into any contract ensuring that the steamer should continue on the register without any additional requirements for safety than were at first exacted when she was admitted. The survey, it was averred, only guaranteed that the ship certified under it was up to the existing standard. Awning-decked vessels were, it was stated, peculiarly liable to be overloaded in consequence of their structure, and of a custom of loading them as though they were built of full scantlings to the extreme upper deck, and Lloyd's committee had come to the honest and impartial conclusion that safety required a change. The various circulars quoted show their efforts in this direction, and ultimately they came to the final resolution to deprive all non-compliant vessels of their classification. Lloyd's further stated that without the precaution of the load-line as now required they would not be faithfully and accurately representing the character of the “California,” were they to retain her in the highest class in the register.

The pursuers pleaded—“(1) Upon a sound construction of the contract between the pursuers and defenders, the defenders were bound to continue the classification of the pursuers' vessel so long as the conditions specified in the defenders' rules at the date of her classification continued to be fulfilled. (2) The defenders having, in breach of the contract between them and the pursuers under which the said vessel was classified, withdrawn and expunged the classification of the said vessel, to the pursuers' loss, injury, and damage, the pursuers are entitled to reparation as concluded for.”

The defenders pleaded, inter alia—“(1) None of the defenders being subject to the jurisdiction of the Court of Session, the action should be dismissed. (2) Separatim, none of the individual defenders being subject to the jurisdiction of the Court of Session, the action cannot be maintained against them or the Society of Lloyd's Register of British and Foreign Shipping. (3) The action is incompetently laid against the said society, and should be dismissed. (4) The averments of the pursuers are not relevant or sufficient to support the conclusions of the summons against any of the defenders. (5) There not having been any contract between the pursuers and the Society of Lloyd's Register, or anyone on its behalf, to the effect libelled, the action cannot be maintained. (8) The adoption of the regulations requiring a load-line as a condition of awning decked vessels retaining their classification having been lawful, and within the powers of the committee according to the rules and regulations in force in 1872, and, separatim, according to the practice of the society, the committee were entitled to expunge the ‘California’ from the register, and the defenders are entitled to absolvitor.”

The Lord Ordinary ( Young) pronounced an interlocutor repelling the first, second, and third pleae-in-law for the defenders, but sustaining the fourth and fifth, and in respect thereof assoilzieing the defenders, and finding them entitled to expenses, &c. He added this note:—

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“ Note.—The pursuers' steamer ‘California’ was built at Glasgow in 1871–2 under the survey of one of Lloyd's surveyors, and in 1872 was classed 100 A1 at Lloyd's, and thereafter down to 1877 was continued in that class on Lloyd's register, being periodically surveyed as required by Lloyd's rules and regulations. The ship has am awning deck, and it appears there have always been some special rules regarding awning-decked ships. Those existing in 1872 were presumably, and indeed admittedly, complied with in the case of the ‘California.’ Since then a new rule has been introduced by the committee of Lloyd's, whereby it required ‘that in all cases of awning decked vessels classed in the register book a load-line shall be determined on for them, to be marked on the ship's sides, and recorded in the register book and on the certificate of classification,’ and that, failing compliance, the committee will not continue the character of the vessel in the register book. The pursuers had due notice of this new rule in January 1877, and were required to take the proper steps for complying with it before the reprint of the register book in April following. They refused compliance on the ground that the committee were not entitled ‘to apply their load-line rule’ to the ‘California,’ or to ‘expunge her classification for non-compli—ance with it.’ The committee thinking otherwise, deprived the ‘California’ of her classification, and for this the pursuers now sue Lloyd's association for damages as for breach of contract.

The defenders object to the jurisdiction of this Court, and also plead that the action is incompetently laid against the association. I cannot sustain these pleas, for I am of opinion, 1st, that, assuming the facts averred to disclose a good cause of action to the pursuers against Lloyd's association in the matter to which they relate, this Court has jurisdiction to entertain it; and 2d, that the association, which has appeared, has been well called according to our rules of procedure. I do not dwell on these pleas, for the defenders further maintain that the facts averred disclose no good cause of action, and I am very clearly of opinion that they do not.

The pursuers' case depends on the validity of their proposition that the facts averred by them imply a contract between them and the defenders with respect to the ‘California,’ whereby the classification of that vessel on the register shall be preserved so long as the rules and regulations of the association in force at the date of the original registration in 1872 are complied with. I cannot sustain this proposition.

The defenders allege that it is necessary to the end and object for which their association was formed and exists ‘that the committee shall, from time to time, and as occasion requires, exact qualifications for the several classes which have the effect of excluding ships whose structure has been ascertained by experience to expose them to danger or objection, and it has always been the practice of the committee to alter the rules according to these considerations, and with reference to ships built under survey and already classed, and to exact compliance of the rules so altered as a condition of the vessels' retaining their classification.’ The pursuers deny this, but I must regard the denial as immaterial, for if the defenders' practice has not been governed by the considerations mentioned, I think it very clear that it ought to have been, and I can see no ground for implying a contract with the pursuers to the effect that their ships shall be so dealt with. The value of a classification at Lloyd's consists only in the confidence which it gives to the public, the measure of which is precisely the trust reposed in the association and its servants. The chief duty of the association is not to shipowners, but to the public who employ ships to carry themselves and their goods in reliance on the classifications of the association as in truth certificates of safety or of the absence of avoidable causes of danger, and, indeed, it is only in so far as this duty is performed to the public satisfaction that shipowners can benefit by the classification of their ships. The association can only apply the rules which existing experience suggest as proper to be followed, but the public who rely on their certificates (or classification), properly expect that they will be duly vigilant to observe facts connected with shipping, and guard against dangers as growing experience may disclose them. The explanation which the defenders give on record of the dangers which have of late years, and since 1872, been found to attend awning — decked vessels, and which induced them to make the rule of which the pursuers complain is intelligible and instructive. It would be a grave misfortune and greatly impair public confidence in the association if a court of law were to hold that they were under implied contract with respect to all ships already classified which compelled them to continue the classification after they had become satisfied that it was undeserved, and therefore misleading. That this or any other Court should order them to do so as under contract to that effect is of course extravagant. If such order were made, the association would no doubt comply with it, but would probably announce on the face of their register that it was an act of obedience on their part, and implied no certificate by them on their own judgment that the ship was worthy. But such an order is obviously out of the question. Damages may no doubt be given for breach of a contract which the Court would not enforce specifically, but here, I think, is no contract at all to the effect alleged.

I therefore repel the first, second, and third pleas for the defenders, but sustain the fourth and fifth, and assoilzie the defenders, with expenses.”

The pursuers reclaimed.

At advising—