Taitexma Enterprise Corporation v. Tillemont Shipping Corporation S.A. and Another

CACV000070/1994

1994, No. 70
(Civil)

IN THE COURT OF APPEAL

(On appeal from HCA 1992 CL-117

now consolidated with 1993 CL-111)

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1994, No. 132
(Civil)

(On appeal from HCA 1993 CL-111

now consolidated with 1992 CL-117)

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Coram: Hon Penlington, J.A., Mayo and Rogers, JJ.

Dates of hearing: 8, 9, 13 and 14 September 1994

Date of handing down judgment: 23 December 1994

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J U D G M E N T

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Penlington, J.A. (giving the judgment of the court):

Background

1. Between the 12th and 14th of August 1992 cargo over which the plaintiffs herein claim rights as owners, consignees or endorsees was loaded in Keelung onto the Panamanian registered vessel United Sing ("the vessel") which then departed on the 15th for Hong Kong. However on the 16th the vessel was stranded on rocks near Nan Pang Island of the coast of Shantou, in the Peoples Republic of China (the PRC). The no. 2 hold and the engine-room were flooded and, as there was a typhoon in the area and the sea was very rough, the Captain decided to abandon the vessel. The whole crew took to life-rafts and were picked up by a Chinese tug which arrived on the scene in the early hours of the 17th August. Later that day the second defendant, the vessel's manager ("Fairweather'), on behalf of the first defendant, the vessel's owner, ("Tillemont") sent a telefax to agents in Shantou indicating where the vessel had grounded and asking them to take all necessary steps to safe-guard the vessel and its cargo. The following day they faxed again undertaking to pay all expenses incurred.

2. On the 18th and 19th August the typhoon was still affecting sea conditions in Shantou but on the 20th a fishing vessel was hired and a party from the Public Security Department of Nanao county was able to board the vessel. They left before dark but on returning the following day, the party found some 30 fishing vessels in the area and clearly substantial looting of the cargo had taken place. Photographs were later taken which show very graphically hatches and containers broken into and the contents removed. It would seem that the Security Department officers were heavily outnumbered and were even then unable to ensure that further looting did not take place.

3. A Mr. Mathews was appointed as surveyor on behalf of the vessel's owners and he went to the vicinity of the vessel on the 20th together with a Mr. Manning, a clerk from the defendants' firm, Messrs. Holman Fenwick and Willan, who is also a certified master mariner. Mr. Manning subsequently carried out interviews with various members of the crew of the vessel.

4. Messrs. Mathews and Manning were not able to board the vessel on the 20th as the captain of the tug which they were aboard refused to go close to the vessel for fear of being stranded himself. They were not able to go on board until the 26th by which time it is clear that the cargo had, to all intents and purposes, been totally looted, together with any fittings such as radios and navigational equipment which could be removed from the vessel. Mr. Mathews carried out a survey and took the photographs I have already referred to.

5. On receipt of Mr. Mathews' survey report, Fairweather on behalf of Tillemont sent out a notice of abandonment to all cargo owners consignees stating that the vessel was aground due to an error of navigation and that because of the extensive damage to the vessel it was uneconomic to effect repairs so as to complete the voyage which was accordingly abandoned. The plaintiff's were to be responsible themselves for the safety and salvage of their cargo. The plaintiffs were advised of the looting which Fairweather said had been beyond their power to prevent.

6. The marine insurers of some of the plaintiffs then instructed Messrs. Crump and Co. to take action on their behalf and a partner of that firm, Mr. C.A. Potts, swore an affidavit in support of an ex parte application for a Mareva Injunction to prevent any money which might be obtained by Tillemont from its insurers being remitted out of Hong Kong. A search of the company Register had shown that Tillemont is registered in Panama and is in all probability a "one ship" company with no assets now that the vessel was lost. The directors of Tillemont are three persons whose address was given as 18th Floor, Flat D, 234 Des Voeux Road West, Hong Kong. Tillemont itself however has no registered office. Fairweather is a Hong Kong registered company which manages some ten Panamanian ships, including the vessel.

7. The total value of the cargo was about $US1,250,000 and the Mareva Injunction which was sought was to require Tillemont to retain that sum, plus interest and costs of $US250,000, within Hong Kong. The application for the Mareva Injunction came before Kaplan J., ex parte, on the 1st October 1992 and was granted, the defendants being ordered to retain in Hong Kong the sum of at least $US1,500,000. The plaintiffs undertook to issue a writ forthwith and to issue an inter-parte summons which was duly filed for hearing on the 9th October. However on the 2nd October the matter came before Mayo J. who, by consent, made an order discharging the injunction as against Fairweather.

8. The summons against Tillemont came before Stock J. on the 9th October and he made an order continuing the Mareva Injunction. He considered that there was sufficient evidence before him as to service and the fact that both defendants appeared before him showed that they knew of the proceedings. There was no argument before him as to the merits of the plaintiff's case.

9. The matter next came before Deputy Judge Mitchell Q.C. on an application for substituted service. The plaintiff sought an order that the writ be served on Tillemont by serving it on its solicitors, Messrs. Holman, Fenwick and Willan. He considered that if Tillemont wished to dispute jurisdiction, it being a foreign company, it should acknowledge service and then apply under Order 12 rule 8 for an order setting aside the writ. He found that as Tillemont had no registered office in Panama nor an established place of business in Hong Kong service on it pursuant to Order 11 rule 4 or under Section 338(2) of the Companies Ordinance was not possible. He accordingly made an order for substituted service of the writ on Tillemont by service on Messrs. Holman, Fenwick and Willan.

10. Tillemont then, by a summons of 8th May, sought an order under Order 12 rule 8(1) that the Hong Kong court had no jurisdiction over it and to set aside the Mareva Injunction granted by Kaplan J. and continued by Stock J. on the grounds that (1) there was no jurisdiction to make the orders, (2) the plaintiff had failed to make full disclosure in seeking the ex parte order from Kaplan J. and (3) the plaintiffs did not have a good arguable case. That summons was adjourned and eventually came before Patrick Chan J.

11. Meanwhile however Tillemont appealed against the order of Deputy Judge Mitchell of 20th April and by a judgment of 20th July 1993 this court allowed that appeal but indicated that the plaintiff might apply again for an order for substituted service in accordance with the principles set out in that judgment. Accordingly an application was made ex parte to Mayo J. for an order that the plaintiffs have leave to serve a concurrent writ on Tillemont in Panama and that service of a copy of such concurrent writ on Tillemont's solicitors, Messrs. Holman, Fenwick and Willan, in Hong Kong be deemed to be good service. Mayo J. ordered accordingly on 13th September 1993.

12. The next stage in this procedural drama was that Tillemont applied by summons dated 8th October to Patrick Chan J. to discharge the order of Mayo J. for substituted service and the Mareva Injunction order of Kaplan J. and Stock J. Application was also made by summons that in the event of the Mareva Injunctions not being discharged, Tillemont be allowed to provide security in substitution therefor.

13. In a judgment of 31st March 1994 Patrick Chan J. dealt with the two summonses which were before him, those of 8th May and 8th October. Having gone into the extensive affidavit evidence before him and the relevant authorities, he held that the plaintiff had not failed to make full and fair disclosure in seeking the ex parte Mareva Injunctions. He was also satisfied that on that evidence the plaintiffs had made out a good arguable case so as to justify the continuation of the injunction. In doing so, Patrick Chan J. considered the defendant's contentions against the plaintiff's right to sue; that they had not shown a good arguable case, they had been guilty of material non- disclosure and there was no jurisdiction to make the orders. He also considered the other ground argued for discharge of the Mareva Injunction, that the plaintiff had been guilty of delay between the Court of Appeal's decision of 20th June 1993 and its seeking substituted service under Order 11. Patrick Chan J. held that there had not been undue delay.

14. He also held that the plaintiffs had shown a good arguable case, that there had not been material non-disclosure and the court did have jurisdiction to make the orders. The defendants now appeal from that decision.

Is there a good arguable case?

15. It is the main thrust of the case for the plaintiffs that Tillemont has failed in its duty under Article III Rules 1 and 2 of the Hague Rules to

"exercise due diligence to make the ship seaworthy, to properly man, equip and supply the ship and to make the cargo holds fit and safe and to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried".

16. There seems to be little doubt that, on the evidence, the grounding of the ship was due to the negligence of those responsible for its navigation, and, it would seem, in particular its Third Officer. The notice of abandonment sent by Fairweather to the plaintiffs says that "owners confirm their previous advice that the vessel is presently aground near Nan Pang Island of Shantou following grounding as a result of an error in navigation in heavy weather late on 16th August 1992 whilst on route to Hong Kong." The question is whether that error of navigation was such a wholly negligent act that the defendants had arguably failed to select properly qualified crew or had failed to provide the crew with adequate navigational equipment thus rendering the ship "unseaworthy" within the meaning of that word in the Hague Rules. It is clear that those rules exempt a ship-owner from liability for an error of navigation or a "peril of the sea".

17. There is authority that lack of care in appointing properly qualified crew members may result in a vessel being rendered unseaworthy. In "The Makedonia" [1962] Lloyds Rep. 316, Hewson J. held that where the vessel was forced to jettison cargo due to mechanical problems caused by inefficient engineers the owners had failed to exercise due diligence in the selection of the crew of the vessel and that rendered it unseaworthy. Such cases turn on their own facts but that decision is relied on for the principle that a vessel may be unseaworthy due to the choice of incompetent crew. At the hearing of this matter before Patrick Chan J., and here, it was the case for the plaintiff that the competence of the master in deciding not to stop the vessel when he knew that a typhoon was threatening, the apparent failure to keep a proper look-out, the mistaken reading of the charts by the third officer and the failure to prevent the looting of the cargo would all have to be examined at a trial and could not be decided on affidavit evidence. The plaintiffs were not in a position now to dispute the evidence sworn on behalf of the defendants but may be able to do so following discovery. They say that the discovery so far made is totally inadequate.

18. In reaching his decision on this aspect. Patrick Chan J. cited the decisions in TheHellenic Dolphin [1978] 82 Lloyd's Rep. 336, approved in The Theodegmon [1990] 1 Lloyd's Rep. 52, at 54, by Phillips J. He said:

"In the circumstances I shall accept and apply the conclusions of Mr Justice Lloyd in The Hellenic Dolphin, [1978]2 Lloyd's L.R,336 at 339:

'The cargo-owner can raise a prima facie case against the ship owner by showing that cargo which had been shipped in good order and condition was damaged on arrival. The ship owner can meet that prima facie case by relying on an exception, for example, perils at sea. The position in that respect is exactly the same whether the Hague Rules are incorporated or not. The cargo-owner can then seek to displace the exception by proving that the vessel was unseaworthy at commencement of the voyage and that the unseaworthiness was the cause of the loss. The burden in relation to seaworthiness does not shift. Naturally, the court can draw inferences : in Lindsay v. Klein the inference of unseaworthiness at commencement of the voyage was overwhelming. But if, at the end of the day, having heard all the evidence and drawn all the proper inferences, the court is left on the razor's edge, the cargo-owner fails on unseaworthiness and the ship-owners are left with their defence of perils of the sea. If, on the other hand, the court comes down in favour of the cargo-owners on unseaworthiness, the ship-owners can still escape by proving that the relevant unseaworthiness was not due to any want of due diligence on their part or on the part of their servants or agents.

It follows that, as the loss suffered by the plaintiffs was caused by a peril of the sea, the onus is on the plaintiffs to prove that the stranding was itself caused by unseaworthiness that existed when the vessel commenced her voyage : Smith Hogg and Co. Ltd. v. Black Sea and Baltic General Insurance Co. Ltd. [1940]67 Lloyd's L.R.243; [1940] A.C.997. The onus will then shift to the defendants to show that the casualty was not attributable to any want of due diligence on their part.""

19. He went on to cite the decision of Parker J. in The Tatiangela [1980] 2 Lloyd's Rep. 193 at 198.

"The unreported Court of Appeal decision of April 10th, 1979, in Fary-Jones (Insurance) Ltd. v. I.F.M. Funding G.m.b.H. and Others, a transcript of which was supplied to me, establishes (1) that, in order to obtain or retain, the grant of a Mareva injunction, the plaintiff must, as in the case of leave to serve out, show that he has a good arguable case on the merits, and (2) that the Court which deals with the matter is both entitled and bound to consider the strength or weakness of the plaintiff's and defendants' case.

In a case such as the present, where the burden is upon the defendants, the strength or weakness of the plaintiff's case depends essentially upon the strength or otherwise of (a) the defendants' evidence that there was no personal fault and (b) any evidence that the plaintiff may produce setting up a particular alleged fault. The position must be judged at the stage where the matter is before a Court. In the present case the plaintiff sets up nothing more than the actual loss. This establishes, I accept, a prima facie case but it does no more. It does not show that the plaintiff has good, good arguable, weak or bad prospects or in any way reveal the quality of his case. The question must therefore depend upon any assessment of the defendants' evidence.........

Mr Bathurst sought to convince me that, where the charterer has lost his goods and the vessel has been sunk, he can do no more than rely on his prima facie case unless and until he has obtained from the owners through particulars and discovery both documentary and by interrogatories on the details of what happened and what precautions the defendants had taken, because all such knowledge is in the owner's possession. The cargo-owner is therefore, so it was argued, entitled to have his injunction until then. I cannot accept this. The Mareva injunction is a useful and very powerful remedy, but its grant is a serious matter which may do the defendants great damage, and in The Genie [1979]2 Lloyd's L.R.184, Lord Denning, M.R., observed at p. 189 that it must not be stretched too far. It would in my judgment be stretching it too far to allow it in cases where a ship-owner had advanced cogent evidence of lack of personal fault and the cargo-owner had neither put in countervailing evidence nor advanced some credible hypothesis as to what, involving personal fault, had happened or might reasonably be inferred to have happened.

Furthermore, although at the ex parte stage it may be sufficient simply to set up the loss, I do not consider that this will always be so, for I am unable to see how, if he has made no enquiries at all, a cargo-owner can properly submit that he has a good arguable case. He simply does not know and he has made no attempt to find out. It may be different if he has made inquiries and met with no answers or evasive answers. It may be that in that case it would be right to invite the Court to infer that there was a good arguable case, but it would in may judgment imperil the continued existence of the Mareva injunction if it were granted on loss of cargo without more. I cannot consider it to be just and convenient to expose foreign ship-owners to having assets here frozen on such material alone."

20. That decision was, naturally, heavily relied on here and below by Tillemont. The plaintiffs seek to distinguish it on the basis that they have asked for sight of all relevant documents and have not been given it.

21. Patrick Chan J. then went on to consider the evidence in the light of the principles that a ship-owner was not liable under Article IV Rule 2 of the Hague Rules for damage to or loss of cargo caused by the act, neglect or default of the master in the navigation of the vessel or by perils of the sea. In doing so he said:

"In considering the evidence, I must bear in mind that this is only an interlocutory stage and not a trial and that I have only the benefit of affidavits and not the full evidence. It is not disputed that the vessel was grounded near Nan Pang Island off Shantou, that it had to be abandoned, and that the vessel was pilfered. There was a constructive total loss of the cargo. That is all the plaintiffs could establish for the time being. There is therefore a prima facie case that the 1st defendant as the owner of the vessel was in breach of its contractual obligation to make the ship seaworthy and to care for and deliver the cargo."

22. The defendants take issue here with that statement and say that the fact that the vessel grounded, was abandoned and its cargo pilfered was not prima facie evidence that it was unseaworthy and even less so when the other evidence is considered. That evidence is helpfully set out in the judgment of Patrick Chan J. as follows:

"The 1st defendant adduced evidence in the form of an affidavit by Mr Davidson who had gathered information from certain persons employed by the 2nd defendant which was the manager of the vessel and from interviews of the crew after the incident. According to him, the incident occurred as follows.

The vessel departed from Keelung in Taiwan at 0200 hours on 16th August 1992 with an initial course at 240 and bull sea speed of 13.5 knots. There was a north-north-easterly wind of force 5-6, with moderate seas and a swell of about 2 metres from the north-east. The weather conditions were moderate but there were reports about a tropical depression moving from near the Taiwan bank towards the Taiwanese coast. The Master had considered stopping the vessel and drifting to allow the depression to pass. However, he decided to alter the course and sailed close to the China coast. During the voyage, the Master had taken 2 satellite fixes. At about 2000 hours, the tropical depression was due to the south-east and the Master believed that it would pass the vessel to port. The wind was still north-easterly at force 6. The Master then received a telefaxed weather map from Beijing indicating that the depression would curve to a more northerly track although there were reports from other weather stations indicating different routes. It was said that because of the uncertainty, the Master decided to alter course to the north and to anchor.

Up to that time, the Master had been plotting the vessel's course on British Admiralty Chart 1962. When he decided to anchor, he marked an anchorage position on the PRC Chart No.9112 which was of a larger scale. He then instructed the Third Officer to fix the vessel at 2250 hour by radar. This was done. The Third Officer was also told to take a course as appropriate for the anchorage. He plotted the course from the 2250 hour position. Unfortunately when he plotted the 2250 hour position on the PRC Chart No.9112, he misinterpreted the latitude scale of the chart and wrongly plotted the position of the vessel five times further away from the radar target than was in fact the case. At about 2300 hours, the Third Officer again obtained a radar fix of the vessel but again misinterpreted the latitude scale. He had thus wrongly assumed the vessel's position.

At about 2255 hours, the Third Officer gave instructions to change to diesel oil in preparation for anchorage. At about that time, the Master was studying a further weather report in the chart room when the Third Officer called him saying that he had seen a lot of white water directly ahead. The Master rushed to the bridge from the chart room. Having briefly scanned the sea with binoculars, he told the Quartermaster who was on the wheel to apply hard aport helm. He wished to alter to port since he saw more white water to starboard and because the wind was on the starboard bow and therefore the vessel would turn faster to port than starboard. The vessel's head did not move and the Master ordered full astern. Almost immediately the Master felt a lot of vibration and realised that the vessel was aground.

Upon checking, it was found that water was entering the engine room from near the tail shaft. Attempts were made to pump the water out. Later it was also found that the No.2 hold was also damaged and water was entering into that hold. At about 0525 hours the generators were not working. At about 0600 hours a very big wave hit the vessel causing it to rock very violently. The Master therefore ordered the crew to abandon the vessel.

According to Mr Davidson, since 16th August 1992 when the vessel was grounded, efforts were made to arrange for the protection of the vessel and the cargo on board. However, the typhoon was affecting Shantou and because of the typhoon warning, it was impossible to visit or go on board the vessel until 20th August 1992 when the typhoon abated. It was at about 1430 hours on the 20th August that public security officials went on board the vessel. They left however before dark. Upon return on the next morning, they found that there were more than 30 fishing vessels and a few hundred fishermen at the scene looting the vessel. It was said that the officers were outnumbered by the fishermen and hence could not prevent looting from continuing. In the morning of 20th August, surveyors appointed by the 1st defendant and/or 2nd defendant purported to visit the vessel. They were unable to go on board because the tug could not get close to the vessel, partly because of rocks nearby and partly because of the presence of looters. When they finally went on board the vessel on 26th August and carried out a thorough survey of the vessel and the cargo, it was found that the vessel had been seriously looted and stripped. All removable contents of the containers on board had been stolen.

There was also evidence in the affidavit regarding the hiring of the Master, the Third Officer and members of the crew. It was said that they were experienced and qualified seamen. Efforts were made to ensure that the crew were experienced and qualified. The Master was also given general and specific instructions with regard to the management of the vessel."

23. He then went on to say that it was not enough for the plaintiffs to say that until full discovery is made they can only put forward a prima facie case. "On the other hand at this interlocutory stage, the court has to assess all the evidence, including, in particular, the 1st defendant's evidence to see whether it can be shown that the loss was not caused by lack of care and diligence and there was no fault on its part". That, it is submitted for Tillemont, puts too high a burden on it and is contrary to the authority then cited by Patrick Chan J. of The Tatiangela. He then went on to refer to five areas where he considers there is possible negligence by the vessels crew. These were:

1. The Master's decision to continue the voyage instead of stopping to allow the typhoon to pass.

2. The decision to turn to the north and then anchor when an up-to-date weather map had been faxed to him. That he found "suggested some incompetence".

3. The 3rd officer did not plot the vessel's position correctly from the two radar fixes he obtained and he misread the chart's scale not once but twice. "This may well suggest incompetence".

4. The 3rd officer should have spotted the white water earlier and there was no evidence as to why the vessel did not answer to its helm when the Master ordered full aport.

5. There was not enough satisfactory evidence as to what was done between the 16th and 26th August to protect the cargo from looting.

24. Having considered all that evidence, Patrick Chan J. said that he was not satisfied that Tillemont had shown that the grounding was due to errors of navigation or that the loss of the cargo was not due to the actual fault of the carrier, Tillemont, acting through its manager, Fairweather. "On the contrary, the evidence suggests some degree of incompetence and lack of diligence". He went on "I am given to understand that the plaintiffs had also made a request on the 1st defendant for particulars and discovery. The details of such request are not known to me. However it was not denied that the request has not yet been answered." He distinguished the case from The Tatiangela where, he said, the defendant had put evidence before the court which showed that:

"all proper steps had been taken to see that the vessel was in every respect seaworthy and properly equipped and that there were recent certificates covering her fire fighting equipment. The evidence adduced suggested that the fire which broke out on the ship occurred without the fault of the owner or manager. Furthermore, the plaintiff in that case had made no enquiries at all to find out what happened. The evidence put before the court by the 1st defendant in this case was far less satisfactory and the plaintiffs had so far tried their best without success to gather evidence."

25. It is the case for the defendants on the question of whether the plaintiffs have shown a good arguable case that the vessel was not seaworthy that there is no evidence whatever that it was not properly equipped or that the crew were not properly selected, or did not possess relevant certificates of competency. There certainly was evidence that the Third Officer, Mr. Xin Pei-ping, had made very serious errors in plotting the position of the vessel. He was initially using an admiralty chart 1962 which was marked with corrections up to no. 3347 of 1991. From 2250 hours however he was using chart 9112 which is published by the Mapping Agency of the Navigation Guarantee Department of the Chinese Navy. Messrs. Falconer, who are authorised admiralty chart agents in Hong Kong confirm that both charts were the most up-to-date editions available in August 1992. The Third Officer however failed to realise that the latitude scale on chart 9112 was different from the admiralty chart 1962. As a result at 2250 hours he plotted the position of the vessel five times further away from the radar target on Nan Pang Island which he had used to take a fix. That error was compounded at 2300 hours when the Third Officer again fixed the vessels position in the same way and making the same error. He fixed the position as 22° 57.1 minutes north and 17° 18.8 minutes east whereas it was in fact 23°11.5 minutes north and 17° 17.1 minutes east. At that time the master, Capt. Gao Ying Quing, was in the chart-room studying the latest weather map which had been faxed to him from Guangzhou. It was then that the Third Officer saw white water ahead of the vessel and told the captain who took immediate steps to avoid grounding but unsuccessfully. Clearly there was an error of navigation on the part of the Third Officer, which possibly should have been noticed and corrected by the Captain but that is not enough to fix the defendants with liability under the Hague Rules. The plaintiffs must show not only was there incompetence by the crew of the vessel which caused the loss of the vessel and cargo but that the defendants had been negligent in appointing incompetent crew. The Makedonia. The Popi M. [1983] 2 Lloyds 235 at 248-250.

26. On the evidence there were only two members of the crew of the vessel who played a part in the errors which resulted in its loss, the Captain and, more importantly, the Third Officer. Detailed evidence has been filed on behalf of the defendants regarding the qualification and method of selection of each of them.

27. The master of the vessel, Capt. Gao Ying Quing was born in 1949 and went to sea as an ordinary seaman. He was promoted to Third Officer in 1977 and as Chief Officer in 1980. He obtained his Third, Second and First Mates certificates in 1977, 1978 and 1980 respectively. He obtained his Masters certificate in November 1983. He holds a Panamanian ocean-going masters certificate. He has served on various types of ships, including general cargo vessels, bulk carriers, container ships and tankers. He operated, inter alia, by COSCO, a very large ship-owning division of the Chinese Government. He joined the vessel as its master in Hong Kong in June 1992. Between then and the grounding, he made several voyages as its master between Keelung and Hong Kong as the vessel was on liner service between those ports.

28. The Third Officer, Mr. Xin, graduated from the Guangzhou Mariners Training School in 1983 and went to sea the following year as an able seaman. From September 1986 to 1989 he studied at the Tsingtao Marine College and in 1989 he received a certificate of graduation. Following that he served as an assistant officer on a vessel M.V. Gan Gang and then on the M.V. Xin Du up to November 1991. He received his Marine Officer Certificate of Competency of the P.R.C. in September 1991. He was the Third Officer on the M.V. Xin Du from November 1991 to March 1992. He also holds a Third Officer's Certificate of Competency from the Republic of Panama.

29. Copies of the relevant certificates are exhibited to Mr. Davidson's first affidavit.

30. It should perhaps be said at this stage that it would seem that Panamanian certificates do not mean that the holder has sat and passed any examination. They simply say that the holder is entitled to sit the examination. That however does not apply to the certificates issued by the P.R.C.

31. There was evidence as to the manner in which the crews for ships managed by Fairweather are chosen. Its crew department manager, a Mr. Chan Siu-hung sent a fax in January 1992 to COSCO in Guangzhou saying that he required a crew for the vessel in June or July and asked for details of those available. He was asked to go to Guangzhou to inspect lists of available crew and he did so on 14th January. He went through the files and having studied the experience and qualifications of those therein contained he selected most of the crew, including the master and Third Officer. A copy of the contract between Fairweather and COSCO for the supply of crew for, inter alia, the vessel was exhibited.

32. Capt. Gao was supplied by Fairweather with two copies, one in English, one in Chinese, of the Ocean Tramping Company's general instructions which Fairweather has adopted as its standard instructions to masters. The English version was exhibited. It seems to be comprehensive and deals with the use and care of navigational equipment, both electronic and printed material, precautions if a typhoon is threatened, crew selection for various duties etc.

33. Following the grounding of the vessel Capt. Gao instructed the Chief Officer to take soundings of the tanks and bilges. These showed that salt water was entering the vessel and bilge pumps were started but the water level still continued to rise. By 0400 hours on the 17th August the vessel had a 10° list starboard and by 0425 this had increased to 28°. There was 6.5 metres of water in no. 2 hold and the Chief Engineer reported that due to water in the engine-room there was a danger that the generators would cease to function. At 0600 a big wave hit the vessel causing it to rock violently and the Captain gave orders to abandon the ship via its life rafts.

34. As a result of the distress calls made from the vessel a tug came to the scene at 0325 hours but could not come close due to rocks. However the life-rafts were blown down-wind to the tug, the crew taken on board and taken to Shantou on the 17th August, Fairweather sent a fax to a company called Penavico at Shantou informing them of the vessels position and requesting that Penavico liaise with the relevant Government officials in Shantou to secure the safety of the vessel and its cargo and on the 18th Fairweather again faxed Penavico saying that all necessary payments should be made on the defendants behalf. Copies of these faxes were exhibited. Telephone calls were also made to COSCO asking them to go to Shantou to make necessary arrangements to protect the vessel and cargo. That was done and Capts. Fu Ying and Yiang of COSCO, Mr. Zhang So Chun, Managing Director of Fairweather met in Shantou on the 19th. On that and the following day, Capt. Fu Ying met and liaised with the Harbour Master and his staff at Shantou. He spoke to local government officials and sought their assistance in securing the safety of the vessel and its cargo. However at that time the typhoon warning was still in force. Eventually on the 20th a boarding party of ten armed men was able to board the vessel under the command of a Capt. Dr. Lin Kei of the public security department of Nan Ao county. They were however clearly greatly outnumbered by the looting fishermen and understandably were not prepared to do more than fire shots into the air. Due to the still rough seas, the danger of the vessel capsizing and the lack of power, the boarding party told Capt. Fu that they would not remain on board over-night and did not do so. A full report of the Nan Ao county government's efforts to preserve the vessel and its cargo was also exhibited. That report states that all possible steps were taken, bearing in mind the weather conditions and the very large numbers of looters, to prevent the loss of the cargo and, while naturally such a report should be looked at on the basis that it is very much self-serving, it is difficult to see what more could have been done. Clearly the looting was mainly done very soon after the vessel grounded by fishermen who were fully prepared to run the risk of the vessel capsizing in order to steal its cargo and who were not deterred by the presence of armed officials, who they greatly outnumbered.

35. Patrick Chan J., having considered the evidence as to the steps taken to preserve the cargo said that between the time of the grounding at about 2300 hours on the 16th to the 20th August the typhoon warning was still in force and it was understandable that little or nothing could be done to protect the cargo during that period. However the survey party could not get aboard until the 26th by which time the vessel and cargo had been stripped. There was no evidence as to what had been done to prevent that during that latter period. With respect that does not seem to be correct. There was detailed evidence of what was done by the local government officials who must have been the only ones Tillemont could call on for assistance. All expenses were guaranteed and it is difficult to see what more Tillemont could have done to protect the vessel's cargo. I do not consider that the plaintiffs can show a good arguable case on that aspect of their claim.

36. Patrick Chan J. said that he was not satisfied that Tillemont had shown that the grounding was due to errors of navigation. He found that the evidence "may suggest some degree of incompetence and lack of diligence".

37. On the authorities cited such as The Theodegmon, The Hellenic Dolphin, The Makedonia and ThePopi M. that is not enough. There must be evidence which shows a good arguable case not that the responsible members of the crew committed errors but that they acted in such a way as to show that by employing them the owners had shown want of due diligence. In the Popi M. at 250, Bingham J. (as he then was) having examined evidence which showed that a vessel had sunk due to the failure of the crew to shut a water-tight door. However as regards the owner's liability for that he said:

"If, contrary to the defendants' main submission under his head, the loss was proximately caused by crew negligence, the defendants submitted that the plaintiffs had not discharged the onus upon them of showing that such loss had not resulted from want of due diligence by the plaintiffs and their managers. Attention was directed to the absence of written standing orders and instructions by the managers to the master and officers, and some criticisms were made of the crew recruitment methods employed. I reject these points entirely. The vessel's officers were recruited in a normal manner and were adequately qualified. No matter how assiduous and careful owners or managers might be, they could not be expected to instruct sea-going officers to take steps and observe precautions so elementary and obvious as those which were neglected here. This point was not pressed and it is unnecessary to say more of it." (my emphasis)

38. Those words are, in my view apposite here. There is evidence that the captain and 3rd Officer were fully qualified, recruited from a large and reputable organisation, were experienced in handling the vessel on this particular route and had been supplied with modern navigational equipment, up-to-date charts, and comprehensive operating instructions, particularly as regards navigation if a typhoon was threatening.

39. I do not consider that the plaintiffs have made out a good arguable case against Tillemont of failing to make the vessel seaworthy or of taking all reasonable steps to preserve the cargo. I would therefore allow the appeal and discharge the injunction on that ground.

40. I would only add that the sad delay in delivery of this judgment is entirely due to me and I take full responsibility for that delay.

Representation:

Mr. Michael Thomas, Q.C. with Mr. Clifford Smith instructed by Messrs. Holman, Fenwick & Willan for appellant (1st defendant)

Mr. Geoffrey Ma, Q.C. with Mr. Russell Coleman instructed by Messrs. Crump & Co. for respondents (plaintiffs)