It was found that the Master did not rely on the draft bill and that the bill was in any event accurate – the cargo was in apparent good order and condition.
Court of Appeal
The Court of Appeal considered the meaning of “apparent good order and condition” and provided the following helpful summary:
- A statement in a bill of lading as to the apparent order and condition of the cargo refers to its external condition, as would be apparent on a reasonable examination.
- What amounts to a reasonable examination depends on the actual circumstances prevailing at the load port. The Master’s responsibility is to take reasonable steps to examine the cargo, but he is not required to disrupt normal loading procedures.
- What matters is what is reasonably apparent to the Master. The bill of lading contains a representation by the Master and says nothing about what may be apparent to anyone else, such as the shipper, who may have other means of examining the cargo.
- The statement relates to the apparent order and condition of the cargo at the time of shipment, that is to say of receipt by the carrier, and not at any earlier time.
- The statement is based upon the reasonable examination of the cargo which the Master has (or should have) undertaken.
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In this case, the Court of Appeal agreed that the cargo was in apparent good order and condition and so the statement on the draft bill of lading was accurate. But that was a statement from the shippers, only accurate to the shippers’ knowledge based upon their reasonable examination of the cargo, in a draft bill. The signed bill of lading contains the Master’s representation as to the apparent order and condition of the cargo, for which the Master is responsible. The Court of Appeal upheld the High Court’s decision that the tender of a draft bill is a request by the shipper that the Master should satisfy himself as to the cargo’s condition.
Comment
So what of the ‘general principle’ that the arbitrator had relied upon, that the charterers must be responsible for the consequences that follow an inaccurate bill of lading being presented to the Master? The Court did not doubt its application generally but explained that:
- The Master did not have to sign a bill of lading stating that the cargo was in apparent good order and condition if, based upon his examination, he did not consider it to be so.
- The bill of lading in this case was not inaccurate nor was it a representation about the apparent order and condition of the cargo. As the Court had found, it was a merely a request to the Master to satisfy himself whether the bill could be signed in this form. In this case, on the facts, he rightly concluded that it could be.
It was suggested that this position could encourage shippers to present bills stating that the cargo is in good order and condition when they know damage is present. The Court of Appeal did not have to address that question - there was no finding here that the shippers knew that the cargo was damaged. However, the Court did indicate that by tendering a draft bill stating that the goods are apparent good order and condition, “the shippers make an implied representation that they are not actually aware of any hidden defects or damage which, if known to the master, would mean that he could not properly sign the bill as tendered.”.
The Court of Appeal’s decision helps provide clarity to the general principle relied upon by the owners. The presentation of a draft bill of lading for the Master to sign is common – but this will be a reminder to owners that, as far as the condition of the cargo is concerned, it is for the Master to assess the condition himself and decide whether or not it is in apparent good order and condition. The presentation of a draft bill from shippers stating this does not derogate the Master’s responsibility in this respect.
Related item: MT Polar: novel incorporation and insurance code questions addressed by High Court
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