A perishable cargo arriving at destination in a damaged state is a common feature of cargo shipping. Discovering the cause of the damage, so as to work out the all-important question as to who is the responsible party, can be a troublesome task. There are often a number of possible reasons and each potential cause may give rise to different results in the claims that parties might have against one another. In The Santa Isabella, in which the owners were claiming demurrage, a variety of reasons for the cause of the contamination were considered because if they were attributable to the owners, then the owners could not claim for demurrage arising from results from delays at the discharge ports (Budget v Binnington ).
The vessel was carrying 44,000 mt of maize from Topolobambo on the western coast Mexico to Durban, South Africa. The cargo was fumigated at Topolobambo and the instructions to the owner were that the cargo should not be ventilated for the first 12 days of the voyage. Ventilation thereafter was limited because, the owners claimed, it was unsafe to do so. The vessel’s route took 39 days around Cape Horn rather than through the Panama Canal. On arrival in Durban, significant condensation was discovered along with weevil infestation, and the authorities said that the cargo could not be discharged. Over the course of the following three months, there was skimming of damaged cargo and further fumigations after which the remaining 10,300mt of cargo was discharged at Richard’s Bay.
In this case, there were a number of possible reasons for the damage to the cargo:
The length of the voyage – routing
The longer the voyage takes, the greater the chance that there will be some damage to the perishable cargo by the time the vessel arrives at the discharge port. Should the cargo arrive damaged, there should be some explanation for that and the inference would be that there was a want of due care on the part of the owner. The owners’ explanation was that the length of the voyage, which they submitted was a “usual and customary” route, made the damage inevitable. The question was therefore whether the route around Cape Horn, which was not the shortest geographical route (that would have been via the Panama Canal) could be considered usual and customary or reasonable. The owners therefore relied on the length of the voyage (which they said was justified) as an explanation for the damage and not anything that they had done or failed to do.
The charterers’ position was that the direct route –the Panama Canal route – would be the contractual route but as soon any other route than the direct route was considered, other factors needed to be considered before one could consider it usual and reasonable. In this case, the longer geographical route meant a voyage through predictably and significant colder temperature (increasing the need for ventilation) and through worse weather conditions (limiting the ability to ventilate the cargo).
The court did not accept this argument. Extending the duty to care for the cargo to routing decisions would strike the wrong balance between the owners and the charterers’ obligation. On the charterers’ submission, owners would have to routinely weigh up the costs and duration of alternative routes - that took the obligation on the owners too far. It should be remembered that the charterers are likely to be better placed to know whether particular route should be taken and have the option to negotiate such a route. The question would remain whether the route was usual and reasonable in the interests of all involved but without the charterers’ more refined test. In this instance, there was no recommended route and most ships travelled via Cape Horn. It was therefore considered to be usual and reasonable.
The charterers also tried a different approach which was that the choice of route was a breach of the Hague Visby Rules (HVR) article III, rule 2 to properly care for the cargo. The charterers also failed on this ground.
The length of the voyage – breach of speed warranty
The charterers also claimed that the length of the voyage was a cause of the damage and that the voyage had been prolonged because the vessel’s speed was below the warranted speed and therefore the owners’ were at fault by reason of a breach of the speed warranty. In this instance, whilst it was found that there was a breach, it was not possible to identify a particular element of damage or loss which was caused by that breach.
Ventilation of the cargo
The HVR article III, r.2 required the owners to use a sound system to avoid cargo damage and reference would be made to general industry practice (see here). Instructions to the owners were that they should not ventilate the cargo for the first 12 days. After that, the owners said that for safety reasons (due to the voyage route – which, as can be seen from above, was found to be justified), ventilation was limited. The charterers submitted that this was not a sound system and therefore a breach which caused the delays at the discharge port (thereby defeating the claim for demurrage).
The court agreed with the charterers. It found on the facts that there had been safe periods when ventilation could have taken place, calculating that had there been proper ventilation (taking into account any unsafe periods) the damage would have been 6 to 12 inches of dried crust at the top of the cargo but no more.
Reinfestation of the cargo
A question was raised as to why there was still the presence of weevils. There was suggestion that the initial fumigation had been defective and, rather, the most likely explanation for the reinfestations after arrival was inadequate cleaning of the topsides – which meant a further breach of HVR article III, r.2 by the owners.
The charterers relied on a quarantine exception in the charterer, which was a defence to the demurrage on the basis that the delays at the discharge port fell within the meaning of quarantine. This was rejected by the court – there was no real isolation of the cargo or of the vessel or crew.
The owners’ demurrage claim
The court had to consider a number of potential arguments which would ultimately decide whether the owners were entitled to any demurrage. On the facts of this case, the court found that the owners were entitled to take the route that they took but had failed to properly care for the cargo. Whilst it was found that the route (which was justified) and the requirement that there be no ventilation in the first 12 days would have resulted in damage to the cargo (and so not through any breach by the owners), that damage would have been limited to 6 to 12 inches of dry crust. With that amount of damage, discharge at Durban would have exceeded its laytime at Durban by just 3.7 days and would have discharged within the allowed laytime at Richard’s Bay. However because the owners did not have a sound system for ventilation (by failing to ventilate when they safely could have), the damage was significantly worse and was thus the cause of the delays meaning that the owners were not entitled to the demurrage that they were claiming.
The Santa Isabella is an interesting example of the different factors which will affect where responsibility lies when a perishable cargo arrives damaged. On the one hand, vessel owners will be pleased to see that the court refused to refine the test for a usual and reasonable or customary route to the more complicated approach advocated by the charterers. But whilst the owners were found to be justified in their routing, that would not give them reason to avoid their responsibility to continue to properly care for the cargo by ventilating it, as required by Article II, r.2 of the HVR.
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