Ship Starsin, Re, (2003) 307 N.R. 100 (HL)

• Case Date: March 13, 2003
• Jurisdiction: Canada (Federal)
• Citations: (2003), 307 N.R. 100 (HL)

Ship Starsin, Re (2003), 307 N.R. 100 (HL)

MLB headnote and full text

Temp. Cite: [2003] N.R. TBEd. AP.064

Owners of cargo lately laden on board the ship or vessel "Starsin" and others (Original respondents and cross-appellants) v. Owners and/or demise charterers of the ship or vessel "Starsin" (Original appellants and cross-respondents) and two other actions

([2003] UKHL 12)

Indexed As: Ship Starsin, Re

House of Lords

London, England

Lord Bingham of Cornhill, Lord Steyn, Lord Hoffmann, Lord Hobhouse of Woodborough and Lord Millett

March 13, 2003.

Summary:

Timber and plywood was shipped on board the Ship Starsin from the Far East to West­ern Europe. The cargo was damaged during the voyage because of negligent stowage by the shipowner's employees. At the time the vessel was time-chartered to Continental Pacific Shipping (CPS) which had become insolvent. The cargo was carried under contracts of carriage contained in or evi­denced by a series of transferable bills of lading of which the four respondents, on different dates became the holders (i.e., the cargo owners). The cargo owners sued the ship­owner for dam­ages in contract under the bills of lading, or alterna­tively, for damages in tort. Issues arose as to whether the ship­owner or the time-charterers (CPS) were the carriers under the bills of lading; what, if any, protection the Himalaya clause in the bills of lading afforded the shipowner; and if the shipowner was not protected by the Himalaya clause, whether the cargo owners could maintain their tort action against the shipowner. The trial judge held that the bills of lading were the char­terer's and that CPS was the contrac­tual carrier (see [2001] 1 Lloyd's Rep 85). The trial judge held also that the Himalaya clause applied to the shipowner but that the protec­tion afforded to the shipowner was limited to the protection available to the carrier under the clause. The trial judge held that the cargo owners could pursue their tort claims against the ship­owner.

On appeal, the Court of Appeal, allowed the appeal, holding that the bills of lading were shipowner's bills and that the ship­owner was the contractual carrier, entitling the cargo owners to sue the shipowner in contract for any recoverable loss they had suffered (see [2001 1 Lloyd's Rep. 437). The shipowner appealed and the cargo owners cross-appealed.

The House of Lords allowed the ship­owner's appeal except with respect to one of the cargo owners (Makros Hout BV). The court held that the bills of lading contained or evidenced a contract of carriage made with CPS as sole carrier. The shipowner was not a party to the contract of carriage and was therefore not liable under the bills of lading contracts. The court, Lord Steyn dissenting on this point, held that the Hima­laya clause did not protect the shipowner from a tort claim by the cargo owners. The court held, however, that the cargo owners (except for Makros) could not maintain their tort actions against the shipowner because the cargo owners did not have either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred (i.e., they were not "cargo owners" when the damage occurred). It was not enough for them to have had only contractual rights in relation to the damaged property. This was not the case with Makros, which had already obtained title to the goods before the damage to those goods occurred. The court dismissed the cross-appeal.

Contracts - Topic 2054

Terms - Implied terms - From apparent intention - [See second Shipping and Navigation - Topic 1947 ].

Contracts - Topic 7400

Interpretation - General principles - Gen­eral - Lord Bingham of Cornhill of the House of Lords reviewed the rules appli­cable in construing a commercial document - The judge stated: (1) that a busi­ness sense will be given to business docu­ments; (2) that it was common sense that greater weight should be attached to terms which the particular contracting parties had chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contract­ing parties had never addressed their minds; (3) that it has long been recognised by very distinguished commer­cial judges that to seek perfect consistency and economy of draftsmanship in a com­plex form of contract which has evolved over many years is to pursue a chimera; and (4) "'In all mercantile trans­actions the great object should be certainty: and therefore, it is of more consequence that a rule should be certain, than whether the rule is established one way or the other. Because speculators in trade then know what ground to go upon'" - See paragraphs 9 to 13.

Shipping and Navigation - Topic 451

Ships - Ownership and control - Liability of owner - Negligent stowage - Four holders of bills of lading (cargo owners) shipped timber and plywood on board the Ship Starsin from the Far East to Europe - The cargo was dam­aged during the voyage because of negli­gent stowage by the ship­owner's employees - At the time the vessel was time-chartered to Continental Pacific Ship­ping (CPS) which had become insol­vent - The cargo owners sued the ship­owner for damages in tort - The House of Lords held that three of the cargo owners could not maintain a tort action against the ship­owner because the cargo owners did not have either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred (i.e., they were not "cargo owners" when the damage occurred) - It was not enough for them to have had only contractual rights in relation to the dam­aged property - This was not the case with the fourth cargo owner which had already obtained title to the goods before the dam­age to those goods occurred - See para­graphs 36 to 41; 64, 87 to 91, and 139.

Shipping and Navigation - Topic 451

Ships - Ownership and control - Liability of owner - Negligent stowage - [See Ship­ping and Navigation - Topic 2604 ].

Shipping and Navigation - Topic 1802

Carriage of goods - Carrier - What consti­tutes - [See Shipping and Navigation - Topic 1843 ].

Shipping and Navigation - Topic 1843

Carriage of goods - Contract of carriage - What constitutes - Four cargo owners shipped timber and plywood on board the Ship Starsin - The cargo was damaged during the voyage because of negligent stowage by the shipowner's employees - At the time the vessel was time-chartered to Continental Pacific Ship­ping (CPS) - The port agents signed the front of the bills of lading "As agent for Continen­tal Pacific Shipping (The Carrier)" - Two clauses in barely legible tiny print on the back of the bills of lading (i.e., the identity of carrier clause and demise clause) contra­dicted the contractual posi­tion revealed by the face of the bill sug­gesting that the contract of carriage was between the ship­owner and the cargo owners - The cargo owners sued the ship­owner for damages in contract - The ship­owner argued that the bills of lading were the charterer's bills as per the face of the bills of lading - The House of Lords held that the bills of lading contained or evi­denced a contract of car­riage made with CPS as sole carrier - The shipowner was not a party to the contract of carriage and was therefore not liable under the bills of lading contracts - See paragraphs 6 to 18, 44 to 50; 66 to 86; 123 to 129; 174 to 191.

Shipping and Navigation - Topic 1945

Carriage of goods - Bills of lading - Car­rier - What constitutes - [See Shipping and Navigation - Topic 1843 ].

Shipping and Navigation - Topic 1947

Carriage of goods - Bills of lading - Inter­pretation - [See Shipping and Navigation - Topic 1843 and Shipping and Naviga­tion - Topic 2604 ].

Shipping and Navigation - Topic 1947

Carriage of goods - Bills of lading - Inter­pretation - An issue arose respecting the interpretation of a Himalaya clause in certain bills of lading which appeared to have words missing from one of the condi­tions on the reverse of the bills - The House of Lords held that this was an ap­propriate case to interpolate the words necessary for the purpose of construing the bills of lading - See paragraphs 19 to 23, 53, 94 and 192.

Shipping and Navigation - Topic 2604

Carriage of goods - Liability - Limitations - General - Himalaya clause - Four cargo owners shipped timber and plywood on board the Ship Starsin from the Far East to Europe - The cargo was damaged during the voyage because of negligent stowage by the shipowner's employees - At the time the vessel was time-chartered to Continental Pacific Shipping (CPS) which had become insolvent - The cargo owners sued the shipowner for damages in tort - An issue arose respecting whether, assum­ing CPS to be the contractual carrier under these contracts of carriage, a Hima­laya clause (an exemption clause) on the back of the bill of lading protected the ship­owner from liability to the cargo owners - The court considered the Hima­laya clause in detail, including the interpre­tation of the clause, the effect of the Hague rules, etc. - The House of Lords concluded that the Himalaya clause did not protect the ship­owner from a tort claim by the cargo owners - See paragraphs 19 to 35; 51 to 63; 92 to 117; 140 to 171.

Cases Noticed:

Universal Steam Navigation Co. v. McKelvie (James) & Co., [1923] A.C. 492, refd to. [paras. 7, 81].

Glynn v. Margetson & Co., [1893] A.C. 351 (H.L.), refd to. [paras. 7, 81, 183].

Wehner v. Dene Steam Shipping Co., [1905] 2 K.B. 92, refd to. [para. 8].

Ship Rewia, Re, [1991] 2 Lloyd's Rep. 325 (C.A.), refd to. [paras. 8, 68].

Hamilton v. Mendes (1761), 2 Burr. 1198; 97 E.R. 787, refd to. [para. 10].

Robertson v. French (1803), 4 East 130; 102 E.R. 779 (K.B.), refd to. [paras. 11, 183].

Sutro (L.) & Co. v. Heilbut, Symons & Co., [1917] 2 K.B. 348, refd to. [paras. 11, 183].

Simond v. Boydell (1779), 1 Dougl. 268; 99 E.R. 175, refd to. [para. 12].

Nelson (James) & Sons Ltd. v. Nelson Line (Liverpool) Ltd., [1908] A.C. 16, refd to. [para. 12].

Hillas & Co. v. Arcos Ltd. (1932), 43 Ll. L.R. 359, refd to. [para. 12].

Chandris v. Isbrandtsen-Moller Co., [1951] 1 K.B. 240, refd to. [para. 12].

Ship Okehampton, Re, [1913] P. 173, refd to. [paras. 12, 71, 182].

Vallejo v. Wheeler (1774), 1 Cowp. 143; 98 E.R. 1012, refd to. [para. 13].

Ship Berkshire, Re, [1974] 1 Lloyd's Rep. 185, refd to. [paras. 13, 70].

Ship Venezuela, Re, [1980] 1 Lloyd's Rep. 393, refd to. [para. 13].

MB Pyramid Sound MV v. Briese Schif­fahrts GmbH (The Ines), [1995] 2 Lloyd's Rep. 144, refd to. [para. 13].

Sunrise Maritime Inc. v. Uvisco Ltd. (The Hector), [1998] 2 Lloyd's Rep. 287, refd to. [para. 13].

Fetim BV v. Oceanspeed Shipping Ltd. (The Flecha), [1999] 1 Lloyd's Rep. 612, refd to. [paras. 13, 48, 71].

National Bank of Egypt v. Hannevig's Bank (1919), 3 LDAB 213, refd to. [paras 16, 77].

British Imex Industries Ltd. v. Midland Bank Ltd., [1958] 1 Q.B. 542, refd to. [paras. 16, 77].

Satterthwaite (A.M.) & Co. v. New Zea­land Shipping Co. (The Eurymedon), [1975] A.C. 154 (P.C.), refd to. [paras. 22, 53, 93, 146, 196].

Port Jackson Stevedoring Pty. Ltd. v. Salmond and Spraggon (Australia) Pty. Ltd. (The New York Star), [1979] 1 Lloyd's Rep. 298; 139 C.L.R. 231 (Aus. H.C.), affd. [1981] 1 W.L.R. 138 (P.C.), refd to. [paras. 22, 53, 93, 145, 196].

Hargraves' Trusts, Re; Leach v. Leach, [1937] 2 All E.R. 545, refd to. [para. 23].

Murray, Re; Martins Bank Ltd. v. Dill, [1955] Ch. 69, refd to. [para. 23].

Neeld, Re; Carpenter v. Inigo-Jones, [1960] Ch. 455, refd to. [para. 23].

Neeld, Re; Carpenter v. Inigo-Jones, [1962] Ch. 643, refd to. [para. 23].

Riley's Will Trusts, Re; Riley v. Riley, [1962] 1 W.L.R. 344, refd to. [para. 23].

Nippon Yusen Kaisha v. International Import and Export Co. (The Elbe Maru), [1978] 1 Lloyd's Rep. 206 (C.A.), refd to. [paras. 24, 96].

Gore v. Van Der Lann, [1967] 2 Q.B. 31, refd to. [paras. 24, 100].

Adler v. Dickson (The Himalaya), [1955] 1 Q.B. 158 (C.A.), refd to. [paras. 25, 92, 146].

Midland Silicones Ltd. v. Scruttons Ltd., [1962] A.C. 446 (H.L.), refd to. [paras. 25, 100, 135].

Ship Mahkutai (Ship Owners) v. Ship Mahkutai (Cargo Owners), [1996] A.C. 650; 197 N.R. 214 (P.C.), refd to. [paras. 25, 56, 101, 151, 196].

Ship K.H. Enterprise (Cargo Owners) v. Ship Pioneer Container, [1994] 2 A.C. 324; 166 N.R. 207 (P.C.), refd to. [paras. 34, 92, 133, 198].

Leigh and Sillavan Ltd. v. Aliakmon Shipping Co., [1986] A.C. 785; 66 N.R. 60 (H.L.), refd to. [paras. 36, 64, 139].

Darley Main Colliery Co. v. Mitchell (1886), 11 App. Cas. 127, refd to. [paras. 40, 91].

Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO-International Ter­minal Operators Ltd., [1986] 1 S.C.R. 752; 68 N.R. 241; 28 D.L.R.(4th) 641, refd to. [paras. 56, 154].

Mannai Investment Co. v. Eagle Star Life Assurance Co., [1997] A.C. 749; 215 N.R. 321 (H.L.), refd to. [para. 83].

Drughorn (Fred.) Ltd. v. Rederiaktie­bolo­get Transatlantic, [1919] A.C. 203 (H.L.), refd to. [para. 84].

Ship Eurymedon, Re, [1971] 2 Lloyd's Rep. 399 (N.Z.C.A.), refd to. [para. 98].

Sze Hai Tong Bank Ltd. v. Rambler Cycle Co., [1959] A.C. 576, refd to. [para. 108].

Elderslie v. Borthwick, [1905] A.C. 93, refd to. [para. 127].

Pyrene v. Scindia, [1954] 2 Q.B. 402, refd to. [para. 129].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 131].

Elder Dempster & Co. v. Paterson Zocho­nis & Co., [1924] A.C. 522 (H.L.), refd to. [para. 133].

Ship Hollandia, Re, [1983] 1 A.C. 565, refd to. [para. 141].

Ship Mormacstar, Re, [1973] 2 Lloyd's Rep. 485 (U.S. 2nd Cir.), refd to. [para. 143].

Ship Pera, Re, [1985] 2 Lloyd's Rep. 103 (C.A.), refd to. [para. 144].

Wilson v. Darling Island Stevedoring & Lighterage Co. (1956), 95 C.L.R. 43 (Aus. H.C.), refd to. [para. 146].

Ship Aries, Re, [1977] 1 Lloyd's Rep. 334 (H.L.), refd to. [para. 147].

Firestone v. Vokins, [1951] 1 Lloyd's Rep. 32, refd to. [para. 163].

Adamastos Shipping v. Anglo-Saxon Pe­troleum, [1959] A.C. 133, refd to. [para. 166].

Gadsden (J.) Pty. Ltd. v. Australian Coastal Shipping Commission, [1977] 1 N.S.W.L.R. 575 (C.A.), refd to. [paras. 168].

Sydney Cooke v. Hapag-Lloyd, [1980] 2 N.S.W.L.R. 587, refd to. [para. 169].

Chapman Marine Pty. Ltd. v. Wilhelmson Lines A/S, [1999] FCA 178, refd to. [para. 170, 198].

Young v. Schuler (1883), 11 Q.B.D. 651, refd to. [para. 175].

Tor Line AB v. Alltrans Group of Canada Ltd., [1984] 1 W.L.R. 48, refd to. [para. 193].

Gadsden (J.) Pty. Ltd. v. Australian Coastal Shipping Commission, [1977] 1 N.S.W.L.R. 587 (C.A.), refd to. [paras. 198].

Statutes Noticed:

Hague Rules, art. III, rule 1, rule 2 [paras. 31, 60], rule 8 [paras. 59, 113, 167].

Authors and Works Noticed:

Chitty on Contracts (28th Ed. 1999), p. 633 [para. 175].

Debattista, Is the end in sight for charter­ing demise clauses? (February 21, 2001), Lloyds List, p. 5 [paras. 17, 46].

Gaskell et al., Contracts for the Carriage of Goods by Land Sea and Air (December 31, 2001) (Service Issue 21), p. 1-380, para. 1.6.4.2.25.1 [paras. 17, 46].

Girvin and Bennett, English Maritime Law 2000, [2002] L.M.C.L.Q., pp. 84 to 87 [para. 46].

Goff, Commercial Contracts and the Com­mercial Court, [1984] L.M.C.L.Q. 382, p. 391 [para. 57].

ICC Uniform Customs and Practice for Documentary Credits (1993), art. 23 [paras. 16, 47, 78, 188].

Jack, Malek and Quest, Documentary Credits (3rd. Ed. 2001), pp. 175, 176 [para. 16].

Roskill, Article (1990), 106 L.Q.R., pp. 403 to 406 [para. 70].

Scrutton on Charterparties and Bills of Lading, generally [para. 141]; art. 9 [para. 127].

Counsel:

Not disclosed.

Agents:

Not disclosed.

This appeal was heard by Lord Bingham of Cornhill, Lord Steyn, Lord Hoffmann, Lord Hobhouse of Woodborough and Lord Mil­lett, in the House of Lords. The decision of the House of Lords was delivered on March 13, 2003, when the following opionions were filed:

Lord Bingham of Cornhill - see paragraphs 1 to 41;

Lord Steyn, dissenting in part - see para­graphs 42 to 65;

Lord Hoffmann - see paragraphs 66 to 117;

Lord Hobhouse of Woodborough - see paragraphs 118 to 172;

Lord Millett - see paragraphs 173 to 213.