Ever Lucky Shipping v Sunlight Mercantile: General Average Contribution & Seaworthiness Under Hague Rules

In Ever Lucky Shipping Co Ltd v Sunlight Mercantile Pte Ltd, the High Court of Singapore addressed a claim by Ever Lucky Shipping Co Ltd ('the shipowners') against Sunlight Mercantile Pte Ltd ('the cargo owners') and Liberty Citystate Insurance Pte Ltd for general average contribution following a main engine breakdown on the vessel 'Pep Nautic'. The shipowners sought contribution for costs incurred in towing the vessel to various ports. The defendants resisted the claim, alleging the vessel was unseaworthy due to the shipowners' negligence. The court held that the vessel was unseaworthy at the commencement of the voyage and that the shipowners failed to exercise due diligence to make the vessel seaworthy, thus denying the shipowners' claim for general average contribution for the under-deck cargo. However, due to exemption clauses in the bills of lading, the shipowners were entitled to recover general average contribution from the deck cargo.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for the defendants in part; shipowners entitled to recover general average contribution only from deck cargo.

1.3 Case Type

Admiralty

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The case concerns a claim for general average contribution following an engine breakdown. The court found the vessel unseaworthy, denying contribution for under-deck cargo.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Sunlight Mercantile Pte LtdDefendantCorporationDefense upheld in partPartial
Ever Lucky Shipping Co LtdPlaintiffCorporationPartial JudgmentPartial
Liberty Citystate Insurance Pte LtdDefendantCorporationDefense upheld in partPartial

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Richard KuekGurbani & Co.
R GovintharasahGurbani & Co.
Tan Hui TsingJoseph Tan Jude Benny
Jude P. BennyJoseph Tan Jude Benny
Magdalene ChewJoseph Tan Jude Benny

4. Facts

  1. The vessel 'Pep Nautic' suffered a main engine breakdown on December 24, 1999.
  2. The shipowners claimed general average contribution from the cargo owners.
  3. The vessel was carrying a cargo of logs from West Africa to Tuticorin, India.
  4. The vessel was 22 years old at the time of the incident.
  5. The vessel had been re-classed by INSB, which was not an internationally recognized classification society at the time.
  6. The shipowners were aware that the vessel was overdue for special hull and machinery surveys.
  7. The chief engineer operated the main engine at well below its designed engine load.

5. Formal Citations

  1. Ever Lucky Shipping Co Ltd v Sunlight Mercantile Pte Ltd and Another, Suit 1266/2001, [2003] SGHC 80

6. Timeline

DateEvent
Vessel built in Spain as a bulk log carrier.
Vessel acquired by Greta Shipping Co Ltd and renamed 'Alexandros P'.
Vessel due to undergo five-yearly special classification surveys.
Vessel arrived at Piraeus and was put up for sale.
Vessel sold to SMC Ltd and renamed 'Haj Ibrahim'.
Commencement of special hull/machinery surveys for the vessel at Istanbul, Turkey.
Second survey of the vessel conducted at Damietta, Egypt.
INSB issued an attestation confirming commencement of special hull/machinery surveys.
Vessel arrived in Port Owendo, Gabon.
Vessel physically delivered to the shipowners.
Vessel commenced loading of cargo at Port Owendo.
Vessel arrived at Port Gentil.
Vessel arrived at Bata, Equatorial Guinea and loaded cargo.
Vessel arrived back at Port Owendo.
Vessel berthed at Port Owendo.
Loading completed at Port Owendo.
New master arrived on the vessel.
Clearance arrived for the vessel to sail.
Stowaways disembarked from the vessel at Port Gentil.
Engine tested out.
Vessel sailed from Port Gentil.
Generator failure occurred; main engine stopped.
Second breakdown occurred; main engine stopped again.
Main engine crankcase 'explosion' took place.
Vessel arrived at the inner anchorage of Port Luanda.
Mr Srinivasan and a surveyor from the Salvage Association boarded the vessel at Port Luanda.
Report issued by the Salvage Association.
Crew arrested the vessel for unpaid wages.
Crew withdrew their action.
Vessel departed for Cape Town under tow; shipowners declared general average.
Vessel arrived at Cape Town.
Mr Geoffrey Needham conducted a short survey on board the vessel.
Vessel left Cape Town under tow.
Vessel arrived at Tuticorin.
Vessel completed discharge of cargo at Tuticorin.
Shipowners sold the vessel.
Action commenced.
Defence amended.
Decision Date

7. Legal Issues

  1. Right to General Average Contribution
    • Outcome: The court held that the shipowners were not entitled to general average contribution for the under-deck cargo due to the unseaworthiness of the vessel and their failure to exercise due diligence.
    • Category: Substantive
    • Sub-Issues:
      • Actionable fault of shipowners
      • Seaworthiness of vessel
      • Application of York Antwerp Rules
    • Related Cases:
      • [1957] 2 Lloyd’s Rep 207
  2. Seaworthiness under the Hague Rules
    • Outcome: The court found that the shipowners failed to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage, and that the vessel was unseaworthy at the start of the voyage.
    • Category: Substantive
    • Sub-Issues:
      • Due diligence to make vessel seaworthy
      • Latent defect in vessel
      • Implied undertaking to make vessel seaworthy
    • Related Cases:
      • [1926] 24 LLR 446
      • [2000] 2 LLR 191
  3. Exemption Clauses for Deck Cargo
    • Outcome: The court held that the exemption clauses in the bills of lading were sufficient to absolve the shipowners of any actionable fault for breach of contract in respect of the deck cargo, entitling them to recover general average contribution from the deck cargo.
    • Category: Substantive
    • Sub-Issues:
      • Exclusion of liability for unseaworthiness
      • Interpretation of 'howsoever caused' clauses
    • Related Cases:
      • [1999] 1 LLR 848
      • [1913] P.9
      • [1877] 3 AC 72

8. Remedies Sought

  1. General Average Contribution
  2. Damages

9. Cause of Actions

  • Breach of Contract
  • Claim for General Average Contribution

10. Practice Areas

  • Admiralty Law
  • Shipping Law
  • Commercial Litigation

11. Industries

  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Goulandris Brothers Ltd v B. Goldman & Sons LtdN/ANo[1957] 2 Lloyd’s Rep 207N/ACited to define the 'fault' that must be established to escape general average liability as a legal wrong that is actionable as between parties at the time when the general average sacrifice or expenditure was made.
F.C. Bradley & Sons v Federal Steam Navigation Co.N/AYes[1926] 24 LLR 446N/ACited for the definition of a seaworthy vessel as one that has that degree of fitness which an ordinary owner would want it to have at the time it starts its voyage having regard to the circumstances the vessel would probably meet during the voyage.
The “Fjord Wind”English Court of AppealYes[2000] 2 LLR 191EnglandApproved the holding that seaworthiness is not an absolute concept but is relative to the nature of the ship, to the particular voyage and even to the particular stage of the voyage.
Union of India v N.V. Reederij AmsterdamN/AYes[1963] 1 LLR 223N/ACited to support the principle that the duty to ensure seaworthiness is not delegable and the shipowner is responsible for any failure to exercise due diligence on the part of those whom he has relied upon to make the vessel seaworthy.
W. Angliss and Co v Peninsular And Oriental Steam Navigation CompanyN/AYes[1927] 2 KB 456N/ACited for the principle that when a shipowner buys a ship he must take all appropriate steps to satisfy himself by surveys and inspections that the ship is fit for the service in which he intends to put it.
Corporacion Argentina de Productores de Carnes v Royal Mail LinesN/ANo[1939] LLR 188N/ACited to support the principle that when a latent defect exists, it is immaterial to consider whether due diligence was exercised or not because even if it had been exercised, it would have been useless.
Charles Brown & Co v Nitrate Producers’ Steamship CoN/AYes[1937] LLR 188N/ACited for the principle that latent defect does not mean latent to the human eye, but latent to the senses, meaning the defect would not be discovered in spite of any other test that it may be reasonable to apply in the circumstances.
The ImvrosN/AYes[1999] 1 LLR 848N/ARelied on for the holding that an exclusion clause covering 'any cause' is wide enough to exclude unseaworthiness as a cause of loss in respect of deck cargo not covered by the Hague Rules.
The GalileoN/ANo[1913] P.9N/ADistinguished as the words 'at shippers risk' were clearly referable to other risks than that of a breach of the fundamental obligation of the shipowner in respect of seaworthiness.
Steel v State Line SS Co.N/ANo[1877] 3 AC 72N/ADistinguished as the exemption clause did not exempt the shipowners from liability for unseaworthiness.

13. Applicable Rules

Rule Name
Rule A of the York Antwerp Rules 1974
Rule D of the York Antwerp Rules 1974

14. Applicable Statutes

Statute NameJurisdiction
Hague Rules 1924N/A

15. Key Terms and Keywords

15.1 Key Terms

  • General Average
  • Seaworthiness
  • Due Diligence
  • Hague Rules
  • York Antwerp Rules
  • Latent Defect
  • Exemption Clause
  • Deck Cargo
  • Under-Deck Cargo
  • Crankcase Explosion
  • Connecting Rod Bolt
  • Hull Fouling

15.2 Keywords

  • General Average Contribution
  • Seaworthiness
  • Hague Rules
  • York Antwerp Rules
  • Engine Breakdown
  • Deck Cargo
  • Unseaworthiness
  • Due Diligence

17. Areas of Law

Area NameRelevance Score
General Average95
Shipping Law90
Admiralty and Maritime Law90
York Antwerp Rules85
Seaworthiness80
Carriage of goods by sea75
Warranty Law70
Contract Law60
Breach of Contract50

16. Subjects

  • Admiralty Law
  • Shipping Law
  • Contract Law
  • General Average
  • Marine Insurance