The vessel was chartered to demise charterers which time-chartered it to intermediate charterers, which sub-time-chartered it to the time-charterers. Each charterparty was made on the Barecon 89 form as amended and contained an undertaking to trade the vessel only between safe ports. The time-charterers instructed the vessel to discharge its cargo at the port of Kashima in Japan. Upon attempting to leave the port due to extreme swell from long waves the vessel encountered a very severe northerly gale and was grounded, becoming a total loss. One of the vessel’s hull insurers took assignments of the rights of the owners and the demise charterers and brought a claim against the intermediate charterers. who in turn claimed against the time-charterers for damages for breach of the undertaking to trade only between safe ports. The time-charterers denied that the port had been unsafe, contending that the conditions at the time of the casualty constituted an “abnormal occurrence”. The judge allowed the claim, holding that the combination of weather conditions at the port was not to be characterised as an abnormal occurrence, notwithstanding that the coincidence of the two conditions was rare, because both conditions were physical characteristics of the port and their combination was foreseeable, and so there had been a breach of the safe port undertaking. The Court of Appeal allowed the time-charterers’ appeal, holding that the conditions which affected the port were an abnormal occurrence and that, therefore, there had been no breach by the time-charterers of that undertaking.
On the hull insurer’s appeal—
Held, appeal dismissed. The undertaking was a prediction about the safety of the port when the ship arrived in the future and it necessarily assumed normality. The date for judging breach of the undertaking was the date of nomination of the port. If a reasonable shipowner in the position of the particular shipowner trading the ship for his own account and knowing the relevant facts would proceed to the port, unless there was an abnormal occurrence, the port was prospectively safe. “Abnormal occurrence” had its ordinary meaning as something out of the ordinary course and unexpected, which the notional charterer or owner would not have in mind. The fact that a combination of long waves and northerly gales was theoretically foreseeable did not make it a normal characteristic of the port. In all the circumstances, the Court of Appeal had been entitled to conclude that the combination of weather conditions which had led to the vessel’s casualty was an abnormal and unexpected occurrence. Accordingly, the port was not unsafe and the time-charterers were not in breach of the safe port undertaking (paras 10–11, 14–15, 24–28, 43–47, 88, 92, 108, 127, 128).
Per curiam. If there had been a breach of the safe port undertaking, the time-charterers would not have been entitled to limit their liability pursuant to article 2.1 of the Convention on Limitation of Liability for Maritime Claims (1976), as enacted by section 185 of and Schedule 7 to the Merchant Shipping Act 1995. Article 2.1 imposes a limitation on liability arising from loss or damage to property “occurring on board or in direct connection with the operation of the ship” but that phrase does not include loss or damage to the ship itself (paras 63, 71, 79, 81–87, 90, 107, 108, 127, 128).
Per Lord Mance, Lord Hodge JJSC and Lord Toulson. Clause 12 of the Barecon 89 charter form as amended, which provides for joint insurance and a distribution of insurance proceeds, precludes rights of subrogation of hull insurers and the right of owners to recover in respect of losses by hull insurers against the demise charterer for breach of an express safe port undertaking (paras 108–115, 118, 127, 128, 141, 144, 146).
Mark Howard QC, James M Turner QC and Simon Birt QC (instructed by Ince & Co LLP) for the hull insurer.
Dominic Kendrick QC, David Goldstone QC and Gavin Geary (instructed by MFB Solicitors) for the time-charterers.
Michael Davey QC (instructed by Winter Scott LLP) for the intermediate charterers.