Hooked Up - When the Duty to Exercise Due Diligence Bites

April 2006

The "Happy Ranger" was delivered by the ship builder to her owner in mid February, 1998. Her maiden voyage involved the carriage of a process vessel weighing 833mt ("the cargo") for a gas plant in Saudi Arabia. Unfortunately when lifting the process vessel, the hook on the ship's aft crane broke. The process vessel was dropped on to the ground with resulting damage in excess of US$ 2m.

Cargo interests commenced proceedings alleging a failure on the part of the ship's owners to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage. It was accepted that the ship was unseaworthy, the hook having failed because of a latent defect. However the owner denied any responsibility for the negligence on its part, contending instead that any wrongdoing was on the part of the ship/crane/hook manufacturers prior to the delivery of the vessel. The Owners sought to rely on a barge test of the crane carried out 10 days prior to delivery and the certificates issued by Lloyd's Register ("Class") following this test to demonstrate that they had exercised due diligence after delivery.

The judge accepted that the Owners could not be responsible for the negligence of others prior to delivery, which is in line with the House of Lords judgement in The Muncaster Castle¹ . As was was stated by Lord Radcliffe ² in that case:

"the carrier's responsibility for the work itself does not begin until the ship comes into his orbit, and it begins then as a responsibility to make sure by careful and skilled inspection that what he is taking into his service is in fit condition for the purpose and, if there is anything lacking that is fairly discoverable, to put it right…But if the bad work that has been done is 'concealed' and so can not be detected by any reasonable care, then the lack of due diligence to which unseaworthiness is due is not to be attributed to the carrier"

Despite the fact that the Owners are not responsible for the negligence of others prior to the delivery of the vessel, they are deemed informed by any knowledge obtained prior to delivery. This was especially so in this case as a representative of the Owners had been involved from an early stage of the build.

The double hook arrangement on the crane was an unusual arrangement in heavy lift vessels and was not part of the original design. However, the Owners themselves had amended the design to include the double hook arrangement. It was this particular design that meant the barge test that was intended to proof test the cranes did not in fact proof test the hooks - the barge test only used single hooks and therefore did not test the hooks in the double hook arrangement in which it was intended they would be utilised. What the Owners had apparently failed to appreciate, and what according to the judge should have been obvious to them, was that, where double hooks were to be used, as the angle of the hooks increased so did the load exerted on each hook.

It was argued that the Owners could not be held responsible for defects in construction, and that in this instance the causative carelessness was due to a latent casting defect in accordance with the decision in W. Angliss v. Peninsular & Oriental Steam Navigation³. However, the Judge pointed out that the courts have not ruled out all liability for latent defects before delivery: as was stated by the Court of Appeal in the Kapitan Sakharov⁴ , the Owner is not without more, liable for latent defects before delivery. In fact the House of Lords in The Muncaster Castle⁵ also left the open the possibility that the Owner could be liable for a latent defect that occurred prior to delivery if it had failed to perform a careful and skilful inspection once delivery had been taken.

Another case on point is The Union of India v. N.V. Reederij Amsterdam⁶. In this case the ship had been delivered in 1956 and inspected by Lloyd's Register as part of the continuous survey cycle. In September 1957 when the vessel began a voyage she suffered from an engine breakdown caused by a crack in the reduction gear. The Owners sought to rely on the inspection by Lloyd's Register and that if the crack had been present during the survey, it was not discoverable by the use of due diligence. It was stated by Lord Devlin⁷ that:

"the question is not whether there was a better chance of discovering the crack, but whether, on balance, one or more of the precautions ought to have been taken…..The balance that is so struck will determine whether or not a prudent surveyor should have felt it necessary to do more than these surveyors did."

Applying this to the facts of the current case it could not be said that the Class surveyor who was present for the barge test, which only succeeded in proof testing the cranes due to the unusual hook arrangement, did all that could be expected of a prudent surveyor. This is so because the Lloyd's Rules specifically stated in Section 1:

"1.1 General

1.1.1 Every lifting appliance is to be tested and thoroughly examined before being taken into use for the first time or after any subsequent alteration or repair which may affect the strength of the appliance, or at certain Periodical Surveys as indicated in Section 3.

1.1.2 Every item of loose gear is to be proof tested and thoroughly examined before being taken into use for the first time or after any subsequent repair or alteration which might affect the strength of the item.

1.2 Loose gear For the purpose of these requirements, loose gear is defined as including: hooks"

As such, irrespective of whether there had been a single or double hook arrangement, (as both are deemed to be loose gear) the Class surveyor should, according to its own Rules, have appreciated that a proof test on the crane did not mean that the hooks had also been proof tested.

The Owners had also sought to rely on the Certificates issued by Class following the barge test on the crane. However, this certificate never purported to be a proof test on the hooks. In conclusion on this point the judge decided that given the experience of the Owners, the design used for the hooks, the Owners attendance throughout the build and the certificates that had been issued it should have been obvious that the hooks had never been proof tested to their safe working load and therefore, there had been a lack of due diligence on the part of the Owners after delivery of the vessel.

In addition Class had granted a special exemption to the Owners which increased the safe working load of the crane by 6% to facilitate the lifting of the process vessel. The judge also stated that again this surveyor could not be said to have done all that was expected of a prudent surveyor. In fact the surveyor who granted the exemption, never even attended the vessel and relied on a lifting plan drawn up by the Owners (which failed to make clear that a double hook arrangement had been utilised) and the certificate issued by the previous Lloyd's surveyor following the barge test. As such, it could not be said that a thorough investigation had been performed - the Class surveyor had been negligent in issuing the exemption. As Owners are responsible for the actions of Class, again there had been a failure by Owners to exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage.

As a final point Mrs. Justice Gloster also held that the Owners had breached Article III Rule 2 of the Hague-Visby Rules in failing to properly and carefully load the goods. This was again dependent upon the failure of the Owners as already stated but also because the officers on board the vessel had no prior experience of the double hook arrangement, and the weight of the goods had not been evenly distributed during the lifting process.

This case further illustrates the non-delegable duty of Owners to exercise due diligence under the Hague-Visby Rules. That the particular Class surveyor who attended the vessel missed something critical does not mean that the Owners can rely on that mistake to justify their own failure carefully to inspect the vessel on the basis of all of the information available with them. The standard is that of the prudent surveyor and whether the inspection that was performed could be criticised. In this case all that was required was a proof testing of the hooks, at the minimum to their safe working load plus 10%, which would have taken an hour to complete and the damage would never have occurred.

The Parsons Corporation v. Scheepvaartonderneming [2006] EWHC 122 (Comm) 

1. [1961] AC 807 

2. page 847 (e-g) 

3. [1927] 1 KB 456 

4. [2000] 2 Ll. Rep 255

5. Supra

6. [1963] 2 Ll. Rep. 223 

7. page 235