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'''Summary'''
This was the unsuccessful appeal from [2016] EWHC 3122 (Comm), covered here in DMC/SandT/17/10 [[Link https://www.onlinedmc.co.uk/index.php?title=Transgrain_Shipping_(Singapore)_v_Yangtze_Navigation_(Hong_Kong)]]. The Court of Appeal upheld Teare J’s decision that the word “act” in clause 8(d) of the Inter-Club Agreement 1996 bears the ordinary and natural meaning of “act” and does not require culpability.
This case note is contributed by Justin Gan.
Transgrain argued before Teare J that “act” in ICA clause 8(d) referred to a culpable act. And, since it was entitled to give the orders it did under the charter, the proviso to ICA clause 8(d) was not engaged and liability should be split equally with Yangtze Navigation.
Teare J found the word “act” in ICA clause 8(d) to bear its natural and ordinary meaning, not requiring fault. In so doing he relied heavily on the scheme and intent of the ICA, to apportion liability for cargo claims on a “more or less mechanical basis”.
Transgrain appealed to the Court of Appeal, unsuccessfullybut without success.
Judgment on Appeal
Similarly, the Court of Appeal was mindful of the ICA’s intent to apportion liability for cargo claims on a “more or less mechanical basis” – and indicated its agreement with Teare J for the reasons he gave.
On appeal, Transgrain raised six arguments as to why this reading was wrong, each of which was rejected:
• Argument 1: Previous versions of the ICA referred to culpability; if it had been intended to change this, clear words would have been used.
The Court of Appeal noted that the wording of the 1996 ICA was materially different
from previous versions. It said that it could get no assistance from comparing the present and the previous versions of the ICA “since they say different things.”
• Arguments 2-3: Sub-clauses (a) and (b) of the 1996 ICA both still required fault – see Fn.1 It would be consistent with this to read “act” in (d) as requiring fault.
The Court of Appeal did not agree, as a matter of construction. The wording of (a) and (b) included fault but was not confined to fault.
• Arguments 4-5: Reading “act” in sub-clause 8(d) as including both fault and “no fault” situations would give rise to difficult questions of causation, contrary to the intent of the ICA – since, in that case, even an initial order to load cargo could count as an “act”.
The Court of Appeal explained that one does not inquire into “causes of causes” and in any event it did not see any possible difficulty in determining causation as relevant to the construction of (d).
• Argument 6: There were cases in other contexts which had interpreted the words “act or neglect” as imputing a requirement of “fault”.
The Court of Appeal did not find this determinative, as everything depended on the context. The Court of Appeal also noted that
“such limited authority as there is on the construction of the words “act or omission of the shipper” in Art.IV rule 2(i) of the Hague-Visby Rules does not suggest that the relevant “act” has to be culpable before the shipowner can rely on it, see Ismail v Polish Ocean Lines [1976] QB 893, 903A per Lord Denning M.R.”
'''Comment'''
The Court of Appeal confirmed Teare J’s reading of “act” in ICA clause 8(d), which had previously been welcomed as clarifying the provision and helping to resolve cargo claims promptly and accurately, as intended by the ICA.
Fn.1 ”(8) Cargo claims shall be apportioned as follows:
