MT "Cape Bonny" Tankschiffahrts GmbH & Co KG v Ping AN Property and Casualty Insurance Company of China Ltd & Anor

For the purposes of seaworthiness, a prudent owner must require a defect to be remedied where it exposes the vessel or its machinery to a real risk of breakdown. A carrier seeking to rely on due diligence must show that inspections were of the character reasonably required of a skilled and prudent shipowner and were carried out with reasonable skill, care and competence.

Where inspection results show an unexplained and significant change from previous readings, due diligence may require further investigation even though the readings remain within alignment limits. The carrier bears the burden of proving due diligence after unseaworthiness and causative damage are established. A failure to inspect is causative only where the inspection would probably have detected the relevant defect.

The claimant shipowner sought a contribution in general average from the defendant cargo insurer under a guarantee given after the vessel’s main engine failed during a laden voyage. The vessel was towed to Korea, where its cargo was transferred and the engine repaired.

The parties agreed that foreign particles in the lubricating-oil system made the vessel unseaworthy, but disputed the cause of the bearing failure and whether the owners had exercised due diligence under the Hague-Visby Rules. The principal issues were whether damaged filters and abnormal bearing wear should have been detected before the voyage, whether any failure was causative, and whether the general-average expenditure was reasonably incurred.

The claim was dismissed. The expenditure was caused by actionable fault of the owners, so no general-average contribution was payable.

1. The court found that damaged filter mesh and abnormal wear in main bearing no.1 existed before the voyage. Foreign particles which should have been removed from the lubricating oil therefore remained in the system and caused the breakdown. The precise source of the particles and date of filter damage could not be established, but those uncertainties did not prevent the causation finding.
2. Unseaworthiness is assessed by asking whether a prudent owner, knowing of the defect, would have required it to be remedied before the vessel proceeded to sea. Abnormal bearing wear, foreign particles and damaged filters each rendered the vessel unseaworthy.
3. Under article III r.1 of the Hague-Visby Rules, due diligence is equivalent to the common-law duty of care. The inquiry is whether the inspection was one which a skilled and prudent shipowner should reasonably have made and, if so, whether it was conducted with reasonable skill, care and competence. Under article IV r.1, the owners bore the burden of proving due diligence once unseaworthiness and resulting damage were shown.
4. The May 2011 filter inspection was inadequate because the cartridges were not lifted and examined. However, the owners failed to prove that a proper representative inspection would probably have detected the damaged mesh, so that breach was not causative.
5. The May crankweb readings were unexplained and significant when compared with the vessel’s history, particularly because adjacent units changed in the same direction. A prudent engineer or superintendent should have taken bearing-clearance measurements. The evidence indicated that those measurements would have revealed abnormal wear requiring repair before the voyage. The failure to investigate was therefore a causative failure of due diligence.
6. The court also held, in its alternative consideration of quantum, that the burden of proving that expenditure was reasonably incurred lay on the owners under the Rule Paramount and Rule E of the York-Antwerp Rules. The decisions to engage KOYO MARU, divert to Korea, conduct the STS operation and retain the tug were reasonable in the circumstances.

First-instance judgment in the High Court (Commercial Court). No appellate history was stated in the judgment.