CATCHWORDS

SHIPPING AND NAVIGATION - cargo of phosphate consigned from Tampa, Florida to Esperance WA lost when ship carrying it sank before completion of voyage - cargo shipped pursuant to voyage charterparty entered into by first plaintiff, Sanko, and defendant - vessel provided by second plaintiff, Grandslam, pursuant to time charter entered into between plaintiffs - Grandslam bareboat charterer of vessel - construction of charterparty - whether United States Carriage of Goods by Sea Act incorporated in charterparty - whether Grandslam entitled to immunities provided for in charterparty between Sanko and defendant - whether vessel seaworthy - whether plaintiffs had exercised due diligence to make ship seaworthy - whether plaintiffs entitled to limit their liability under the 1957 Limitation Convention - whether Sanko entitled to recover balance of freight provided for in voyage charterparty.

United States Carriage of Goods by Sea Act 1936, ss.3, 4, 5.

Navigation Act 1912 (as in force prior to coming into force of Limitation of Liability for Maritime Claims Act 1989), ss.330, 333 and Schedule 6.

THE SANKO STEAMSHIP CO. LIMITED AND GRANDSLAM ENTERPRISE CORPORATION v SUMITOMO AUSTRALIA LIMITED & Ors

No. G082 of 1991

CORAM:    SHEPPARD J

PLACE:    SYDNEY

DATE:     29 NOVEMBER 1995

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)    No. G082 of 1991

                                  )

GENERAL DIVISION                  )

              BETWEEN:

                        THE SANKO STEAMSHIP CO. LIMITED

                        AND GRANDSLAM ENTERPRISE CORPORATION

 

                                                  Plaintiffs

 

              AND:

                        SUMITOMO AUSTRALIA LIMITED

 

                                                   Defendant

 

              AND:

                        SUMITOMO AUSTRALIA LIMITED

 

                                              Cross-claimant

 

              AND:

                        THE SANKO STEAMSHIP CO. LIMITED

 

                                       First cross-defendant

 

              AND:

                        GRANDSLAM ENTERPRISE CORPORATION

                                      Second cross-defendant

 

              AND:

                        KIM IN HYEON

                                       Third cross-defendant

CORAM:    SHEPPARD J.

DATE:     29 NOVEMBER 1995

PLACE:    SYDNEY

                    REASONS FOR JUDGMENT

HIS HONOUR:  Shortly after 3.00 o'clock on the morning of 14 February 1991 the vessel "Sanko Harvest" grounded on a reef in the Recherche Archipelago not far from the Western Australian port of Esperance.  The vessel was carrying a cargo of phosphate and was bound for Esperance.  On the night of 17/18 February the vessel sank.  Both the vessel and the cargo were a total loss.  It is agreed by the parties that the value of the cargo of phosphate which the vessel was carrying was $8,900,000.  The defendant sues the plaintiffs for this sum together with interest.

     The loss of the vessel was due to grossly negligent conduct on the part of its crew, particularly its master and second officer.  There is no real dispute between the parties that that is the case.

     The cargo had been consigned by the defendant (its United States parent acted for it in this respect) from Tampa in Florida.  Although the plaintiffs, the Sanko Steamship Co. Limited ("Sanko") and Grandslam Enterprise Corporation ("Grandslam") are the plaintiffs, the principal proceeding is the cross-claim brought against those companies by the defendant, Sumitomo Australia Limited ("Sumitomo"), as voyage charterer of the vessel and consignor of the cargo.  The cross-claim was not maintained against the third cross-defendant who was the master of the vessel.

     The plaintiffs' action is an action to limit their liability pursuant to the provisions of the International Convention relating to the liability of owners of sea-going ships signed at Brussels on 10 October 1957 ("the 1957 Convention") which, until the coming into force of the Limitation of Liability for Maritime Claims Act 1989 on 31 May 1991 (i.e. after the grounding occurred), had effect by force of the Navigation Act 1912; see ss.330 and 333 and Schedule 6 thereof.  It is the contention of Sumitomo that the plaintiffs are not entitled to limit their liability because the loss of the cargo resulted from the actual fault or privity of the plaintiffs; Article 1 of the 1957 Convention.  Originally, one of the defences raised in response to the cross-claim was that the plaintiffs were entitled, in the alternative, to limit their liability pursuant to the provisions of the Convention on Limitation of Liability for Maritime Claims 1976 ("the 1976 Convention") which has effect in Australia by reason of the provisions of the Limitation of Liability for Maritime Claims Act; see s.6 and Schedule 1 thereof.

     Until recently there was a question whether the appropriate limitation regime was that provided for in the 1957 Convention or the 1976 Convention.  This was not the only matter in the Court's list concerning the question whether the 1976 Convention might be applicable in the case of casualties occurring before the Limitation of Liability for Maritime Claims Act came into force.  A similar question had arisen in Victrawl Pty Limited v AOTC Limited (No. NG 73 of 1991).  In
1993 I stated a case to enable a Full Court of this Court to determine which was the applicable limitation regime.  I was asked by counsel in the present case, which was then reserved for judgment, to take a similar course in it.  The stated cases were determined by a Full Court on 29 September 1993.  The principal judgments were delivered in Victrawl; see (1993) 45 FCR 302.

     The Court decided that the 1976 Convention had no application to casualties occurring before the commencement of the Limitation of Liability for Maritime Claims Act.  On 11 February 1994, the High Court granted special leave to appeal against the judgment.  On 3 October 1995, the High Court delivered judgment in both matters.  See Victrawl Pty Limited v Telstra Corporation Limited (1995) 131 ALR 465 and Sanko Steamship Co Limited v Sumitomo Australia Limited (1995) 131 ALR 490.  By majority, the High Court dismissed the appeals from the judgments of the Full Court in both Victrawl and this matter.  It follows that the limitation regime which is applicable here is that provided for in the 1957 Convention.  The plaintiffs will only be entitled to limit any liability they are found to have if they establish that the loss of the cargo was not due to their actual fault or privity.

     As will already have been perceived, the limitation issues are not the only issues with which the Court is concerned.  There are substantial questions whether the plaintiffs are under any liability to Sumitomo whatever.  The issues which arise for determination arise by reason of the terms of the voyage charterparty, two bills of lading, and, depending on the view that is taken of their applicability, the provisions of the United States Carriage of Goods by Sea Act 1936.

The Vessel and its Owners and Charterers

     The Sanko Harvest was a vessel of 32,502 tons deadweight.  It had been built in 1985 and was a bulk carrier for dry cargo.  It was available for charter throughout the world and was thus a vessel known in the trade as a tramp.  It should be understood that that is not a derogatory term.  The vessel was registered in Panama.

     The vessel was owned by a company, Seawall Shipping Corporation.  By a bare boat charter dated 31 March 1987, the vessel was chartered to Tonegawa Marine Corporation for a period commencing on 31 March 1987 and ending on 31 May 2000.  By a novation agreement dated 23 December 1987 made between Tonegawa Marine Corporation, Seawall Shipping Corporation, Sanko and Grandslam, it was agreed that Grandslam should be substituted in place of Tonegawa Marine Corporation as from 10.00 a.m. Japanese time on 31 December 1987.  The obligations of Grandslam arising as a consequence of the novation agreement were guaranteed by Sanko.

     On 31 December 1987, the day of the novation agreement, Grandslam chartered the vessel to Sanko.  The charter was a time charter for the period from the date of delivery of the vessel until 31 May 2000. 

     Grandslam is a company incorporated in Liberia.  Sanko is incorporated in Japan.  It is the owner of all the shares in Grandslam.  It also owns all the shares in another company incorporated in Japan, Eastern Shipping Co. Limited ("Eastern Shipping").  Sanko is a very large shipping company.  In 1990 it operated 84 bulk carriers one of which was over 230,000 deadweight tons.  Two others were over 160,000 deadweight tons.  Additionally it had 41 tankers and liquid petroleum gas carriers.  Two of its tankers exceeded 230,000 deadweight tons.  Some of these vessels were engaged on regular routes; others, like the Sanko Harvest, were tramps.   According to Mr Katsuyuki Totoki, who is a director of both Sanko and Grandslam, Sanko is, together with two other companies, the equal fourth largest shipowner in Japan.

     In 1985 Sanko and its Japanese subsidiaries encountered financial difficulty.  Sanko was the subject of an order made by a court in Japan which provided for its administration in bankruptcy.  The significance of this was explained by Mr Masaharu Ohashi.  He is an attorney practising law in Tokyo.  In evidence is a copy of the Japanese Corporate Reorganisation Law pursuant to which plans have been approved by the Tokyo District Court for Sanko and its associated companies, Eastern Shipping, Sanko Marine Co. Limited ("Sanko Marine") and Zuito Shipping Co. Limited.  The law specifies a procedure as a result of which a reorganisation proceeding will be ordered to commence and a reorganisation plan will, in due course, be confirmed and executed under Court supervision.  Mr Ohashi explained that in Japan a corporation limited by shares has four "organs", the shareholders' meeting, the board of directors, the representative directors and the auditors.  The respective rights and obligations of these organs are specified in the Commercial Code of Japan.  The shareholders' meeting appoints directors and auditors and has other functions to which it is unnecessary to refer.  The board of directors has power to appoint representative directors and supervise these and the other directors' operation of the corporation's business.  The representative directors have power to implement the decisions of the shareholders' meeting and of the board of directors.  A representative director has power to represent the corporation externally and to administer its affairs internally, subject to the powers of the shareholders' meeting and the board.

     Mr Ohashi said that a merger of Sanko Marine and Eastern Shipping was provided for in the reorganisation plans of each of those companies.  The Court confirmed the plans in 1989.  The effect of its order was to bring about the merger of the two companies which, from 1986, were both administered by the same trustee.

     Mr Ohashi also said that the reorganisation law envisages the possibility of directors being given certain powers in relation to the reorganisation, but in the absence of such a provision, the general administration of a company being reorganised is conferred upon the trustee.  No particular powers have been conferred on the directors of Sanko or any of its subsidiaries and accordingly the only power of the board of directors of each of those companies has been to appoint or remove representative directors, to decide to convene shareholders' meetings and to approve the transfer of shares.  Representative directors lose most of their powers as a result of the appointment of a trustee.  Similarly, shareholders lose their powers relating to the management of the affairs of the company.  Their only powers consist of the appointment or removal of directors and auditors and of making some amendments to the articles of association.

     There are three trustees of Sanko and one trustee in respect of each of the other companies.  Trustees are subject to the supervision of the Tokyo District Court which must give prior approval to certain acts of the trustees.

     Trustees are given the executive power to operate the corporation's business and to administer its assets.  The trustee has the duty of the management of the affairs and assets of the corporation and in practice exercises those powers through the corporation's employees whose continued employment will be a matter for the trustee or his delegates. Each of the heads of the departments in Sanko are given the title "General Manager".  They are all directors but have the limited powers referred to above.

     As I understand Mr Ohashi's evidence, the administration of the affairs of each of the companies is conducted separately.  Although Sanko controls the other companies, there is not a joint administration.  Nevertheless, there is close consultation amongst the respective trustees.

     On 31 January 1987, i.e. before the merger of Sanko Marine and Eastern Shipping, Grandslam entered into an agency agreement with Eastern Shipping whereby it appointed Eastern Shipping to act as its agent for the vessels designated in the agreement.  These included the Sanko Harvest.  Other vessels operated by Sanko were managed by Sanko Marine.  The evidence is not clear on the point, but since the merger of Eastern Shipping and Sanko Marine, these two companies have presumably become one entity.

     The management agreement provided that Eastern Shipping should have power to appoint and employ sub-agents to perform on behalf of Grandslam a number of specified services.  These included the recruitment of masters, officers and crew of vessels, the conduct of interviews of applicants in order to examine their competence to fulfil the duties of the posts for which they applied, and to conclude employment contracts on behalf of Grandslam with applicants who were proved to be competent and satisfactory to Grandslam in every respect.  The agency agreement came into force on 31 January 1987.  It was to continue in force for a period of 12 months and thereafter was automatically renewed for subsequent periods of 12 months unless notice was given by either party that it would not renew the agreement.  Such notice had to be given at least one month before the expiration of the relevant 12 month period of the agreement.

     On 1 May 1986 Eastern Shipping had entered into an agreement, described as an agency agreement, with Chun Kyung Shipping Co. Limited ("Chun Kyung"), a company incorporated in Korea.  Chun Kyung agreed to undertake to employ and recruit crew competent and physically and mentally fit to navigate and maintain vessels and to act as agent in the best interests of Eastern Shipping according to its instructions in regard to manning and personnel management of crews for vessels.  The agreement was a continuing one which could be terminated on two months' prior notice in writing.  On 1 April 1988 an agreement was entered into between Eastern Shipping and Hanjoo Maritime Co. Limited ("Hanjoo"), another Korean company.  The agreement provided that the agreement of 1 May 1986 was to be terminated on 30 April 1988 and that that agreement would be assigned and transferred to Hanjoo which was described as the "newly appointed Manning Agent".

     Hanjoo was not a company in any way related to Sanko.  Both the Eastern Shipping and Hanjoo agreements were in force at all times relevant to the events in issue in this case.

The Voyage Charterparty

     On 3 December 1991 the Sanko Harvest became the subject of a voyage charter pursuant to the terms of a voyage charter -party entered into between Sanko of Tokyo, "as Disponent Owners" and Sumitomo of Sydney as charterer.  It may be noted that that expression was also used in relation to Grandslam in the time charter of the vessel to Sanko.

 

     According to The Marine Encyclopaedic Dictionary, Eric Sullivan, 3rd ed. (1992), a disponent owner is a person or  company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried.  The expression was referred to by Morris J. in O/Y Wasa Steamship Company Ltd., and N.V. Stoomschip 'Hannah'v. Newspaper Pulp & Wood Export Ltd. (1949) 82 Ll.L.Rep. 936.  His Lordship described the phrase (at 954) as a "somewhat vague one".  He thought that it would cover a time charterer and added that it covered someone who can dispose of a ship without being the owner of the ship, "for the 'disponent owner' must be different from the owner."                      

     The charterparty provided that the vessel should carry a cargo of 28,000 metric tonnes of bulk fertilisers made up of
8,000 and 20,000 metric tonnes respectively of different grades of phosphate from Tampa to Esperance, Kwinana and Geraldton in Western Australia.  The charterparty was in the usual "Gencon form".  "Gencon" is a reference to a general purpose voyage charterparty published by the Baltic and International Marine Council (BIMCO); see The Marine Encyclopaedia (supra). Item 21 of the schedule, which forms the first page of the charterparty, provides for additional clauses.  There are there referred to clauses 17-49, "plus USA Clause Paramount" and certain other clauses to which it is unnecessary to refer.  All these were deemed to be incorporated in the charterparty.

     The primary obligation of Sanko was provided for in Clause 1 which obliged Sanko to load the cargo, proceed to the discharging port, and to deliver the cargo.  It is for breach of that obligation that Sanko has been sued.  But, for the purposes of the case, a more critical clause in the charterparty was clause 2 which was as follows:-

     "2.  Owners' Responsibility Clause

     Owners are to be responsible for loss of or damage to the goods or for delay in delivery of the goods only in case the loss, damage or delay has been caused by the improper or negligent stowage of the goods or by personal want of due diligence on the part of the Owners or their Manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied or by the personal act or default of the Owners or their Manager."

     It should be noted at this point that clauses 1 and 2 are printed clauses.  Parts of them were struck out.  Clause 2, as originally printed, was much longer.  There are questions to be determined concerning the meaning and effect of clause 2.  One of the submissions made by counsel for Sumitomo was based on the language used in that part of the clause which was omitted.  Counsel claimed that the omitted words threw light on the meaning that the remaining words were intended by the parties to have.

     Clause 41 of the charterparty provided, inter alia, that the Clause Paramount, amongst other clauses, was to be deemed to be incorporated "in this Charter Party and to apply to all bills of lading issued under this Charter Party."    The Clause Paramount provided:-

     "If the vessel loads in the U.S.A., the U.S.A. Clause Paramount shall be incorporated in all Bills of Lading and shall read as follows:-

     This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approval April 16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act.  If any terms of this Bill of Lading be repugnant to said Act to any extent, such terms shall be valid (sic) to that extent, but no further." 

It would appear that the word "valid" should be read as "invalid".

     There are issues between the parties concerning the relationship between clause 2 and the Clause Paramount and questions concerning whether the contract of carriage was affected by the United States Carriage of Goods by Sea Act 1936 ("the United States Act") or whether the "owners' responsibility" was governed entirely by clause 2 of the charterparty.

The United States Act

     The United States Act provides that every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States in foreign trade shall have effect subject to the provisions of the Act.  There follow the Hague Rules, i.e. those rules as enacted in the United States.  Section 1(a) provides that the term "carrier" includes the owner or the charterer who enters into a contract of carriage with a shipper.  There is then a heading which says "Contract of Carriage Under B/L - When B/L Issued Under Charter Party".  There follows s.1(b) which provides:-

     "The term 'contract of carriage' applies only to contracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same."

     Section 2 provides for the carrier's duties and rights.  It says:-

     "Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth."

     Section 3(2) provides that the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods consigned.  The section, like clause 1 of the charterparty, provides for the primary obligation of the carrier.

     Rights and immunities are provided for in s.4.  Section 4(2)(a) provides that neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship.  It is upon that provision which the plaintiffs rely to escape liability if, contrary to their primary submission, the Hague Rules are applicable.

     It is next appropriate to refer to s.3(1) which is headed, "Due Diligence to Make Seaworthy Before Sailing".  Section 3(1) is as follows:-

     "The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to-

     (a)  Make the ship seaworthy;

     (b)  Properly man, equip, and supply the ship;

     (c)  Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation."

     Section 3(1) needs to be read in conjunction with s.4(1).  It is headed, "Immunities - Unseaworthiness Without Want of Due Diligence - Burden of Proof".  Section 4(1) is as follows:-

     "Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried fit and safe for their reception, carriage, and preservation in accordance with the provisions of paragraph (1) of section 3.  Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other persons claiming exemption under this section."

     In summary, assuming that these provisions are applicable, the effect of them is that the carrier may escape the liability it would have under s.3(2) if the loss was caused by the act, neglect or default of the master or the servants of the carrier in the navigation or in the management of the ship (s.4(2)(a)).  There is no issue between the parties that the loss did result as a consequence of negligent navigation and management of the ship by the master and the second officer.  That immunity may, however, be lost if the claimant establishes that the ship was unseaworthy.  It is for the claimant to establish unseaworthiness (s.3(1)).  However, even if unseaworthiness be established, the immunity will not be lost if the carrier establishes that it exercised due diligence to make the ship seaworthy and to secure that the ship was properly manned, equipped and supplied.  The onus of establishing the exercise of due diligence, assuming unseaworthiness to have been found, is upon the carrier (s.4(1)).

     In the present case the plaintiffs say:

     (a)  The casualty was caused entirely by the act, neglect or default of the master or other servants of the plaintiffs with the consequence that they are immune from suit. 

     (b)  The vessel was not unseaworthy, or, at the least, Sumitomo has not established that it was.

     (c)  If it be found that the vessel was unseaworthy, the plaintiffs have established that Sumitomo's loss was not caused by want of due diligence on their part to make the vessel seaworthy.

     These paragraphs indicate three of the principal issues in the case.  It will emerge, in due course, that, whether the liability of the plaintiffs is governed by the charterparty only or by the charterparty and the bills of lading, the considerations to which these questions give rise are central to the outcome of the case.  It is to be observed that the way in which Sumitomo seeks to overcome the immunity provided for in s.4(2) of the Act is to rely on unseaworthiness and the claimed failure of the plaintiffs to exercise due diligence to make the ship seaworthy.  If Sumitomo is successful in this respect, s.4(2) will not apply because the real cause of the loss will be found to have been the plaintiffs' failure to exercise due diligence to make the vessel seaworthy.

The Bills of Lading

     The shipment was the subject of two bills of lading.  They were in similar terms.  The first designated the shipper as Sumitomo Corporation of America of New York and the consignee as Sumitomo of Sydney.  The vessel was the Sanko Harvest, the port of loading Tampa, Florida and the port of discharge "Australian port(s)".  The bill was signed on 8 January 1991 by a person acting on behalf of Strachan Shipping Company "as agents for the master".  In evidence is an authority signed by the master and addressed to the Strachan Shipping Company.  It says that the master of the Sanko Harvest authorises the Strachan Shipping Company "to sign on my behalf the 'Bill of Laden' (sic), covering only cargo loaded onboard my vessel on her present voyage at this Port [Tampa], provided Bill of Lading will be issued with strict conformity with Mate's receipt and without prejudice to the Charter Party, subject all terms, provisions and conditions and exceptions contained in the relevant Charter Party."  A clean receipt was given for the cargo which consisted of 21,993.165 metric tonnes of di-ammonium phosphate in bulk.

     On the face of the bill appeared the words, "THIS BILL OF LADING SUBJECT TO ALL TERMS, CONDITIONS AND EXCEPTIONS OF THE GOVERNING CHARTER PARTY AND ANY ADDENDA THERETO."  Clause (1) of the conditions of carriage endorsed on the bill of lading provided that all terms and conditions, liberties and exceptions of the charterparty were incorporated.  The carrier was in no case to be responsible for loss of or damage to cargo arising prior to loading "and" after discharging.  Clause (2) of the conditions was headed "General Paramount Clause".  It was as follows:-

     "(2).  General Paramount Clause.

     The Hague Rules contained in the international Convention  for the Unification of certain rules relating to Bills of Lading, dated Brussels the 26th August 1924 as enacted in the country of shipment shall apply to this contract.  When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply."

     The second bill of lading was in similar terms but provided for the shipment of a cargo of 8,798.385 metric tonnes of granular triple superphosphate.

     It should be observed at this point that the more usual course of there being a consignor and a consignee of the cargo was not followed.  Effectively Sumitomo was both the consignor and the consignee.  There is not in this case, therefore, any assignment or transfer of the bills of lading to a consignee.  I shall deal with the significance of this later on.

The Crew of the Vessel - Their Qualifications and Appointments

     The log of the vessel shows that it commenced loading at Tampa on 8 January 1991.  It sailed later that day.  The log shows that the voyage upon which it then embarked was voyage No. 39 from Tampa, USA, to Esperance, Australia.  The crew of the vessel was entirely Korean.  Importantly for the purposes of this case, its master and other deck officers were Koreans who had been trained in Korean maritime training institutions.  There are three such institutions, namely, the Korea Maritime University (KMU), the National Mopko Maritime Junior University (MOPKO) and the Korea Marine Training and Research Institute (KMTRI).  There are also three maritime high schools.  KMU is situated in Pusan.  MOPKO is in south-west Korea.  It is a marine academy which provides a three year course for all shipboard departments.  Both KMU and MOPKO have training ships.  KMTRI is also situated in Pusan.  It provides instruction in all International Maritime Organisation (IMO) and International Convention on Standards of Training, Certificate and Watchkeeping for Seafarers, 1978 (STCW) courses.

     The master was Captain Kim In Hyeon ("Captain Kim") who is not to be confused with Mr Kim Hyeon Seon ("Mr Kim") who was a former second officer on board the vessel.  He left it for another vessel before voyage No. 39.  Both the Messrs. Kim gave evidence.  The second officer for the voyage was Mr Gim Dong Uk ("Mr Gim") and the third officer Mr Han Song Kuk ("Mr Han").  The master and the second and third officers were called as witnesses.  There was a chief officer on board, Mr Gim Min Jong, but he was not called.  So far as I can tell from the evidence, all these officers were employees of Eastern Shipping.  They were not employees of Grandslam, which apparently had no employees.  I say this, notwithstanding that there appears in some places in the evidence a suggestion that the officers were in fact employees of Grandslam.  I do not think it material to make a finding about the matter.  All I will say is that I think the preponderance of evidence establishes that the officers were employees of Eastern Shipping.  If that be wrong, they must have been employees of Grandslam.  It may be noted that Captain Kim said that he was employed by Eastern Shipping.

     The appointments of the master and the second and third officers were recommended to Eastern Shipping by Hanjoo.  Employees of both Eastern Shipping and Hanjoo gave evidence of how the appointments came to be made.  The Eastern Shipping witnesses were Mr Hiromi Kobayashi, at the relevant time a director of Eastern Shipping and general manager of its ship management department, Mr Yasuhira Sensui, the manager of Eastern Shipping's marine section which is within the ship management department, Mr Kenko Ohtsuka, at the relevant time a superintendent in the marine section, and Mr Masao Yamamoto, at the relevant time assistant manager of Eastern Shipping's marine personnel section.

     The employees of Hanjoo who gave evidence were Captain Yeong Seob Yun ("Captain Yun"), Hanjoo's marine director, and Mr Sung Gan Lee.  As marine director, Captain Yun had responsibility for recommending the appointment of officers and crew for many of the ships in the Eastern Shipping fleet.  Mr Lee was his assistant manager.  Hanjoo was not the only manning agency used by Eastern Shipping.  Another agency was used as well. 

     Evidence was given about the working relationship between Sanko and Grandslam.  The witnesses who gave this evidence were Mr Totoki, who, as mentioned, is a director of both Sanko and Grandslam and the general manager of Sanko's co-ordination department, and Mr Takeo Takada, who is the deputy general manager of the dry cargo operation department of Sanko.

The Witnesses - a General Comment

     It is appropriate at this point to make a general comment about these various witnesses.  They comprise four deck officers (three on board at the time of the grounding), two Hanjoo executives who were Korean, and six Eastern Shipping or Sanko executives who were Japanese.  These 12 witnesses all gave evidence through interpreters.  Despite this it was clear from the outset that some of the witnesses, although by no means all, were able to speak English, and understand spoken and written English.  On one or two occasions - Captain Kim is an example - the witness was tried in English, but it became clear that this was not a practical course.  The witness box is a difficult place and it seemed to me that a number of questions were being misunderstood.  In the interests of accuracy and in fairness to the witness, the attempt to take evidence in English was given up and interpreters were used.

     The credit, in some cases only in the sense of reliability, of all these witnesses is in question to a greater or lesser extent.  There are serious questions about the honesty of a number of them, particularly the deck officers on board the vessel at the time of the grounding.  Except in relation to one witness, Mr Gim, the second officer, whose evidence I would not accept unless it were supported by evidence from other witnesses whose evidence was acceptable, or by contemporary documents or the surrounding circumstances, I have not found it an easy task to make up my mind about the credibility and reliability of the various witnesses.  The fact that evidence was given through interpreters made the task of assessment more difficult than it might have been had the evidence been given in English.  Furthermore, it emerged, as indeed one would expect that it would, that there were considerations to be weighed in the balance arising because of cultural (using that word very broadly) differences which there obviously are between Japan and Australia, Korea and Australia and indeed, Japan and Korea. 

     In passing it may be mentioned that Japanese do not understand Korean either spoken or written and Koreans do not understand Japanese either spoken or written, that is, unless the other language had been learnt.  That is subject to some instances where Chinese characters, which are used in both languages, have a common meaning in both countries.  It is apparent that the Japanese executives of Eastern Shipping communicate with Korean executives of Hanjoo and Korean crew in English. 

     In reaching my conclusions about the credibility of witnesses, I have endeavoured to make due allowance for all these matters, but I do not pretend that the exercise has been a simple one.

The Duties of the Navigation Officer

     Conventionally the second officer of a vessel is its navigation officer.  Mr Gim undertook the duties of navigation officer on the vessel on the voyage in question.  As navigation officer he had a number of important tasks each of which is relevant to the circumstances of this case.  It was his responsibility to select the course which the vessel would take from Tampa to Esperance.  The responsibility was not his alone.  The ultimate responsibility was that of the master but it was for Mr Gim initially to plot the suggested course the vessel would take and seek the master's approval of it.  He chose a course which took the vessel through the Panama Canal and, by what is described as a great circle route, through Cook Strait which separates the North and South Islands of New Zealand.  From there the vessel went to Banks Strait between Clarke Island (which is south of Flinders and Cape Barren Islands) and Tasmania, through Bass Strait, and across the Great Australian Bight until it reached the proximity of Esperance.  The course which Mr Gim recommended the vessel should take was adopted by the master.

     Another duty which Mr Gim had was to lay off on the applicable charts the detailed course which the vessel would follow throughout its voyage.  There is a question whether he did this for the whole of the voyage before the vessel left Tampa.  If he did not, there is a question whether proper practice required Mr Gim to lay off in detail the course for the entirety of the voyage before the vessel departed Tampa.  Such an exercise would have involved him in selecting from one or more chart catalogues each of the applicable charts, getting out those charts and plotting on them the course which the vessel would follow.  The exercise, if it is done properly, would involve the use of charts for areas not necessarily covered by the course selected.  Proper practice requires that charts be available for adjacent coasts whether of islands or mainland.  The reason for this is that, for a variety of reasons, vessels may be required to divert, for instance, to take injured or sick crewmen closer to assistance, to assist other vessels which may need help or to avoid adverse weather.  Courses are laid off in pencil so that old courses may be removed and the charts reused.

     An important duty which the second officer had was to make small corrections to charts pursuant to notices to mariners issued from time to time.  Chart corrections, or rather, the lack of them, constitute one of the major areas of contention in this case.  I shall say more about chart corrections a little later.

     A fourth duty which the second officer had was to take his turn as a watchkeeping officer.  In accordance with convention he had the two watches from midnight to 4.00 a.m. and noon to 4.00 p.m. each day.  Watchkeeping officers were not usually assisted by the presence of a lookout.  It appears that the practice of there being on the bridge, especially at night, both an officer of the watch and a lookout no longer exists.  If a second officer is behind with record keeping, such as the making of chart corrections, he may be assisted by a lookout during his watch in order to free him to do this work.  No lookout was on duty on the night of the grounding.

The Voyage and the Applicable Charts

     The log shows that the vessel travelled from Tampa through the Gulf of Mexico and arrived at Cristobal, Panama, on the northern (Caribbean Sea) side of the Panama Canal.  On 12 January 1991 the vessel took on bunkers.  The vessel travelled through the Panama Canal during the late afternoon and night of 13 January and cleared the Canal shortly before midnight.  The vessel began its long voyage across the Pacific on 14 January 1991.  So far as one can tell from the evidence and the log, the voyage proceeded uneventfully until the vessel approached Esperance.

     The port of Esperance is on the south coast of Western Australia.  It has substantial port facilities for medium size bulk carriers and tankers.  According to the Harbour Master, Captain Harrod, about 25 such vessels come to the port each year.  To the south of Esperance lies the Recherche Archipelago which is a chain of islands and reefs.  To the south-west of Esperance is a channel whereby the port can be approached from the west.  The channel is known as the Causeway Channel.  To the north of the Causeway Channel is another channel, the West Channel, which I understand is not used by large vessels.

     Neither Captain Kim nor any of his officers had been to Esperance before.  But Sanko vessels had visited the port on earlier occasions.

     In the course of the crossing of the Great Australian Bight and on the approaches to Esperance, the ship used three charts.  These were British Admiralty Charts, BA4709 and BA3189, and Australian Chart AUS119.  There is a question whether it used, or should have used, Chart BA1059.  On board was the Australian Pilot published by the British Admiralty.  The Pilot and the charts are, of course, all in the English language.  The log and other records on board the vessel were written up in English.  English is the international language of the sea.  There is a question to be considered concerning the competency of each of the deck officers in English.

Chart Corrections

     It is necessary to refer in some detail to what is shown on the charts and what is said in the Pilot.  But before that is done, reference needs to be made in more detail to Mr Gim's important duty of making small corrections to charts.  Because the vessel was a tramp, it had a large library of charts.  The reason for this was that its crew could never be sure to what part of the world the vessel would be required to go on its voyages.  Small corrections are necessary because of changes, some minor and some more significant, which are constantly being made to charts around the world.  These small corrections are notified in weekly Notices to Mariners (written in the English language) which are published by the Hydrographer of the Royal Navy.  They are received by vessels all over the world on a regular basis and require second officers constantly to make amendments to charts which are carried by their ships.

     British Admiralty and Australian charts were not the only charts the vessel carried.  It had some Japanese and United States charts.  The latter were prepared by the Defence Mapping Authority - in the evidence referred to as DMA.  The United States charts were principally for United States ports and adjacent coastal waters.

     There is a difference of opinion amongst the expert witnesses called in the case concerning the question whether proper practice requires all charts on a tramp vessel such as the Sanko Harvest to be kept up to date or whether it is sufficient if the charts needed for the next voyage are corrected.  Plainly it is desirable that all charts be kept corrected up to date, but the extent of that task on a vessel which carries a library of over 2,000 charts is substantial bearing in mind that it is apparently the practice for the second officer to do all or most of the corrections and also be available for his other duties.  The task is a tedious one and, although some officers - Captain Beetham, who gave evidence for Sumitomo, is an example - seemed to think the task an enjoyable one, there is other evidence which described the task as not only tedious but "a drudge".  The task is in a sense a repetitive one.  It requires a high degree of concentration.  Accuracy and neatness are essential.  The proper discharge of this duty by a second officer may be critical for the safety of his ship and its crew.  Because the task is done by a man and not a machine it cannot be done safely for a period of much more than two hours at a time.  In those circumstances it would not be surprising if, the human mind being what it is, mistakes were made from time to time. 
Yet there appears to be very little checking of the second officer's work by other officers.

The Australian Pilot

     On board the vessel was volume 1 of the sixth edition of the Australian Pilot, i.e. sailing directions for the relevant part of the Australian coast.  It covered the south coast of Australia from Cape Leeuwin to Green Point.  The sixth edition was first published in 1962.  Later "editions" of the sixth edition were published in 1966, 1971, 1973, 1979 and 1989.  The edition which the ship had was that published in 1973 but it had been corrected in accordance with supplements which had been issued from time to time.  Each new supplement is cumulative; it replaces all earlier supplements because it contains the information published in these as well as new material.  The latest supplement which was available prior to the grounding was the tenth.  It was published in 1988.  There is a question whether the tenth supplement was on board.     One of the records held by Sanko, it having been sent to it from the ship before the grounding occurred, was an inventory of charts and other publications, the "Chart Pub. Inventry [sic]" as it was called.  Although neither the Pilot nor any supplement thereto was saved from the vessel, it appears from the inventory that the 1973 edition of the Pilot and the eighth supplement thereto were on board.  There is oral evidence that the tenth supplement was also on board.  That evidence is challenged by counsel for Sumitomo.  I do not accept the oral evidence to the effect that the tenth supplement was on the vessel.  Accordingly, I should approach the matter on the basis that the ship was equipped with the eighth, but no later, supplement.

     A copy of the Pilot is in evidence.  It is not that which was on board.  It has been corrected in red ink and contains corrections and additions to be found in the tenth supplement.

     Chapter 3 of the Pilot, i.e. the copy in evidence, is entitled "Archipelago of the Recherche".  It refers (p.40) to Chart BA1059 and says that the Archipelago of the Recherche consists of a vast number of islands and reefs.  Its extent is indicated including the fact that in places it extends to a distance of 30 to 40 miles offshore.  The Pilot says that, unless a vessel were proceeding to Esperance Bay, as the Sanko Harvest was, the Archipelago should be avoided at all times on account of the haze frequently found amongst the islands.  Reference is then made to Chart AUS119 and to a number of features including the Causeway and the Causeway Channel.  The Causeway is said to consist of rocks and submerged reefs and to extend north-easterly from a feature known as Giant Rocks which are two rocks 13 metres and 9 metres high respectively lying 8½ miles south-south-east of Figure of Eight Island which is also described.  The Pilot says that Giant Rocks should be given a wide berth by vessels approaching from the south.

     The Causeway Channel is said to be deep and free from danger.  Its position is indicated.  One of its boundaries, as one would expect from its name, is the Causeway.  In a further reference to Chart BA1059 and also to Chart AUS119 the Pilot gives directions for the navigation of the Causeway Channel.

     The Pilot then proceeds to give detailed information about Esperance Bay and about anchorages.

     One of the notations added to the Pilot is as follows:

     "          AREA DANGEROUS TO NAVIGATION

     The area of the Recherche Archipelago is inadequately surveyed.  Vessels without local knowledge should not traverse the area and passage should not be attempted at night."

This notation was added as a consequence of a notification which appeared for the first time in the ninth supplement.  The notation did not appear in the eighth or any earlier supplement.

     Chapter 3 of the Pilot refers (p.47 et seq) to Chart BA3189.  Under a heading "Directions from East through Archipelago of the Recherche to Esperance" (p.48), it says that passage through the Archipelago should not be attempted late in the afternoon or at night and that if a vessel is unable to reach Esperance in daylight, it should anchor in one of two places specified.  Detail is then given of the easterly approach.  It was not the approach adopted by the Sanko Harvest on the night in question.  The material about the easterly approach in the Pilot was in the 1973 edition and not the subject of addition by any of the supplements to which I have referred.

The Charts

     Chart BA4709 is a general chart showing the southern coast of the mainland of Australia from King Island in Bass Strait in the east to Cape Leeuwin in the west.  Charts BA3189 and AUS119 would normally have been used by a vessel approaching Esperance from the direction in which the Sanko Harvest travelled.  As mentioned, there is a question whether Chart BA1059 should also have been used.  AUS119 is a large scale chart for the port of Esperance and its approaches.  It is referred to on pp.41-42 of the Pilot.

     On 21 May 1988 weekly edition number 20 of the British Admiralty Notices to Mariners issued.  It was on board the vessel as were, of course, the four charts to which I have referred.  The charts and that edition of the Admiralty Notices to Mariners were saved from the vessel before it sank.  Amongst the notices included in the relevant edition of the Notices to Mariners was Notice No. AUS219 (not to be confused with chart AUS119).  It required the making of small corrections to charts BA1059, BA3189 and AUS119.  It is common ground that none of the corrections was made to BA3189 or BA1059.  Four of the corrections were made to AUS119 but the fifth was not.  There is a question about when the corrections made to AUS119 were noted on it.  I am asked to infer that they were not made before the grounding but were made after it took place.  The fifth correction was of vital importance.  It instructed those making corrections to insert in two places on the charts in question underwater rocks with the legend "Breaks" in positions which were specified.

     It was on one of these groups of underwater rocks that the Sanko Harvest grounded.  If they had been marked on the chart as they should have been, it is probable that the vessel would not have grounded at least in that place.  I shall come to the submissions made by counsel for Sumitomo in support of the proposition that, prior to the grounding, no corrections had been made to AUS119 any more than they had to BA1059 or BA3189.  As mentioned, these charts had not been corrected at all.  It is Sumitomo's case that the reason that the underwater rocks upon which the vessel grounded were not marked on the chart was that the second officer, Mr Gim, when making the corrections to the chart after the grounding, which he should have made beforehand, could not bring himself to plot the rocks underneath the ship, the position of the grounding being marked on it.  If he had done so, the chart would have revealed that he had laid off a course directly to the rocks which the correction notice AUS219 required to be noted on the chart.

     It is next necessary to refer in some detail to what is shown on charts BA1059, BA3189 and AUS119.  BA1059 is a chart for the south coast of Australia from Doubtful Island Bay to the head of the Great Australian Bight.  It is in two sections.  The first of these sections is from Doubtful Island Bay to Point Dover and includes both the Archipelago of the Recherche and Esperance Bay.  The chart is said to be prepared from surveys made by two officers of the Royal Navy and Colonial Government officers in the years 1879 and 1880.  The adjacent islands and soundings are said to be "chiefly on the authority of Matthew Flinders, Commander of HMS 'Investigator' 1802".  Further surveys of part of the area between Esperance Bay and a reef known as Pollock Reef were from surveys by a Royal Naval survey ship, the "Penguin", between 1897 and 1901.

     Immediately south of Esperance Bay and below the Causeway is an area marked "Foul Ground".  Below that is the legend, "Dangerous to Navigation".  Further to the west of those words the chart contains the added legend "Dangerous to Navigation (See Caution)".  That was placed correctly pursuant to an earlier Notice to mariners issued in 1986 but that notice was corrected by a later one still which required the removal of the words "Dangerous to Navigation" from that position and the original legend "Dangerous to Navigation" to be highlighted in magenta.  That correction was not made to the chart.  Much further to the east on the other side of the Archipelago were also written the words "Dangerous to Navigation (See Caution)".  These are correctly placed and are written in red.  Relevant to these two cautions is a printed sticker that has been placed on the chart.  It is in the following terms:

     "             DANGEROUS TO NAVIGATION

     The area of the Recherche Archipelago is inadequately surveyed.  Vessels without local knowledge should not traverse the area and passage should not be attempted at night."

     It will be observed that that warning is in the same terms as that which appears in the Pilot as a consequence of the addition made to it by the ninth supplement which issued in 1986.

     The two markings on the chart which refer to the area being dangerous to navigation refer back to this sticker which, placed as it is on the extreme left hand side of the chart, is in the wrong place.  It should have been in the area of the title of the chart.

     Chart BA1059 was not used for the purpose of laying off the course of the vessel going into Esperance.  It was used for the purpose of laying off the course out of Esperance the vessel was intended to take when it left for Kwinana.  This must have been done prior to the vessel grounding.  It seems unlikely that it would have been done afterwards.  This means that Mr Gim had had BA1059 about the time he laid off the course to go into Esperance.  It seems difficult to think that the warnings on it were not noticed by him at or about the time he laid off the course of the vessel on the other charts.

     The charts used for the entry to Esperance were BA3189 and AUS119.  Mr Gim's courses for the voyage into Esperance are shown on them.

     Chart BA3189 is a chart larger in scale than BA1059 and shows the south coast of Australia from Cape Le Grand, to the south of which is Hastings Island, to Cape Pasley.  BA3189 shows that the vessel intended to (and probably did) approach Esperance first of all on a course of 289 degrees true.  It made landfall whilst on that course at 2330 hours on 13 February 1991.  Its then position was plotted on chart BA3189 by the third officer, Mr Han, with the aid of radar.  Subsequently it altered course for a short distance to 328 degrees and then travelled due north until it reached a point south-south-east of Mondrain Island.  It then changed course to 281 degrees, a course upon which it was when it became possible to use the much larger scale chart AUS119 for the final approach into Esperance.  AUS119 extends from Butty Head and Figure of Eight Island in the west to Cape Le Grand and Hastings Island in the east.  The course laid off and actually taken by the vessel involved a change of course from 281 degrees to 329 degrees.  The change of course occurred south of Hastings Island.  It took the vessel to a point almost equidistant between Hastings Island and Hood Island to the south-west.  That is where it grounded.  If it had not done so, its intended courses from about that point were 286 degrees, 297 degrees and 358 degrees respectively to the proximity of the port.

     Chart BA3189 shows few soundings south of 34 degrees 10 minutes.  Across the whole of the bottom quarter of the chart are written the words, "Portions not sounded should not be traversed".  The words are printed in black type that is not particularly large.  Nevertheless, they would be apparent to a reasonably competent navigator.  The course of the vessel from the time it came on to BA3189 at longitude 123 degrees east, latitude 34 degrees 34 minutes south was substantially through unsounded waters.  Mr Gim said that he thought he could safely traverse the area because there were no obstructions.  He took the fact that there were no soundings as an indication that his course would take him over deep water.  The fact, however, is that the course he laid off took the vessel through the "o" of the second "not" in the instruction, "Portions not sounded should not be traversed".

     The heading to the chart is, "Cape Le Grand to Cape Pasley with Part of the Archipelago of the Recherche".  It says that the area was surveyed by Royal Naval officers on the Penguin in 1900 to 1901.  Affixed to the chart near its heading is a red sticker in similar terms to that on chart 1059 and the note which first appeared in the ninth edition of the supplement to the Pilot.  Correctly in place marked in red are the words "Dangerous to Navigation (See Caution)".  The reference to the caution is a reference to the red sticker.  The words are placed close to Hastings Island.

     Although chart BA1059 is on a somewhat smaller scale than chart BA3189, chart BA1059 is useful because it gives an overall view of the approach to Esperance.  Chart BA3189 does not.  The two markings "Dangerous to Navigation" on BA1059 are placed on either side of the Archipelago.  Neither is proximate to Hastings Island and the printed words (part of the original chart), "Portions not sounded should not be traversed", earlier referred to together with the clear marking of the Causeway Channel referred to in the Pilot, point the way which should be followed.  As it was, the course selected by Mr Gim and approved by Captain Kim took the vessel into the area of the Archipelago close to both Mondrain Island and Hastings Island which are marked on BA3189 and Hood Island.  All three islands appear on BA1059.

     Although it may be correct to conclude that the only charts used were BA3189 and AUS119 to which I have yet to come, it is clear, as earlier mentioned, that chart BA1059 was used at the relevant time because marked on it is the course which had been laid off for the vessel's departure from Esperance.  The course selected was 250 degrees and would have taken the vessel along the southerly edge of the Causeway Channel.  Why the course is so close to the edge of the Channel and not through the middle of it is something about which one can only speculate.  There is a suggestion that the reason was that such a course would keep the vessel 20 miles offshore.  But that hardly seems a sufficient reason if the selected course took the vessel to the vicinity of the Causeway rather than kept it well within the Channel.  Furthermore, there is a marking on chart BA1059 of the ship's position when it was south-east of Mondrain Island before it began its northerly track towards that Island.  It must follow that both Mr Gim and Captain Kim had made some use of chart BA1059 and must have been aware of its warnings and cautions.

     Chart AUS119 is entitled "Approaches to Esperance".  It is said to be on the authority of Admiralty, i.e. British Admiralty, surveys of 1897 and 1900.  The chart is comparatively large in scale and has three insets which are on larger scales still.  One of these shows the actual port of Esperance.  It is not relevant for present purposes.  The main part of the chart extends from Butty Head in the west to Cape Le Grand in the east.  At the top of the chart is Esperance Bay and Esperance itself.  Towards the bottom of the chart appear the words "Archipelago of the Recherche" and under these the words "Dangerous to Navigation" written in black print which is comparatively small.  The Causeway Channel and the Causeway are both shown.  There is a similar red sticker to that which appears on the other charts.  It is headed, "Dangerous to Navigation" and is placed near the heading of the chart.  Written  in red just south of Ram Island and to the north-east of Hastings Island are the words "Dangerous to Navigation (See Caution)".  As in the other cases, the reference to the Caution is a reference to the red sticker.

     The course of the vessel has been laid off on the chart.  It commences by picking up the course laid off on BA3189 of 281 degrees.  There is a change of course south of Hastings Island to 329 degrees which led the vessel to the reef on which it grounded.  As mentioned, the point of grounding was equidistant from Hastings Island and Hood Island.

     There is no contest between the parties that the vessel took the course which I have described nor is there any contest that the course was plotted on charts BA3189 and AUS119 both of which were on board.  It is also common ground that on board was the Australian Pilot and at least the eighth supplement to the 1973 edition of the sixth edition of it.

     Objectively speaking therefore, those on the vessel had clear warning from the Pilot and the charts they were using that the area was dangerous and one which the ship should not traverse.  Much was made by counsel for the plaintiffs of the fact that the Causeway and the Causeway Channel are themselves part of the Archipelago and thus literally within the warnings referred to.  But the Pilot makes it clear that the Causeway Channel is the way a vessel is to come in and a fair reading of all that is in the Pilot and on the charts would not suggest to a reasonable reader that the Causeway Channel was not to be used; otherwise Esperance could not be entered from any direction.

The Circumstances of the Grounding

     In the second paragraph of these reasons I said that the loss of the vessel was caused by grossly negligent conduct on the part of its crew, especially the master and second officer.  What I have said about the way the grounding occurred demonstrates the truth of this statement.

     For the purpose of dealing with at least one of the submissions made on behalf of the defendant, it is necessary to emphasise the heinousness of the shocking piece of navigation which led the vessel to the rock upon which it eventually foundered.  It is no exaggeration to say that the master and second officer of the vessel made a conscious decision to make a frontal assault on the Archipelago of the Recherche.  This they did contrary to clear and explicit warnings about the dangers of such a course for any vessel let alone a vessel of moderately deep draft of the size of the Sanko Harvest especially when fully loaded.

     Not content with their decision to endeavour to thread their way through such a treacherous area, they decided that they would do it at night, itself something they were explicitly warned against doing by the charts and the Australian Pilot which they had available to them.  They navigated with the aid of the radar alone.  For most of the period the only eyes the ship had were those of the officer of the watch, Mr Gim, who had plotted the course.  About 20 minutes or so before the grounding, Captain Kim came on to the bridge.  In navigating at night, the pair denied themselves the opportunity to observe the condition of the sea.  A daylight passage, although still extremely dangerous for a vessel of this size, may have enabled them to see broken water or patches of quiet sea, i.e. sea less broken than the general conditions - force 3 or 4 - which prevailed would have yielded.  Either would have indicated rocks at or near the surface and thus danger.  Radar would not have detected the presence of these any more than would the human eye at night.

     Whether or not any supplements to the 1973 edition of the Australian Pilot later than the eighth was on board, the charts and the pilot the ship undoubtedly had contained enough information to alert a novice to the fact that the chosen course was perilous enough in the day time.  At night it was folly bordering on madness.  The charts plainly indicated that the area was dangerous to navigation and also that portions not sounded should not be traversed whether at night or otherwise.

     There was a clearly marked channel, the Causeway Channel. It was well marked and it was safe by night as well as by day. The problem about it from Captain Kim's point of view was that it involved an additional 60 miles, or possibly 80 miles sailing.  In terms of time an additional period of at least 4 hours was required.  Captain Kim had ordered stevedores for 6 a.m. on 14 February.  He was committed to them.  If he had taken the Causeway Channel, he would not have arrived in Esperance until well into their shift.  If this had occurred, he may have incurred, or may have thought he would have incurred, the displeasure of his employers.  This was put to him in cross-examination.  He denied that this was the reason why he took the serious risk he did.  Having reflected on the matter, I am not prepared to find that the reason for not taking the Causeway Channel was to do with the lateness of the vessel for the stevedores.  It may have been, but there may have been other reasons some perhaps stemming from Captain Kim's personality.

     It is not necessary, for the purpose of deciding this case, to reach a conclusion on this matter.  What matters is the fact that Captain Kim did take his ship into dangerous waters.  But explanations other than the need to be on time for the stevedores may stem from a degree of rashness in Captain Kim's make up.  Earlier I mentioned that Captain Kim and Mr Gim chose a course, which they described as a great circle route, which took the vessel through Cook Strait between the North and South Islands of New Zealand and then through Banks Strait, a comparatively narrow passage between islands to the south of Flinders Island and the north coast of Tasmania.  There was absolutely no warrant for either of these courses.

     There is evidence, which I accept, which establishes that a great circle route from the eastern side of the Panama Canal to Esperance would, if properly charted, take the vessel south of both New Zealand and Tasmania.  That evidence is consistent with evidence which establishes that the outgoing second officer of the Sanko Harvest, who left the ship in Tampa, had already provisionally plotted a course for the vessel which would have taken it south of New Zealand and Tasmania.  Furthermore, the idea of passing through Cook Strait - I am not so sure about Banks Strait - appears to have come from Captain Kim rather than from Mr Gim.  What follows is entirely speculative, but there is something to be said for the view that Captain Kim may be one of those mariners who likes to demonstrate to his employers and his peers that he has the skill and the dash to take a vessel to the edge of danger and bring it safely through.

     I mention these matters only to show that the most obvious explanation for the choice of the route through the Archipelago may not be the correct one.  As I say, it is not necessary to reach a conclusion why such an extraordinary course was selected.

     Another matter I should mention is evidence given by Captain Kim that he was extremely anxious about sailing through the Archipelago.  He said that it was a matter upon which he reflected many times.  He claims to have discussed it with Mr Gim and said in effect that he, Mr Gim, reassured him and persuaded him that it was safe.  This is an odd thing for a master to say.  Captain Kim was the master.  The ultimate choice of route and the responsibility for it were his.  I do not accept this evidence of his concern.  I think he was quite happy with the route selected.  Support for my conclusion in this regard is to be found in his instruction that he was to be called when the vessel had reached a point west of Mondrain Island and had almost reached the end of its traverse of so much of the course of the vessel which was 281 degrees, i.e. not long before the vessel turned to its final and more northerly course of 329 degrees.  By that time Mr Gim was navigating on Chart AUS119.  He had finished with BA3189.  Thus the vessel had already negotiated much of the area that was marked with the injunction, "Portions not sounded should not be traversed".

     Captain Kim's coming to the bridge after the ship had sailed so far into dangerous waters negates his claimed concern about the passage he had selected on the advice of his second officer, who, with whatever assistance the radar gave him, was the only eyes and ears of the ship until 20 minutes before the grounding.  All other members of the crew were below and presumably asleep.  Captain Kim would not have noticed anything untoward when he came on to the bridge shortly before 3 a.m.  The vessel was on course; all was quiet as she made her way to the uncharted rocks.

Some General Comments on the Officers and their Evidence

     It is necessary to say something more of the competency of the officers of the Sanko Harvest.  Although Captain Kim and Mr Gim were the principal players, Mr Gim being the navigating officer, the ship carried the customary four deck officers, the master and the first, second and third officers.  Watches were kept by the three officers.  The third officer, Mr Han, was called.  The chief officer, Mr Gim Min Jong was not.  Each of the four officers was aware of the charts and the plots of the courses on them.  Each knew as well as the master and Mr Gim the route through which the vessel would pass in order to reach Esperance.  There is no suggestion in the evidence that any officer expressed the slightest concern about it.  Professor Moreby, an expert witness called on behalf of Sumitomo, used the expression "collective competence" in relation to some aspects of the matters with which he dealt.  In relation to this group of deck officers, I would invert the expression and say that they together, by their conduct on the night of the grounding and before, demonstrated collective incompetence.  Unquestionably a cause of the grounding was that incompetence.

     Counsel for the plaintiffs attempted to overcome the difficult position which confronted them by attributing the cause of the grounding to one or more casual acts of negligence on the part of Captain Kim and Mr Gim.  The fundamental error committed by Mr Gim was, so counsel said, his failure to correct the relevant charts to show the rocks noted in para 5 of the Notice to Mariners No. 219.  If these had been marked, the course of the vessel would not have taken it over them.  It would have been plotted to avoid them.  The ship, in counsel's submission, was properly equipped with a complete set of charts, up to date copies of Notices to Mariners and the Australian Pilot.  The second officer knew that the charts for the voyage had to be corrected in accordance with the Notices to Mariners.  Substantially, so counsel said, this task was done.  His only mistake, grave though it was, was to omit noting the position of the critical rocks.  That was the immediate cause of the disaster.  All was thus due to Mr Gim's failure to discharge his duty to correct the charts.

     Against the possibility that the Court would take a broader view of the matter and say that the real cause was the decision to navigate through the waters of the Archipelago, counsel said that the choice of the route was for the master on the advice of the second officer.  Again, no more than casual acts of negligence were involved.  Unseaworthiness was not established, and on the assumption that the United States Act applied, the plaintiffs were immune from liability by reason of the operation of s.4(2)(a) of that Act.

     There are a number of things to be said about these submissions.  Chapter 3 of the Pilot to which I referred earlier describes the Archipelago of the Recherche as consisting of a vast number of islands and reefs extending from Figure of Eight Island to the north rock of a feature known as Eastern Group some 123 miles to the east.  It extends, as I have mentioned, for a distance of 30 to 40 miles offshore in some places.  Furthermore the area is dangerous to navigation.  It is inadequately surveyed.  Vessels without local knowledge should not traverse the area and passage should not be attempted at night.  The Pilot, as I have earlier mentioned, indicates the way in which one may safely reach Esperance.  The most usual way is by the Causeway Channel.  When one adds into the equation the injunctions on the charts to which I have made reference, particularly those which say the area is dangerous to navigation and that portions of the archipelago had not been sounded and should not be traversed, there is a clear indication that, even with an up to date set of charts and an up to date Pilot, the area will remain dangerous because it has not been properly surveyed.  The very fact that the rocks on which the vessel foundered were not noted anywhere until 1988 illustrates the problem.  There may well be - there probably are - many other rocks close to the surface which have not been marked or even found.  It must be emphasised that this case is not about a small vessel such as a fishing trawler.  It is about a moderately large bulk carrier with a substantial draft.  Depending on conditions of tide and wind, rocks 20 feet below the surface or even deeper could present a problem for it.  That is what the warnings are telling competent mariners.

     When Captain Kim was pressed about this matter he took refuge in saying that he relied on his local knowledge.  When asked to explain this, he said that he had local knowledge because he had studied the Pilot and the charts.  The objective evidence demonstrates that any study of the charts undertaken by him was gravely inadequate.  But that is by the way.  In the context in which it appears, the expression "local knowledge" requires an actual knowledge of the area.  It does not refer to a person who has never visited the area no matter how intensive a study of charts and other documents he has made.

     I am prepared to accept that Captain Kim, because of his language difficulties, may not have understood the position.  But that renders him incompetent in an objective sense.  The fact that he may not have a sufficient knowledge of English, particularly navigational English, may not be his fault but his ignorance is an indication that he was not competent to navigate the vessel because his understanding of the English language was insufficient for this purpose.

     In passing, I should say that I agree with counsel for the plaintiffs that it may be quite possible for a large vessel to follow a course such as was selected by Captain Kim and Mr Gim for the Sanko Harvest and reach Esperance without incident.  But whether one does or not, is a matter of sheer chance.  Perhaps one will achieve one's object nine times out of ten.  But the risk is there and it is significant.  Proper practice and good seamanship required the risk not be undertaken.

Were the Charts Corrected?

     As I said at the outset, there is a question whether the charts had been corrected at all.  The only charts saved from the vessel were those to which I have referred.  The others went to the bottom of the sea.  Just why no more were saved is a matter of some puzzlement to me.  It was not as if the vessel went down suddenly.  It was on the reef for three or four days before it sank.  An examination of charts for other areas of the voyage would have disclosed whether or not the practice of correcting charts was followed.  That is a substantial issue in the case. 

     That matter aside, having considered the evidence relevant to the question whether Mr Gim did correct the charts, I have reached the conclusion that I should reject it.  I have already made it clear that Mr Gim made a most unfavourable impression upon me.  I said earlier, and I repeat it, that I would not accept any evidence given by him unless it were corroborated either by other evidence in which I had confidence or by contemporary documents.  The contemporary documents, in my opinion, tend to establish Mr Gim did not correct Chart AUS119 until after the grounding.  He had ample opportunity to do this.  To the extent that Captain Kim's and Mr Han's evidence is contrary to that being the case I reject it also.  That finding means that Captain Kim was well aware that he was sailing into very dangerous waters on uncorrected charts.

     The only chart which was claimed to have been corrected prior to the grounding was Chart AUS119.  Notice to Mariners AUS219 required corrections to be made to three charts, namely, AUS119, BA3189 and BA1059.  The corrections noting the underwater rocks were required to be made on BA3189 as well as AUS119 and a correction to note one of the groups of underwater rocks (namely that referred to in para. 5a of the notice) was required to be noted on BA1059 as well.  The ship's copies of each of those charts, as I have mentioned, are all in evidence.  No corrections at all were made to BA3189 or BA1059.  The disarming explanation given for this failure was that it was unnecessary to make them on the other charts because AUS119 would be the chart being used for the entry into Esperance and, as I understand it, for the departure from Esperance.  That was said to be the case despite the fact that the course to be followed after the vessel's intended departure from Esperance was plotted on BA1059.  It is true that the corrections required by the notice to mariners to note the rocks on which the vessel grounded were not in the area of the Causeway Channel.  They were thus not of relevance to the vessel's departure.  But how could any competent officer be sure of this unless he undertook the task of correcting the charts?  He could not have known until he had made the corrections and then plotted the courses whether the corrections were in the area of the plot or not.

     The importance of making corrections to charts in accordance with notices to mariners cannot be overstated.  This is a matter mentioned by a number of the experts called in the case.  It is such an obvious thing, it scarcely requires expert evidence to support it.  There needs to be a system in place which will ensure, so far as possible, that charts are corrected.  If they are not, the vessel will be sailing on outdated charts.  Disaster could well be the consequence.

     An indirect advantage of correcting three charts instead of one is that, because of the possibility of error, that possibility will be minimised.  If a correction was missed, as Mr Gim claims it was here, it is unlikely to be missed on three charts.  The fact that it is picked up on the second, it having been omitted from the first, will almost certainly alert the navigator to the fact that he needs to go back to the first and correct it as well.  That precaution was not taken on any view of the case.  But the fact that the three charts were not corrected, I think, is symptomatic of the state of shoddiness on this vessel and consistent more with a practice of making no corrections at all than with any practice of usually correcting charts.  The position could, of course, have been put beyond doubt by the preservation of charts for other areas which were traversed during the voyage.  As I have said, there was no reason why the charts should not have been preserved.  The failure to preserve them is, I think, a matter I can take into account in reaching my conclusion.  I think the inference is fairly open that nothing on those charts would have assisted the plaintiffs' case in this respect.  That is the inference which I draw.

     There is some other evidence to which I should refer in this connection.  It concerns the noting in the chart correction log of notices to mariners received on board the vessel in the chart correction log and the practice of crossing them out as corrections required by them were made.  An examination of the chart correction log in respect of chart AUS119 discloses that a number of notices noted in the log were crossed out up to and including 1986.  Thereafter no crossing out appears.  The evidence suggests that some second officers did not enter references to notices to mariners in the log until they made the chart corrections which the notices required.  The notices to mariners received in respect of chart AUS119 are noted in the log but not crossed out from and including 1987.  Specifically there is no crossing out of notice to mariners number AUS219.  One can see, by examining the entries in respect of other charts, that there are many instances where references to notices to mariners were crossed out up to 1987.  That seems to have been the usual practice.  On the other hand, the instances of crossing out after 1986 are comparatively few.

     For those who may need to read the chart correction log I should, perhaps, point out that sometimes the figure "9" is written back the front so that it looks like a "p".  Significantly, of course, notice to mariners AUS219 noted against chart AUS119 is, as I have mentioned, amongst those entries which have not been crossed through.

     Both the former second officer, Mr Kim (not Captain Kim), and the third officer at the time of the grounding, Mr Han, gave evidence about chart correction and certain entries in the chart correction log.  In his statement of evidence, Mr Han said that, between April and December 1990, he did some chart correction work after he was requested to do so by Mr Kim.  Mr Han had joined the Sanko Harvest on 2 April 1990.  The second officer on the vessel between his joining and December 1990 was Mr Kim.  It will be recalled that Mr Kim was replaced at the end of December 1990 by Mr Gim.

     Mr Han said that the charts he corrected included charts for a voyage to Spain.  He said that he followed a standard procedure when correcting charts.  It was first to make the correction on the chart which he was correcting, then to enter the correction number on the bottom left corner of the chart.  He then placed a slash through the correction number of the chart in the chart correction log.  Inferentially the number of the chart was already in the chart correction log when he made the correction.  Mr Han looked at a number of entries in the chart correction log and identified some of the slashes through correction numbers as having been written by him.  The charts which he corrected were not charts for the voyage in question in this case.

     Mr Han said that Mr Kim did not tell him to put the slashes through the correction numbers.  He did what he did because that had been his practice during his service in the Korean Navy.  He said that he recollected Mr Kim saying to him words to the effect that he was to make a note on the chart and in the log "that you've done the corrections."  Mr Han said that he recalled two or three occasions on each voyage on which the Sanko Harvest sailed during the period from April to December 1990, when he saw Mr Kim on the bridge at the portside chart table with notices to mariners and charts on the table.  Mr Han said that this was during the daytime watch from 12 noon to 4 p.m.  Mr Han also said that, during the voyage from Tampa to Esperance, he recalled, on two occasions, seeing Mr Gim at the portside chart table.  He appeared to Mr Han to be doing chart correction work.  The table had charts and notices to mariners on it and Mr Gim had a pencil or biro in his hand.  These occasions were when the vessel was sailing across the Pacific.

     Mr Han said that he did not see Mr Gim making any corrections to any chart after the grounding.

     Mr Han was extensively cross-examined and I shall refer to some of the cross-examination in a moment.  Before I do so I refer to evidence given by the former second officer, Mr Kim.  Mr Kim was extensively cross-examined and I formed an unfavour­able view of his evidence.  He said that practices varied between second officers who corrected charts.  Some did not enter the notices to mariners in the chart correction log until the corrections were done.  He was one who followed that practice.  Others followed the practice of putting a slash through charts already noted in the chart correction log after corrections were made.  That was the practice Mr Han described and is the practice described in other evidence.

     I do not accept Mr Kim's evidence that he corrected charts on any voyage which were noted in the log but not slashed through.  He was cross-examined about a number of charts for different voyages.  I do not find it necessary to go to the detail of this evidence.  Having listened to it and having considered the transcript of it, I am of the view that Mr Kim's evidence is false at least in this respect and I reject it.

     I accept that Mr Han did correct charts during the period April to December 1990.  It was not his duty to correct charts because he was the third officer, not the second officer.  But he did what he did "because of my future career.  That was the reason why I volunteered to correct" charts.  Mr Han also said that Mr Kim told him that whenever a chart correction was made, the log (I understood him to mean the chart correction log) will be marked by certain marks and "it is my habit from school days as well as navy service period and subsequent ship to mark such correction by slash-slash mark.".  He was asked what Mr Kim had said to him in the conversation the two had before he began to correct the charts.  Mr Han said that Mr Kim told him to make certain marks after each chart correction.  He was referred to para. 6 of his statement which is where he described the correction of a number of charts and the putting of slashes through the correction numbers in the chart correction log.  It was suggested to him that Mr Kim had told him to do it this way but the witness did not accede to this. 

     The conclusion I draw from this evidence is that Mr Han did do some corrections for the purpose he said namely, to further his career.  In other words he did what he did in order to gain further experience.  He knew what to do in relation to the various marks that had to go on the charts and in the chart correction log and he followed the customary practice, which he had been taught by others, of putting slashes through references to notices to mariners in the chart correction log once the corrections required by the notices had been made.  As earlier mentioned, that had plainly been the practice of second officers up to 1986 or 1987.  Thereafter there are few slashes through any of the correction numbers in the log in relation to any chart.  Mr Kim's evidence is against the preponderance of evidence and the overall probabilities of the case.  It is, as I say, rejected.

     I do not believe that Mr Gim made any corrections to charts for the voyage from Tampa to Esperance except perhaps corrections to United States charts.  There is evidence which establishes that the United States Coastguard was very watchful of vessels entering and leaving United States ports and frequently boarded them to make inspections of charts and check to see whether corrections to them had been made.  Unless they were made, a vessel was not permitted to enter the port to which it was sailing or to leave a port from which it wished to depart.  There were apparently heavy penalties for breaches of the United States regulations in force in this regard.  The marine section of Eastern Shipping and Sanko itself seem to have been well aware of this.  Despite denials that are to be found in the evidence, I find that care was taken to correct United States charts for United States waters because of the fear of disruption to voyages and the imposition of penalties.  I find that the same care and concern was not exercised in relation to charts for areas away from the United States.  It follows that I reject so much of Mr Han's evidence as suggests - that is about as far as it goes - that Mr Gim was correcting some unspecified charts during the voyage of the Sanko Harvest across the Pacific.

     Before I leave this aspect of the case, I should say, in passing, that I have not understood why there was not the most searching examination and investigation by the appropriate authorities into this casualty.  It resulted in the spilling of tens of thousands of tons of phosphate on to the floor of the Southern Ocean in the vicinity of the Archipelago and also the spilling of a degree of fuel oil although I do not know how much.  I realise that the ship is a foreign ship and was crewed by a foreign crew.  But it was obvious from the position of the ship that it was where it should never have been.  Those responsible for the safe navigation of the vessel hazarded the safety of their ship and the crew whose lives were plainly in danger.  If the ship had come off the rocks (which it eventually did three of four days later) on the evening of the grounding and had then sunk, there would undoubtedly have been a serious loss of life.  This is because most of the crew must have been asleep.  Furthermore, the vessel, in traversing the course it did, hazarded the environment in which it was.  The danger may not have been as great as it would have been if the vessel had been an oil tanker, but the danger of serious damage was there.

     Of course, so far as the outcome of this case is concerned, all that is by the way.  It is necessary now to go to the contractual documents in some detail.

The Contractual Documents

     It is only by reaching some conclusions on the meaning and ambit of the contractual documents earlier referred to that one can ascertain the extent and the limits of the contractual rights and obligations of the parties.  The principal clause of the voyage charterparty which requires consideration is clause 2.  The central words are "Owners are to be responsible for loss of the goods only in case the loss has been caused by personal want of due diligence on the part of the Owners or their Manager to make the vessel in all respects seaworthy and to see that she is properly manned, equipped and supplied or by the personal act or default of the Owners or their Manager".  If one were to engage in the exercise of construction of clause 2 which the plaintiffs' submissions require, each of the words I have emphasised would need to be carefully considered in the overall context in which it appears. 

     It will be recalled that the parties to the voyage charterparty were Sumitomo and Sanko.  Sanko is not the owner of the vessel but the time charterer of it.  But it was described in the charterparty as "the disponent owner".  I have earlier referred to the meaning of this expression.  I am satisfied that the expression "Owners" in clause 2 should be read as a reference to Sanko and not to the actual owner of the vessel.  After all the owner of the vessel was Seawall Shipping.  It was not Grandslam which was the demise or bareboat charterer of it.  Seawall Shipping had absolutely no connection with the voyage in question or with the carriage of the goods dealt with in the voyage charterparty.  The companies concerned with the carriage were Sanko, which was the voyage charterer to Sumitomo and the time charterer from Grandslam, Grandslam, and Eastern Shipping which was Grandslam's manager.  The ship was effectively operated by Eastern Shipping but as agent for Grandslam, and perhaps Sanko.  Unless Eastern Shipping was also Sanko's manager, Sanko itself, although the company referred to as the owners in clause 2, had no relevant manager.  In that event, insofar as clause 2 applied to Sanko, there was no manager to which the clause could apply.  In the submission of counsel for Sumitomo, Eastern Shipping was in fact Sanko's manager as well as that of Grandslam.

     In passing, I should mention that it would seem that there was a practice in the Sanko organisation whereby ships with Japanese officers were operated by Sanko Marine and ships with Korean officers such as the Sanko Harvest, were operated by Eastern Shipping.  The evidence does not reveal what occurred after the two companies merged.  That is probably not a matter of any significance for the outcome of the case. 

     In due course, it may be necessary to reach a conclusion on whether Eastern Shipping was Sanko's manager and on the meaning and effect to be accorded to the word "personal" in clause 2 of the charterparty.  But, for the moment, I need to deal with the submission by counsel for Sumitomo concerning the use, if any, to be made of the deleted portions of clause 2, as originally printed, in construing the clause as it was after the deletions were made.  The purpose of the submission is to attempt to cut down the significance that the word "only", where appearing in the clause, might have if regard were not had to the deleted words.  If this were the correct approach, it would have consequences, not only for the construction of clause 2 of the charterparty but also for the construction of other clauses thereof.

     The clause, as it appears in the charterparty, is as follows:

     "2.  Owners' Responsibility Clause

          Owners are to be responsible for loss of or damage to the goods or for delay in delivery of the goods only in case the loss, damage or delay has been caused by the improper or negligent stowage of the goods (unless stowage performed by shippers Charterparty or their stevedores or servants) or by personal want of due diligence on the part of the Owners or their Manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied or by the personal act or default of the Owners or their Manager.

          And the Owners are responsible for no loss or damage or delay arising from any other cause whatsoever, even from the neglect or default of the Captain or crew or some other person employed by the Owners on board or ashore for whose acts they would, but for this clause, be responsible, or from unseaworthiness of the vessel on loading or commencement of the voyage or at any time whatsoever.  Damage caused by contact with or leakage, smell or evaporation from other goods or by the inflammable or explosive nature or insufficient package of other goods not to be considered as caused by improper or negligent stowage, even if in fact so caused."

     The significance, if any, to be accorded deleted parts of printed clauses of contracts in construing the remaining parts has been discussed in a number of cases.  I firstly refer to the speech of Lord Reid in Timber Shipping Co. SA v London & Overseas Freighters Limited [1972] AC 1.  The case concerned the construction of a charterparty.  His Lordship said (at 15-16):

     "The parties in making their contract struck out the word 'about' and inserted in the blank '12 months 15 days more or less in charterers' option.'  The word 'about' in the form obviously reflects the existing law that dates are presumed to be flexible.  Am I entitled to take note of the fact that this word has been struck out and a definite margin of 15 days more or less substituted?  If I am so entitled then I have no doubt that the 15 days more or less was intended to define the degree of flexibility and to oust the ordinary presumption of flexibility.  If I am not then I would have doubts.

     There is a controversy as to whether one can ever look at deleted words in an agreement.  If the words were first inserted by the draftsman of the agreement and then deleted before signature then I have no doubt that they must not be considered in construing the agreement.  They are in the same position as any other preliminary suggestion put forward and rejected before the final agreement was made.  But it appears to me that striking out words from a printed form is quite a different matter.  The process of adapting a printed form to make it express the parties' intentions requires two things to be done.  Those parts which are not to be part of the agreement are struck out and words are inserted to complete the rest of the form so as to express the agreement.  There is no inference that in striking out words the parties had second thoughts: the words struck out were never put there by the parties or any of them or by their draftsman.  I must not express a concluded opinion because for some reason this question was not argued by counsel on either side.  But fortunately in this case the result is the same on any view, whichever view I take of the real meaning of the duration provision.  So I shall assume in the appellants' favour that I can take the deletion into account and that the 15 days more or less supersedes any presumption that the law might otherwise make."

     There is then the decision of the House of Lords in Mottram v Sunley [1975] 2 Lloyd's Rep. 197.  The contract in that case was a building contract.  Lord Cross said (at 209):

     "When the parties use a printed form and delete parts of it one can, in my opinion, pay regard to what has been deleted as part of the surrounding circumstances in the light of which one must construe what they have chosen to leave in.  The fact that they deleted (iii) shows that these parties directed their minds (inter alia) to the question of deductions under the principle of Mondel v Steel [(1841) 8 M. & W. 858] and decided that no such deductions should be allowed."

     Earlier the matter had been considered by Diplock J (as Lord Diplock then was) in Louis Dreyfus & Cie v Parnaso Cia Naviera S.A. [1959] 1 QB 498.  That case, like the present, concerned a charterparty in the Gencon form.  His Lordship held that because certain words in clause 2 of the charterparty, "no loss or damage or delay", were, in their context, ambiguous, assistance in their construction might be obtained by looking at the deleted printed words of the third paragraph of the clause.  His Lordship said (at 512-13):

     "The exceptions clause, clause 2 of the charterparty, consists of three printed paragraphs, the third of which has been deleted and typed words substituted for it.  The first question which I have to consider is whether, in order to assist myself in construing the paragraphs that remain, I can look at the one which has been deleted.  There is a pleasant diversity of authority on this subject which the curious can find conveniently listed in a note in Scrutton on Charterparties, 16th ed. (1955), p. 33.  But the court, in construing a contract, is seeking to ascertain the intention of the parties as expressed in the words that they have used.  Where there is a standard form of words familiar to commercial men and contained in a printed form in general use, such as the 'Gencon' charter, it seems unreal to suppose that when the contracting parties strike out a provision dealing with a specific matter, but retain other provisions, they intend to effect any alteration other than the exclusion of the provision struck out.  I cannot, prima facie at any rate, ascribe to them any intention of altering the meaning of the words in the provisions which they have chosen to retain.  I say 'prima facie' because there may be added or substituted words which drive one to the conclusion that they did intend to ascribe to the words retained a meaning modified by the added or substituted provisions; but, while I think that I must look first at the clause in its actual form without the deleted words, if I find the clause ambiguous, I think that I am entitled to look at the deleted words to see if any assistance can be derived from them in solving the ambiguity, bearing in mind the prima facie rule which I have indicated."

     By the time the House of Lords decided Timber Shipping Co., Lord Diplock was already a member of the House of Lords but he was not a member of the House who sat either in that case or in the subsequent case of Mottram.

     The current edition of Scrutton on Charterparties and Bills of Lading, to the 16th edition of which Diplock J referred, is the 19th edition which was published in 1984.  The authors say (at 21) that it has been a matter of controversy whether the court may look at deletions from a printed form as showing the intention of the parties, but that the weight of authority is now in favour of the view that the court may not look at deletions.  A number of authorities are referred to for this proposition.  The footnote indicates that there are two lines of cases, one which supports the statement made by the authors and the other to the opposite effect.  These include Louis Dreyfus, Timber Shipping and Mottram.

     I have considered some of the other cases but do not regard it necessary to refer further to the authorities than I have except to mention that the matter was the subject of recent consideration by the Queensland Court of Appeal in Postle v Sengstock [1994] 2 Qd R 290.  The document which was construed in that case was a mortgage.  The Court referred (at 298) to a number of authorities including Louis Dreyfus, Timber Shipping and Mottram and said that, although certain printed terms were deleted from the contract under consideration because they were not relevant, it was permissible to refer to them as an aid to the meaning of ambiguous words in a printed term which remained.  That was the view adopted by Diplock J in Louis Dreyfus and I think, with respect, that it represents a sensible and practical solution to the problem.  It is the approach I propose to adopt here.

     The next question is whether there is an ambiguity in the printed words which have been retained.  If there is, there is the further question whether the deleted words shed light on how the ambiguity is to be resolved.  The essence of the submission made by counsel for Sumitomo is that a consideration of the whole of the clause as originally printed discloses that the words of the second paragraph emphasised that the owners were not to be responsible for loss or damage arising from any other cause whatsoever, "even from the neglect or default of the Captain or crew or some other person employed by the Owners onboard or ashore for whose acts they would, but for this clause, be responsible, or from unseaworthiness of the vessel on loading or commencement of the voyage or at any time whatsoever".  The point counsel make is that the deletion of these words should be taken to have had the effect of weakening the clause from the owner's point of view.  In their submission there could have been no other reason for their deletion.  I see the force of this, but I think that the approach I must adopt is to consider whether there is to be found in the words which remain undeleted an ambiguity.  On the authorities to which I have referred, it would only be permissible to go to the deleted words if there were an ambiguity found in the words that remained.

     I have decided that I should accept the submission by counsel for Sumitomo that there is ambiguity present in so much of the clause as remained after the deletion.  It is important that this exercise is undertaken with the whole of the provisions of the charterparty in mind.  Counsel for Sumitomo submitted that, if the word "only" were given the effect contended for by counsel for the plaintiffs, a number of the typed clauses in the charterparty would have no effect.  The word "only" construed in this way would deny those provisions, which are to be found in typed rather than printed clauses, any practical application.  The first of the clauses is clause 22 which is a "gear clause".  It provided that the owners undertook to maintain all of the vessel's cranes in good working order at each hatch.  The vessel was to provide sufficient power to drive them simultaneously at all times if required free of expense to the charterers.  The clause also provided certain guarantees in relation to the performance of the cranes to the detail of which I do not go and also provided for the consequence of breakdown of the cranes or the failure to supply sufficient power in relation to a claim for demurrage.  It is difficult to think that the parties intended, by the deletions they made from printed clause 2, so to affect the provisions of clause 22 as to deny Sumitomo the benefit of it.

     Then there is clause 36 which contains a description of the vessel.  It contains what would be read as a warranty as to the vessel's classification and again as to the cranes with which it was equipped and their capacity.  If it should have emerged that the vessel was not in class, again it seems difficult to think that Sumitomo would have been denied any remedy if it had suffered damage as a result of the ship being delayed or diverted as a consequence of this.

     Next there is clause 37 in which the owners guarantee that the terms and conditions of employment of the crew of the vessel will be covered by certain agreements including trade union agreements and will remain so for the period of the charter.  The clause provided that, should the agreements not conform to international transport federation standards, no time lost as a consequence would count.  A similar comment may be made about this clause as I have made in relation to clauses 22 and 36.  In a similar category is clause 38 which is an oil pollution clause in which the owners agreed to indemnity the charterer against any liability which might be imposed on them or which they might incur under any statute regarding liability for pollution of navigable waters by oil by reason of any contravention of any statute by the ship, the master or any servant or agent of the owners.  The clause limited the owner's aggregate liability in respect of any oil pollution incident to $US400 million and made other provisions about limiting the amount for which the owners might be liable.

     Then there is clause 39 dealing with stevedores.  These were to be considered to be the owner's servants.  Stevedoring damage if any was to be settled directly between the owners and the stevedores.  Finally there is clause 42 which provided that the vessel's hold ladders were to comply with requirements as laid down by the Australian Waterside Workers Federation.  If they did not, the responsibility for any modification was to be at "Owners' risk and expense".  The cost of stevedoring labour standing by and wharf crane hire as a result of ladders not complying with the requirement were to be for the owners' account and any time lost was not to count even if the vessel were on demurrage.

     Counsel for the plaintiffs submitted that the typed clauses 22, 36, 37, 38, 39 and 42 each dealt with a quite specific matter.  They were not clauses of general operation.  But if clause 2, as it remained after the deletions, was intended to have the width of meaning contended for by the plaintiffs, what does one say about the ambit of clause 2.  I suppose it could be said that the typed clauses should be construed as particular exceptions from the operation of a general provision, but, bearing in mind that clause 2 is printed and has some of its provisions deleted and that the other clauses are typed, is one justified in taking such a simplistic approach without considering what was it that the parties really intended by their deletions from clause 2?  To put it another way, I am of opinion that the presence of provisions such as are contained in the typed clauses to which I have referred ought to make one cautious about giving the word "only" the conclusive effect which is contended for by the plaintiffs.

     Before going further to the judgment of Diplock J in Louis Dreyfus, I should mention that in the run of the argument in the Court of Appeal in that case (Louis Dreyfus & Cie v Parnaso Cia. Naviera S.A. [1960] 2 QB 49), Sellers LJ remarked that the clause was "very obscure" and Harman LJ said that it was "a ghastly document"; see at 53.  Those views from two highly respected judges are themselves sufficient to make one pause before giving the matter the deep consideration which the submissions made on behalf of Sumitomo require.  I should also mention that the Court of Appeal reversed the decision of Diplock J in Louis Dreyfus but did not discuss the question of the effect of deleting parts of printed clauses from contracts.  What Diplock J said in his judgment at first instance remains, therefore, authoritative.

     In reaching his conclusion in Louis Dreyfus, Diplock J said (at 514):

     "Paragraph 1 of this clause [the clause in question in both the Louis Dreyfus case and this case] is expressly limited to loss of or damage to the goods or to delay in delivery of the goods, and the phrase 'the loss, damage or delay' is also plainly so limited.  The paragraph is clumsy in form, because it appears to be placing a positive liability for loss, damage or delay arising from certain causes, a liability which would exist at common law quite apart from the clause.  It negatives or excludes liability which would exist at common law for damage, loss or delay from other causes only in so far as such exclusion is implicit in the word 'only'--'Owners are to be responsible for loss of or damage to the goods or for delay in delivery of the goods only' in such and such case.  One would not expect the draftsman of a clause designed to exclude liabilities which would otherwise exist at common law to rest content with an exclusion which was merely implicit, and, having started with his first paragraph in the positive form, one would expect him to go on to state in express words the exclusion of liability which up to that stage has only been implicit by the use of the word 'only.'  And this, it seems to me, is what he has done, for he goes on:  'And'--a conjunctive word consistent with a reference to the same subject-matter as has gone before--'the owners are responsible for no loss or damage or delay,' the same phrase as used above where it was clearly limited to loss of or damage to the goods or delay in delivery of the goods, 'arising from any other cause whatsoever.'  It is not 'no loss or damage or delay whatsoever,' or any other word used to enlarge its meaning, although the word 'whatsoever' is used in relation to cause.  The paragraph might well have stopped with the words 'any other cause whatsoever,' but per majorem cautelam the draftsman goes on to say 'even from the neglect or default of the captain or crew or some other person employed by the owners on board or ashore for whose acts they would, but for this clause, be responsible, or from unseaworthiness, of the vessel on loading or commencement of the voyage or at any time whatsoever,' all of which would have been excluded, one would have thought, by the words 'any other cause whatsoever.'  One finds here, therefore, a draftsman (cautious, no doubt, because of the contra proferentem rule) who is taking the opportunity of saying, in all the ways that he can think of, that the owner is not to be responsible for damage of the kind which is the subject-matter of the exceptions clause other than that arising from particular causes."

     In the present case the deletion is of the whole of the second part of the clause.  In Louis Dreyfus it was only of the latter part of it commencing with the word "Damage caused by contact with or leakage, smell or evaporation...".  So the particular problem in Louis Dreyfus was quite different from the problem here.

     The importance of the passage which I have quoted from his Lordship's judgment is the need, in a drafting sense, for the second part of the clause to balance the positive liabilities for loss, damage or delay arising from the expressed causes in the first part of the clause.  Furthermore, his Lordship said that the first part excluded liability for damage, loss or delay from other causes "only in so far as such exclusion is implicit in the word 'only'".  At the risk of repetition, I state again what Lord Diplock said about this, namely, that one would not expect the draftsman of a clause designed to exclude liabilities which would otherwise exist at common law to rest content with an exclusion which was merely implicit.  One would expect him to go on to state in express words the exclusion of liability which up to that stage had only been implicit by the use of the word "only".

     It is perfectly clear that the word "only" may in some cases have a decisive effect.  This proved to be the case in the recent decision of the High Court in David Grant & Co Pty Limited v Westpac Banking Corporation (1995) 131 ALR 353 but, as in every case involving the construction of a document, be it a contract or a statute, one has to construe the document as a whole and a word, such as the word "only" in clause 2 of the charterparty here, in the context in which it appears.

     There is a further consideration.  In Westfal-Larsen & Co. A/S v Colonial Sugar Refining Company Limited [1960] 2 Lloyd's Rep. 206 Walsh J, when a judge of the Supreme Court of New South Wales, had to construe a clause in a charterparty which provided, "The Owners only to be responsible for delay in delivery of the Vessel or for delay during the currency of the Charter and for loss or damage to goods on board, if such delay or loss has been caused by want of due diligence on the part of the Owners or their Manager in making the Vessel seaworthy and fitted for the voyage..."  Walsh J held that the first sentence of clause 13 confined the area of responsibility to a personal want of diligence on the part of shipowners or their manager and to other personal acts or omissions on their part.  The decision of Walsh J was followed by McNair J in The Brabant [1967] 1 QB 588.  The same conclusion was reached by the Court of Appeal in England in Nippon Yusen Kaisha v Acme Shipping Corporation (The Charalambos N Pateras) [1972] 1 WLR 74, but that case concerned the second sentence of clause 13 which does not include the word "only" so that the case does not appear to me to be of as much relevance as either Westfal-Larsen or the Brabant.

     These cases and some others were reviewed by the House of Lords in its decision in Tor Line AB v Alltrans Limited [1984] 1 WLR 48.  The judgment of the House was written by Lord Roskill.  He had been party to the decision in the Pateras in 1972 when he was a member of the Court of Appeal.  His Lordship said (at 57-8) that he had changed his mind about the meaning of clause 13 to which he had subscribed in 1972.  Earlier his Lordship referred to the Westfal-Larsen and to Walsh J's conclusion in which he relied on the word "only".  Lord Roskill continued (at 57):

     "But, my Lords, with profound respect to the learned judge, he has in construing the first sentence not only misunderstood the significance of the word 'only' in the position in which it appears in the clause but he appears to have treated the words 'or any other personal act' etc. as standing on their own instead of as related together with the immediately preceding words to the two cases of delay and the single case of loss or damage to goods on board, brought about by either of the two specified causes to which I have already drawn attention.  I fear that the learned judge misconstrued the clause and that he should have held that it did not protect the owners in the events which had happened."

     He made a similar criticism of McNair J's judgment in the Brabant.  Eventually he concluded that, upon its true construction, clause 13 did not afford the owners a defence to the claim by the charterers in that case; see at 58.

     It is open to me, of course, to prefer the judgment of Walsh J and also that of McNair J particularly having regard to the fact that Walsh J eventually became a judge of the High Court of Australia.  I do not think it necessary to reach a conclusion on which view should be preferred.  Obviously, the view espoused by Lord Roskill is one deserving of very great respect bearing in mind that it represents the unanimous view of the members of the House of Lords who sat on the appeal.  It is also entitled to respect, in my opinion, because his Lordship changed the view he had earlier expressed about the meaning of the clause in the Pateras in 1972.  The clause in question here is not clause 13 considered in the various authorities to which I have referred.  It is a different clause.  One similarity between the two, however, is that the word "only" appears in the early part of each clause.

     The decision of the House of Lords in Tor Line and the discussion in Lord Roskill's judgement serve to indicate how difficult these questions of construction can be.  But my task is to construe clause 2 of this charterparty.  And a significant difference between this case and the cases concerning clauses 13 of a charterparty in the form in which the charterparty in Westfal-Larsen was, is that none of these involved the question whether words deleted from a printed clause could be considered in construing what remained, and, if they were considered, what effect, if any, they might have on the outcome of the exercise of construing the words which remained.

     The starting point for that exercise is to determine whether or not there is an ambiguity in the words remaining after the deletions.  For the various reasons I have given I am satisfied that there is.  The next question is whether resort to the deleted printed words will help.  The striking thing about them to my mind is that, as counsel for Sumitomo has submitted, they delete from the charterparty words which would have clearly operated to exclude the owner's liability for any cause or matter other than those stated in the first part of the clause.  One is entitled to ask, why were these words deleted?  They only had one purpose; it was to emphasise the exclusion from liability for which, uninstructed by a consideration of the whole of the terms of the charterparty, one might be tempted to think the first part of the clause provided because of the use of the word "only".  Once one considers, however, that there is manifest in the typed clauses 22, 36, 37, 38, 39 and 42 an intention by the parties that the owners were to be responsible, in the circumstances provided for in these various clauses, for damage and loss consequent upon a breach of them, the parties' purpose in omitting the second part of the clause becomes possible to explain.  If they had not been omitted, there may well have been a conflict between those particular typed clauses and printed clause 2 because of what it contained in the second part of it.  It seems likely that the removal of the second part of it was intended to avoid that conflict and make it clear that the owner remained liable under the typed clauses to which I have referred.

     Once that conclusion is reached, what effect is one to give the word "only" in the first part of the clause?  Before I answer that question directly, I should say that, if, despite the presence of the word "only", the liability of the owner for loss or damage under the typed clauses to which I have referred is preserved, why should not liability under printed provisions of the charterparty also apply in their terms?  The principal obligation of the owners is, as I have mentioned, that imposed upon them by clause 1, which like clause 2, contains some deletions from the print, thus showing that the parties did not unthinkingly adopt a printed form.  They turned their minds to the actual form they wished it to have.  Clause 1 of the charterparty is the clause upon which Sumitomo sues.  The agreement for which clause 1 provides is that the vessel is to proceed to the loading port or place specified in the appropriate box on the face of the charterparty or so near thereto as she may safely get and "lie always afloat and there load a part cargo as specified on the face of the charterparty which the charterers bind themselves to ship, and being so loaded the vessel shall proceed to the discharging port or place specified on the first page of the charterparty as ordered on signing bills of lading or so near thereto as she may safely get and lie always afloat and there deliver the cargo on being paid freight..."

     If the two printed clauses, i.e. clauses 1 and 2, had been left in the terms in which they were printed and if there had been no typed clauses added to the printed form of charterparty, the position may have been quite different, but what counsel for the plaintiffs ask me to do is to treat the word "only" in the overall context of the charterparty looking at it as a whole, as a word which unquestionably operates to exclude liability for loss or damage for any cause or matter other than those specified in the first part of clause 2.  Having regard to all the matters I have taken into account, that is not something I feel able to do.  But then I have to come to a conclusion as to whether the word "only" is to be given any significance at all.

     Counsel for Sumitomo submitted that I should solve the difficulty by disregarding the word "only".  In support of this proposition they referred to the decision of the House of Lords in Adamastos Shipping Co. Limited v Anglo-Saxon Petroleum Co. Limited [1959] AC 133 where Lord Reid said (at 174) that there were many cases where a court must disregard words, including whole terms which the parties have put in their contract.  His Lordship said that those were cases where there was something in the contract itself which made the course necessary.  As an example he instanced a case where the words may be inconsistent with the main object of the contract and referred to Glynn v Margetson & Co. [1893] AC 351.  Glynn v Margetson I think was a clearer case than this one and Adamastos a different kind of case although I need to come to it in a different connection in due course.  Nevertheless, I think the alternatives here are only two.  Either one gives the word "only" full effect, in which case one would give it overriding effect, or one ignores it.  Either course involves doing some violence to the language which the parties have used or adopted.  But I see no middle course.  None was suggested in argument.  I am not therefore in the fortunate position in which one finds oneself in so many exercises of construction of being able to leave the word "only" in and yet give it a meaning which is qualified or circumscribed or cut down by other provisions of the contract.  I think I must face up to a situation in which it is a case of giving it full effect or ignoring it.  I think I will best reach a result which gives effect to the overall intention of the parties by not giving the word "only" any effect and following the course referred to by Lord Reid, in a different context, in Adamastos.

     The substantial hesitation I have had in taking this course arises from the fact that to do so means that I turn the clause into one in which it amounts to a statement of liabilities which the owner will have for loss of or damage to the goods which is, in a sense, redundant because, in that event, the owner will be under those specified responsibilities as well as other more general ones.  In particular, clause 1, subject to what I have to say about clause 41 of the charterparty and the Hague Rules in due course, will have its full effect.  Of course, if I be wrong in the approach I have decided to take, clause 2 will give a substantial immunity to the owner but the owner will still be liable for, relevantly for the purposes of this case, loss or damage resulting from personal want of due diligence on the part of the owners or their manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied or from the personal act or default of the owners or their manager.  As earlier mentioned, if those words were to apply in terms and were the only source of liability difficulties would arise in relation to the words "manager" and "personal" in each of the places where they appear.

     I go next to a consideration of the effect of clause 41 and the "USA Clause Paramount".  It will be recalled that, relevantly, clause 41 provides that the USA clause paramount is deemed to be incorporated in the charterparty and to apply to all bills of lading issued under it.  It is important to emphasise that it is not only to apply to bills of lading issued under the charterparty but that the clause paramount is incorporated in the charterparty itself.  Clause 41 provides that "This Bill of Lading shall have effect subject to the provisions" of the United States Act which shall be deemed to be incorporated therein and nothing contained in the charterparty shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under the Act.  One difficulty is to reconcile the provision in clause 41, which says that the clause paramount is incorporated both in the charterparty and is to apply to all bills of lading, with the clause paramount itself.  The clause itself says nothing about the charterparty.  It provides that the clause to be incorporated in bills of lading is to commence with the words, "This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act..."

     A first step in resolving this problem is to refer to the decision of the House of Lords in Adamastos.      Adamastos was a case involving the charter of a tanker by an oil company.  Like the charterparty here, it contained a clause paramount which began with the words, "This bill of lading shall have effect subject to" the United States Act "which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under the said Act."  The House of Lords held that, on the true construction of the charterparty, the United States Act affected the rights and liabilities of the parties under the contract despite the use of the words, "This bill of lading..." which, it was concluded was to be read, in accordance with the common meaning and intention of the parties, as if they were, "This charterparty...".  It is to be observed that the decision was based upon the incorporation of the provisions of the Act in the charterparty and not upon any basis associated with giving the Act itself an operation independent of the charterparty.  In other words the provisions of the Act became contractual only by reason of the incorporation of them in the charterparty.  It was for this reason that the provisions of s.5 of the Act, which excluded the provisions of the Act from charterparties, were rejected as being, in the circumstances, inapplicable.

     In the course of his speech, Lord Reid said (at 168-9):

     "As it stands 'This bill of lading' does not make sense, but no one suggests that the parties by mistake attached the wrong form of clause to the charterparty.  They intended to attach this clause and they must have intended it to mean something.  It was argued that it was meant to be a clause which the charterers were to be bound to include in any bill of lading, and that it was not meant to affect the charterparty itself.  I can find no ground for this argument--particularly when I find that in both the New Jason Clause and the Both to Blame Collision Clause there are provisions introduced by the words: 'The charterers shall procure that all bills of lading issued under this charterparty shall contain the following clause.'  To give effect to this argument it would be necessary to read in at the beginning of the paramount clause these or similar words.  This could only be done if there was some clear indication elsewhere that it must be done, and there is nothing anywhere to show that this was the intention.

     If the paramount clause is to have any meaning or effect at all 'This bill of lading' must be held to be a misnomer for 'This charterparty.'  I find nothing to raise any doubt that this was the intention, and the fact that clause 52 directs that the paramount clause is to be 'incorporated' in the charterparty appears to me to be a clear pointer that its initial words must be so read."

     His Lordship then referred to s.5 of the United States Act and said (at 169-170):

     "This case appears to me to raise in an acute form the question how far a court is entitled to go in disregarding words in a contract in order to discover the intention of the parties.  It is difficult to see how anyone who had given any thought to the provisions of the United States Act could have drafted this paramount clause for inclusion in a charterparty:  it must have been drafted for inclusion in a bill of lading where it would be quite appropriate.  But it appears that for a considerable time a clause in substantially this form has been included in a number of charterparties.  We do not know how this practice originated, and we do not know and are not entitled to guess just what the parties had in mind when they agreed to incorporate the clause in this charterparty.  The intention of the parties can only be inferred from the words which they have used.  Undoubtedly the charterparty must be read as a whole, and any term in it must be read in light of the general nature of the contract, of the fact that the contracting parties were business men, and of all relevant facts known to the parties when it was made.  But in the end we must take the words which the parties have used, and interpret them.

     As the parties have chosen to incorporate in a charterparty provisions which are designed to apply, and only to apply, to bills of lading, one must, I think, infer that they intended these provisions to be incorporated mutatis mutandis; and in order to see what this involves I would begin by trying to read references to bills of lading in the Act as if they were references to charterparties.  That necessarily involves the rejection as insensible of the provisions of section 5 of the Act that its provisions shall not be applicable to charterparties, and I find little difficulty in taking that step."

     After some further discussion, his Lordship went on to say (at 174) that there were many cases where a court must disregard words including whole terms which the parties have put in their contract, and he referred to Glynn v Margetson & Co. (supra).

     In the present case counsel for the plaintiffs seeks to distinguish the clause in question from that in Adamastos.  I think there is force in the point which he makes.  If one looks at the clause paramount itself it is plain upon its face that it was to operate to incorporate in all bills of lading a clause to the effect that the bill of lading would have effect subject to the provisions of the United States Act.  That, so counsel submits, is as far as the matter goes.  There is no problem because it is clear that the clause is to affect bills of lading and it is clear that when it makes this provision it is plainly not talking about incorporating the provisions of the United States Act in the charterparty.  But one needs to go back to the terms of clause 41, which is the clause which provides for the incorporation of the United States Act in the bills of lading.  As counsel for Sumitomo stressed, that is not all it provides.  Relevantly it provides that the clause paramount is deemed to be incorporated in the charterparty.  That is the first part of the provision.  The second part of it is that the clause paramount is to apply to all bills of lading issued under the charterparty.

     Counsel for Sumitomo submitted that, if one reads clause 41 and the clause paramount itself only so as to provide that the United States Act is to be incorporated in the bills of lading issued under the charterparty, one is overlooking the words "are deemed to be incorporated in this Charter Party".  It was argued that one should read the phrase, "are deemed to be incorporated in this Charter Party and to apply to all Bills of Lading issued under this Charter Party.", as a single provision.  In other words, it was not to be construed as providing for the incorporation of the United States Act in both the charterparty and in bills of lading issued under it. I do not think that this gives effect to the words which provide expressly that the clause paramount is to be deemed to be incorporated in the charterparty.  That seems to me to be a provision which stands independently of the provision which operates to incorporate the United States Act in the bills of lading to be issued under the charterparty.

     Counsel for the plaintiffs rely, of course, on the terms of the clause paramount itself which says nothing about a charterparty.  They contend that is itself an indication that the phrase in clause 41 to which I have referred was not intended by the parties to go further than to deem the provisions of the United States Act to be incorporated in bills of lading and not the charterparty itself.  I see the force of this but, as indicated, I think the submission does not do justice to the terms of clause 41.

     In my opinion, therefore, the provisions of the United States Act are incorporated in the charterparty.  They are incorporated, not by the operation of the Act, but by the agreement of the parties.  The provisions of the Act must therefore be read in the light of all the other provisions of the charterparty which may bear on the meaning and effect which they are to have.  If I had accepted the plaintiffs' submissions concerning the meaning and effect of clause 2 of the charterparty, it may have been the case that there would have been a conflict between the provisions of clause 2 and the relevant provisions of the United States Act.  In the event of such a conflict, it may well have been right to resolve that conflict in favour of giving clause 2 the dominant operation and treating inconsistent provisions of the Act, incorporated as they were by contract, as repugnant to one of the principal provisions of the charterparty.  But in the light of the meaning I have ascribed to clause 2, this problem does not arise because the provisions of the United States Act, when applied to the charterparty, will provide a code which will indicate fairly clearly what the respective rights and obligations of the parties are under the charterparty itself. 

     In Adamastos Lord Reid thought (at 177) that it might appear to some to be "legalistic" to hold that a contract meant something which no reasonable businessman could have intended.  He added, however, that if a court was precluded from remaking a contract and was only entitled to construe the words which the parties had used, the court might have to tell them that they had produced a very unreasonable result.  This case does not give rise, in my opinion, to that sort of problem.  To my mind the construction of clause 2 which I have adopted and the incorporation of the United States Act into the charterparty give it a sensible meaning and result in it operating in a commercially sensible way.  In other words my reading down of the word "only" in clause 2 so as to cut down the operation of that clause contended for by the plaintiffs is balanced by my construction of clause 41 which restores the
apparent imbalance which my construction of clause 2 might otherwise have been thought to bring about.

     I do not pretend that the exercise of construction in which I have had to engage has been straightforward or without difficulty.  Other minds may have different views on the meaning of the various provisions.  But I think in this day and age, if, on the basis of the words which the parties have used, one can reach a result which seems to give to the contract a commercially sensible operation, one can have some confidence in thinking that one has achieved a result which was probably the one which the parties intended.

     I think that my conclusions so far do justice to the very comprehensive arguments presented on both sides concerning the construction and operation of the charterparty.  I have by no means mentioned every point that was argued nor have I referred to every authority which was relied upon by the parties.  All I can say is that I have done my best to give the matter a full consideration and the outcome is as I have indicated.

     There are some further matters, however, which I need to address.  As mentioned earlier, two bills of lading were issued in respect of the shipments which were made under the charterparty.  Clause 9 of the charterparty, another of the printed clauses from which words have been deleted, provides
that the "Captain" is to sign bills of lading at such rate of freight as presented without prejudice to the charterparty.

     The relationship between a charterparty and a bill of lading issued pursuant to it was considered by the Court of Appeal in England in The President of India v Metcalfe Shipping Co. Limited [1970] 1 QB 289.  I do not find it necessary to discuss the decision in detail.  It is enough to say that the court held that the charterparty was prima facie the contract which governed the relations between the shipowners and the charterers for the carriage of goods unless altered by the parties, expressly or by implication.  Where the charterparty authorised the master to sign the bill of lading without prejudice to the charterparty, it operated as a mere receipt for the goods or as a document of title and had no impact on the charterparty.  The bills of lading here were not signed by the master but by Strachan Shipping Company "as agents for the Master".

     There is disagreement in the submissions as to whether the bills of lading were signed by Strachan Shipping Company as agents for Sanko or agents for Grandslam.  In the view that I take of the matter I do not need to decide that question which, in other circumstances, it may have been necessary to resolve, not in relation to the liability of Sanko but the liability of Grandslam.  In cases concerning a bill of lading which is endorsed to a consignee - it will be recalled that Sumitomo was, in effect, both the consignor and the consignee of the cargo - it will probably be the terms of the bill of lading which has been endorsed which govern the contractual relationship between the consignee and the shipowner.  A number of authorities for this proposition exist.  It is not appropriate to discuss them nor to determine whether the law is completely settled in regard to this matter.  Reference may, however, be made to Scrutton (ibid) at 62 and the decision of the Supreme Court of New South Wales in Gardener Smith Pty Limited v The Ship Tomoe 8 (1990) 103 FLR 51 and the decision of this Court in Hunter Grain Pty Limited v Hyundai Merchant Marine Co. Limited (1993) 117 ALR 507 at 510.  It follows that, as between Sumitomo and Sanko, the bills of lading operate as mere receipts for the cargo and have no effect in relation to the operation of the charterparty which governs the relationship between Sanko and Sumitomo, and as I shall indicate in a moment, Grandslam and Sumitomo.

     There is then a question concerning the meaning and effect of printed clause 12 of the charterparty which provides that indemnity for non-performance of the charterparty is not to exceed "proved damages" exceeding estimated amount of freight.  A clause in these terms was considered by the Court of Appeal in England in Leeds Shipping Company Limited v Societe Francaise Bunge [1958] 2 Lloyd's Rep. 127.  The judgment of the Court was given by Seller LJ who said (at 145):

     "The charterers would have been surprised if the Eastern City, having been fully loaded with their barley, had been run on to the rocks and their cargo lost by the negligence of the master and this clause had been invoked by the shipowners to limit their liability to the freight.  If the words 'non-performance' were to be given so wide a meaning as to cover every breach of contract and the clause to be so construed as to cover every claim, however large and however arising, then it would appear to infringe a reasonable agreement as to amount and take on elements of a penalty clause which the Courts have found repugnant and consistently refused to enforce."

     Earlier Sellers LJ had said (at 144) that non-performance, in the context of the clause, would be the refusal or failure of the ship to enter upon the charterparty's obligations at all or the refusal or failure of the charterers to take any step to fulfil the contract into which they had entered.

     Counsel are agreed that the Leeds Shipping Company case provides a complete answer to the plaintiffs' submission based on clause 12.  Nevertheless, counsel for the plaintiffs submitted that Leeds Shipping Company was wrongly decided and ought not to be followed.  No argument was developed in support of this submission.  The decision is a decision of the Court of Appeal in England which has stood for very many years and I see no reason why it should not be followed.  The plaintiffs' submission based upon clause 12 is therefore rejected.

     The next matter to be addressed is the basis, contractual or otherwise, of the liability of Grandslam.  It will be recalled that Grandslam was the bare boat charterer of the
vessel from Seawall Shipping Corporation.  On the face of the evidence, it had no employees, but engaged Eastern Shipping as its manager.  There are submissions, made on behalf of Sumitomo, to the effect that the reality of the situation was that Sanko was Grandslam's manager.  For the moment, however, I propose to assume that Grandslam had no employees and engaged Eastern Shipping as its manager.  The better view of the evidence is that the members of the crew, including the officers, on board the Sanko Harvest at the time of the grounding, were employed by Eastern Shipping.  It will also be recalled that Grandslam chartered the vessel, pursuant to a time charter, to Sanko and that Sanko in turn chartered the vessel to Sumitomo under a voyage charter for the voyage in question.

     The relationship between Sumitomo and Sanko was, as I have earlier decided, governed by the charterparty, although, by reason of their incorporation into that contract, the terms of the United States Act contained important provisions affecting their legal relationship.  The primary submission of counsel for Sumitomo was that the only relationship between Sumitomo and Grandslam was that of bailor and bailee, that Grandslam was a bare bailee of the cargo and that it was liable to Sumitomo for damages because it had not shown that it had taken due care of the goods.  In the submission of counsel for Grandslam, the relationship between Grandslam and Sumitomo was governed also by the charterparty with the consequence that the terms and conditions which applied between those parties were identical with those which applied between Sanko and Sumitomo.

     The principal authorities which it is necessary to consider are Elder Dempster & Company Limited v Paterson Zochonis & Company Limited [1924] AC 522 and Wilson v Darling Island Stevedoring & Lighterage Company Limited (1956) 95 CLR 43.  It is to the second of those authorities to which I first turn.  The majority of the Court comprised Dixon CJ, Fullagar J and Kitto J.  The judgment of Fullagar J was agreed in by Dixon CJ (at 52).  Fullagar J's judgment will be remembered for a number of things but, in passing, one of the noteworthy things about it is what was said about it by Viscount Simonds in the decision of the House of Lords in Scruttons Limited v Midland Silicones Limited [1962] AC 446.  Viscount Simonds said (at 472), after referring to the agreement of Dixon CJ with the judgment of Fullagar J in Darling Island:

     "So do I--with every line and every word of it, and, having read and reread it with growing admiration, I cannot forbear from expressing my sense of the loss which not only his colleagues in the High Court of Australia but all who anywhere are concerned with the administration of the common law have suffered by his premature death."

     I have mentioned this, not because it has any direct relevance to the outcome of this case, but because I think it appropriate, from time to time, to remind ourselves, in an age of change undreamt of by those who have preceded us, of the great bond that there was, and, in my respectful opinion, still is, amongst the distinguished judges of the common law world.

     Each of the cases to which I have referred concerned the question whether third parties might rely on the benefit of terms of contracts between shippers of goods, or consignees who took assignments of bills of lading, and shipowners where there were words in the contracts which indicated that others were to have the protection of provisions such as exception clauses.  The House of Lords in Elder Dempster and the High Court in Darling Island reached different conclusions about this matter.  But different results were reached because of differences in the documents and in the facts of each of the cases.  Fullagar J said (at 77) that Elder Dempster turned on the very special and peculiar relationships which were created when goods were consigned to be carried on a chartered ship. 

     Later Fullagar J referred to the facts in Elder Dempster and said (at 78):

     "The master signed the bills of lading 'P. Bedford, agent,' the word 'agent' being printed.  Rowlatt J. held that the shippers had contracted with Elder, Dempster, the charterers, and not with the owners, and that decision was not contested on appeal.'  (Contrast Wilston S.S. Co. v Andrew Weir & Co. (1925) 31 Com. Cas. 111.)  In my opinion, what the Elder Dempster Case (1924) A.C. 522 decided, and all that it decided, is that in such a case, the master having signed the bill of lading, the proper inference is that the shipowner, when he receives the goods into his possession, receives them on the terms of the bill of lading.  The same inference might perhaps be drawn in some cases even if the charterer himself signed the bill of lading, but it is unnecessary to consider any such question."

     For present purposes the point which needs to be made is that, despite things that have been said by commentators over the years about Elder Dempster, it is still good law.  And, because of the judgment of Fullagar J in Darling Island, it represents the law in Australia in a case in which there are similar facts and documents.  There was no submission to the contrary of this except that counsel for Sumitomo said that the case was confined to its own very narrow circumstances and that the reality was that it had not been applied either in England or Australia for very many years.  It is not appropriate to write a history of the developments in this area of the law which occurred after the decision in Elder Dempster but much of that history up to 1962 is to be found in Fullagar J's judgment.  A later chapter in the history would include reference to the decisions of the Privy Council in New Zealand Shipping Co. Limited v A.M. Satterthwaite & Co. Limited (1975) AC 154 and Port Jackson Stevedoring Proprietary Limited v Salmond & Spraggon (Australia) Proprietary Limited (1980) 144 CLR 300.  Satterthwaite was an appeal from a decision of the New Zealand Court of Appeal and Port Jackson an appeal from the decision of the High Court itself ((1978) 139 CLR 231).  The decision of the High Court was reversed.  The later history would show that the two decisions of the Privy Council have led to controversy both in subsequent judicial decisions and in the writings of various commentators.  But none of that is relevant for the outcome of
this case.  What is relevant is the decision in Elder Dempster to which I now return.

     The facts in Elder Dempster occurred prior to the coming into force of legislation giving effect to the Hague Rules.  The bills of lading in question in the case protected the charterers of the vessel from claims for damages due to bad stowage.  Damage to a cargo of palm oil was caused because heavy cargo was placed directly on top of the casks.  The casks were crushed and the greater part of the oil was lost.  The charterers and the shipowners were sued for damages for breach of the contract of carriage evidenced by the bills of lading.  It was held that the damage to the cargo was not caused by the unseaworthiness of the ship, as it was alleged to have been by reason of the absence of 'tween decks or the non-provision of a temporary 'tween deck.  The damage was held to have been caused by bad stowage.  The charterers were therefore protected by the exceptions in the bills of lading.  It was also held that the shipowners were entitled to the same protection.

     The relevance of the case for present purposes is in relation to the question of the terms and conditions upon which the shipowners carried the cargo.  In the course of his speech, Viscount Cave said (at 533-4):

     "There remains a further question, which arises between the shippers and the shipowners, the Griffiths Lewis Steam Navigation Company.  It is contended on behalf of the respondents that, assuming their loss to be due to bad stowage on the part of the master of the ship, the owners are not protected by the conditions of the bill of lading, to which they were not parties, and are accordingly liable in tort for the master's negligence.

     .....................................................

     I do not think that this argument should prevail.  It was stipulated in the bills of lading that 'the shipowners' should not be liable for any damage arising from other goods by stowage or contact with the goods shipped under the bills of lading; and it appears to me that this was intended to be a stipulation on behalf of all the persons interested in the ship, that is to say, charterers and owners alike.  It may be that the owners were not directly parties to the contract; but they took possession of the goods (as Scrutton L.J. says [in the Court of Appeal]) on behalf of and as the agents of the charterers, and so can claim the same protection as their principals."

     To the same effect is the speech of Viscount Finlay where his Lordship said (at 547-8):

     "It was urged for the plaintiffs that, even if their case against Elder, Dempster & Co. failed on account of the terms of the bill of lading, they ought to succeed against the owners, Griffiths Lewis Steamship Navigation Company, Ld.

     It was said that the master and crew were in the service of this company as owners, and that their conduct in putting an excessive weight on the palm oil barrels amounted to a tort, for which the owners were liable, as having been committed by their servants.

     .....................................................

     It appears to me that if the plaintiffs are to succeed it must be upon the bill of lading.  The owners of the goods put them on board the Grelwen to be carried on the terms of the bill of lading.  It is said that the imposition of the weight of the kernels on the top of the palm oil barrels was a wrongful act, resulting in the destruction of the barrels and the loss of the oil, and that for this wrongful act, committed by their servants, the shipowners are liable, apart from contract altogether, so that the plaintiffs, in claiming from the shipowners, would not be hampered by the conditions of the bill of lading.  This contention seems to me to overlook the fact that the act complained of was done in the course of the stowage under the bill of lading, and that the bill of lading provided that the owners are not to be liable for bad stowage.  If the act complained of had been an independent tort unconnected with the performance of the contract evidenced by the bill of lading, the case would have been different.  But when the act is done in the course of rendering the very services provided for in the bill of lading, the limitation on liability therein contained must attach, whatever the form of the action and whether owner or charterer be sued.  It would be absurd that the owner of the goods could get rid of the protective clauses of the bill of lading, in respect of all stowage, by suing the owner of the ship in tort.  The Court of Appeal were, in my opinion, right in rejecting this contention, which would lead to results so extraordinary as those referred to by Scrutton L.J., in his judgment."

     Lord Sumner said (at 564-5):

     "It may be, that in the circumstances of this case the obligations to be inferred from the reception of the cargo for carriage to the United Kingdom amount to a bailment upon terms, which include the exceptions and limitations of liability stipulated in the known and contemplated form of bill of lading.  It may be, that the vessel being placed in the Elder, Dempster & Co.'s line, the captain signs the bills of lading and takes possession of the cargo only as agent for the charterers,though the time charter recognizes the ship's possessory lien for hire.  The former I regard as the preferable view, but, be this as it may, I cannot find here any such bald bailment with unrestricted liability, or such tortious handling entirely independent of contract, as would be necessary to support the contention."

     Lord Dunedin and Lord Carson agreed in the speeches of Viscount Cave and Lord Sumner (see at 548 and 565).  Viscount Finlay wrote a dissenting judgment but what he said in relation to the point in question here is in line with what the other members of the House of Lords said. 

     In this case the bills of lading are signed by Strachan Shipping Company as agents for the master.  It is plain, on the face of the evidence, that the master was employed by Eastern Shipping or, perhaps, Grandslam although that is not the view I take of the evidence.  In my opinion there is no basis for saying that the bills of lading were signed on behalf of Sanko.  They were signed on behalf of the master who, in turn, was employed on behalf of the time charterer of the vessel, i.e. Grandslam.  The bills of lading provide that all terms and conditions of the charterparty are incorporated in them and they also provide that the Hague Rules, in practical terms the United States Act, are to apply to the contract.  In those circumstances there can be no doubt that the provisions of the voyage charterparty and the Hague Rules are incorporated in the bills of lading. 

     There was discussion during the argument about whether, assuming the provisions of the charterparty were incorporated in the bills of lading, the incorporation of them was in terms or, on the other hand, upon the basis that the provisions of clauses such as clause 2 would be construed mutatis mutandis so that they would be read as referring to the time charterer, i.e. Grandslam, rather than Sanko.  In my opinion, the relevant rights and obligations of the parties to the charterparty are governed by the Hague Rules as applied by clause 41 of the charterparty and the United States Act which the clause effectively incorporates.  The same applies in relation to Grandslam.

     In addition to relying on Elder Dempster and Wilson v Darling Island, counsel for the plaintiffs relied upon a decision of my own, when a judge of the Supreme Court of New South Wales, in J. Gadsden Pty Limited v Australian Coastal Shipping Commission (20 September 1976, unreported, but affirmed on appeal; see [1977] 1 NSWLR 575 per Samuels JA at 582).

     A distinguishing feature of Gadsden from the present case is that the master did not sign the bills of lading nor were they signed by the agent of the ship or its owners.  They were signed by an employee of the charterer.  I said (at 26) that there was therefore not to be derived from the bills of lading any indication that the defendant received into its care the goods in question upon and subject to the terms of the bills.  Here the position is different.  In the view I take of the matter the bills of lading were signed on behalf of the time charterer, Grandslam.  The Elder Dempster case therefore applies and has the effect of incorporating the terms of the Hague Rules, i.e. the United States Act, into the bills.  That is in accordance with the decision of Fullagar J in Darling Island.

     The conclusion at which I have arrived, therefore, is that both the charterparty and the bills of lading were subject to the terms of the United States Act.  Because of my view of the meaning and effect of clause 2 of the charterparty, it is the United States Act which governs the respective rights and obligations of the parties.  By that I mean the respective rights and obligations of Sumitomo and Sanko and also of Grandslam and Sumitomo.  The relevant provisions of the United States Act are s.3(1) and s.4(1).  Section 3(1) obliges the carrier to exercise due diligence to make the ship seaworthy and properly to man, equip and supply the ship.  The onus of establishing a breach of this provision is upon a claimant.  It is therefore Sumitomo which must demonstrate that the Sanko Harvest was unseaworthy or not properly manned or equipped.  If that onus is discharged, both Sanko and Grandslam will be liable unless they demonstrate that the loss suffered, although resulting from unseaworthiness, was not caused by want of due diligence on their part to make the ship seaworthy and to secure that the ship was properly manned and equipped.  Section 4(1) needs to be read in conjunction with s.4(2), para. (a) of which provides that neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship.  As earlier mentioned, it is upon that provision which the plaintiffs rely to escape liability if the Hague Rules are applicable as I have decided they are. 

Causation

     Before I come to the question of unseaworthiness, I need to mention a question of causation.  There was a contest between the parties as to whether unseaworthiness, if established, needed to be the cause, or a cause, of the loss, or whether it would be sufficient if it were established that the vessel were unseaworthy in an absolute sense.  In my opinion, the preferable view, and the view which I adopt for the purpose of determining this case, is that the unseaworthiness, if established and not excused by s.4, must be a cause of the loss.  So much is established by The Europa [1908] P 84 and Kish v Taylor [1912] AC 604.  I also refer to the dissenting judgment of Viscount Finlay in Elder Dempster in which he said (at 536) that, for any loss or damage caused by unseaworthiness, the shipowner is liable, but the mere fact that the ship was unseaworthy does not make the shipowner liable unless the loss was caused by the unseaworthiness.  I refer also to Scrutton (ibid at 87) where it is said that the shipowner will be liable in damages for loss caused by unseaworthiness unless he is expressly protected from such liability by exceptions in the charter or bill of lading.  Both The Europa and Kish v Taylor are cited in support of this proposition.  Accordingly, I proceed on the basis that even if unseaworthiness is established, it will only be relevant to the determination of the claim if it is shown to have been a cause of the loss suffered by Sumitomo.  This view is confirmed by a consideration of the terms of s.4(1) of the United States Act which commences with the words, "Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence...".  That is a clear indication that unseaworthiness, if it is established, must be causative of the loss before a claimant will be entitled to recover.

     If, contrary to the conclusion I have reached, the provisions of clause 2 of the charterparty, upon their proper construction, denied Sanko's liability except in the specific cases provided for in the clause, I would have reached a similar conclusion.  On that approach s.4(1) of the United States Act would be inapplicable but, in my opinion, that would make no difference.  Unseaworthiness and failure properly to equip the vessel falling within the clause would be irrelevant unless a cause of Sumitomo's loss.

Unseaworthiness

     I next consider the question whether Sumitomo has established that the vessel was unseaworthy.  The question of unseaworthiness was dealt with in the submissions made on Sumitomo's behalf under a number of headings.  In summary, it is alleged that the vessel was unseaworthy for the following reasons:

     (a)  it was sailing on uncorrected charts;

     (b)  the vessel was not manned by competent officers.

     There are other matters dealt with in the submissions which, although stated to be separate matters upon which the submission of unseaworthiness was based, are in my opinion but aspects of the sailing of the vessel on uncorrected charts and the failure to man it with competent officers.  I deal with these matters as follows.

Unseaworthiness - Sailing on Uncorrected Charts

     The evidence to which I have referred establishes plainly that the vessel was sailing on uncorrected charts.  It is to be understood that at this stage I am not dealing with the question whether that was due simply to the act, neglect or default of the master or other servants of Grandslam (or Eastern Shipping) in the navigation or in the management of the ship; see s.4(2)(a) of the United States Act.  My finding, at the moment, relates only to the objective question whether the ship was unseaworthy because it was sailing on uncorrected charts.  Clearly it was. 

     The next questions concern the matters upon which the plaintiffs rely under s.4 of the United States Act.  The starting point for a consideration of those matters is, in my view, the decision of the House of Lords in The Marion (Grand Champion Tankers Ltd v Norpipe A/S [1984] AC 563).  In that case the anchor of the vessel fouled an oil pipeline on the sea bed causing severe damage to the pipeline.  Several oil companies which suffered loss commenced an action against the shipowners seeking damages for negligence.  The shipowners admitted liability because the damage was caused by the negligence of the ship's master who was navigating with the aid of an obsolete chart on which the position of the pipeline was not marked.  The owners sought a decree limiting their liability on the ground that the incident causing the damage occurred "without their actual fault".  The limitation regime upon which they relied was that provided for in the 1957 Convention then in force in the United Kingdom.  The case is thus one concerning the 1957 Limitation Convention and is not of direct application to the question of the breach of obligation for which Sumitomo sues the plaintiffs in this case.  Nevertheless, the case, in my opinion, is helpful in indicating the way in which the Court here should approach the problem it has in relation to uncorrected charts in the context of the extent of the plaintiffs' obligation under the relevant provisions of the United States Act.

     The principal judgment in the House of Lords was delivered by Lord Brandon of Oakbrook.  His Lordship said (at 572) that there was a time when courts dealing with contested limitation actions considered that shipowners or ship managers sufficiently discharged their responsibilities if they appointed a competent master and thereafter left all questions of safe navigation, including the obtaining at the owners' expense of all necessary charts and other nautical publications, entirely to him.  His Lordship said that the former approach had now been out of date for more than 20 years as appeared from the decision of the English Court of Appeal in Rederij Erven H Groen v The England [1973] 1 Lloyd's Rep.373 ("The England").  Lord Brandon referred to what Willmer LJ had said in The England (at 383) namely:

     "It seems to me that it is no longer permissible for owners or managers to wash their hands so completely of all questions of navigation, or to leave everything to the unassisted discretion of their masters.  This relatively new approach, as I think it is, was well illustrated by the decision of this court in The Lady Gwendolen [1965] P.294."

     Willmer LJ then referred to what he himself had said in The Lady Gwendolen, namely (at 345):

     "It seems to me that any company which embarks on the business of shipowning must accept the obligation to ensure efficient management of its ships if it is to enjoy the very considerable benefits conferred by the statutory right to limitation."

     In the course of his judgment in The Marion, Lord Brandon referred to the evidence which had been before the trial judge, Sheen J.  He said that, at the hearing of the appeal, the House of Lords was referred to only comparatively small parts of the vast mass of evidence on practice.  Instead, counsel for the 13 respondents placed before the House, in the form of two schedules, the contents of which were not seriously challenged by counsel for the appellants, a summary of the essential evidence of practice adduced on either side.  His Lordship continued (at 575-6):

     "Those schedules show, as counsel for the appellants had no alternative but to admit, that the finding of Sheen J. that, on the totality of the evidence, a large majority of shipowners of high reputation regard the provision of charts and their maintenance as matters which are quite properly left to the responsibility of the master, without any supervision by owners or their managerial representatives, cannot be supported.

     The schedules instead are indicative of three main matters.  The first matter indicated by them is that, while a substantial number of reputable shipowners do rely solely on their masters for obtaining and maintaining charts, without exercising any supervision over them in this respect, a majority of such shipowners are not content with such a system or lack of system.  That majority, while relying primarily on their masters for obtaining and maintaining charts, exercise a degree of supervision over them in order to satisfy themselves that they are carrying out properly their duties in that field.  The forms of supervision used vary considerably, depending no doubt on the size of the companies concerned, the number and types of ships which they operate, and the trades in which such ships are employed.  The forms of supervision used, however, include, first, regular or random checks by marine superintendents or other qualified managerial staff when ships are visited by such persons in port; secondly, the complete overhaul, in the form of inspection and checking of chart rooms and their contents, at regular or irregular intervals; and, thirdly, the complete landing of the contents of chart rooms for inspection and checking, again at regular or irregular intervals.

     The second main matter which the schedules indicate is that the practice of relying solely on the master, without exercising any supervision over him, is characteristic mainly of shipowners in the U.S.A.  It further appears, from some of the evidence, that one reason for this sole reliance is, as one witness very frankly put it, that some shipowners 'do not want to know'.  That deliberate ignorance may well be attributable to the fear of the award of punitive damages by juries in the U.S.A. in the event of marine casualties caused by the use of obsolete or uncorrected charts of which, if shipowners did exercise supervision, they might be found to have been actually or constructively aware.

     The third matter which the schedules indicate is that, during the last 20 years or so, an increasing number of shipowners have adopted a system involving
at least some degree of supervision of their masters in relation to charts."

     Lord Brandon observed (at 576) that, at the relevant time, the Marion was operating under the Liberian flag.  He referred to Liberian Notices to Mariners which had been issued, not only after, but also before, the ship changed her flag from the Panamanian flag to the Liberian flag.  One of these notices stated that all ships were to carry adequate and up to date charts, sailing directions, lists of lights, notices to mariners, tide tables and all other nautical publications necessary for the intended voyage.  The notice was but a passing on to Liberian vessels of an amendment adopted by the IMCO assembly.  A further notice stated that reports on investigations of strandings and other navigational casualties continued to show an alarming increase in the number of such accidents wherein the direct or proximate cause had been attributed to failure to have on board up to date charts, publications, notices and similar navigational data.

     After referring to these matters, Lord Brandon quoted from the judgment of Dunn LJ who had been a member of the Court of Appeal from which the appeal to the House of Lords was brought.  In the quoted passage Dunn LJ said ([1983] 2 Lloyd's Rep.156 at 164):

     "It seems to me, in the light of the Liberian Marine Notices, that the practice, if it be a practice, of leaving the correction of charts wholly to the master without even knowing what if any system was in operation on board the vessel, and without any supervision of the master and his officers, was fraught with danger, and not consistent with the high standard of care the judge held was owed by ship owners in relation to charts.  If, as here, the master is grossly negligent and effectively operates no system at all for the correction of charts, that will not come to light unless and until there is a casualty.  I cannot regard that as a satisfactory situation where the safety of lives and valuable property is concerned."

     After quoting this passage, Lord Brandon continued (at 576-7):

     "What Dunn L.J. was there saying about the correction of charts still basically current, applies a fortiori to the destruction or effective segregation of charts which have become obsolete, and have on that account been superseded by other and more modern charts.

     I stated earlier, after referring to what had been said by Sir Gordon Willmer in The England [1973] 1 Lloyd's Rep. 373, 383 that what he there described as 'This relatively new approach' should now be regarded as the correct approach in law to the problem of actual fault of shipowners or ship managers in contested limitation actions; and that it would be right to apply that approach to the facts of the present case.  Proceeding on that basis, I entirely agree with the strictures made by Dunn L.J. on the system, or perhaps more correctly the lack of system, followed by FMSL in their management and operation of the Marion, so far as the obtaining and keeping up-to-date of charts are concerned.  It was the duty of Mr. Downard to ensure that an adequate degree of supervision of the master of the Marion in this field was exercised, either by himself or by his subordinate managerial staff, Mr. Lowry or Mr. Graham, each of whom was fully qualified to exercise such supervision.  I am further of the opinion that, in so far as Mr. Downard failed to perform his duty in this respect, such failure constituted in law actual fault of the appellants.

     Having dealt with the first criticism of Mr. Downard, that he had no proper system for ensuring that the charts and other nautical publications on board the Marion (a) were not obsolete or superseded, or (b), if still current, were kept corrected up-to-date, and having held that that criticism was justified, I turn to the second criticism made against him."

     It is not relevant at this stage to refer to his Lordship's treatment of the second criticism of Mr Downard.  It is of more relevance in relation to the questions to be decided under the 1957 Convention.  That is a matter to which I shall come later on.     But I should explain that FMSL is a reference to the Marion's managers, a company known as Fairfield-Maxwell Services Limited.  Messrs Downard, Lowry and Graham were all employees or other officers of FMSL.  Earlier in his judgment, Lord Brandon had said (at 571) that Mr Downard was the person whose fault would constitute, as a matter of law, the actual fault of the appellants for the purposes of the 1957 Convention.  He was the managing director of FMSL.  Lord Brandon also said that, although FMSL employed three other persons in a managerial capacity, namely Mr Lowry as operations manager, Mr Graham as assistant operations manager, and Mr Martinengo as superintendent, no faults of theirs, if they occurred, could constitute, as a matter of law, the actual fault of the appellants.

     The authorities to which I have referred and some others were considered by Heerey J in Alstergen v Owners of the Ship "Territory Pearl" (1992) 36 FCR 186 at 187-193.  His Honour followed The Marion and some of the earlier, but more recent cases, including The Lady Gwendolen and The England.  Towards
the end of his treatment of this topic, his Honour said (at 192-3):

     "It was argued by Mr Carter on behalf of the defendants that these authorities are limited to circumstances where there has been some event which puts the shipowner on notice that direction or supervision of the master is required.  I do not agree.  While there was some evidence in both The Lady Gwendolen and The Marion of facts which should have prompted inquiries by the shipowner, and such evidence was obviously relevant to the issue of actual fault or privity (as it is in the present case), the judgments do not suggest that the responsibility of the owner is conditioned on such a finding.  In respect of The Marion Mr Carter pointed to evidence which showed that the shipowner had received, prior to the accident, a report of a Liberian Government inspection which included, to use Lord Brandon's words (at 577f), the 'devastating comment' that corrections of charts had been omitted for several years.  However a perusal of the report (at 576-577) shows that this remark related to a second criticism of the shipowner.  There was a first, and quite independent criticism, viz, that the owner had no proper system for ensuring that charts on the vessel were not obsolete or, if current, were kept up to date.  This was held to be actual fault of the owner (see also 579e) notwithstanding that it did not depend on prior notice of the master's default.

     I should add that in The England there was no suggestion of any circumstance prior to the collision which should have put the owner on notice to supply the master with a copy of the Port of London River By-laws."

     I am in respectful agreement with what the members of the House of Lords said in The Marion and with the earlier English cases to which I have referred.  I am also in agreement with Heerey J in his general approach to the problem he had before him.  And, with respect, I wish specifically to record my agreement with what he has said in the quoted passage from his judgment.

     In saying what I have, I bear in mind that all the cases to which I have referred are limitation cases under the 1957 Convention.  But, in my opinion, as counsel for Sumitomo submitted, they also have a relevance in relation to the initial question whether the plaintiffs were in breach of their obligations under the United States Act.  I shall develop reasons for that view after I have considered the evidence.  But I wish to say at this point that the general course of the English decisions, with which I have indicated my respectful agreement, is in line with the view that high standards of skill and seamanship are required of those who navigate ships throughout the world and, further, that those responsible for operating and/or managing ships have an equally onerous obligation to see to it that their ships are safe and properly manned and equipped for the voyages which they undertake.

     I turn now to the evidence in relation to the question of chart correction.  On 2 April 1987 Eastern Shipping distributed a circular letter to all masters and chief engineers of vessels under its management.  The letter began by saying that, as had been recently realised, the policy of chart correction and management of charts/publications on board vessels had been varied from ship to ship since financial problems of the company which had begun in August 1985.  These were said to be due to the suspension of the automatic supply of tracings and other corrections.  The circular said that special attention was being paid to this matter and "endeavouring for all chart(s) correction, for which we are highly appreciated."  By this I take it that the author of the letter was saying that Eastern Shipping appreciated the importance of chart correction.  A number of guidelines were then laid down.  These were as follows:

     "1.  Coverage area

          To maintain the present coverage of charts on board.  Most of the vessels have charts/pubs covering world-wide, with B.A. charts mainly, and American charts/pubs for U.S.A. and Japanese one for Japan waters.

          When voyage fixed and route decided, please check immediately whether enough charts and latest edition charts on board.

     2.   Charts Correction

          BA/N.O./JAPAN N.T.M. are supplied automatically at certain intervals.

          You must use up-dating corrected charts and you are requested to maintain up-to-date all charts on board, not only the intended route, as practicable as possible.

          Please maintain correction log with notebook or correction cards and keep all 'Notices to Mariners' on board.

          As a reference of correction log for BA charts, we suggest you to use NP234 (CUMULATIVE LIST OF ADMIRALTY NOTICES TO MARINERS), which is issued twice a year and supplied automatically together with NTM.

          If you still require a computer output summary of correction list made by CORNES CO., we may supply upon request."

The emphasis is mine.

     There followed discussion concerning the supply and purchase of charts, new editions of charts and a number of other matters to which it is unnecessary to refer.  The important point to note is that under the paragraph headed "Charts Correction" the instruction was that masters were to use "up-dating" corrected charts and were requested to maintain up to date all charts on board, not only the charts for the intended route "as practicable as possible".

     So far as it went the instruction was an appropriate one to give.  It was criticised, however, by some of the experts who gave evidence in the case upon the basis that it did not go far enough.  In their opinion it should have said in clearer terms that all charts on board the vessel were to be corrected up to date.

     The document to which I have referred is not the only document in evidence instructing masters of vessels to keep charts corrected up to date.  A number of others are referred to in one of Captain Bozier's statements at pp.28-31.  I see no purpose in going to the detail of what Captain Bozier has summarised at those pages but, in my consideration of the matter, I have taken into account what he has said and the documents to which he has referred.

     It is plain that the instructions to keep charts corrected up to date were not obeyed at least on the Sanko Harvest.  The notice to mariners AUS219 required corrections to be made to charts BA1059, BA3189 and AUS119.  The corrections which the notice required to be made included, so far as concerns charts BA3189 and AUS119, the underwater rocks upon which the vessel foundered.

     As mentioned earlier the notice was dated 21 May 1988 and was available soon afterwards.  The chart correction log shows that it was on board the vessel where it is noted in relation to each of the charts BA1059, BA3189 and AUS119.  I cannot be specific as to the date of its receipt but the evidence of Mr Sensui, the manager of the marine section of Eastern Shipping, to the detail of whose testimony I shall later refer, establishes that notices to mariners and other publications were received by vessels no more than two months after their date of issue.  He said that the delay between the date of issue and the receipt of a publication by a vessel depended in part upon the vessel's schedule.  The longest journeys undertaken by Sanko vessels were approximately four weeks.  Allowing for a delay of one or two weeks between the date of issue and date of receipt, the maximum delay before delivery to a vessel was, according to Mr Sensui, about eight or nine weeks.

     Evidence to which counsel for Sumitomo has drawn my attention establishes that proper practice required that the corrections noted in the notice to mariners should on any view have been made much earlier than the commencement of the voyage upon which the vessel eventually foundered.  The correction should have been made by the second officer on board when the notice to mariners was first received in 1988 or by any subsequent second officer in performance of the 1987 and earlier instructions to correct all charts on board.

     Furthermore, the vessel, with a different crew, had engaged in an earlier voyage in January 1989 which had taken it across the Great Australian Bight.  It then called at Thevinard, the port for Ceduna, a South Australian town towards the eastern side of the Bight.  From there it travelled across the Bight for other ports.  Although these did not include Esperance the charts should have been corrected in relation to that voyage because proper practice requires correction of charts for coasts adjacent to a vessel's course in case, for instance, of an emergency necessitating an unexpected call at a port on that coast.

     The charts not having been corrected at any of these points of time, they should have been corrected by Mr Kim, the second officer from whom Mr Gim took over for the voyage in question.  Proper practice required that he ensure that all charts for the forthcoming voyage to Esperance were corrected before he handed over his duties.  But, as I have earlier found, he was not accustomed to making any corrections to charts at all.

     The charts for Australian waters or, indeed, the whole outfit of charts, could have been updated by a chart agent at any time after April 1988.  An alternative was that the ship could have been supplied with corrected up to date charts before the voyage commenced or even at Cristobal where it took on bunkers before beginning its voyage across the Pacific.

     In any event, as I have found, the charts should have been corrected by Mr Gim.

     The totality of this evidence tends to establish that, whatever the instructions to masters of Sanko vessels may have said, there was no practice of correcting charts or making all corrections to charts in force at any time after 1988 and possibly before that.  I have earlier remarked on the fact that charts on board the vessel for earlier sections of the voyage were not saved from the vessel although they could have been.  These would have shown, one way or another, whether there was on board the vessel a practice of correcting charts for the instant voyage.  There is no explanation as to why these charts were not saved.  As I have said, I think I can safely draw the inference that nothing on them would have assisted the plaintiffs' case.

     Mr Kenko Ohtsuka resigned as a superintendent employed in the marine section of the ship management department of Eastern Shipping in January 1992.  He had held the position since November 1989 so that he was a superintendent in the marine section of the ship management department of Eastern Shipping at the time that the vessel foundered.  Mr Ohtsuka said that one of his main responsibilities was to ensure that documentation was sent on a regular basis to all vessels managed by Eastern Shipping.  In para. 9 of his statement he said that the Eastern Shipping chart correction procedure did not require that each chart carried on board a vessel be corrected whenever a notice to mariners was received which affected that chart.  The system required that each chart to be used on a particular voyage be corrected for that voyage.  His statement was silent on the question whether the charts were to be corrected at the beginning of the voyage or during the voyage as the vessel progressed towards its destination.

     Mr Yasuhiro Sensui was appointed manager of the marine section of Eastern Shipping on 16 June 1990.  He said that the marine section was within Eastern Shipping's ship management department.  He was manager of the section at the time he gave his evidence.  Mr Sensui said that, when a notice to mariners was received on the vessel, the date of its receipt had to be inserted on the document entitled "Record of Chart Correction Log" for the relevant chart opposite the notice to mariners number for the relevant year.  Corrections to charts in notices to mariners were numbered sequentially.  The chart correction procedure in place in 1990 required that the year and correction number be recorded in the chart correction log against the particular chart.  The procedure then provided that when the chart was to be used for a proposed voyage, the second officer had to make all corrections to it and, having done so, had to cross out the entry in the chart correction log which referred to the number of the notice to mariners requiring that correction of that chart.  This was the practice referred to by Mr Han whose evidence I have earlier discussed.

     Mr Hiromi Kobayashi is a director and the general manager of the general affairs department of Eastern Shipping.  In the course of his oral evidence he said that "the Company" instructed that all charts should be corrected.

     Mr Kobayashi's evidence is consistent with the instruction to which I referred earlier dated 2 April 1987.  The evidence of Mr Ohtsuka and Mr Sensui is inconsistent with both Mr Kobayashi's evidence and the instruction.  Captain Kim's evidence on the question is interesting.  In his oral evidence he said that, when he first became second officer of a Sanko vessel, he was instructed to correct all charts on it as notices to mariners came in.  He said that there were about 2,000 charts.  He said that there was a change in procedure after 1985 because it took "too many hours" for all chart corrections.  Thereafter he corrected the charts "affected" for the voyage in question.  He said that this was in accordance with what the master of the vessel upon which he was then sailing, Captain Kim Yum Sik, told him.  He said that after that time it was his belief that "generally" on Sanko vessels only charts for the voyage were corrected.  In his evidence he said that the master had told him that the other chart corrections "for second officer are so tremendous that from now on the chart correction should be covering the port that ship is sailing and all the other charts are by making the entry into the log book will suffice".  He added that all the charts relating to the vessel's course in question were to be corrected but any other charts were to be entered in the log book.  By the log book I take him to be referring to the chart correction log.

     Later Captain Kim was shown the written instruction dated 2 April 1987.  He said that the instructions from his master, the other Captain Kim, while he was a second officer, were similar to the written instruction, namely, the second officer should correct all charts concerning the intended route or course but, whenever there was time such as when the ship was anchored, all other charts were to be corrected if practicable so that there was no difference between his practice and that required in the instruction.

     Captain Kim Yum Sik was not called to give evidence and I am asked by counsel for Sumitomo to draw the inference that any evidence he was able to give would not have been of assistance to the plaintiffs' case.  I accept that submission.

     The best I can make of all this evidence is that, whatever the written instruction may have provided or Mr Kobayashi may have said, there was not in practice in relation to the Sanko Harvest and, probably in relation to other Sanko vessels, any system for the correction of charts as a consequence of the receipt of notices to mariners other than a rather loose system of requiring the correction of charts to be used for the particular voyage.  The system, such as it was, did not seem to require that the corrections be done before the voyage commenced.  The system did, however,
require the corrections to be made.  The real question in the present case is the extent to which any system at all was supervised by those responsible for the management of the Sanko fleet.  Obviously the tighter the system is and the tighter the supervision of the system is the more likely it will be that all corrections will be picked up and made.

     In the submission of counsel for Sumitomo, good practice then required (and now requires) that competent shipowners and managers gave clear instructions to masters of its vessels that all charts on board were to be corrected up to date and, further, that that instruction be monitored and supervised to ensure that such instructions were carried out.  This is in line with the view of the House of Lords in The Marion earlier referred to.

     There is much evidence to support these propositions.  I do not refer to it all.  A great many expert witnesses were called by both sides.  Careful analyses of their evidence were made by counsel for the parties in the course of their submissions.  The experts' reports and their oral evidence occupy many pages of written material and of transcript.  I have considered this evidence as best I can.  I have decided that to refer to it all would make this already long judgment far too long and much more tedious than it already is.  For that reason, I have selected from the experts two witnesses, Professor Moreby and Captain Beetham, whose evidence I accept.  I hope that those experts to whom I do not refer by name will understand that no discourtesy is intended in my not referring to their testimony.  My only reason for taking the course I have is to keep the length of the judgment within reasonable bounds by referring to the evidence of two witnesses whose evidence I fully accept.

     The first of the expert witnesses to whom I refer is Professor Moreby.  At the time he gave his evidence, he was a visiting professor to the University of Plymouth in the United Kingdom and to the Australian Maritime College.  He was also a consultant to a number of shipping companies, particularly World Wide Shipping Agencies Limited of Hong Kong.  Professor Moreby's seagoing experience is not extensive.  But he is qualified as a master mariner and also as an extra master.  He was at sea between 1946 and 1959 when he served as an officer on Shell Company tankers.  He achieved the rank of first officer.  From 1959 to 1973 he was a lecturer or principal lecturer at the Plymouth College of Technology.  He became Dean of the Faculty of Maritime Studies at the Plymouth Polytechnic in 1973, a position he held until 1986.  He was thereafter made Professor of Shipping at the Plymouth Polytechnic.  From 1987 to 1990, he was head of the Department of Shipping and Transport, Polytechnic South West.  Polytechnic South West is now apparently part of the University of Plymouth.  It is clear that Professor Moreby is a highly respected expert in this area and, notwithstanding the fact that he has spent his life, at least since 1959, as an academic, he is dealing with a very practical subject and has been consulted over the years by many shipping organisations about their problems.

     Professor Moreby's evidence is relevant in relation to other issues and I propose to refer to it generally at this point rather than only in relation to chart correction.  I should preface my remarks about what he has said by saying that much of it appears to me to be commonsense and such as one might reasonably expect would be the position in a competently run shipping company or group of shipping companies.

     Professor Moreby commenced by referring to a document which was undated but which he recalled had been issued some 10 to 15 years ago from the International Chamber of Shipping and the International Shipping Federation.  It was entitled the "Code of Good Management Practice in Safe Ship Operation".  The introduction to the document says that merchant shipping is a specialised and technical business.  Its complexity has been increased during the last ten years by the extensive new conventions developed to improve safety and "social" conditions for the guidance of all companies operating ships.  The code contains guidelines mainly couched in general terms but some specific ones.  In particular clause 2.1.3 says that management should ensure that shore-based personnel understand fully the implications of "commercial decisions" in terms of the safety of the ship and the possible effect on the marine environment.  In other words, shore-based personnel should be aware that cost cutting (economic rationalisation in the language of some) may be taken too far.  It may reach a stage where it prejudices the safety of the ships and crews for which management has responsibility.  In clause 3.2.6, the code says that management should ensure that crew members are provided with up to date navigation and other documentation in a language or languages fully understood by them.

     After referring to some other instructions and practices, Professor Moreby said that the competent, prudent ship operator (whether owner or manager) striving to ensure that he is operating his vessels at a safe standard will have in place an overall, carefully designed, fully operational and fully documented safety management system.  Such a system should include procedures for ascertaining the competence of all personnel, procedures for verifying that each member of staff performs his or her duties at or above the required, defined level, and procedures for supplying all equipment and information needed for the safe operation of ships.

     Professor Moreby said that the very essence of safe and proper ship operations in the modern shipping industry, involving as it does shipowners, disponent owners, ship managers and manning agents was one under which the authority to carry out a specific function or functions must be clearly and unambiguously delegated from one party to another.  On the other hand one party must never abdicate its responsibilities either formally or by default.  Professor Moreby said that well managed shipping companies, concerned about the safety of their ships, their crews and their cargoes and concerned about protection of the marine environment should have in place three particular systems and procedures.  These were:

     "(a)The company will consist of seagoing personnel to operate, maintain and control the ship and shore-based personnel to establish policies and to implement and control systems and procedures.

     (b)  The company will have in place a safety policy set at a very senior level of management and a system to ensure that the policy is being followed and that the safety procedures are being carried out.  This system will consist of a clearly designated chain of responsibility so that those employees who are directly responsible for checking compliance with safety procedures are themselves checked.

     (c)  The company will establish procedures for bridge (and engine) watchkeeping duties; procedures for voyage planning and prosecution; and procedures for the correction and up-dating of charts and nautical publications.  The company then needs to establish and maintain procedures for ensuring that the safety navigation procedures are being carried out, by inspection visits to each ship in the fleet at regular and frequent intervals and at least 6 monthly, by experienced Master Mariner marine superintendents and experienced Chief Engineer engineer-superintendents."

     Having examined the evidence which was before him, Professor Moreby concluded that neither Sanko nor Eastern Shipping had in place any established procedures for navigating Sanko ships safely or any procedures for ensuring that safe navigation practices were being followed by regular, scheduled inspection visits by superintendents to each ship in the Sanko fleet.  He also thought that there were no procedures to ensure that masters were competent to command Sanko vessels or that all seafarers were properly selected and trained, and no procedures for verifying that the people manning and operating Sanko vessels were competent to perform their duties with regard to safety.  Nor was there any structured organisational system which ensured that adequate and continuous control was exercised over all activities affecting the safety system of Sanko ships.

     These, of course, are matters for the Court to determine.  They are not matters which I can adopt because of the favourable view I took of Professor Moreby as a witness.  I must examine the evidence for myself and I shall do so later on.  But it does seem to me to be important that a person of Professor Moreby's experience, and indeed distinction, should express these views.  They are views which, if the factual basis for them is supported by the evidence, I should take very much into account.

     It is convenient at this point to refer to what Professor Moreby has said about manning.  It will be recalled that that is the other principal area in respect of which unseaworthiness of the vessel is alleged.  Professor Moreby refers to the fact that some ship owning companies are the direct employers of all crew.  Others subcontract the manning, maintenance and operation of their ships to a ship management company which is the direct employer of the crew even though they may be engaged by a manning agent.  That is what has happened here.  The crew were recruited by a manning agent, Hanjoo, for Eastern Shipping which is the management company.  There is a question whether it is the manager only for Grandslam, which was the bareboat charterer of the vessel, or whether, in a de facto sense, it was also Sanko's manager.  In para. B2.1.2 of his report, Professor Moreby said in part:

     "When one or more manning agents are used by a shipowner or ship-manager, it is good practice for the shipowner or ship-manager to retain control of and monitor the activities of their manning agents by:

     (a)  issuing instructions, guidelines and/or criteria to be used by the manning agent(s) when recommending the appointment of individual seafarers;

     (b)  requiring the manning agent(s) to submit the application forms and details of all potential recruits (at whatever rank) together with the agent's recommendations to the shipowner's or ship-manager's head office for final approval and confirmation of each appointment by a superintendent and/or a personnel manager;

     (c)  retaining - and not delegating - the authority to promote a seafarer of whatever grade to the next higher grade."

     In section B3 of his report, Professor Moreby deals with chart and publication correction.  He refers in para. 3.1.2 to "The Mariners Handbook" (6th Ed, 1989) which says that a system is required to keep an outfit of charts up to date.  A system is also required which will show quickly and clearly that all relevant corrections have been received and "applied", i.e. made, and that new charts and new editions have been obtained or ordered.  He also says, quoting from "The Mariners Handbook", that all corrections to charts given in notices to mariners should be inserted on the charts affected.  In para. B3.1.3 of his report Professor Moreby says:

     "(i)  It is good practice for owners or their ship-managers to send chart corrections to each ship in the form of Notices to Mariners plus Overlay Correction Tracings.  When all the corrections contained in a particular batch of N to M's have been made, the Second Officer has to report to the Master.  The Master is then required to check personally, 10% of the corrections chosen on a random basis and only after this check has been made do both the Second Officer and Master sign the chart correction form (listing all the corrections made) and forward it to the company.  In addition, during their ship inspections held at least twice a year, company superintendents check a random sample of chart corrections.  These good practices are followed, for example, by BP and Shell Tankers (UK) (see Doc 49).

     (ii)  Alternatively, chart corrections may be sent to each ship in the form of Notices to Mariners plus Overlay Correction Tracings with clear instructions (as in BP and Shell as well) that all the corrections are made on each relevant chart; then, at 6-monthly intervals, all the folios of charts are landed and replaced by folios of fully corrected charts from the chart agents.  This system, for example, is used by Blue Star.

     (iii)Some large ship-management companies have contracts for automatic chart up-dating services with one or two chart agents.  Under these services new charts and new editions are automatically supplied to each ship as soon as they are published.  The agents also send notices to mariners plus tracings to each ship.  In addition, superintendents visit each ship at least twice a year and high in importance on their points to be checked are the chart corrections."

     In para. B3.2.3, Professor Moreby says that good practice requires that all corrections in notices to mariners received be made soon after they are received on all "the relevant charts on board".  It is also necessary to have in place a satisfactory system for ensuring that this is done.

     In para. B3.2.7, Professor Moreby says that many shipping companies land the whole "suite of charts" once or twice a year to be replaced with a new suite fully corrected up to date.  He points out that, had the suite of charts been landed and replaced annually or even at two-yearly intervals, the chart in question, i.e. AUS119, would have been properly corrected and would have shown the rocks on which the Sanko Harvest grounded.

     Professor Moreby says that it appeared that the suspension by Eastern Shipping of weekly chart correction lists, the suspension of the supply of overlay chart correction tracings, the absence of an alternative method of ensuring corrections had been made, and the absence of a system of renewing the whole suite of charts each year or every two years contributed directly to the grounding of the Sanko Harvest.  I should explain that Professor Moreby's reference to overlay chart correction tracings refers to a method adopted by many shipping companies or ship management companies, including Eastern Shipping at one stage, of providing tracings upon which the position of corrections required by notices to mariners have already been marked.  This makes the navigating officer's task of correcting charts much easier because the actual plot has been done for him.  All he needs to do is to transpose the plot on the tracing on to the chart which is being corrected.  There was no such system in force at the time of the grounding nor had there been for a long time.

     There is more in Professor Moreby's report about chart correction but I think I have covered the essential ground.

     I next refer to the evidence of Captain E.H. Beetham.  Captain Beetham is a principal in a London firm of consulting engineers, marine surveyors and naval architects known as Edon Liddiard Vince & Company Limited.  He has been employed by that company since 1985 and has been a director since 1988.  He is engaged in survey and consultancy work for marine lawyers, underwriters, P&I Clubs, charterers and shipowners dealing with casualty investigations, ship losses and so on.  He has had extensive experience at sea.  He obtained his master's certificate in 1965 and had command of a number of vessels until 1985.  This included the command of very large bulk and oil carriers trading between South America and Northern Europe and also to the Far East.  Captain Beetham concluded his report by saying that it was the duty of a manager, within which expression he included all persons who were legally responsible for the management of a ship, to ensure that the vessel was managed properly both on board and ashore.  This required the provision of a ship which conformed to all regulations, was properly manned and was supplied and fitted out with all the equipment required for its trade.  In relation to chart correction, Captain Beetham said that there were two ways of carrying out corrections to charts.  These were either working through the corrections as soon as possible after the notices to mariners were received doing first the charts in the areas where the vessel was trading and following on by bringing all the chart folios up to date as soon as time permitted, or, alternatively, operating the system, which he believed was followed on board the Sanko Harvest, whereby charts in areas where the vessel was not trading were not corrected until the vessel received orders to go on a voyage to one of those areas.

     Captain Beetham said that the second system had the disadvantage that there might be a considerable number of corrections to be completed in a short time.  This could lead to skipping some corrections and others being left completely.  He stressed that chart corrections had to be done quickly because passage planning could not be completed until all the appropriate charts had been corrected.  He thought that the passage had to be planned prior to the ship leaving her departure port.  It followed that the charts had to be fully corrected prior to the vessel leaving that port.  A heavy backlog of corrections when orders were given at fairly short notice would make this impossible in many cases.  On the evidence that he had to consider, he drew the conclusion, which I have already drawn, that no corrections had been carried out on charts on board the Sanko Harvest since about 1986.  He said that this suggested that it was not simply a case of bad habit on one ship or by one second mate but was a widespread bad practice.  That of course is a matter for me but I find it difficult to resist drawing the same conclusion as Captain Beetham has drawn.  After all, in the period in question, the Sanko Harvest had a succession of officers and particularly a succession of masters and second officers.  There were certainly no apparent changes in practice of any one of these officers from the practices of the others.

     Captain Beetham drew the same conclusions as I have drawn from the chart correction log deeming those notices to mariners which were noted against charts but not crossed through not to have resulted in chart corrections.  The analysis he has prepared of the chart correction log and of the relevant charts is much more involved than the one that I have undertaken but there is much to be said for the view that Captain Beetham's analysis demonstrates beyond question that it was not the practice on the Sanko Harvest at least after 1986 or thereabouts to correct any charts. This does not mean that no charts were ever corrected, but it does mean that the exercise was a haphazard one.  No effective system for the correction of charts was in place.

     In the course of his oral evidence Captain Beetham said that it was the practice in every ship upon which he served, whether as second officer, master or in any other rank to keep all the charts on the ship up to date.

     I think that the view is open that, in relation to a ship such as the Sanko Harvest engaged in world wide trade with over 2,000 charts on board, it would be an understandable practice to follow Captain Beetham's second alternative and correct only those charts which were required for the next voyage of the vessel.  But I do not think that such a practice would be a sound one.  It would not accord with Professor Moreby's views.  Furthermore, there are the practical problems about it mentioned by Captain Beetham.  One is in a dilemma.  Proper practice does require the detailed planning of the next voyage before departure from the port where the voyage is to commence.  There may be a very limited time in which the corrections can be carried out, particularly bearing in mind other duties which the second officer will have.  In some situations the task with which a second officer is presented in those circumstances may be well nigh impossible.  The only way in which one can be reasonably assured that the charts will have been corrected is to ensure that corrections are made as notices to mariners come in, if not immediately, then at least on a progressive basis which will ensure that the charts are kept reasonably up to date at all times.

     The evidence discloses that there are ways of overcoming the practical problem of a second officer having to correct large numbers of charts every time a new notice to mariners comes in.  There is much to be said for the view that updated charts or charts corrected ashore should replace the existing charts, or those of them that need replacing, at regular intervals.  If there is time, the ship's stock of charts can be landed and corrected ashore.  If neither of these things is done, at the least the beleaguered second officer should be supplied with tracings which will make his task easier.  It was not the practice of Eastern Shipping to do any of these things. 

     There is other evidence from a number of witnesses to the same effect as that of Professor Moreby and Captain Beetham in that they say that it was the practice on ships upon which they served for all charts to be corrected. 

     There is overwhelming evidence in support of Professor Moreby's view that a competent shipowner or manager should have a system of checking upon the correction of charts by an inspection by a company superintendent who visits the ship at least twice a year.  Professor Moreby said that it was good practice for the master to check a random sample of 10 per cent of chart corrections made by his second officer and for him to sign a form listing the corrections made.  This would be the subject of a report from the superintendent to the company.  He said that such practices were followed by BP and Shell Tankers (UK).

     In this respect, Captain Beetham said in his report that the superintendent making a competent inspection of a vessel will check on log and record books, bridge publications, correction of charts and records of corrections, the laying off of courses on charts and the passage planning details both in note form and upon a chart, safety limits, means of position fixing, selection of routes and available depths.  Competent owners or managers will require a check list to be completed by visiting superintendents.

     To my mind, there is nothing particularly startling or novel about any of these propositions.  To me, they are part of what commonsense requires.  They accord completely with the tenor of the decision of the House of Lords in The Marion which I have earlier discussed.  It will be remembered that chart correction is a time consuming and, for most people, a tedious affair.  It is an activity which is likely to give rise to human error from time to time.  It is a procedure which cries out for checking.  The consequences of a chart not being corrected may well be quite horrendous as occurred in the present case. 

     Amongst the documents in evidence is a report of a visit to the Sanko Harvest made on 20 June 1988 by Mr Ohtsuka.  Mr Ohtsuka was asked about the report in the course of his cross-examination.  He said that he did not recall what took place during the visit apart from what had appeared in his report.  He acknowledged that the report contained no reference to navigation matters but was largely concerned with a problem that had arisen about the ship's deratting certificate.  He said, however, that the reason there was nothing in the report about navigation matters was that he did not discover any problems "because I was expected - I was told to do a documentation check on the occasion of my visits."

     In para. 12 of his statement of evidence, Mr Ohtsuka said that in March or April 1987 Mr Matshushima, who was the manager of the Sanko Marine marine section, gave him a handwritten document to which was attached another document headed "Handbook".  Present at the time was a Mr Takami who was the other marine superintendent in the marine section of Sanko Marine at that time.  According to Mr Ohtsuka, Mr Matshushima said that it was necessary to prepare an up to date checklist, for visiting ships.  He said the document Mr Matshushima handed him was a draft which Mr Matshushima had prepared.  Mr Ohtsuka and Mr Takam were asked to read it and to revise it as they saw fit.  They were told by Mr Matshushima that the attached handbook was out of date.

     Mr Ohtsuka said that he read the checklist and used it as his point of reference for ship visits which he conducted whilst he was superintendent with Sanko Marine and Eastern Shipping.  He took the checklist with him each time he visited a ship and referred to it from time to time.  The checklist is in evidence.  It contains a reference in para. 3 under the heading, "Adjustment of charts and marine books".  Paragraph 3 then says, "Including Well-Known Marine LTR003-87".  The marine letter is the marine letter to which I have already referred which deals with a number of matters including chart correction.  It will be recalled that this was the instruction formerly in place which requested masters to maintain up to date all charts on board, not only the charts for the intended route so far as was practicable.

     In his statement, Mr Ohtsuka said that he understood para. 3 of the marine letter, which is the one to which I have just referred, to require, as a checklist item, that he was to look at the charts to see whether the latest editions were on board for the voyage and to see that the charts were corrected up to date and that the chart correction log was being maintained.

     Mr Ohtsuka said that, on his ship visits, it was his usual practice to go first to the Captain's cabin and to discuss current operations as well as any particular problems which he had been experiencing from an operational point of view.  It was always his practice to go to the bridge and to look at charts.  His practice was to look at the chart on the chart table and, in particular, at the correction numbers in the left bottom corner.

     The only inspections Mr Ohtsuka appears to have done were of vessels in Japanese ports, usually ports in Tokyo Bay.  His inspection of the Sanko Harvest in June 1988 was apparently carried out at the port of Tokuyama.  Mr Ohtsuka said that he was familiar with charts for Japanese ports and with "the most recent corrections".  His practice was to check to see that these had been made.  He would then open the top drawer of the chart drawer which contained the charts to be used on the vessel's next voyage.  He would check the left bottom corner of each of the charts to see whether there were recent corrections noted.  His practice was to take at least one of those charts out of the drawer and placed it on the chart table to see whether there were corrections noted on the chart.  He would then open the second top drawer which contained charts for the voyage just completed.  He would go through each chart and look at the bottom left hand corner to see whether it had recent corrections noted on it.  On most visits to ships he also looked at the chart correction log to see whether it was being used.

     Mr Ohtsuka had been shown a copy of the chart correction log for the Sanko Harvest.  He said his practice, when he looked at the chart correction log, was to take one of the charts in the top drawer and compare the correction numbers recorded in the log for that chart with the correction numbers recorded in the bottom left hand corner of the chart.  It was his practice, so he said, to look at the chart correction log if he was not satisfied from his inspection of the charts that they had been corrected to date.  He said that, during the period that he worked as a superintendent, there were less than five occasions on which he was satisfied that charts had not been corrected up to date.  It was his practice to make a record of that fact in his ship visit report.  On those occasions he did not speak directly to the second officer
about chart correction.  He spoke to the captain and stressed to him the importance of keeping charts up to date.

     Mr Ohtsuka also referred to a visit to the Sanko Humanity which he had made on 4 July 1990.  At that time Captain Kim was serving as chief officer on the Sanko Humanity.  Mr Ohtsuka said that he recalled meeting him.  He spent about an hour talking to him in the general office on board the vessel.  He observed him giving orders to the boatswain and responding to orders given by the stevedores' foreman during a grain discharge operation.  He did not remember the exact content of the orders.  As a result of that discussion and his observation, he formed the opinion that Captain Kim, as he was to become, had good leadership qualities.  He thought he had good communications with other members of the crew.  He recalled having conversations with Mr Kobayashi and Mr Sensui in late 1990 concerning the question whether Captain Kim should be given command of a vessel.  He remembered saying to Mr Kobayashi and Mr Sensui words to the effect that he had met Captain Kim when he visited the Sanko Humanity in July and had formed a good impression of him.  He told the others that he was satisfied that Captain Kim could be given command of a vessel such as the Sanko Harvest.

     In the submissions made by counsel for Sumitomo it is contended that I should find that Mr Ohtsuka in fact made no check of chart corrections upon his visit to the Sanko Harvest
in June 1988.  The following reasons were advanced in support of the contention:

     (a)   There was no mention of the subject in Mr Ohtsuka's report.

     (b)   When he did look at charts, his practice was to look only at the charts on the chart table, which would have been those for the port where the inspection was taking place.  This was to be compared with the assertion in his statement that he always looked at charts in drawers relating to the prior and to the next voyage.  Counsel referred to Mr Ohtsuka's oral evidence in which he agreed that he would have expected that the charts which were on the chart table would have been those used for entering the port where he was making the inspection or those for leaving that port.  Mr Ohtsuka also agreed that it was his practice to look only at those charts.  He did not, in his oral evidence, give evidence of looking at charts for voyages just completed or for the next voyage.

     (c)   Because of the failure of second officers to cross through notices to mariners noted against charts in the chart correction log, an inspection of the chart correction log should have raised a serious question in his mind as to whether any chart corrections were being carried out at the time of his inspection or had been carried out after 1986.

     (d)   There is no evidence of any instruction of Eastern Shipping to Mr Ohtsuka or employees in his position to make any check on charts.  Furthermore, there were no reports produced from him, whether in relation to the Sanko Harvest or any other vessel, recording any finding whether positive or negative concerning chart corrections.  Counsel said that it ought to be inferred that, if there were any such reports, they would have been produced.

     I accept the general purport of the submissions made to me by counsel for Sumitomo in this respect.  I am not satisfied that Mr Ohtsuka made any inspection of charts or did anything to check whether chart corrections were being made when he visited the vessel in June 1988.  Furthermore, there does not appear to have been in place any system or any clear instructions about what those inspecting ships were to look for or were to report on.  The whole affair seems to have been of a most slipshod kind.  It is difficult not to conclude, and I do conclude, that the principal purpose of the inspection of the Sanko Harvest was to overcome the problem which had arisen in relation to the deratting certificate which had expired.

     I next come to the evidence of Mr Yasuhiro Sensui.  On 16 June 1990 he was appointed manager of the marine section of Eastern Shipping which, as I have indicated earlier, was within Eastern Shipping's ship management department.  At the time he gave his evidence, he was manager of the marine section.  He passed his masters examination in 1969 and joined Sanko.  He was employed variously as a fourth, third and second officer on various bulk carriers and tankers in the Sanko fleet.  In 1974 he came ashore and worked as an assistant superintendent in the marine department, marine section of a company, Fuji Shipping Management Co. Limited, which later became Sanko Marine.  In 1978 he had been appointed assistant manager of the marine section of Sanko Marine and in 1981 became manager of that section.  It was from this position that he moved in February 1986 to a position as a manager "in the trustee staff" of Sanko Marine and worked there until April 1990 when he was appointed to his present position.

     Mr Sensui said there were six staff in the marine section.  There were four superintendents, a clerk/secretary and Mr Sensui himself.  The four superintendents were Mr Kuwana, Mr Kondo, Captain Tan and Mr Ohtsuka.  Mr Kuwana and Mr Kondo were responsible for discharge and loading operations for tankers and gas carriers.  Captain Tan and Mr Ohtsuka were responsible for the operations of bulk carriers.  These were crewed mainly by Filipino and Korean crews.  Captain Tan was responsible for bulk carriers crewed by Filipinos and Mr Ohtsuka was responsible for bulk carriers crewed by Koreans.  Mr Ohtsuka was also responsible for ensuring that publications, including charts and notices to mariners, were forwarded to vessels.

     Mr Sensui said that Sanko vessels carried over 3,000 charts and publications.  The evidence in the present case would suggest that there were over 2,000 charts on board the Sanko Harvest.  Mr Sensui said that in March 1985 a system was introduced under which a vessel had to complete a document entitled "Charts/Pubs Inventry" (sic) once a year and return one copy of the document to Eastern Shipping.  The first charts/pubs "inventry" was dated 15 March 1985.  It was sent to Sanko vessels by an Eastern Shipping miscellaneous notice.  The vessels carried British Admiralty charts, Australian charts, United States charts, Japanese charts and some Canadian charts.

     Mr Sensui said that prior to August 1985, Eastern Shipping "automatically" supplied to all vessels managed by it latest edition charts and publications as soon as they were published.  It also provided notices to mariners with tracing paper for British Admiralty and Japanese charts.  At the time, tracing paper was not available for United States charts.  He said that after August 1985 a decision was made to cancel the automatic supply of charts to each vessel and to suspend the distribution of BA and Japanese chart tracing paper.  From that time on masters of vessels were required to purchase new editions of charts from Eastern Shipping or local agents when required.  The advice of the change in the system was provided to each Sanko vessel managed by Eastern Shipping by a miscellaneous notice dated September 1985.  Mr Sensui described the documents which were on board the Sanko Harvest.  One of these was a document entitled "General Instructions and Guidance" which identified the responsibilities of the various sections within the Eastern Shipping management department.  It recorded that it was the prime duty of the navigation officer to keep charts and publications corrected and up to date with a record of corrections maintained.  It also recorded that superintendents from the marine section would attend the vessel for inspection and assistance and to ensure that company instructions were complied with.

     Mr Sensui described the system for the distribution of charts and notices to mariners in 1990.  He said that navigation charts and notices to mariners and other publications were received by vessels no more than two months after their date of issue by the chart publisher.

     Mr Sensui said that Eastern Shipping introduced chart correction logs in May 1976.  There were variations to the form of chart correction logs issued from time to time.  He said that the chart correction procedure in place in 1990 was that, when a notice to mariners was received on the vessel, no matter in respect of what chart it was issued, its date of receipt had to be inserted on "the document" entitled "Record of Chart Correction Log" for the relevant chart opposite the notice to mariners number for the relevant year.  Corrections to charts in notices to mariners were numbered sequentially.

     Within Eastern Shipping's office a separate file was kept for each vessel.  The file consisted of at least one drawer in a filing cabinet.  There were a number of dividers which meant that documents were kept under a number of headings.  These included visiting reports.

     Mr Sensui then referred to United States Coastguard boarding reports which he said were not always received by Sanko in Tokyo.  He said that the consequence of a notice might be that, if the Coastguard report indicated a major deficiency, the master of the vessel would be advised that the vessel could not have port clearance until the deficiency was rectified.  He referred to two coastguard boarding reports relating to the Sanko Harvest, the first dated 22 August 1990 and the second 26 December 1990.

     Mr Sensui referred again to the document entitled "General Instructions and Guidance" in which it was said that it was of paramount importance and the primary duty of the navigation officer to keep publications corrected and up to
date.  The nominated navigation officer on Sanko vessels was the second officer. 

     Mr Sensui said that part of his duties was to visit vessels for ship inspections.  Between 1978 and 1986 he did a number of inspections when he was employed first as assistant manager and then as manager of the marine section of Sanko Marine.  At that time he followed a standard superintendent inspection procedure.  He first went to the master's cabin and discussed matters of company policy with the master.  He next went to the bridge with the master to look at the night order book.  The importance of this was to establish that the night order book was being used.  He enquired about any navigation problems which might have been encountered on the voyage just completed.  He then went to the portside table which normally had the charts which had been used for the voyage just completed.  The harbour chart was usually on top.  He checked the date and edition of the chart.  He was familiar with the latest editions of harbour charts for ports in Tokyo Bay.  He said:

     "On occasions I noticed that second officers didn't enter  corrections in the chart correction log until they had made the corrections to the charts themselves.  In those cases I instructed the second officer to enter the fact of the corrections into the chart correction log when the notices to mariners were received as that was the ESC system.  I did not check the chart correction log against cumulative lists of notices to mariners to make sure that it was being completed properly unless there did not appear to have been any recent entries in the chart correction log.  It has been my practice to follow that standard inspection procedure whenever I visit vessels in the ESC managed fleet."

     Mr Sensui said that, since his appointment as manager of the marine section of Eastern Shipping, he had sought to visit ten vessels which were visiting Tokyo Bay every six months.  The visits occurred at weekends and were to the ports of Chiba, Funabashi, Tokyo, Kawasaki and Yokohama.  Each visit lasted between three and six hours.  No record of the visits was kept.  Additionally, but less frequently, he visited vessels at ports more than 50 kilometres from the Eastern Shipping office in Tokyo.  Records of those visits, he said, were kept by Mr Kobayashi.  The visits were normally for two days and he stayed overnight on the vessel. 

     Mr Sensui then turned to manning changes.  He said that each month during 1990 Hanjoo advised Eastern Shipping's marine personnel section by facsimile of crew changes to vessels which were to occur during the following month.  If they involved promotions or the employment of senior officers, applications for employment or promotion were prepared within the marine personnel section and distributed to the various managers within the ship management department.  He referred to an application for promotion dated 1 December 1990 in respect of Captain Kim.  He said that his recollection was that, when he saw the document in December 1990, it had attached to it a Hanjoo personnel record card for Captain Kim.  He said that he had not met Captain Kim before.  But before writing the words, "agree subject to handover properly" and placing his seal on the document, he spoke to Mr Ohtsuka,
Mr Kuwana and Mr Kondo who were superintendents in the marine section.  He recalled that Mr Ohtsuka told him that Captain Kim was young but that he had a good record, that he had met him before and that he had formed a favourable impression of him.  On that basis, on the basis of the details in Captain Kim's personnel record card, and on the basis that his promotion was put forward by Captain Yun of Hanjoo, Mr Sensui said that he was satisfied that Captain Kim was suitable to be given command of the Sanko Harvest.

     Before coming to some of the evidence given by Mr Sensui in cross-examination, I should say that it strikes me as very strange that a person intent on inspecting vessels in a fleet managed by the company of which that person is manager should make no record of the inspections notwithstanding that they occupied some hours and in some cases more than a day.  Mr Sensui has no idea of what vessels he inspected or when his inspections were carried out.  He has only his assertion that he followed the practice mentioned in his evidence to support him in describing the nature of the inspections he made.  If, for the moment, I accept his evidence at face value, and I think there is a real question whether I should, it is plain that he is not following out any guidelines such as were deposed to by Professor Moreby and Captain Beetham.  This indeed was put to him in the course of his cross-examination.  He said that Eastern Shipping was not a member of the International Shipping Federation nor was it a member of any other association of shipowners or ship managers.  He was asked whether, having regard to the grounding of the Sanko Harvest, he did not agree that it would have been sensible in 1990 for Eastern Shipping to be a member of one or more of the ship managers or owners associations to learn about current practices of other ship managers and shipowners.  The answer was, "No, personally I don't think so."

     Mr Sensui also said that not all Eastern Shipping managed ships were supervised.  The evidence needs to be referred to in its entirety.  It was as follows:

     "MR CALDWELL:  Before the end of 1990, were you aware that some of the Eastern ships were sailing from time to time on uncorrected charts or charts that were not fully corrected?

     THE INTERPRETER:  Which ships do you refer to?

     MR CALDWELL:  Any Eastern ships.

     THE INTERPRETER:  No, well we didn't supervise all of them.  I am sorry, I will have him to repeat that.  Well, as I said, the ship had to do what it did but when we did carry out an inspection then if we saw charts that were not corrected then we would tell them to correct them or to get new charts."

     Mr Sensui also said that it was physically impossible to take any other course than to carry out the correction of charts for use on the intended voyage.  He did say that that was the minimum necessary and that masters had been told by charts when that was necessary.

     Mr Sensui said that he was aware of chart agencies but Eastern Shipping did not use them.  His experience with chart correction agencies was when he was with Sanko Marine.  He said that Sanko itself used the services of a chart correction agency.  In Sanko he had the experience of having the whole of the chart outfit either corrected or replaced.  He said that Sanko had a system whereby that was done every year or two years but the only company in the group which used the system was Sanko Marine.

     However, it then emerged that he was not speaking of every vessel managed by Sanko Marine but only one ship which was in dry dock and the agency was used as "a test case".  He also said that in Tokyo and Yokahama it was very difficult to find enough people who could do correcting work.  There were only one or two firms and the number had recently reduced to one. 

     There is more of Mr Sensui's evidence to which reference could be made but, in the view I take of the matter, I do not think it necessary to go further.  The reading of some of his evidence might suggest to some that he was being at times evasive or deliberately misunderstanding questions.  I think that view of him as a witness is open, but I rather think that the passages in the transcript which are capable of suggesting this are more probably explained by the fact that, notwithstanding the use of an interpreter to assist him in giving his evidence, he was at times confused about what was required of him.  What comes through, however, is that there was no systematic inspection of vessels by Eastern Shipping superintendents and that, when inspections were made, no records of what precisely was done or not done and what was noticed were not kept.

     Mr Kobayashi was asked whether he had any knowledge in 1990 of the persons checking chart corrections.  He said that he had heard that Mr Ohtsuka and a Captain Tan were "doing it."  He also said that he had heard that some persons had done checking on some vessels.  He did not remember whether he had any knowledge in 1990 of the extent to which any particular vessel had been checked.  His evidence then proceeded as follows:

     "MR CALDWELL:  Did you regard it - that is the matter of correcting of charts - as a responsibility of the master and the second officer, and that the management on shore did not have a responsibility to check them?

     THE INTERPRETER:  Yes."

The reference to the interpreter is a reference to the witness.

     Mr Kobayashi had no recollection whether there were written instructions about checking chart corrections.  He said that it was the duty of the marine section.  Earlier he had said that he understood that there were staff able to check for chart corrections and that in some cases the checking had been done on "some ships."

     Further evidence given by Mr Kobayashi was as follows:

     "MR CALDWELL:  Mr Kobayashi, you know now, do you not, that the Sanko Harvest had not been visited by anyone in the marine section before its grounding since May of 1988?

     THE INTERPRETER:  I didn't know that clearly.

     MR CALDWELL:  Well, you had given no particular instructions about when ships should be visited by the marine section, had you?

     THE INTERPRETER:  No, I didn't.  I believe that was the duty of the technical section.  It is the job of the marine section managers.

     MR CALDWELL:  It is correct that in 1990 you had no idea how often the marine section was visiting the ships?

     THE INTERPRETER:  I didn't know about the Sanko Harvest.

     MR CALDWELL:  In relation to many of the other ships you did not know either, that is correct, is it not?

     THE INTERPRETER:  I did know at the time a fair amount of that information; who was - when each ship was being - when a lot of ships were being visited.

     MR CALDWELL:  But so far as you were aware nobody in Eastern kept a list of all the ships, all of the 90-odd ships under your control, and determined when each ship had been last visited by the marine section?

     THE INTERPRETER:  I didn't and it wasn't ever - as an overall thing it wasn't done, but each section was keeping a list.

     MR CALDWELL:  Mr Kobayashi, you did not know of any particular list being kept by the marine section, did you?

     HE INTERPRETER:  I have looked at the records at the overall movements of the ships.

     MR CALDWELL:  You did not know of any list having been kept by the marine section of all of the ships and listing when each ship was last inspected by that section?  Do you agree?

     THE INTERPRETER:  They were - they did make such a list in the marine section.

     MR CALDWELL:  I see and after the grounding - well, let me ask you this.  Within a few months of the grounding you became aware that the grounding appeared to have been the result of lack of chart correction and poor passage planning, did you not?

     THE INTERPRETER:  Yes, I did receive such a report.

     MR CALDWELL:  And did you call for a copy of this list that you say you knew was being kept by the marine section as to its visits to that vessel?

     THE INTERPRETER:  No, not at the time.

     MR CALDWELL:  And you did not call for it because you knew that there was no such list in existence, did you not?

     THE INTERPRETER:  No, that was not the reason.  There was no special reason that I didn't call for this list."

The reference to May of 1988 in the first question should be a reference to June 1988.  Again the reference to the interpreter is a reference to the witness.

     Earlier Mr Kobayashi had given the following evidence:

     "MR CALDWELL:  You may have been able to remember the ships visited by yourself but, you would agree that in 1990 you would not have been able to remember which ships had been visited by other people in your department during 1989 before December, would you?

     THE INTERPRETER:  I wouldn't remember myself, but the manager of each section there would have been able to control that.

     MR CALDWELL:  Yes.  In 1990 did you have any knowledge as to the particular matters that were looked at on ships by marine superintendents in the marine section when they went to ships?

     THE INTERPRETER:  I know from - would have been told by the marine superintendents.

     MR CALDWELL:  Did occasionally did you see a written report from a marine superintendent who visited a ship?

     THE INTERPRETER:  Yes.

     MR CALDWELL:  Apart from the matters covered in those reports do you agree that you did not have any knowledge in 1990 of what matters might have been checked by a particular person in the marine section when he went to a ship?

     THE INTERPRETER:  If it was not written in the report I would not know at all."

     In counsel's submission, which I accept, Mr Kobayashi's attitude, as revealed by this evidence, involved a refusal to accept any responsibility for the inspection of vessels under Eastern Shipping's management.  It was either a question of saying it was a matter for the officers on board to do what needed to be done or of saying that those in the marine section would have been aware of what should be done.  Yet it is clear that the officers on board the Sanko Harvest neglected their duties in a most serious way and it is also clear that, within the marine section of Eastern Shipping, there was no system and no clear instructions given either to those whose duty it was to inspect vessels or to masters and other officers.  It is apparent from this evidence that the same shoddiness which was present on board the Sanko Harvest itself permeated the Eastern Shipping organisation.  There was grossly inadequate record keeping, a substantial lack of system and a failure overall to exercise any real supervision over more junior employees in the Eastern Shipping office ashore or in the vessels which were the subject of the company's management.  And, of course, the evidence establishes that there was absolutely no inspection of the Sanko Harvest after June 1988 when Mr Ohtsuka visited it in the circumstances which I have described.  The standards which are referred to in the evidence of Professor Moreby and Captain Beetham which I have accepted as applicable and which, in any event, reflect the general tenor of the decision of the House of Lords in The Marion, were simply not observed.  Furthermore, the witnesses asked about the matter seemed to answer the questions asked them in a somewhat surprised fashion as if they were quite irrelevant to the question at hand or to their own responsibilities.  Their evidence reflected no understanding of the significance of the onerous nature of these in a modern day and age.

     The reality was that the matter of correcting charts was left by Eastern Shipping to its masters and second officers.  This is what Mr Sensui really says in at least one place and I think it is the truth.  In earlier years proper practice was recognised.  Whether for reasons of financial difficulty - the Sanko companies' affairs were being administered in bankruptcy - or otherwise, proper practice was discarded in 1987 and an inadequate and inefficient system, if that is the name by which what was done can be dignified, replaced the earlier one with the consequence that there was no real attempt to check what was being done by masters and second officers on board the Eastern Shipping managed vessels.  The evidence of Professor Moreby and Captain Beetham to which I have referred establishes that Eastern Shipping's practices were not in accordance with the requirements of modern day ship management practice.  Plainly, the failure to ensure a proper system of chart correction led directly to the sinking of the Sanko Harvest and Sumitomo's loss.

     The question which I must ultimately answer is whether the unseaworthy state of the vessel was caused by want of due diligence on the part of the carrier to make the vessel seaworthy and to properly man and equip it within the meaning of s.4(1) of the United States Act as incorporated in the charterparty between Sanko and Sumitomo.  Grandslam, the actual carrier of the goods, is, for the reasons earlier given entitled to the same rights and bound by the same obligations as is Sanko.  Grandslam has no employees of its own.  Its directors entrusted the entirety of the management and operation of the company to Eastern Shipping.  The conclusions to which I have come on the question of chart correction demonstrate positively that Eastern Shipping did not exercise due diligence in supervising the correction of charts on board the vessel as proper practice required it to do.  The fact that the vessel was sailing on uncorrected charts was thus due to want of due diligence, in a relevant sense, on the part of Eastern Shipping and thus Grandslam.  This is a matter upon which Grandslam carries the onus of proof.  Not only has the onus not been discharged; the evidence positively establishes want of due diligence in the respects which I have found.

Causation Again

     That leaves the position of Sanko itself.  I prefer to leave this until I have dealt with the other main allegation of unseaworthiness to do with the manning of the vessel and the competency of its officers.  But I should deal with a submission in relation to causation which, if upheld, would prevent Sumitomo from succeeding against Grandslam at least insofar as Sumitomo's case is based on a failure to correct charts and to have in place a system designed to ensure that this was done.  That submission relates to the fact that the course selected by Mr Gim and approved by Captain Kim, taking the vessel as it did through the middle of the Recherche Archipelago, was the real cause of the collision and that that was an act done in the course of the management or navigation of the vessel and thus something for which the carrier was not responsible.  The essence of the submission is that the vessel did not come to grief because of an uncorrected chart.  It came to grief because it was taken through the Archipelago, an area where it had no business to be.  Eastern Shipping had no control over the route which the vessel would follow and thus the fact that the vessel foundered because of the failure of the second officer to correct a chart was not the real cause of the loss.  The real cause was the taking of the vessel into the Archipelago in the first place rather than taking a course to Esperance by way of the Causeway Channel thus entering the port from the west. 

     In my opinion the submission relied upon by counsel for the plaintiffs runs counter to the decision of the House of Lords in Smith Hogg & Company Limited v Black Sea and Baltic General Insurance Company Limited [1940] AC 997.  The opening words of the headnote aptly summarise the decision.  The proposition for which the case is authority is that a shipowner is responsible for loss or damage to goods, however caused, if his ship was not in a seaworthy condition when she commenced her voyage, and if the loss would not have arisen but for that unseaworthiness.  The principal judgments were delivered by Lord Wright and Lord Porter.  Lord Wright referred (at 1004) to the decisions in The Europa and Kish v Taylor previously referred to.  As Lord Wright said, the authorities establish that unseaworthiness does not affect the carrier's liability unless it causes the loss.  Lord Wright continued (at 1004):

     "In carriage of goods by sea, the shipowner will in the absence of valid and sufficient exceptions be liable for a loss occasioned by negligence.  Apart from express exceptions, the carrier's contract is to deliver the goods safely.  But when the practice of having express exceptions limiting that obligation became common, it was laid down that there were fundamental obligations, which were not affected by the specific exceptions, unless that was made clear by express words.  Thus an exception of perils of the sea does not qualify the duty to furnish a seaworthy ship or to carry the goods without negligence:  see Paterson Steamships, Ltd. v. Canadian Co-operative Wheat Producers, Ltd. [1934] A.C. 538.  From the nature of the contract, the relevant cause of the loss is held to be the unseaworthiness or the negligence as the case may be, not the peril of the sea, where both the breach of the fundamental obligation and the objective peril are co-operating causes.  The contractual exception of perils of the seas does not affect the
fundamental obligation, unless the contract qualifies the latter in express terms."

     Later his Lordship said (at 1005):

     "In truth, unseaworthiness, which may assume according to the circumstances an almost infinite variety, can never be the sole cause of the loss.  At least I have not thought of a case where it can be the sole cause.  It must, I think, always be only one of several co-operating causes.  The importance to my mind of Carver's statement is that it uses the indefinite article, '"a" cause,' not the definite article, '"the" cause.'  In this connection I can draw no distinction between cases where the negligent conduct of the master is a cause and cases in which any other cause, such as perils of the seas, or fire, is a co-operating cause.  A negligent act is as much a co-operating cause, if it is a cause at all, as an act which is not negligent.  The question is the same in either case, it is, would the disaster not have happened if the ship had fulfilled the obligation of seaworthiness, even though the disaster could not have happened if there had not also been the specific peril or action."

     The reference his Lordship made to "Carver's statement" is a reference to a statement in the then current edition of Carver's Carriage of Goods by Sea.  Lord Wright referred to this (at 1005) where he said:

     "The law is, I think, correctly stated by the late Judge Carver in Carriage of Goods by Sea, s. 17.  I quote from the fourth edition, published in 1905, which was the last edition revised by the learned author.  The words of the section are: 'And further the shipowner remains responsible for loss or damage to the goods, however caused, if the ship was not in a seaworthy condition when she commenced her voyage and if the loss could not have arisen but for that unseaworthiness.... If her unfitness becomes a real cause of loss or damage to the cargo, the shipowner is responsible, although other causes from whose effect he is excused either at common law or express contract have contributed to cause the loss.'"

     In his concluding remarks Lord Wright referred to the speech of Lord Atkinson in Standard Oil Company of New York v Clan Line Steamers [1924] AC 100 and said (at 1007) that the loss in that case was held to have resulted from the unseaworthiness of the vessel.  He said that in that as in other cases, the right to rely on the exception of negligence was conditional on due diligence on the part of the owners to make the ship seaworthy which the owners had failed to exercise.  He continued (at 1007-8):

     "I refer to this authority (Standard Oil Company) in support of the conclusion that 'a' cause of the loss was the unseaworthiness, notwithstanding the intervening negligence of the master.  In cases of the type now being considered, the negligence, if any, must almost inevitably occur in the course of the voyage, and thus intervene between the commencement of the voyage when the duty to provide a seaworthy ship is broken, and the actual disaster.  I doubt whether there could be any event which could supersede or override the effectiveness of the unseaworthiness if it was 'a' cause."

     What Lord Wright said in Smith Hogg was applied by Stephen J in his judgment in Shipping Corporation of India Limited v Gamlen Chemical Co. (A/Asia) Proprietary Limited (1980) 147 CLR 142 at 154-5.

     Here it was negligent navigation of a high order for the master of the vessel to take on the Recherche Archipelago in the way that he did.  But the ship he was sailing was unseaworthy for the reasons I have mentioned and the evidence plainly establishes that Eastern Shipping failed in its duty as a manager to use due diligence to make the ship seaworthy.  That is sufficient to conclude the case against Grandslam whose manager Eastern Shipping was.

Unseaworthiness - Manning of Ship by Incompetent Officers

     I now turn to the second principal area of complaint made by counsel for Sumitomo.  That is the submission that the vessel was unseaworthy because it was manned by incompetent officers.

     In dealing with this aspect of the case, I need first of all to refer to the evidence of two witnesses, Mr Yeong Seob Yun (referred to in the evidence as Captain Yun) and Mr Sung Gan Lee.  As earlier mentioned, Captain Yun is the managing director of Hanjoo.  He is a Korean.  The head office of Hanjoo is in Pusan in Korea.  Between May 1980 and September 1984 he was employed in the marine section of Eastern Shipping as a superintendent.  In that position he was involved in the supervision of Korean manned vessels managed by Eastern Shipping.  In 1984 he left Eastern Shipping and returned to Korea to work at the Chun Kyung Seaman's Training Centre as an instructor.  In 1986 he became a director of the Centre and held that position until it closed at the end of that year.  In 1988 he was appointed a director of Hanjoo which, as he said, is a crewing and manning agency.  He referred to its appointment on 1 May 1988 as manning agent for Eastern Shipping in respect of a number of vessels including the Sanko Harvest. 

     Captain Yun said that Hanjoo supplied officers and ratings for approximately 50 vessels of which 18 were owned by Sanko and managed by Eastern Shipping.  At the time he gave his evidence it was providing officers and ratings for another 30 or so vessels owned by five different companies which he named.  Captain Yun said that Hanjoo was one of the three largest crewing and manning agencies in South Korea.  There were between 90 and 100 such agencies in that country.  Until about 1984 South Korea provided the greatest number of crew for foreign owned vessels of any country in the world.  At the time he gave his evidence the Philippines was providing the greatest number.  Four to five years previously South Korea provided approximately 35,000 crew for these vessels.  At the time he gave his evidence in 1992 the number had reduced to 25,000.  Captain Yun said that Hanjoo had approximately 1,300 officers and ratings on its books.  The number included 67 masters.  At any one time just over 1,000 of these were at sea.

     Captain Yun then referred to the Korean marine education system which I described earlier in this judgment.  He said that Hanjoo employed most of its young officers from the Korea Maritime University or from MOPKO and occasionally from one of the three maritime high schools.  When a new officer or rating was employed by Hanjoo, a personal record card was prepared.  A copy of the card was sent to Eastern Shipping.  During the course of the person's employment, details were added to the card.  Copies of the card as amended were not sent to Eastern Shipping unless the person was recommended for a promotion.  The card had no evaluation information recorded on it.

     Hanjoo kept files for each "seafarer".  They contained his personal record card, copies of licences and certificates, the employment contract between the seafarer and Eastern Shipping (which was signed by Hanjoo on behalf of Eastern Shipping) and any crew evaluation reports.  Crew evaluation reports were completed every six months by the master of each vessel.  These were read by Captain Yun who completed a box headed "Comments" and inserted a rating which ranged from AA to DD with a short comment.  A copy of the report was then sent to Eastern Shipping.  The report was filed by Hanjoo with the other documents relating to the seafarer.  When officers or ratings passed through the Hanjoo office in Korea either on route to a vessel or on their way home, their current crew evaluation report was discussed with them.  If there was a bad report, it was Captain Yun's experience that the person usually resigned.

     Captain Yun said that there were no evaluation reports prepared in relation to masters and chief engineers.  Their performance was judged by ship visits by shore staff, by occasional on board and office interviews and by the way a vessel performed.  On every occasion that a vessel manned by Hanjoo called at a Korean port, a member of Hanjoo's office visited the vessel.  In Captain Yun's experience, at least one or two Sanko/Eastern Shipping vessels called at a Korean port each month.  No records were kept of these visits.  Hanjoo also regularly invited senior ship staff to its office in Pusan for a reception or dinner so as to maintain continuing contact with them.

     Captain Yun said that he dealt with various people in the marine department of Eastern Shipping on a daily basis.  In 1990 he spoke regularly to Mr Yamamoto who he understood to be an assistant manager in Eastern Shipping's marine personnel section.  It was his practice to speak to the person in this position by telephone at about 10 a.m. every day if possible.  The conversations lasted for up to 30 minutes and comprised the discussion of general crewing matters.

     Each month Hanjoo prepared a memorandum to Eastern Shipping advising of crew changes for the following month.  Hanjoo kept waiting crew lists which were lists of masters and other officers waiting to be assigned to vessels.  If there were no masters or officers of a particular rank on the waiting list, consideration was given to promoting an officer.  The general procedures which were followed in relation to the promotion of crew and other matters were said to be summarised in a document entitled "Hanjoo Maritime Co. Limited Staff Organisation for Crew Management".  The document was prepared by Captain Yun in 1988 when Hanjoo was first established.  It sets out the general procedures which were then and are still followed by Hanjoo in relation to recruiting, nominating, and rating officers for a vessel, and undertaking orientation procedures for officers before they left South Korea to go to a vessel.  If, at the end of these promotion procedures, there was no satisfactory recruit available among the officers "employed" by Hanjoo, Captain Yun would go to another manning agency in South Korea.  Usually this would be Wooil Shipping Co.  Captain Yun had spoken to Mr Lee of that agency about this proposal but, at the time he gave evidence, he had not had to use officers employed by that agency.

     Captain Yun said that the general rule for promoting officers required at least two years sea experience as a third officer, three years sea experience as a second officer and three years sea experience as a chief officer.  He said the rule was not inflexible and might be varied to take account of matters such as academic background, age and ability.  For example it was not uncommon for someone to spend two years as a third officer, two years as a second officer and four years as a chief officer.  He said that it was quite common in South Korea for chief officers to be promoted to the position of master at an age of 31 or thereabouts.  He gave a number of instances of this.

     Captain Yun said that the principal matters which he took into account when considering whether an officer should be promoted from chief officer to master were his experience, his academic background and recommendations he had received from other masters with whom the officer had served.

     He then came to the appointment of Captain Kim to the Sanko Harvest.  He said that it became necessary to appoint a new master to that vessel in November 1990.  He said there was a shortage of masters at that time and that he had considered whether any chief officers warranted being promoted to master.  It was in those circumstances that he came to consider Captain Kim.  He said that it was his view that he was sufficiently experienced and able to be promoted to master.  He was a graduate of the Korea Maritime University and had received three recommendations from other masters concerning his promotion.  The first of these was contained in the crew evaluation report of Captain Chung dated 31 December 1988 which was prepared when Captain Kim was chief officer on the "Spring Eagle".  Captain Yun understood Captain Chung's comments concerning Captain Kim to be that he was a little hasty but he would become an excellent master with a little more experience.  Captain Chung was not a senior master employed by Hanjoo.  Captain Yun said, "However I respected his judgment." 

     It is appropriate at this point to pause to consider what Captain Chung said in his report about Captain Kim.

     The report consisted of a number of roneoed pages which, for the most part, have been filled in by Captain Chung. Captain Chung's name was shown in the report as "Jung Won Hwa".  As Captain Yun said, the report was in relation to Captain Kim's service on the Spring Eagle and was dated 31 December 1988.  The period of service was from 15 June 1988 to 31 December 1988.  Some formal details and Captain Kim's academic background were referred to.  There were then three pages upon which a number of aspects apparently thought to be helpful in assessing the capacity of an officer seeking promotion were set out.  These included working attitude, co-operation, evaluation of knowledge under which are to be found knowledge and commonsense, professional knowledge, and academic background of foreign language.  There followed the evaluation of actual work, managing ability and an evaluation of personality which included such matters as etiquette, sociability, trustworthiness and drinking habits.  The report was signed not only by the master, Captain Chung, but also by the chief engineer.  The master signed secondly and in some of the spaces where ratings are to be filled in there are two marks in the form of a circle.  The reason for the two marks, as I understand it, was that one was made by the chief engineer and the other by the master.  The chief engineer did not fill in all available spaces, but the master filled in most of them.  The ratings received by Captain Kim from the two officers were either exemplary or excellent or good.  In most cases they were excellent.

     There was then an evaluation of "one-self".  This appears to mean the officer's evaluation of himself.  This provided for demerits, merits, study plan, hope, "reorder of consideration of service" and need for guidance.  A demerit, apparently awarded by Captain Kim against himself, was a tendency to emphasise principle too much.  A merit point was Captain Kim's English, especially his written work.  Just below the words "need guidance" the following appears, "He is an extremely excellent officer, he has talent and capability, somehow he has a bit of rashness.  Need guide to cultivate serious and calm judgment ability."  I do not read this as Captain Kim's evaluation of himself.  It seems more likely that it was written by Captain Chung who placed his remarks on the wrong part of the form.  The original document is in Korean and I have only a translation to guide me so that I cannot drawn any conclusions about the matter upon the basis of the handwriting.

     The document concluded with a synthesis of the consideration of the matters that had gone before.  Again the ratings were exemplary or excellent.  Again there was the legend "Need Guidance" beside which was written in handwriting "With a bit more experience and serious and calm judgment ability, capacity for tolerance with staff, and add bit more knowledge, then I am sure that he can be a good captain."

     I return to Captain Yun's statement.  He said that on 24 February 1990 he received a telex from Captain Lee who was the master of the Sanko Humanity which was a sister ship to the Sanko Harvest.  Captain Lee was a senior master employed by Hanjoo and Captain Yun said that he respected his judgment.  The facsimile is in evidence.  The relevant part of it says:

     "Recommend C/O Kim in Hyeon for Capt in succession to me.  He graduated fm KMMA in 1982.  I had an opportunity to observe closely his personality and study my ship.  He is well trained as good mate during his seven years in ECS fleet.  Also he is diligent and a thorough gentleman.

     Blve he will work master Biz successfully as having Gd career with Gd foundations and leaderships."

     Captain Yun then referred to a crew evaluation report prepared by Captain Chu dated 30 August 1990 which was prepared when Captain Kim was chief officer on the Sanko Humanity.  Captain Yun said that Captain Chu was a very experienced master and he respected his judgment.  Before making the decision to recommend Captain Kim's promotion to master, he spoke to Captain Chu by telephone and Captain Chu again recommended the promotion of Captain Kim to him.

     The crew evaluation report is in evidence but it does not appear to have been signed.  It is in a similar form to the earlier one and I will not go into the same detail.  But again the ratings given Captain Kim were in the categories of exemplary, excellent or good.  Under demerits in the self-evaluation section is the note "has tendency to concentrate on principle".  Merits comprised English and personnel management.  It said that Captain Kim wanted to be "a nice captain who has management capability".  Underneath these remarks is some handwriting in which it is said "AB.  He has got capacity to be a captain."  The letters "AB" refer to Captain Yun's rating of Captain Kim according to his scale, AA to DD.  This was written by Captain Yun and not by the master.

     At the end of the report beside the words "Need Guidance" is the remark, written by Captain Chu, "I am sure that he has capacity to be a captain, but if possible firstly he better do captain of a ship which isn't bigger than 3T, (small and medium size) to build his experience."  It was explained in the evidence that the notation "3T" was a mistake made by the translator.  The figure should have been 10,000 tonnes.  In other words the recommendation was that Captain Kim be appointed to a vessel no larger than 10,000 tonnes in order to build his experience.

     Captain Yun said that he had met Captain Kim in Hanjoo's office in Pusan many times.  His first impression of him was that he was intelligent and capable.  He spoke good English.  Captain Yun said that he was sufficiently impressed with him in his early meetings with to ask him whether he would be prepared to work in the Hanjoo office with him.  Captain Kim told him that he first wanted to become a master.

     Captain Yun said that the question of the promotion of Captain Kim to be master of the Sanko Harvest was discussed at a Hanjoo crew management committee meeting.  The meetings were held each Wednesday afternoon in Hanjoo's office in Pusan.  He named the persons who attended.  He said that the meetings were sometimes attended by Captain Han who was from Hanjoo's office in Seoul.  Captain Yun said that he recollected a discussion concerning the promotion of Captain Kim at such a meeting.  He though Captain Han was present.  No record of the discussion was kept.  One member of the committee, Mr Bae, was strongly in favour of promotion.  Other members of the committee were also in favour of it and no one spoke against it.

     It seems somewhat remarkable to me that no record of the discussion was kept.  My impression is that there are no records kept of any of the Wednesday afternoon meetings to which Captain Yun refers.  I would have thought discussion about promotions of officers to the rank of master would have warranted the most detailed consideration and discussion and that there would have been a note made of what was said by each person at the meeting and a record of it kept.  Human recollection is noted for its frailty.  There is absolutely no way of checking whether Captain Kim's promotion to master was discussed at a meeting of the kind described by Captain Yun or, if it was, what was said about him at the meeting.  What was said, for instance, assuming the meeting had the document before it, of his captain's recommendation made as recently as 31 August 1990, that, if he be given command, he be given command first of all of a ship no larger than 10,000 tonnes.  Surely this was a matter that merited consideration.  And what of the statement in the earlier evaluation report made at the end of December 1988, which, after all, was only a little over two years prior to the grounding, that Captain Kim "somehow... had a bit of rashness.  Need guide to cultivate a serious and calm judgment ability."  Again one would have expected that matter to be given serious consideration.  But there is no evidence that it was.  Captain Yun does not comment on it.  He merely says that he had long been impressed with Captain Kim and that he and other members of the committee to which he referred were all in favour of the promotion.  The whole procedure seems to have been most unsatisfactory especially bearing in mind the heavy responsibility which was to be placed upon the shoulders of a relatively young man who, although previous masters had spoken of his promise, apparently thought he had some failings which needed to be rectified.

     Captain Yun said that Hanjoo sent a memorandum to Eastern Shipping on 30 November 1990 concerning the promotion of Captain Kim.  The memorandum had attached to it a copy of the up to date Hanjoo personal record card for Captain Kim as well as the history card of another officer.  Shortly afterwards Eastern Shipping advised Captain Yun that it had agreed to the promotion.  Captain Yun could not remember who in Eastern Shipping told him this.  In due course it will be necessary to consider the evidence of those in Eastern Shipping who received the documents from Captain Yun.  I shall say more of them when I come to that evidence.

     Captain Yun said that it had been his experience that Eastern Shipping occasionally rejected officer promotion recommendations made by Hanjoo.  In relation to senior officers, this happened up to twice per month.

     Captain Yun then turned to the appointment of Mr Gim as second officer.  Paragraph 37 of Captain Yun's statement is as follows:

     "Another crew member who joined the 'Sanko Harvest' with Kim In Hyeon was the second officer Gim Dong Ug.  He had been employed by Pan Ocean Shipping Co Limited ('Pan Ocean') until he was recruited by Hanjoo to the 'Sanko Harvest'.  Pan Ocean is a Korean owner/operator of bulk cargo vessels.  It has a reputation as a well run shipping line.  He had 1 year 7 months sea experience as a third officer and 4 years 1 month experience as a second officer.  I was sufficiently satisfied with Gim Dong Ug's qualifications and experience to recruit him to the position of second officer on the 'Sanko Harvest' with Kim In Hyeon as master.  I have recently obtained a copy of Gim Dong Ug's evaluation record card from Pan Ocean."

     Captain Yun said that Hanjoo undertook an orientation session for crew before they left Korea to join a vessel.  Every master, officer and rating was seen in Hanjoo's office.  Most of the subjects covered during those orientation sessions were described in the document entitled "Hanjoo Maritime Co. Limited Staff Organisation for Crew Management" to which Captain Yun had earlier referred.  He said that Hanjoo kept a record of each crew orientation which was conducted.  This recorded who was seen and when and by whom the officer was seen.  The record indicated that on 26 December 1990, Captain Yun himself conducted an "orientation" of Captain Kim and Chief Engineer Choo and that Captain Lee conducted an orientation of Second Officer Gim.  Captain Lee is the manager of Hanjoo.  I shall refer to his evidence in due course.

     Captain Yun said that he followed "a fairly standard procedure" in relation to orientations which he conducted.  He prepared notes for the purpose of doing so.  He recalled giving the orientation to Captain Kim and that he went through the notes which he had prepared for that purpose.  He added, "In relation to route selection, I recall saying to him that if he had any concern about selecting the course he should seek advice from the Ocean Route Co. which was a company which provided advice in relation to route selection.  Captain Yun said that he also recalled saying to Captain Kim that he should familiarise himself with the most recent circular letters sent by Hanjoo to the vessel.  The letters were sent by Hanjoo to the master and covered such things as route selection, navigation, chart correction and prevention of accidents.  Letters issued by Hanjoo were numbered consecutively by reference to the year of issue.  Captain Yun said that he also recalled talking to Captain Kim about anchoring at Cristobal and about reporting to Eastern Shipping in Hanjoo.

     Captain Yun said that crew changes had also been made on the Sanko Harvest at Vancouver, British Columbia, on 20 June 1990.  On 13 June 1990 a memorandum was sent to Eastern Shipping advising that Mr Gim Min Jong was to be appointed chief officer of the Sanko Harvest.  Captain Yun said that before he joined the Sanko Harvest, Mr Gim had been employed by various other shipping companies and manning agencies including Chun Kyung.  He had two years experience as a third officer and two years experience as a second officer.  He was a graduate of a university described as the Dong-A University and had done a one year graduate course at the Korea Maritime University.  Captain Yun said that he was satisfied with Mr Gim's experience and qualifications.  He did not recall any specific discussion in the crew management committee meeting concerning his recruitment and promotion to the position of chief officer.  Captain Yun said that he had been shown a crew evaluation report for Mr Gim Min Jong prepared by Captain Ahn dated 10 November 1990.  He noted that the report said "CB.  He is insufficient for linguistic knowledge and expert knowledge".  Captain Yun said that his "rating" of "CB" was "a low grade of average rating".  He added that the report did not affect his judgment to appoint Captain Kim as master of the Sanko Harvest with Mr Gim Min Jong serving as chief officer.

     In evidence is an efficiency report relating to Mr Gim Min Jong.  It is similar in form to those relating to Captain Kim.  It is dated 10 November 1990 and signed by the then master of the Sanko Harvest, Captain An Yung Su.  Most of the evaluations made in relation to Mr Gim were said to be average.  He had three which were "good" and three that were "lack".  These were for learning attention, professional knowledge and planning and organisational ability.  The actual rating given him was "CB - Lack of language professional knowledge".  Comment was made that he needed a lot of effort in professional and foreign language knowledge.  On that evaluation, Captain Yun must have realised that Mr Gim was bordering on incompetence, if not actually incompetent.  So Captain Yun was recommending the command of the vessel be given to Captain Kim, who two years previously was said to lack serious and calm judgment and, at the same time, knowing that there was on the vessel a chief officer who was, to say the least, of doubtful competence.  One might have thought, if the command was to be given to Captain Kim, it would not be given unless there was on board the vessel a very competent and experienced chief officer to whom Captain Kim could turn for advice. 

     As mentioned earlier, Mr Gim was not called to give evidence.  One can well understand why.  If he had been called, it seems likely that it would have been clearly established that his English was insufficient to enable him to read charts and other publications.  That inference is open to me to draw, particularly bearing in mind his failure to give evidence and I do draw it.  Yet Mr Gim had to take his turn as a watchkeeping officer and had obligations, although not as directly as did his namesake, the second officer, to give Captain Kim advice on navigational matters.  It would seem unlikely that he would have had the ability to proffer any advice at all.  I say this partly because he would have been quite unable to understand the charts on which he was relying for the safe navigation of the vessel but also because of his lack of professional knowledge referred to in Captain An's evaluation of him.

     The next witness to whom I refer is Mr Sung Gan Lee.  He had seagoing experience and began his employment with Hanjoo in June 1987.  In 1988, Mr Lee prepared a document entitled "Duty Organisation Table".  The document was discussed with Captain Yun.  At that time, Mr Lee was an assistant manager at Hanjoo and the person responsible for the manning of Eastern Shipping managed vessels.  Mr Bae was the deputy general manager of Hanjoo and was responsible for the manning of non-Eastern Shipping managed vessels.  Captain Yun was the general manager.  After 1 May 1989, when Hanjoo took over from Chun Kyung the manning of non-Chun Kyung vessels, Captain Jeong became general manager of Hanjoo responsible to Captain Yun.  Mr Bae remained deputy general manager.  Mr Lee continued to be an assistant manager. 

     Mr Lee said that between 1 May 1989 and June 1991, when he left Hanjoo, he and Mr Bae had the same responsibilities but with respect to different vessels.  Mr Lee said that he did not recall any document which recorded the procedures for recruiting new officers and ratings or for promoting crew which were followed within Hanjoo in the period he was an assistant manager and later manager responsible for Eastern Shipping managed vessels.  He said that he met the second officer, Mr Gim, three times in December 1990.  Each of the meetings was held in Hanjoo's Pusan office.  The third meeting was an orientation meeting which he conducted.  At the first meeting Mr Gim gave Mr Lee an "application letter".  He did not have a copy of this.  He learned that Mr Gim had trained at MOKPO Marine College, that he had a Korean certificate grade 3 and that he had previously worked for Pan Ocean Line for a period of four years.  There was a discussion about wages and conditions and a discussion to the following effect:

     "Lee:'You have been on shore for 3 years.  Why have you spent such a long time on shore?  Have you had any accident at sea?'

     Gim:  'No.  I was just involved in my private business during this time.'

     Lee:  'You spent 4 years as a second officer with Pan Ocean.  Do you remember what the second officer has to do?'

     Gim:  'I remember everything.  I haven't forgotten it at all.'

     Lee:  'What kind of vessel do you want to sail on?'

     Gim:  'Tankers.'

     Lee:  'We can't employ you on a tanker.  You have to go on a bulker.  Do you have your seaman's book?'

     Gim:  'No.  I'm getting a new one.  I've lost the previous one whilst ashore.'"

     Mr Lee said that he asked Mr Gim a number of questions relating to navigational equipment, satellite navigation systems and his familiarity with the tasks of a second officer.  He asked him particularly whether he had sailed through the Panama Canal or from Japan to North America and across the Indian and Atlantic Oceans.  Mr Lee said that he did not recall the substance of the answers which Mr Gim gave.  Again there is apparently no record of the discussion so one does not know what his answers were.

     Mr Lee said that he rang Pan Ocean Line to make enquiries about Mr Gim.  The answer he received so he said was, "We've had no problems.  He was employed in Pan Ocean for a long time so he should be a good second officer.  If he was a bad officer he wouldn't have stayed with us for such a long time".  It may be observed that Mr Lee did not ask Pan Ocean for any records held by it in relation to Mr Gim. 

     In para. 13 of his affidavit, Mr Lee said:

     "After the first meeting I formed the view that Mr Gim was sufficiently experienced and qualified to be employed by Hanjoo as a second officer.  I particularly took into account the fact that he had served as a second officer with Pan Ocean for a period of 4 years.  Pan Ocean Line is a Korean owner and operator of bulk cargo vessels and tankers.  It has a reputation as a well run and efficient line having high crew standards.  Pan Ocean had told me that Mr Gim was a good second officer.  In my experience I would have expected the person to whom I spoke at Pan Ocean to be frank with me and to indicate whether there were any reasons why Mr Gim was not suitable to be employed as a second officer.  It is not uncommon for inquiries to be made by Hanjoo of Pan Ocean or other shipping companies and for Hanjoo to receive such inquiries.  In my experience those inquiries are responded to fully and frankly."

     Mr Lee had a discussion with Captain Yun and Captain Jeong about Mr Gim in which he recommended that Mr Gim be employed.  He does not say what the reaction of the other two persons was.  At the second meeting it was agreed that Mr Gim would work for the company.  Mr Lee said that he said to him:

     "In my own case when I was a second officer chart correction was supposed to be done to all the charts.  Nowadays Eastern Shipping doesn't require that all the charts be corrected.  It's understood that this is very difficult to do.  But you must do your best to keep all charts and publications up to date and the charts to be used for particular voyages must be corrected completely."

     During the second meeting, Mr Gim was introduced to Captain Yun and Captain Jeong.  There was a short discussion after which Captain Yun told Mr Gim that the company was happy to employ him as a second officer.

     Mr Lee said that the two meetings he had with Mr Gim were conducted in the Korean language.  He did not make any attempt to assess his understanding and comprehension of the English language.  He understood that, by reason of the fact that he had a second officer's certificate and had trained at MOKPO, that he had passed an English examination during that time.  He also understood that he had had four years service with a large Korean ship owner, Pan Ocean Line, and had navigated all over the world.  He believed that he would have had to have an understanding of navigational English in order to satisfactorily perform his duties.

     Mr Lee then described the third meeting in which he said he conducted an orientation for the members of the crew of the Sanko Harvest who were joining the vessel at Tampa.  The orientation lasted about two hours.  He has a note of his standard procedure in conducting an orientation meeting.  This and a translation of it is in evidence.  I have read the document and taken it generally into account but I do not think it takes matters very much further than does Mr Lee's statement.  Mr Lee said that it was his practice, in relation to second officers, to say something to the following effect, "The second officer should keep his mind on chart correction and do as much work as possible.  Charts for the forthcoming voyage must be corrected."

     I am prepared to assume that the general tenor of Mr Lee's evidence is correct.  But it demonstrates how vague and unsatisfactory the position was.  There is no record of any of the things he claims to have told Mr Gim.  It is also true that many of them, particularly the last matter, ought to be well known to any competent second officer.  The trouble is that without there being in place a system of regular supervision of the work of officers on vessels, the likelihood is that things will either be, or become, slack.  Conversations such as Mr Lee deposes to about chart correction, if they occurred, serve little purpose in the absence of a proper system.

     The next witness to whom I should refer is Mr Yamamoto.  Mr Yamamoto was first employed by Eastern Shipping in 1975 when he joined the personnel section of the marine department. From February 1980 until August 1981 he served as an assistant superintendent in the marine section of Eastern Shipping.  During that period he visited vessels as a superintendent.  In August 1981 he was appointed assistant manager of the marine personnel section and remained in that position until December 1990 except for a period of about a year in 1984-85 when he worked in the Hong Kong office of another Sanko company as an accountant.  In December 1990 Mr Yamamoto joined the ships account section of Eastern Shipping and in October 1992 began work in the business headquarters department of Sanko.  Mr Yamamoto said that in 1990 the manager of the marine personnel section was Mr Morishita.  The previous manager had been Mr Kumabe.  The section was divided into two parts.  One looked after marine personnel matters concerning Korean crews.  The other looked after those matters for Filipino and European crews.  Mr Yamamoto was an assistant manager and was responsible for Korean crews.  He had a secretary/clerk who assisted him.  A Mr Akiyama was also an assistant manager, he being responsible for Filipino and European crews.  He was assisted by a Mr Hashimoto and a secretary/clerk.

     Mr Yamamoto said that, before May 1988, the Korean crew for Eastern Shipping managed vessels were provided by Chun Kyung and Dong Ji Marine Co. Limited.  After May 1988 the services previously provided by Chun Kyung were provided by Hanjoo.  He referred to the fact that the managing director of Hanjoo was Captain Yun.  Mr Yamamoto said that he had previously worked with him when he was a marine superintendent in the marine section of Eastern Shipping in the early 1980s.  He also said that in 1990 Korean crews were supplied to Eastern Shipping managed vessels by either Hanjoo or Dong Ji.

     Mr Yamamoto said that during the period from 1981 until 1990 there was a system in place within the Eastern Shipping personnel section for the keeping of records concerning Korean crew supplied by Hanjoo.  He described the system which was in force prior to 1984.  I do not find it necessary to refer to this.  After August 1984 the former practice of keeping Eastern Shipping cards which had been in force was no longer followed.  Instead the then manning agent, Chun Kyung, prepared and sent to Eastern Shipping personal record cards which were current at that date.  The cards were kept as part of the records of Eastern Shipping and added to or amended from time to time. 

     Mr Yamamoto's statement contains detailed evidence about the records which were kept.  I do not refer to the detail of these because they do not relate to members of the crew of the Sanko Harvest who were on board at the time of the grounding.  Eventually Mr Yamamoto said that from July 1986 the system in force was that copies of crew evaluation reports for senior engineers and for officers from third officer to captain were sent by Hanjoo to Eastern Shipping together with a rating and comment from Captain Yun.  The vessels included the Sanko Humanity but not the Spring Eagle.  As I understand the evidence, that means that the report dated 31 December 1988 concerning Captain Kim, to which I have earlier referred, was not sent to Eastern Shipping.  On the other hand, the report dated 30 August 1990 concerning Captain Kim's service on the Sanko Humanity was received by Eastern Shipping.  It will be recalled that that is the report on which the then captain of the Sanko Humanity wrote the comment which included the suggestion that, if Captain Kim was to become a master, it would be better if he were captain of a ship which was not larger than 10,000 tonnes "to build his experience.".  It is also the report upon which Captain Yun had written a note to the effect that Captain Kim had the capacity to be a captain.

     Captain Yun's note can be seen upon the document referred to by Mr Yamamoto.  His comment is circled and is underlined with a purple line.  Mr Yamamoto said that his stamp appears in the top left hand corner of the document.  The stamp is in red.  Mr Yamamoto said that his practice was to highlight, with a marker pen, the part of the report which he wanted his secretary to transfer on to the Eastern Shipping personal record card or the Hanjoo personal record card if no Eastern Shipping card had been prepared.  She would then make that note in the remark box in the bottom right hand corner of the card.  Mr Yamamoto does not recall underlining the remark made by Captain Yun in purple but it would appear that this is what he must have done.  Thus the only part of the report from the Sanko Humanity which was transferred to Captain Kim's personal record card was Captain Yun's comment to the effect that Captain Kim had the capacity to be a captain.  Anyone reading the personal record card without the aid of the report of the master of the Sanko Humanity would thus be misled.

     Mr Yamamoto described the procedure followed during 1990 in relation to crew replacements.  He said that Hanjoo would prepare a list of the crew to be replaced and advise Eastern Shipping of the list by facsimile.  Lists were sent approximately twice a month.  There is a reference to a document dated 30 November 1990 which, Mr Yamamoto said, was an example of a crew replacement advice.  On receipt of the document the practice was for the secretary to make a copy of the facsimile.  She would then attach to the copy the original personal record cards kept by Eastern Shipping for each of the officers of senior rank who were to join the vessels referred to in the list.  These included the chief officer and the captain.  If the senior officer signing on had not worked for Eastern Shipping before or had not worked for Eastern Shipping during the previous two years, the secretary would request Hanjoo to send by facsimile a copy of its current personal record card for the officer.  She would not do this if a card had already been provided with the Hanjoo list advising of the crew changes.  She would then attach to the copy of the Hanjoo facsimile the copy of the current Hanjoo personal record card which had been sent.  Those documents were then circulated to each of the sections within the ship management department responsible for Korean crew.  These sections included supply, marine, technical and marine personnel.  The reasons for this circulation was to enable members of those sections to make any comments on the senior officers nominated to join the vessel.  Occasionally adverse comments were received.  This occurred about six or seven times a year.  A second reason for the practice was to enable those sections to say if they did not want a particular ranking officer to be replaced at that time.  For example it might have been desirable to keep an existing chief engineer on board the vessel for an impending survey because of his familiarity with the operation of and equipment on the vessel.

     About a week before each crew change was to occur, Hanjoo would send Eastern Shipping a final list of the crew signing on each vessel.  The list would contain details of the rank and name of the crew member and some other particulars.  There is an example referred to in Mr Yamamoto's statement of such a list dated 13 June 1990.  Once crew changes had been completed the documents relating to the crew change were stapled together.  The bundle of documents was then stamped with a number indicating what number crew change for the year and vessel the documents related to.

     In 1990 Mr Morishita introduced a new system for the employment or promotion of senior ranking officers.  This involved the preparation of an application for employment or promotion.  The personal record cards kept by Eastern Shipping were attached to the application form which was then circulated to each of the sections of the ship management department.  The cards attached were the Hanjoo personal record cards kept in Eastern Shipping's office.  The crew evaluation reports were not circulated with those applications.

     Mr Yamamoto said that he did not recall seeing any written guidelines at Eastern Shipping relating to the employment or promotion of crew.  He said, however, that he had guidelines or aims which he followed in relation to the employment and promotion of Korean crew.  For graduates of the Korea Maritime University, those guidelines or aims were two years sea experience as third officer, three years as second officer and three years as chief officer.

     Because of objections to other paragraphs of Mr Yamamoto's statement, a substantial part of it was not read but Mr Yamamoto gave oral evidence about these matters.  The only other part of his statement to which I should refer is to be found in para. 32 in which he recounts some inspections of the Sanko Harvest which he made in 1989 and 1990.  These do not, to my mind, take the evidence in relation to any issue in this case very far.  His evidence does not establish what the nature or extent of any of these inspections was.  There is no record of them.  The evidence does not overcome the problems of proper supervision of Sanko vessels by marine superintendents earlier referred to.

     When the hearing of this matter began there were statements of evidence from each of the witnesses whom the parties intended to call.  There was no statement of Mr Yamamoto because the plaintiffs did not at that time consider him to be an essential witness.  Indeed it would seem that they intended only to call evidence from Hanjoo in relation to the way in which officers were selected for service on Eastern Shipping managed vessels.  The principal witness called for this purpose was Captain Yun to whose evidence I have referred.  It seems likely that as the case developed and as the purport of what a number of the experts called in the case were saying emerged, those advising the plaintiffs thought it necessary to call an officer from the personnel section.  So Mr Yamamoto was called.  There was an objection taken by counsel for Sumitomo to his being allowed to give evidence.  I reflected on this matter and decided that, although there was a risk of prejudice in relation to allowing him to give evidence, he should be permitted to give the evidence although not, unless counsel for Sumitomo agreed, by statement.  That was the reason why a good deal of Mr Yamamoto's statement was not received in evidence.

     Mr Yamamoto's evidence in chief and his cross examination are lengthy and not easy to follow.  This was not entirely Mr Yamamoto's fault.  Obviously there are difficulties, notwithstanding the use of interpreters, with witnesses sometimes grasping a real understanding of what they are being asked.  I have endeavoured to make allowances for this but I am left with the impression that he was an evasive witness at least in some respects.  In the view that I take of one piece of evidence that he gave, to which I shall now refer, I do not think that a decision on whether his testimony was altogether unreliable needs to be made.

     The evidence to which I refer appears in his cross-examination.  He was referred to the report made by the master of the Spring Eagle on 31 December 1988.  The original of the report is written in Korean.  Mr Yamamoto could not read or speak Korean so that he could not read the original of the document.  It would seem from his earlier evidence that it is unlikely that he had seen the document before he was asked to give evidence in the case because it was apparently not sent to Eastern Shipping, the Spring Eagle not being an Eastern Shipping managed vessel.  The document appears at pp.259-263 of a bundle of documents known as the translation bundle.  The translations of course are in English which Mr Yamamoto can read.  The cross-examination proceeded as follows:

     "MR KING:  And you told his Honour yesterday afternoon that there were three matters that you considered important on the question of promotion of Mr Kim, one of which was the evaluations of the captains.  Do you recall that evidence.

     THE INTERPRETER:  Yes.

     MR KING:  Your Honour, that appears at 1706 of the transcript.

     Now, do you consider, as a general consideration, that a calm judgment is an important matter in - important quality for a master?

     THE INTERPRETER:  Yes.

     MR KING:  Do you consider coolness and lack of rashness to be important qualities for a master?

     THE INTERPRETER:  Yes.

     MR KING:  Would you have a look please at the translation bundle at page 262 and 263.

     THE INTERPRETER:  Yes.

     MR KING:  If you had seen and understood in December of 1990 the statements that appear at the bottom of page 262 about Mr Kim not being his own self-evaluation and the statement at 263, would you have still reached the view you told his Honour yesterday and recommended his promotion?

     THE INTERPRETER:  No, it would not have changed.

     MR KING:  And would you turn to page 268 in the translation bundle?  If, the promotion of Captain Kim in December 1990 you had seen the reference beside the words 'need guidance', would you have still promoted Captain Kim?

     THE INTERPRETER:  Yes, I would have recommended him.

     MR KING:  It is correct, is it not, that you paid no regard at all to the opinions of masters who had observed Mr Kim in 1990?

     THE INTERPRETER:  Well, with hindsight we can see that we could have ignored it, but we cannot understand why the captain should have recommended him to be promoted as captain and at the same time added these comments.

     MR KING:  Well, looking back on it now, Mr Yamamoto, if you had seen and understood the comments of the captains under which Mr Kim had served prior to December 1990 contained in those reports, you would have taken steps to investigate the qualities and eligibility of Mr Kim to be promoted to master, that is right, is not it?

     THE INTERPRETER:  Yes, well, by looking at back - the two years they were being influenced by what was happening in - in those two years, no doubt his characteristics are noted in here.

     MR KING:  Mr Yamamoto, the fact is that ESC in 1990 paid no regard to the evaluation reports at all, did it?

     THE INTERPRETER:  We were not ignoring them.

     MR KING:  And again it was - I withdraw that.  It was simply a matter of leaving it up to Captain Yun to decide whether someone should be promoted or not, that is correct, is not it?

     THE INTERPRETER:  No, that's not so."

     There are some things I should explain about this evidence.  Firstly, the reference to the interpreter is, of course, a reference to the witness himself.  A reference to p.268 in the translation bundle is a reference to the report dated 30 August 1990 which did go to Eastern Shipping and was seen by Mr Yamamoto although, because he could not understand the Korean language, he could not understand what was written on it.  It was there said that he had the capacity to be a captain but that it would be better if he were captain of a ship not bigger than 10,000 tonnes.  Those remarks, although the document was sent to Eastern Shipping were not conveyed by Mr Yamamoto to any other member of the Eastern Shipping staff.

     Against that background it is necessary to look at the answers given by the witness in cross-examination.  It is plain on the face of the cross-examination that, if Mr Yamamoto had seen and understood what had been written in the two reports dated 31 December 1988 and 31 August 1990, the remarks of the two masters in them would not have made the slightest difference to him and, in the absence of any other evidence from any employee of the personnel section in Eastern Shipping, anyone else in Eastern Shipping either.  The position which is revealed is one in which Mr Yamamoto is inclined to take the masters' criticisms of Captain Kim as being inconsistent with the main thrust of their reports.  He is inclined to be critical of them for this.  His reaction was to discard what he found unpalatable and to take the masters to task for referring to any matters that might suggest caution in appointing the officer being reported on to the position of master.

     I think there was a reason for this attitude.  It seems to be tolerably clear from the internal documents of Hanjoo and, to a degree, Eastern Shipping, that Sanko was confronted, from time to time, with the need to appoint masters or other senior officers at short notice.  There was no identifiable group of officers from whom a new master could readily come.  The whole affair seems to have been a very much on an ad hoc basis.  This was probably due to the financial difficulties through which the Sanko group of companies was passing but it provides no excuse for not having a proper system of recruiting masters on an ongoing basis from well qualified and sufficiently experienced personnel.  Another factor was the existence of the management agreement with Hanjoo itself.  This had the effect of tying Eastern Shipping to Hanjoo and limiting its choice of potential masters to those whom Hanjoo had on its books.  It is true that Captain Yun referred to there being the ability to consult another manning agent if there were no suitable person to be appointed.  This may have been so, but, as he conceded, there had been no occasion when the other manning agent had been used.  By limiting itself in this way, Eastern Shipping denied itself access to a much larger pool of potential appointees.

     All these things, I think, explain Mr Yamamoto's apparent frustration over the fact that in reports of masters indicating that an officer had the potential to become a Captain, there were statements qualifying what they had said in the form of statements such as are to be found in the reports on Captain Kim made in 1988 and 1990 by his then captains.

     In my opinion, any prudent person looking at what the masters had written and contemplating promoting Captain Kim to the rank of master would have made the most searching inquiries themselves to see to it that whatever risk was involved was minimised.  Furthermore, the position appears to me to be one which called for substantial counselling of Captain Kim and a substantial oversight of his initial period as master.  How wise it would have been, if these facts had been known, to send him half way around the world on a voyage which would conclude with a passage through quite treacherous waters is a matter upon which minds may differ, but it seems to me to be unlikely that any prudent ship manager would take such a risk.  When one adds to this the fact that the report about the first officer who was to join the ship at the same time suggested that he was on the borderline of competence and that the second officer, until he joined the vessel earlier in 1990, had not been to sea for some two or three years, the whole exercise seems to have represented a gamble that should never have been taken.  Subsequent events proved this to be the case.

     It is next necessary to recall the findings I have made about the objective signs of incompetency on the vessel which the evidence discloses.  Earlier I used the phrase "collective incompetency".  As I then remarked, this inverted Professor Moreby's reference in his statement to "collective competence".  I am satisfied that no competent team of bridge officers would have taken this vessel on the course it took through the Archipelago towards Esperance.  I do not wish to repeat the evidence which there is about the warnings on the charts and other publications or to go back over aspects of chart correction with which I have already dealt.  But the totality of the behaviour of the deck officers on the vessel reeks of incompetence.  Not one of the four officers thought that there was anything wrong with the way the vessel was to approach Esperance.  Not one had the slightest concern about it.  This may have been due to an imperfect understanding of written English.  Indeed, I think that this may well be one of the reasons which led to all the officers, but particularly Captain Kim and Mr Gim, the second officer, ignoring so many warnings.  Another reason may have been foolhardiness or plain stupidity.  Yet another may have been a lack of sufficient experience and navigational skill.  It is not possible to ascribe a particular reason for the conduct which was engaged in.  All one can say is that, looking at the matter as objectively as one can, the conduct of the crew in relation to its attempt to take the vessel into Esperance was reckless in the extreme and indicative of grave incompetence pervading the navigation of the vessel.  That those responsible for the management of the vessel should have allowed such a situation to develop is itself an indication that there was something seriously wrong with the supervision and management of the vessel by Eastern Shipping.

     I next turn to the expert evidence relevant to this matter.  As in the case of chart correction, a variety of experts gave evidence.  The evidence which I accept is that given by Professor Moreby and Captain Beetham.  As in the case of chart correction, that does not mean that I reject other evidence given by experts.  I do not refer to it simply because of the extensive task that that would involve.  I am clearly of the view that the opinions expressed by Professor Moreby and Captain Beetham are opinions deserving of acceptance.

     In para. 2.1.2 of his statement, Professor Moreby said:

     "When one or more manning agents are used by a shipowner or ship-manager, it is good practice for the shipowner or ship-manager to retain control of and monitor the activities of their manning agents by:

     (a)   issuing instructions, guidelines and/or criteria to be used by the manning agent(s) when recommending the appointment of individual seafarers;

     (b)   requiring the manning agent(s) to submit the application forms and details of all potential recruits (at whatever rank) together with the agent's recommendations to the shipowner's or ship-manager's head office for final approval and confirmation of each appointment by a superintendent and/or a personnel manager;

     (c)   retaining - and not delegating - the authority to promote a seafarer of whatever grade to the next higher grade."

     Professor Moreby referred to the Code of Ship Management Standards of the International Ship Managers Association.  Para. 4.1.2 of that Code provides that the ship management company shall have a system to control the selection and recruitment when manning agents are used.  Furthermore, the International Maritime Organisation International Safety Management Code, states in para. 6.3, that the company shall ensure that the master is competent to command the ship.  The International Marine Organisation Convention on Standards of Training, Certification and Watchkeeping requires, in para. 16, that there be adequate knowledge of the English language enabling an officer to use charts and other nautical publications.  Professor Moreby said that, not only was sufficient command of English required by the Convention; it was also good management practice for the shipowner or ship manager to ensure that seafarers - especially masters and deck officers - could speak, read and understand English.  Australia, the United States, Panama, Japan and South Korea are all parties to the Convention.

     Later Professor Moreby said that, through whatever channel the seafarer was recruited, it was good practice for a representative of the principal, whether owner or ship manager, to check all the original documents, certificates and licences held by an applicant, his sea experience, and his knowledge, by putting to the applicant professional questions appropriate to his department.  Furthermore, it was good practice to keep on file full, written records of the selection process and the interviewers' comments and recommendations.  Professor Moreby said that some companies - he instanced World Wide, Hong Kong, and Shell Tankers UK Limited - had systems whereby an officer to be promoted to master sailed with and understudied an experienced master for about three months.  Similar arrangements applied to officers to be promoted to chief engineer.  He also said that all good quality, prudent ship management companies did not simply accept certificates of competency as evidence of competence to serve in the rank for which the man was certificated.  In particular Hanseatic and also Denholms, Wallems and Columbia gave extra training.  It was the superintendents of these companies on their regular periodical visits to their ships, and also while the ships were in dry dock, who made recommendations that specific chief officers appeared ready to be promoted to master and specific first or second engineers appeared ready to be promoted to chief engineer.

     Professor Moreby said that an example of good practice concerning the promotion procedure from chief mate to master was to be found in Denholm Ship Management (Holdings) Limited of Glasgow.  This involved all potential masters, whether British, Indian or Filipino, going through the same process.  After serving for two years as chief mate, the potential appointee was reviewed by the Denholm promotion board and if found satisfactory he entered the "promotion zone".  He stayed for a year in the promotion zone during which time particular attention was paid to him during superintendents' visits, to his reports from masters and to any incidents in which he was involved "for good or ill."  If his progress was satisfactory during his year in the promotion zone, he passed through to the promotion block for a further year during which time special reports were requested from masters and visiting superintendents as to his suitability for command.  The Denholm promotion board reviewed all the reports and spoke to the superintendents who met the potential appointee during his promotion zone and promotion block.  If the promotion board was satisfied that he could be promoted to master, he was invited to the Glasgow head office where he was both briefed and assessed by each of the departments and sections.  This final assessment process took a full working week.  If found satisfactory by the promotion board and by all departments and sections, his promotion to master was confirmed at the end of the week in the Glasgow head office.

     It was submitted on behalf of the plaintiffs that the standards espoused by Professor Moreby were standards of perfection and were unrealistic in a modern world.  I would reject these submissions because of the authority which, in my view, Professor Moreby's opinions ought to be accorded and because, in any event his evidence establishes that the standards he advocates are those used by a number of shipping companies.  The standards Professor Moreby sets are not the pipe dreams of some unrealistic academic; they are standards which are in fact practised in the real world.  This does not mean that every shipping company must have in place a system such as is used in Denholms.  But it does mean that there must be in place a system which will be likely to lead to the appointment of satisfactory, experienced and competent officers.  Any such system, particularly a system for the appointment of senior officers to senior positions, must involve the shipowner or ship manager itself.  It is not a task that can be delegated to a manning agent as was the case here.  So far as the evidence discloses, Eastern Shipping had no satisfactory system at all.  It kept no records.  It did not find out all that Hanjoo knew of particular appointees.  It depended on a casual and superficial evaluation of whatever Hanjoo sent it and upon some equally casual conversations its staff had with ships' officers on the rare occasions when vessels were inspected.  An instance of one of these is the conversation Mr Ohtsuka claims to have had with Captain Kim when he was chief officer on the Sanko Humanity.  Mr Ohtsuka does not recount seeking the views of the master of that vessel, Captain Chu, on Captain Kim's potential.  If he had, it seems likely that Captain Chu would have reported to him orally in much the same way as he reported in his written report earlier referred to.

     The vice of the procedure which Eastern Shipping adopted was essentially its haphazardness, its lack of method, its
irregularity, and its failure to require adequate, or indeed any, record keeping.

     If proper systems are not in place, it is likely, as was clearly the case here, that ships engaged in international trade will be manned by incompetent crews.  This will be because they have not been sufficiently assessed for their ability to do their respective jobs.  The various Korean establishments in which the relevant personnel here qualified may be of the highest standing.  But one knows that in other areas - I instance the law, medicine and engineering - a graduate from the most outstanding university in the world will not be able immediately to exercise competently and well the duties involved in his or her profession.  What counts is experience and the reaction of particular people to circumstances which confront them as they go along.

     Captain Beetham referred to the Hanjoo "Procedures for Promoting Crew (Mainly Officers)":

     "1.   To Check how many high ranks crew is available to recruit.

     2.    In case of shortage, selection for the candidates to be promoted shall be done among the crew members who are recommended by Masters.

     3.    To check how many years he has the past experience (Shipboard contract base), for reference at least two years should be necessary to be promoted from 3/O to 2/O and at least three years from 2/O to C/O and also at least 3 years from C/O to Captaincy APT.

     4.    His past record through crew evaluation report and from the Captain who worked on board with him shall be checked, or E.S.C. Superintendent Reports.

     5.    In the Crew Management Committee, discuss his performance in details.

     6.    Awaiting confirmation from E.S.C."

     Two of these procedures is an example of what I referred to earlier when I said that the selection procedure seemed to be designed to deal with shortages of available appointees for the position of master and for other ranks as well.

     Captain Beetham said that the basis for Captain Kim's selection for promotion was unclear.  He thought that it was uncertain whether this was the result of a recommendation from masters that he had sailed with or whether he was simply nominated through the manning agency.  He said that, if the managers, i.e. Eastern Shipping, accepted his nomination and promotion without considering recommendations and without carefully assessing whether his competence and experience were adequate or without having a system which required the making of such an assessment on an informal basis, "they were negligent."

     In a supplementary statement, Captain Beetham referred to the reports dated respectively 31 December 1988 and 30 August 1990 from the Spring Eagle and the Sanko Humanity.  He referred to what was said by the masters of these vessels.  He said that the bulk of the information in the efficiency report forms was in a tabulated evaluation under different questions and that the majority of these in both reports were answered under "Excellent" or "Exemplary".  The value in these reports was not so much in the column in which the majority of points was made as any individual's definition of "good" or "excellent" would vary depending on whether they were considering the average officer or the ideal officer.  Captain Beetham thought that the greater value was in where the remarks deviated to a lower level than the others and in the Spring Eagle report these deviations were shown in co-operation, professional knowledge, knowledge of Japanese, maintenance skills, planning and organisation ability, sincerity and confidence, etiquette and sociability.

     In the Sanko Humanity report the deviations were shown in knowledge of English and Japanese, in training and leadership and leadership qualities, in sincerity and confidence and again in etiquette and sociability.  Captain Beetham thought that there seemed to be doubt whether these evaluation reports were forwarded to Eastern Shipping when the promotion of Captain Kim was considered or whether only his record card was sent.  On the findings I have made, I think that the probabilities are that the report from the Spring Eagle was not sent but the report from the Sanko Humanity plainly was although it went to Mr Yamamoto who could not understand it because it was written in Korean.  Captain Beetham said that he did not think that promotion would have been approved by any competent ship manager if these reports had been received by them, given the remarks on more experience being required, on serious and calm judgment ability, on tolerance with staff, with the need for more knowledge and with the need to build his experience.

     Captain Beetham referred to the statement by Mr Sensui that he would have promoted Mr Kim anyway (I have earlier referred to this evidence).  Captain Beetham said that this attitude of Eastern Shipping paid little attention to the evaluation reports despite the fact that they were the only comments about the abilities of Captain Kim by anyone with direct experience available to them.  He added, "I find this a remarkable attitude on the part of a shipping company's manager."  I am of the same opinion.

     Captain Beetham continued:

     "In my opinion it is impossible to consider the promotion of any chief officer as long as there are any provisions or specifications mentioned; to say that a man would be a good master provided he drank little, or that he would be a good master provided he learned something about ship handling, or to say that he would be a good master if he gained more experience is not recommending a person as suitable for command at that time.  In my experience there must be at least two independent recommendations from masters with no adverse reports being provided subsequent to either of those recommendations.  Consideration would also be given to any earlier remarks in reports particularly adverse comments that could only be eliminated by monitoring the man over a reasonable period of time."

     I accept this evidence as being evidence of what good practice in the shipping industry requires in relation to the appointment of masters and I accept the opinions which Captain Beetham has expressed.

     There is much more of Captain Beetham's evidence to which reference could be made but I have referred to sufficient of it to demonstrate that the procedures adopted by Hanjoo and Eastern Shipping were gravely inadequate.  It follows that both my own reaction to the evidence of the employees of Hanjoo and Eastern Shipping who were called and the expert evidence which I have accepted coincide.

     The evidence of the circumstances in which the grounding occurred establish that, objectively speaking, the four deck officers were incompetent.  That was not to be unexpected in the light of the way in which each of them came to be promoted or appointed to the positions which they held.  Plainly enough, a vessel which is manned by an incompetent crew is unseaworthy.  Unquestionably the incompetence of the officers was a cause of the grounding.  No competent master or group of officers would have taken the vessel into the archipelago.  The Causeway Channel would have been used.  The unseaworthiness of the vessel arising because of the incompetence of the officers was plainly a cause of Sumitomo's loss.

     The evidence establishes that the unseaworthiness of the vessel and the failure to secure that the ship was properly manned was caused by want of due diligence on the part
of Grandslam which was the carrier of the cargo.  Again I leave aside the question of Sanko's liability.  It will be recalled that Grandslam had no employees of its own.  It had a board of directors and a trustee responsible for its management because of its financial problems, it being one of the companies in the Sanko group which was under management in the way that I described in the early part of this judgment.  The board of Grandslam and the trustee entrusted the management of the vessel entirely to Eastern Shipping, which was another Sanko company.  Grandslam cannot escape the obligations it had under the United States Act by saying that it employed a competent manager, Eastern Shipping, to manage and run the ship for it.  In the absence of Grandslam having any employees of its own, Eastern Shipping should be regarded as standing in its place for the purpose of the management and crewing of the vessel.  In effect it was Grandslam's alter ego.  It was thus Grandslam's obligation to see to it that due diligence was exercised to make the ship seaworthy and to see that it was properly manned.  It failed in those duties.      In summary, my conclusions are that the vessel was unseaworthy because it was sailing on uncorrected charts and because it was not properly manned.  The failures in this respect were due to the want of due diligence of Grandslam, responsible as it was for the acts and omissions of Eastern Shipping.

The Liability of Sanko

     I next come to the question of Sanko's liability.  The question is whether its position should be different from that of Grandslam because it was the time charterer of the vessel from Grandslam and entered into the charterparty as disponent owner.  It employed no manager and its case is that it played no part in the management of the ship or the supervision of the crew.  There is some further evidence in relation to this matter to which I need to refer.

     Mr Katsuyuki Totoki is a director of Sanko and a director of Grandslam.  He referred to the fact that Grandslam was the bareboat charterer of approximately 80 vessels each of which was time chartered to Sanko.  Sanko Harvest was, of course, one of these.  He said that in December 1990 the directors of Grandslam were a Mr Suzuki, Mr Takada and himself.  Mr Suzuki was general manager of Sanko's accounting and finance department.  Previously a Mr Fujiwara had been general manager of its co-ordination department but he had ceased to be a director.  He confirmed Grandslam had no employees and that there were no regular meetings of directors of it held.  He said that the ship account and management section was responsible for controlling Grandslam's budget.  The co-ordination section within the co-ordination department of Sanko was responsible for new building projects and the sale and purchase of vessels.

     Mr Totoki then referred to the dry cargo operation section no. 1 which was within the dry cargo operation department of Sanko.  It was responsible for the operation of Grandslam vessels time chartered by Sanko and managed by Eastern Shipping.  He said that the Sanko Harvest was within the area of responsibility of the dry cargo operation section no. 1.  The manager of that department in December 1990 was a Mr Yamamoto, not the Mr Yamamoto to whose evidence I have earlier referred.  The man in the department who looked after the operation of the Sanko Harvest was a Mr Toshiro Ueyama.  Vessels chartered by Grandslam were managed by Eastern Shipping.  In about January each year discussions proceeded between Grandslam and Eastern Shipping with a view to fixing the fee to be charged by Eastern Shipping.  These negotiations were conducted on Grandslam's behalf by personnel within the co-ordination department of Sanko.  The Eastern Shipping agency fee consisted of a management commission plus a lump sum fee.  The latter covered direct expenses and disbursements incurred by Eastern Shipping in operating the vessel.  The former covered the other cost of operating Eastern Shipping.  These costs were apportioned amongst the vessels which it managed.

     In a supplementary statement, Mr Totoki said that Eastern Shipping had different premises from Sanko and different employees.  As mentioned earlier, he said that Sanko was, together with two other companies, the equal fourth largest ship owner in Japan.

     Mr Totoki said that the fixing of voyage charterparties and operational matters in relation to cargo for ships which were time chartered by Sanko was the concern of the dry cargo chartering department and the dry cargo operation department.  He also said that the ultimate control of Sanko was with the trustees who had been appointed by the Tokyo District Court and who reported to the court once a month.  The same was true of Eastern Shipping whose trustee was not one of the trustees who administered Sanko.  The Eastern Shipping trustee also reported to the court once each month.  This is in line with the evidence of Mr Ohashi referred to in the early part of this judgment except that Mr Totoki does not mention the liaison between the various trustees referred to by Mr Ohashi.

     Mr Takada said that he was the deputy general manager of the dry cargo operation department within Sanko.  He said that the division of function between the dry cargo chartering department and the dry cargo operation department with respect to the Sanko Harvest was that the voyage charterparty between Sanko and Sumitomo was fixed by the dry cargo chartering department and that operational matters pursuant to the voyage charterparty were undertaken by the dry cargo operation department.  The particular person concerned with the Sanko Harvest from the operational point of view was Mr Ueyama who reported to Mr Yamamoto.  Mr Yamamoto reported in turn to Mr Takada.  It was Mr Takada's function to report to Mr Shibue who was the general manager of the dry cargo operation department.  The matters of responsibility which Mr Takada described were the same in 1990 as they were at the time he gave his evidence except that Mr Ueyama ceased to be in the section at the commencement of October 1992. 

     Mr Takada said that the operation department liaised with the vessel, with the charterer and with the agents throughout the world concerning loading and unloading and the like.  It was usual for the voyage charterer, i.e. Sumitomo, to engage stevedores at the point of loading and unloading.  In the present case stevedores at Tampa were engaged on behalf of the vessel on the nomination of Sumitomo as the charterer's agent.  Mr Takada said that Sanko had no involvement with either matters of crewing or the appointment or promotion of officers or with any matter to do with the provisioning of the ship or with equipping it with charts or publications, all of which was the province of the manager, Eastern Shipping.

     The relationship between Sanko and Sumitomo is governed by the charterparty.  The fact that, in the view I have taken of the matter, I have proceeded on the basis that the United States Act applies, does not alter the fact that the relationship between the two parties is contractual.  The contract has to be read as a whole.  The primary obligation of Sanko under the contract is provided for in clause 1 of the charterparty which obliged Sanko, as disponent owner, to load the cargo, proceed to the discharging port and deliver it.  That obligation is little different in effect from that incorporated in the contract by clause 41 of the charterparty.  It is to be found in s.3(2) of the United States Act which provides that the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods consigned.  The reference to "the carrier" in that provision in the context of this case is a reference to Sanko.  Because Grandslam carried the goods on the same terms and conditions as applied in the case of Sanko, it had the benefits and the responsibilities provided for in the charterparty.  As I have earlier held, it was also a carrier for the purposes of the provisions of the United States Act, but that, for present purposes, is by the way.

     The evidence establishes that the cargo was not delivered nor was it properly and carefully carried, kept or cared for.  It was loaded into an unseaworthy ship not equipped with up to date charts and not manned by a competent crew.  That unseaworthiness was a cause of Sumitomo's loss.

     Sanko's obligations under the charterparty are modified by the terms of s.4(1) of the United States Act - again the provision is incorporated into the charterparty by clause 41 - which relevantly provides that neither the carrier nor the ship is to be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy and to secure that the ship, inter alia, is properly manned and equipped.  The last sentence of s.4(1) provides that, whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other persons claiming exemption under the section.

     The question is therefore whether Sanko itself, not Grandslam and not Eastern Shipping, failed to exercise due diligence to make the ship seaworthy and to properly man and equip it.

     Although Sanko was described in the charterparty as the disponent owner of the vessel, it was not in fact the true owner of it.  It was the company which could "dispose of the ship" in the sense of making it available for the carriage of cargo.  That did not require it to be the actual owner.  In the present case it was able to "dispose" of the ship because it was the time charterer of it.  That is in accordance with the view of Morris J in The Hannah (supra).  I think I should infer that Sumitomo ought reasonably be taken to have contracted on this basis.  In other words it ought to be taken to have contracted on the basis that Sanko might provide a time chartered vessel to fulfil its contract.

     In fact the time charterer was Grandslam which had no employees of its own and employed Eastern Shipping to operate and manage the vessel.  Both Grandslam and Eastern Shipping were wholly owned subsidiaries of Sanko.  The Sanko Harvest was part of the substantial fleet of Sanko vessels to which I have referred in the early part of this judgment.  There was at least one director of Sanko who was also a director of Grandslam, namely, Mr Totoki.

     As mentioned, Sanko's obligation was to exercise due diligence to make the vessel seaworthy and to properly man and equip it.  It could not shed this obligation.  Its contract bound it to discharge its obligations in this regard.  The onus of establishing the exercise of due diligence is upon the carrier, relevantly for present purposes, Sanko.

     Sanko relied on the evidence of Mr Totoki and Mr Takada to show that the Sanko operation was divided between, on the one hand, the chartering of vessels to consignors of cargo under voyage charterparties and the oversight of those charters once they were entered into (matters attended to by Sanko itself) and, on the other hand, the operation of the Sanko fleet which, in relation to Korean crewed vessels, was by the time chartering of vessels from Grandslam to Sanko and the crewing and management of those vessels by Eastern Shipping aided by the appointment of a manning agent such as Hanjoo.

     I do not think that that evidence assists Sanko's case.  In my opinion, none of the evidence it has led establishes or really goes close to establishing, that there was any relevant exercise of due diligence by Sanko whatever.  The fact is it did not attempt the exercise.  If it had done so, it would have discovered that many of the charts on the Sanko Harvest were not corrected, that the vessel and its officers were not properly supervised by Eastern Shipping both in relation to chart correction and other matters, and that it was manned by four deck officers who were, objectively speaking, incompetent. 

     I can understand that the importation of the Hague Rules into charterparties may sometimes give rise to difficult questions of construction and the need to investigate complex factual situations.  This is a matter referred to by Scrutton (supra) at 372 and 420.  A number of authorities, including Adamastos, are referred to in the footnotes on those pages but they do not touch this problem in any direct way.

     In the result, I am satisfied that Sanko has not discharged the onus which rested upon it under s.4(1) of the United States Act and that it is liable for Sumitomo's loss which was caused, as I have earlier said, by the unseaworthiness of the vessel.

Limitation of Liability

     Two matters remain to be dealt with.  The first of these is limitation of liability and the second a claim for freight made by Sanko against Sumitomo.  I deal with the question of limitation of liability first of all.  It is now settled law in Australia that the 1957 Convention applies in relation to occurrences which occurred before the coming into force of the Limitation of Liability for Maritime Claims Act 1989.  It came into force on 31 May 1991 after the grounding occurred.  Accordingly, it is the 1957 Convention, in force by operation of ss.330 and 333 of the Navigation Act 1912 and Schedule 6 thereof, which applies.  Both plaintiffs seek to limit their liability.  In order to do so they must establish that Sumitomo's loss occurred without the actual fault or privity of either plaintiff.

     I first refer to some authorities.  In James Patrick & Company Limited v The Union Steamship Company of New Zealand Limited (1938) 60 CLR 650, Dixon J (as he then was), who tried the case at first instance, said (at 670):

     "The question is whether, in adopting this attitude.  Captain Patrick fell short of the standard of care which the business of shipowning demands.  Actual fault or privity implies some culpability on the part of the owner.  It may consist in being privy to the neglect, unskilfulness or improper act or omission of a servant or agent.  It may be the neglect or the imprudent or wrongful act of the shipowner himself.  But the shipowner must in some way be to blame in respect of an act or omission on his own part or of his privity to the act or omission of someone else.  A failure to make himself aware of what he ought to know is or may be an actual fault.  To limit his liability, he must show that he himself has not in any such manner been blameworthy in respect of a cause of the loss or damage (See Asiatic Petroleum Co. Ltd. v Lennard's Carrying Co. Ltd. [1914] 1 K.B. 419 at p. 432; Paterson Steamships Ltd v Robin Hood Mills Ltd (1937) 58 Ll.L. Rep. 33, at p. 39.

     The primary responsibility of a shipowner is for the seaworthiness of his ship, the sufficiency of her manning, the selection of her master and officers and the supply of all proper furnishings, equipment and provisions.  All these duties were fulfilled.  The fault alleged is in not exercising a systematic supervision over the actual performance of one o the elementary duties of seamanship by the masters of the four ships, or at any rate by the master of the Caradale, and in not defining for them the mode of its performance.  The case is not one of a large organization controlling many ships and employing a great number of officers.  The ships are few and relatively small.  The voyages are short."

     The case was a very different type of case from the present and concerned the question whether the defendant could limit its liability because it acquiesced in a practice by a master of a ship which involved the navigation of the vessel by night without a special look-out.

     Reference may also be made generally to the decision of the House of Lords in Lennard's Carrying Company Limited v Asiatic Petroleum Company Limited [1915] AC 705 to which Dixon J in James Patrick also referred (at 667).  I do not find it necessary to refer to the detail of this decision.

     Then, of course, there is The Marion which I have earlier discussed at some length.  But I did not discuss then a second criticism of Mr Downard who is referred to in the passages earlier cited from the judgment of Lord Brandon.  His Lordship said (at 577):

     "Having dealt with the first criticism of Mr. Downard, that he had no proper system for ensuring that the charts and other nautical publications on board the Marion (a) were not obsolete or superseded, or (b), if still current, were kept corrected up-to-date, and having held that that criticism was justified, I turn now to the second criticism made against him.  That was that he failed to ensure that there was brought to his notice a document received by FMSL from the Liberian Marine Inspectorate on 26 April 1976, and in consequence failed to take proper steps to remedy the deplorable state of affairs with regard to navigational charts revealed by that report.  In order to examine this second criticism properly, it is necessary to record some further facts as found by the trial judge."

     His Lordship then referred to some of the evidence.  This included the fact that early in 1976 the Marion went to the Genoa dockyard for repairs and maintenance.  An inspection of her was carried out by or on behalf of the marine inspection division of the Liberian Bureau of Maritime Affairs.  Part C of the report was entitled "Navigational Charts, Publications and Records".  Opposite the heading, "Navigational Charts", was the "devastating comment", to use Lord Brandon's language, "Navigational charts for trader vessel corrections omitted for several years."

     It was argued that the only fault in relation to Mr Downard not having the Liberian report brought to his notice was that of Mr Lowry and Mr Graham whose faults were not, as a matter of law, the actual fault of the appellants.  Lord Brandon said (at 579):

     "My Lords, I am not prepared to accept this contention.  Mr. Downard, during the prolonged periods when he was absent in Greece, was in frequent contact with FMSL, presumably by telex or telephone, and there would have been no practical difficulty about his being informed of the Liberian report and its contents.  It is, in my view, an inescapable inference from the fact that neither Mr. Lowry nor Mr. Graham told him of the report and its contents, that the instructions which he left behind him when he went to Greece, with regard to the matters about which he required that he should be kept informed, were insufficiently clear, or insufficiently precise, or insufficiently comprehensive.  If that inference is drawn, as drawn I think it must be, it follows that it was at least in part Mr. Downard's own fault that he was not told about the report.  In so far as it was his own fault, it constituted, as a matter of law, actual fault of the appellants."

     The three cases to which I have referred involved comparatively small shipping companies.  The present case involves a very large shipping company, Sanko, and the group of companies which it controls.  At all relevant times Sanko itself and each of its subsidiaries was the subject of control by a trustee or trustees appointed pursuant to the insolvency legislation referred to in Mr Ohashi's evidence earlier referred to.  Subject to that control, there were the directors to which Mr Ohashi also refers and the various managers and departments which have been mentioned in the evidence.  It would appear to me that the systems, if that is the right word for what passed for systems after 1985, came into being after the companies came under the control of the Court and that steps must have been taken to cut down expenditure in order to return the group to more profitable trading.  This is probably the root cause of the problems which existed both in relation to chart correction and the appointment of officers, particularly masters.

     The findings I have made demonstrate that shoddiness and slackness pervaded the whole organisation particularly in relation to these two matters.  This was apparent in the office of Eastern Shipping.  The evidence establishes that there was a close knowledge in Sanko itself of the way in which Grandslam ships were operated and of the operations of Eastern Shipping.  The onus is upon Sanko and Grandslam to negative actual fault.  It is possible to envisage a case
involving a large shipping company or group of companies such as Sanko in which those responsible for the management of the company at the highest level were able to give evidence in which they deposed to the fact that they did not know, and could not reasonably have been aware, of circumstances existing in the organisation which led to problems such as have been encountered in this case.  But none of the trustees has given evidence.  So far as I can judge, the most senior person to give evidence was Mr Totoki, who is a director of both Sanko and Grandslam.  After him, I would think there is Mr Kobayashi who holds a senior management position in Eastern Shipping.  But there was no attempt on the part of the plaintiffs to put together a cohesive body of evidence from which it might have been inferred that neither the trustees nor very senior management could reasonably have been expected to know what was occurring.

     No such evidence has been offered.  I think the inference that should be drawn is that, if such evidence had been called, it would have been of no assistance to the plaintiffs.  In any event, the plaintiffs bearing the onus of negativing actual fault, it is sufficient for me to say that that onus has not been discharged.  The plaintiffs' case based on a claim to be entitled to limit their liability under the 1957 Convention is therefore not made out and should be dismissed.

Freight

     That leaves the question of freight to which I now come.  Sanko claims a proportion of the freight provided for in the charterparty, notwithstanding that the ship and the cargo were lost before the cargo could be delivered.  The claim is made under clause 34 of the charterparty.  That clause is headed "FREIGHT PAYMENT".  And, so far as material, is as follows:

     "Freight to be 90 percent paid within 5 banking days to Owners' bank (less only commissions on full freight) of signing and releasing Bills of Lading, which to be claused "Freight Payable As Per Charter Party".  Freight to be deemed earned on cargo loaded discountless and non-returnable ship and/or cargo lost or not lost.  Balance of freight payable on settlement of agreed demurrage/despatch."

     Reliance is placed by counsel for Sanko on the words, "freight to be deemed earned on cargo loaded discountless and non-returnable ship and/or cargo lost or not lost."

     Clause 34 is divided into three parts.  The first provides that 90 per cent of the freight is to be paid within five banking days of the signing and releasing of the bills of lading.  The second provides that freight is to be deemed earned on cargo loaded, discountless and non-returnable, ship and/or cargo lost or not lost.  This provision must be read in conjunction with the statement on the first page of the charterparty to the effect that the freight rate is $US34.50 per metric tonne "payable as per Clause 34 of Bill of Lading weight".  The third part of clause 34 deals with the time for payment of the amount in dispute, the final 10 per cent, namely "on settlement of agreed demurrage/despatch".

     Counsel for Sumitomo submit that the words "ship and/or cargo lost or not lost" refer only to the words "freight to be deemed earned on cargo loaded, discountless and non-returnable..."  In support of their submissions they relied upon the decision of the Court of Appeal in England in Compania Navirea General SA v Kerametal Limited (The "Lorna I") [1983] 1 Lloyd's Rep. 373.  There the clause (clause 16) provided that freight was not returnable "cargo and/or vessel lost or not lost" and was to be paid to the owners as to 75 per cent within five days after the master signed bills of lading and as to the balance after delivery of the cargo and receipt of documents from discharging ports.  Lord Donaldson MR said (at 374) that freight was the consideration payable for the carriage of the goods to and their delivery at the destination.  In the absence of special contractual provisions, it was earned only upon the delivery of the goods at their destination.  Forms of words appropriate to alter this position, his Lordship said, were well known, for example, "Freight to be considered earned on shipment".

     The bills of lading in question were signed by the master on 6 December 1977 and the vessel and her cargo were lost shortly before midnight on 11 December 1977 i.e. within the period of five days from the signing of the bills of lading.  The cause of the loss was severe gale force winds.  The advance freight had not been paid and the charterers had refused to pay it.

     Lord Donaldson accepted (at 374) a submission by counsel for the charterers that liability to pay advance freight does not per se affect the time when freight is earned.  It is simply an obligation to make a payment on account of freight at a time when it has not yet been earned.  However, that obligation is subject to a customary incident, capable of being varied or confirmed by express stipulation, that advance freight paid pursuant to the contract is not returnable or recoverable should the contract be frustrated before the freight could be earned.  If, in breach of contract, there is a failure to pay the advance freight before the occurrence of the frustrating event, the accrued liability to pay it continues.  This, so Lord Donaldson said (at 375), was because frustration excuses further performance of the contract, not prior non-performance.  He added that clause 16 contained no words appropriate to produce the result that any part of the freight was earned, or deemed to be earned, upon shipment or on the signing of bills of lading.

     Counsel for the shipowner submitted that clause 16 should be construed in such a way as to make the liability to pay advance freight survive the sinking.  He sought to do this in two ways.  Firstly, he submitted that there was an obligation to pay advance freight which arose as soon as the bills of lading were signed, this obligation being coupled with an option to postpone payment for up to five days, but no longer.  Secondly, he submitted that, even if there were no obligation to pay the advance freight arising before the expiration of the five day period, the words "Freight non-returnable cargo and/or vessel lost or not lost to be paid", were to be construed as importing an obligation to pay the 75 per cent advance freight even if the vessel were lost.  Lord Donaldson said that the argument did not apply to the balance of the freight which was only payable after delivery.

     Lord Donaldson said (at 375):

     "For my part I am unable to accept either submission.  In my judgment, on the true construction of cl. 16, there was no obligation to make any payment of or on account of freight until the expiration of the five-day period and before that occurred the contractual basis of the obligation had been undermined by the loss of the cargo and of the vessel and the frustration of the contract.  As to the other approach, this involves a separation of the words 'non-returnable' from 'cargo and/or vessel lost or not lost' which does not grammatically exist.  The ordinary meaning of the words is that advance freight, if paid, is non-returnable whether or not the cargo and/or vessel is subsequently lost, thereby confirming the customary incident of a contract for the payment of advance freight.  To achieve any other construction would require much clearer words."

     O'Connor LJ said (at 376) that the concept of money being "non-returnable" of necessity required that it had, or at least ought to have been, paid over.  In the present case the money had not been paid over, nor ought it to have been before the contract was frustrated by the loss of the ship and cargo.  Dillon LJ (at 376-7) expressed a similar view.

     The clause in the present case is not the same as clause 16.  Furthermore, the Lorna I was a case where the contract was frustrated.  This is not such a case; the cargo here was lost as a consequence of the breaches of obligation of the plaintiffs which I have found were committed.  Nevertheless, I regard the case as of assistance in determining this matter.  The clause here provides that the balance of the freight is payable on the settlement of "agreed demurrage/despatch".  That is not something which has occurred and cannot now occur due to the loss of the vessel by reason the fault of the plaintiffs, particularly the fault of Sanko.  In those circumstances, I think that the correct conclusion is that Sanko's claim for the balance of the freight provided for in the charterparty must fail.

Conclusion

     In the result there will be judgment for Sumitomo on the plaintiffs' claim.  There will be judgment for Sumitomo on its cross-claim in the sum of $8,900,000 together with interest.  Interest is to run from 14 February 1991 to the date of judgment and to be calculated at the conventionally applicable rates.  The claim made by Sanko for freight is dismissed.

     I do not propose now to direct the entry of judgment.  I propose to give the parties and their legal representatives an opportunity of reading what I have said.  When the matter is next in the list, counsel for Sumitomo are to bring in short minutes of order to give effect to my decision.  I shall then hear counsel, as necessary, on the question of the amount of interest to which Sumitomo is entitled.  I shall also hear argument on any question connected with whether or not interest should be compounded at annual or other rests.  My provisional view is that the plaintiffs should pay the costs of their claim and the cross-claim but, as necessary, I shall also hear counsel on the question of costs.

     I certify that this and the two hundred and twenty-three (223) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.

     Associate

     Dated

                         APPEARANCES

Counsel for the Plaintiff:        B.W. Rayment QC

                                  A.J. Meagher

Solicitors for the Plaintiff:     Ebsworth & Ebsworth

Counsel for the Defendant:        W.W. Caldwell QC (deceased)

                                  P.E. King

Solicitors for the Defendant:     Dunhill Madden Butler

Dates of Hearing:                 31 August, 1, 2, 3, 4, 7, 8, 9, 10, 11, 21, 22, 23, 24, 28, 29, 30 September, 6, 7, 8, 9, 14, 15, 16, 21, 22, 23, 27, 28, 29, 30 October, 2, 3, 4, 5, 10, 11, 12, 13, 17, 19, 20, 24, 25, 26 November 1992

                                  8, 9, 10, 11, 12 February 1993

Place of Hearing:                 Sydney

Date of Judgment:                 29 November 1995