The plaintiff had a contract to supply reinforced steel bars to a buyer, Teng Yue Overseas Construction Sdn Bhd (Teng Yue), in Bintulu, Sarawak, Malaysia. The steel bars were to be shipped to Bintulu from Port Klang, West Malaysia. The defendant was the owner and operator of a tug, the Permata 1, which was used to tow a dumb steel barge, the Permata 2. The defendant arranged for the plaintiff's cargo to be shipped with that of Corpex Sdn Bhd (Corpex), who also had cargo bound for Bintulu. Corpex was entrusted to handle the entire shipment from Port Klang to Bintulu Port. For this reason, the bill of lading named Coprex as both the sole shipper and the consignee with no reference to the plaintiff. However, the contract of carriage with the defendant was entered into with another company called Costrade Sdn Bhd (Costrade). The defendant invoiced this company for the freight charges.

En route to Bintulu, the Permata 2 capsized with the total loss of cargo and barge. The plaintiff sued the defendant in contract and negligence. The defendant applied for the plaintiff's claim to be struck out on the grounds that it disclosed no reasonable cause of action or was frivolous and/or vexatious and/or an abuse of the Court process.

The plaintiff argued that it had title to sue under the bill of lading and in tort, and pleaded art 3.8 of the Hague Rules, which provides that any clause relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability, shall be null and void and of no effect. The defendant submitted that the plaintiff's claim should be struck out on the grounds that: (1) the plaintiff did not have the requisite locus standi to bring the suit; (2) there was no contractual nexus between the plaintiff and the defendant; and (3) the defendant bore no liability for cargo carried on deck.

Held: The plaintiff's claim is struck out.

Carriage of goods by sea in Malaysia is regulated by the Carriage of Goods by Sea Ordinance 1950. It contains a statutory application of the accepted international Conventions relating to the carriage of goods by sea, in this case the Hague Rules. The Hague Rules, applicable in Malaysia by virtue of the Carriage of Goods by Sea Act 1950 (the Act), specifically excludes deck cargo in art 1.c. It follows that the liberty of parties to enter into contracts of carriage for deck cargo is unfettered by the Hague Rules as well as the Act.

The defendant pleaded that its vessels were properly registered, which meant that they were subject to periodical surveys to meet their respective classification for their flag of registration administration and the requirements of their insurers. The defendant further pleaded that Costrade engaged an external surveyor, Sealand Marine & Inspection (M) Sdn Bhd (Sealand), to certify that the lashing of the cargo on the barge and the towage of the barge by the tug was proper and adequate. The survey reports prepared by Sealand showed that the on-tow arrangement of the tug and the lashing of loaded cargo on board the barge was at all material times adequate for the ordinary perils of the sea to be encountered.

It is clear that:

1. There is no privity of contract existing between the plaintiff and the defendant to sustain an action in contract.
2. There is an issue as to whether the plaintiff is still the owner of the goods. There is no averment as to the nature of the transaction between the plaintiff and Teng Yue regarding the cargo. Was it a CIF contract, and if it was, had the ownership and risk in the goods passed to the buyer the moment the cargo crossed the proverbial rail of the barge? Nor was there any pleading of some other contractual arrangement between the plaintiff and Teng Yue which reserved the ownership and risk in the cargo with the plaintiff while the cargo was on the high seas en route to Bintulu.
3. It is unlikely that the plaintiff would have shipped the cargo had it not been paid for by Teng Yue, and based on the pleadings, the cost of the cargo would have included the freight paid by the plaintiff and the insurance that the plaintiff paid to QBE Insurance. With this pleaded scenario, it is difficult to infer that ownership and risk in the cargo was still reserved to the plaintiff after the cargo had crossed the rail of the fateful barge.
4. There is an inherent risk in the plaintiff seeking to transport goods over the open sea in a barge. A dumb barge has no independent power of propulsion or steerage. It is wholly dependent on its tug for motion. Barges also have, notoriously, a very low freeboard, making them vulnerable to the heavy swells and chops of the open sea. With the length of the towing rope, each of the two vessels would be buffeted by different waves and at different phases of the waves. In bad weather, this would put immense pressure on the towing rope and seriously affect the tug's ability to control the tow.
5. There is no evidence that the defendant was negligent. The fact of a capsize does not automatically imply negligence. Perils of the sea are known to bring even the most modern ocean-going vessels to grief. Even Olympic or world-class sailors are known to capsize their boats in placid conditions.
6. There was an independent survey to ensure that the lashings and presumably weight distribution of the deck cargo on the Permata 2 was proper and adequate.
7. There is no evidence that the barge was overloaded or that the weight of the cargo was not properly distributed for the barge. Instead, there was the Sealand report to certify that the cargo was loaded and secured correctly. This report was issued by an independent surveyor.
8. There is nothing in the pleading referring to a report of an investigation of marine incidents (or its equivalent) following the capsize and loss of the Permata 2. Such an investigation is usually mandated by the vessel’s flag State, or at the very least, by its insurance club. Such a report would have shown if the master of the tug, or ultimately the defendant, was in any way lacking before and during the voyage.
9. Notwithstanding the exclusion of liability clauses contained in the bill of lading, the defendant is a 'common carrier', and therefore cannot exclude liability for its negligent conduct. However, based on the pleadings, the defendant is not guilty of negligent conduct.