This case involved a bulk shipment of Chinese yellow maize on the MV Gang Cheng from Dalian in China to Malaysia. Part of the cargo suffered loss and damage, leading to this action in rem. The plaintiff cargo owners claimed damages. The bill of lading was subject to the Hague Rules. The plaintiff submitted that the loss and damage were due to the defendant’s breaches of its duties to make the ship seaworthy (art 3.1.a) and to properly man, equip and supply the ship (art 3.2). The plaintiff also attributed the cause of the loss and damage to the defendant’s negligence in exercising care as bailees of the cargo (ss 104 and 105 of the Contracts Act 1950) and the care that arises under the common law duty of care. The plaintiff's expert witness testified that the damage to the cargo was caused by an ingress of rain and seawater into the holds.

The defendant relied on the excepted perils under art 4.2 of the Hague Rules and sought protection from arts 4.2.c, arts 4.2.i, arts 4.2.q and especially the defence of inherent vice under art 4.2.m to argue that it did not need to use due diligence to make the vessel seaworthy or the cargo holds cargoworthy. The defendant's expert witness testified that the cause of damage was moisture migration.

Held: The judge allowed the plaintiff’s claims.

The defendant breached its contractual obligations as the owners of the ship and as carriers of the plaintiff's cargo. The defendant failed to comply with arts 3.1, 3.2 and 4.1 of the Hague Rules.

There was a clear breach of art 3.1 as the ship was unseaworthy. Article 3.1 is generally taken in its totality to require that a shipowner provide what is generally termed as a 'seaworthy' vessel and is understood to embrace the concept as it existed under the common law. Article 3.1.c was also breached because the carrier did not exercise due diligence to make the 'holds ... and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation'.

The undertaking of seaworthiness at common law included cargoworthiness - an undertaking that the vessel should be reasonably fit to receive and carry the cargo and deliver it at the specified destination. This undertaking was breached because the MV Gang Cheng could not be reasonably fit for those tasks (The Good Friend [1984] 2 Lloyd's Rep 586). The ship was a dilapidated piece of ironmongery only capable of self-propulsion and unfit to carry the cargo it undertook to transport.

The defendant also failed to properly and carefully stow, carry, keep and care for the cargo carried on board the ship (art 3.2). The defects on the MV Gang Cheng were visible from the photographs themselves and any reasonable person could conclude that the hatches' ability to keep water out was compromised. Accordingly, the damage to the cargo was caused solely by the ingress of rain and seawater into the holds.

The onus was on the defendant to prove that it had exercised due diligence to render the MV Gang Cheng seaworthy within the meaning of art 4.1, but no evidence was tendered to that effect.

The defendant sought protection under art 4.2.m (inherent vice), but it was not possible for moisture migration to have caused the damage nor was this to be regarded as an inherent vice by itself. Even though the defendant pleaded reliance on art 4.2.m, it did not adduce evidence to establish the exculpatory provisions. The immunities provided under art 4 would still not apply even if such evidence was adduced because the defendant had breached art 3.1.