CV Scheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Ltd (2007) 160 FCR 342

• Author: Matthew de Plater
• Position: BA LLB (UQ), Graduate Clerk, DLA Phillips Fox (Transport & Trade), Brisbane
• Pages: 95-98

CV SCHEEPVAARTONDERNEMING ANKERGRACHT

V STEMCOR (A/SIA) PTY LTD (2007) 160 FCR 342

Matthew de Plater*

Facts

In late 2001 and early 2002 two consignments of steel coils were shipped from Japan to Australia by CV

Scheepvaartonderneming Ankergracht (‘carriers’) on board the MV Ankergracht (‘Ankergracht’) and MV

Archangelgracht (‘Archangelgracht’) at the request of Stemcor (A/sia) Pty Ltd (‘shippers’).

The consignments were manufactured in Japan for the shippers and each coil was enclosed in an individual steel

casing. The coils were loaded onto the vessels at Yokohama and steamed to Sydney, although the

Archangelgracht also took on additional cargo in Kobe. After the consignments were unloaded and transported

to their final destination, it was discovered that the coils had suffered from corrosion damage.

First Instance Decision

Emmett J of the Federal Court accepted evidence that the Ankergracht consignment had been loaded wet, and

that timber dunnage (used to separate cargo in the hold) had also possibly been loaded wet. With respect to the

Archangelgracht consignment, it was accepted that some cargo was loaded when wet and dunnage used could

also have been wet. However, there was no evidence that the coils themselves were loaded whilst wet in that

case. His Honour concluded that there was clearly water in the hold of each vessel when they left Yokohama

and some additional water probably entered the Archangelgracht’s hold when it docked at Kobe. His Honour

further found that additional water entered the hold of each vessel, in the form of water vapour, as a result of

ventilation during the voyage to Australia.

It was argued whether the corrosion damage to the Ankergracht consignment was caused by water in liquid form

present at the time of loading, or whether the corrosion was caused by water vapour. Based on expert evidence

(which was not challenged on cross-examination) Emmett J found that the corrosion was caused by water

vapour and not water in liquid form. On these facts, Emmett J found in favour of the shippers that the carriers

were responsible for the damage to the consignments. His Honour’s reasons follow.

Application of the Amended Hague Rules

It was agreed that the contract of carriage between the carriers and the shippers was subject to the Amended

Hague Rules (the Rules) as set out in Schedule 1A to the Carriage of Goods by Sea Act 1991 (Cth) (‘COGSA’).

The legal consequence is that the Rules take effect as terms of the bill of lading between the carrier and the

Shippers (ie, they have contractual rather than statutory force).

Article 3 rule 1 of the Rules provides that the carrier is 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; and

(c) 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.

Given the susceptibility of steel coils to corrosion if exposed to water, the Court found that the vessels were

unseaworthy, as neither vessel employed dehumidifiers capable of removing water that entered the holds during

loading or on cargo and dunnage. By failing to fit dehumidifiers, the carriers failed to exercise due diligence to

make their vessels seaworthy and breached Article 3 rule 1 of the Rules.

* BA LLB (UQ), Graduate Clerk, DLA Phillips Fox (Transport & Trade), Brisbane.

(2008) 22 A&NZ Mar LJ 95