Suggested answer for Issue 1

• Issue (0.5 marks)

Did B breach his duty to provide a seaworthy

vessel?
Facts: (2 marks)

1.A, the shipper in Hong Kong, shipped toy cars to London.

2.Bills of lading were issued after the goods had been loaded and
stored in the ship’s holds.
3.The bill of lading named B as the carrier.
4.Before the voyage, B employed ship repairers of high repute and
entrusted them to examine and pass the ship’s survey.
5.The repairers’ negligence in tightening the nuts holding the
inspection covers caused water entered the holds and damaged the
cargo.
6.Clause 16 stated that Hong Kong law applies.
Law: (2.5 marks)
1.Clause 16 of the bill of lading.
2.Section 3(2) of the Carriage of Goods by Sea
Ordinance.
3.Article III(1)(a) of the Hague/Visby Rules.
4.Riverstone Meat Co Pty Ltd v Lancashire Shipping Co
Ltd (The Muncaster Castle) [1961] A.C. 807
Apply: (4 marks)
1.Clause 16 of the bill of lading in question provided that Hong Kong
law applies. Therefore, the Carriage of Goods by Sea Ordinance shall
apply.
2.section 3(2) of the Carriage of Goods by Sea Ordinance states that
Hague/Visby Rules shall apply to carriage of goods by sea in ships
where port of shipment is in Hong Kong. The fact that the toy cars
were carriage from Hong Kong to London a vessel makes
Hague/Visby Rules the applicable law in this case.
3.Article III (1)(a) of the Hague/Visby Rules obliges the carrier before
and at the beginning of the voyage, to exercise due diligence to make
the ship seaworthy. The ship’s nuts holding the inspection covers had
not been tightened properly in the survey before the voyage; this
makes the ship unseaworthy before and at the beginning of the
voyage.
4. According to the Riverstone Meat Co Pty Ltd v
Lancashire Shipping Co Ltd, the shipowner was
responsible for the unseaworthiness resulting from
lack of diligence by a servant of independent ship
repairers, even though they were of high repute and
properly appointed by the shipowners. The
carelessness of the ship repairers in refixing the
inspection covers of a ship resulting the water
damage of the cargo was in breach of the carrier’s
duty of seaworthiness.
5. In the current case, similar to Riverstone Meat Co Pty
Ltd v Lancashire Shipping Co Ltd, the repairers’
negligence in improper tightening the inspection covers
before the voyage should be deemed as failing to
exercise due diligence to make the ship seaworthy.
Moreover, the carrier’s delegation of repairers of high
repute does not exclude the carrier’s personal
obligation to exercise due diligence to make the ship
seaworthy. The obligation of seaworthiness is an
overriding obligation. Upon the breach of this
obligation, the carrier is not entitled to any protection
of the exclusion clauses in Article IV of the Hague/Visby
Rules.
• Conclusion (1 mark)
The entrusted repairers, although of high
repute, did not exercise due diligence to make
the ship seaworthy. Therefore, B did not
satisfy his duty of seaworthiness.
Suggested answer for Issue 2
Issue (1 mark)
Should B be liable for wrongful delivery of the
goods under a straight bill of lading?
If B is liable for the wrongful delivery, could
Clause 2 exempt B from this liability?
Fact (2 mark):
1.The bills of lading named Z as the consignee.
2.The bills of lading named B as the carrier.
3.On arrival in London, B delivered the goods to Z without
presentation of the bill of lading
4.On the reverse of the bill of lading, Clause 2 stated The carrier
shall be under no liability in any capacity whatsoever for loss or
misdelivery of or damage to the goods however caused whether
or not through the negligence of the Carrier, his servants or
agents or subcontractors or for any direct or indirect loss or
damage caused by delay or for any indirect or consequential loss
or damage.
5.Clause 16 stated that Hong Kong law applies.
Law (4 mark):
1.Clause 2 of the bill of lading
2.Clause 16 of the bill of lading
3.Carewins Development (China) Ltd v Bright
Fortune Shipping Ltd [2009] 3 HKLRD 409
Apply (7 Marks):

1.Clause 16 stated that the Hong Kong law is the

governing law.
2.The bills of lading named Z as the consignee. Thus the
bills of lading in question is straight bills of lading.
3. According to the Carewins Development (China) Ltd v Bright
Fortune Shipping Ltd, it is the law of Hong Kong that a carrier of
goods shipped under a straight bill of lading is potentially liable in
contract or in conversion if it releases those goods without the
production of the original bill of lading. In the current case, B, as
the carrier, delivered goods to Z without the production of the
original bill of lading. Although the bill of lading in question is a
straight bill of lading, the characteristic of a bill of lading as a
document of title requires the production of original bill of lading.
The choice of bill of lading, instead of seaway bill demonstrates a
contractual intention that the delivery should be made against the
production of original bill of lading. Therefore, B’s act, to deliver
goods to Z without the production of the original bill of lading, is a
wrongful delivery.
4. In Carewins Development (China) Ltd v Bright Fortune
Shipping Ltd, a clause similar to Clause 2 in question, was
deemed as materially ambiguous. Such exemption clause
should be construed contra proferentem to ascribe the
narrower meaning to it in order to sustain the purpose and
legal effect of the parties’ contract. Construing clause 2 in
question contra proferentem, the word ‘misdelivery’ should
be mistaken or inadvertent misdelivery. B delivered the
goods to Z with conscious that Z did not hold the original bill
of lading; such conscious delivery is deliberate misdelivery
and is not covered in the narrow construction of Clause 2 of
the bill of lading.
Conclusion (1 mark)
B is liable for the wrongful delivery against the
presentation rules, under which B should only
make delivery against the presentation of the
original bill of lading. The exemption clause in
Clause 2 of the bill of lading is too ambiguous to
exclude B from his liability of wrongful delivery
in this case.
 Assessment
• Assessments
– Legal case presentation (25%): group
– Assignment (in form of mid-term test; 25%):
individual
– Open-book examination(50%): individual
 Mid-term + Case study (50%)
• A+: 40 and above
• A: 35-39
• B+: 30-34
• B: 25 – 29
• C+: 20-24
• C: 15-19
• D+/D: 10-14
• F: below 10
 Final exam (50%)
• A+: 40 and above
• A: 35-39
• B+: 30-34
• B: 25 – 29
• C+: 20-24
• C: 15-19
• D+/D: 10-14
• F: below 10