Ship-Owners Under No Duty In Bailment To Complete The Original Voyage Following Termination Of Time Charter

Sinokor Merchant Marine Co Ltd v. The Owners and/or Demise Charterers of the Ship or Vessel "Marcatania" HCAJ 138/2008

In this case, the High Court of Hong Kong was asked to determine whether the ship-owners were under any duty in bailment to complete the original voyage and deliver cargo following withdrawal of the vessel by the ship-owners part way through a voyage for non-payment of hire. The court ruled that the ship-owners did not owe such an obligation.

The background facts

The claimant shipped a number of containers (which the claimant received from its customers) on the vessel Marcatania pursuant to a vessel-sharing agreement with the time charterer of the vessel. Due to the collapse of the shipping market in late 2008, the time charterer became insolvent and failed to pay charter hire to the ship-owners. The owners consequently terminated the time charter while the vessel was in Hong Kong. The claimant demanded that the owners carry the containers to their intended destinations in Mainland China and South Korea but the owners refused. The claimant arranged for transhipment of the containers themselves and sought to recover, inter alia, the costs of transhipping and lost slot hire from the owners.

The owners did not issue any bills of lading in respect of the subject containers. All the bills were issued by the claimant as carriers. Therefore, it was common ground that there was no contractual relationship between the claimant and the owners and no damage to the cargo.

The claimant's case

It was disputed that a bailee's duty includes taking reasonable care of goods and to re-deliver them when asked by a bailor having the right to immediate possession. In the absence of a contractual relationship, the claimant argued that the owners fell under the additional duty to complete the original voyage because the Master supervised the loading of the containers on the vessel. The Master directed where the containers ought to be stowed, while presumably knowing that the containers were destined for Mainland China and South Korea.

The claimant's second argument was that there was a bailment on terms, the terms being the vessel-sharing agreement between the claimant and the time charterer, which required delivery to the final destinations.

The court's decision

The judge was not persuaded by the claimant's arguments. The court held that by merely directing where the containers were to be placed on board the ship, the Master could not be regarded...