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Law Report: No duty owed to

cargo owner: Marc Rich & Co


AG v Bishop Rock Marine Co
Ltd and others: the Nicholas H:
Court of Appeal (Lord Justice
Balcombe, Lord Justice Mann
and Lord Justice Saville) 3
February 1994
YING HUI TAN, BARRISTER
WEDNESDAY 02 MARCH 1994

The requirements for imposing a duty of care are the same whether the
loss caused by the breach of duty is physical damage or purely economic
loss. Whatever the nature of the damage sustained, it is necessary to
consider the foreseeability of the damage, the nature of the relationship
between the parties and whether it is fair, just and reasonable to impose
a duty of care.
The Court of Appeal allowed an appeal by the third defendant,
classification society Nippon Kaiji Kyskai, against Mr Justice Hirst's
decision, on a preliminary point of law, that on the facts pleaded the
society owed a duty of care to the plaintiff cargo owner, Marc Rich & Co.
Two weeks after the Nicholas H embarked on her voyage from Peru to
Italy loaded with cargoes of lead and zinc concentrate, she anchored off
San Juan, having reported a crack in her hull.
After some repairs a surveyor acting on behalf of her classification
society recommended that the vessel continue but that the repairs
should be dealt with at the earliest opportunity after discharge of the
cargo. The day after the vessel sailed from San Juan in Peru she
reported that the temporary welding repairs had cracked, and she sank a
few days later. The cargo was totally lost.
The cargo owner's proceedings against the shipowners were settled by a
payment of a proportion of its claim. The classification society was sued
in negligence for the balance of the claim.

Richard Aikens QC and Jonathan Harvie QC (Norton Rose) for the


society; Peter Gross QC (Lovell White Durrant) for the cargo owner.
LORD JUSTICE SAVILLE said the first issue was concerned with what
the law required for the imposition of a duty of care. The essential issue
between the parties was whether there was a difference in kind or
merely in degree between cases where the negligence had caused
physical damage to the plaintiff's person or property and cases where
the damage was of a purely economic nature.
In recent years there had been a number of cases which dealt with
situations where no physical damage had resulted from the carelessness
in question, but where the claimant had sustained financial loss or
expense. The law drew no fundamental difference between such cases
and those where there was damage to person or property. Whatever the
nature of the loss sustained, the court approached the question in the
same way.
The remedy the law afforded in both cases was by way of financial
compensation. There was neither logic nor common sense in seeking to
draw any distinction between financial loss caused directly and financial
loss resulting from physical injury or damage.
Mere foreseeability of harm to the plaintiff had never been the sole
touchstone in the modern law of negligence. In all cases more was
required. Whatever the nature of the harm sustained by the plaintiff, it
was necessary to consider the matter not only by inquiring about
foreseeability but also by considering the nature of the relationship
between the parties; and to be satisfied that in all the circumstances it
was fair, just and reasonable to impose a duty of care. Those three
matters overlapped and were really facets of the same thing.
Whether the law did impose a duty in any particular circumstances
depended on those circumstances. In differing circumstances the same
or similar factors might take on a different significance.
Turning to the circumstances of the present case, the cargo was loaded
under bills of lading that incorporated the Hague Rules. The
consequence of that under English law was that the shipowners were
under a non-delegable duty to the cargo owner to use due diligence to
make the vessel seaworthy before and at the beginning of the voyage.
To impose a duty on the classification society in favour of the cargo
owner would add an identical or virtually identical duty owed by the
classification society to that owed by the shipowners, but without any of
the internationally recognised balancing factors in the Hague Rules.
That was not just, fair or reasonable. There was a coherent system of
internationally recognised law which placed the primary burden of

caring for the cargo on the shipowners.


There did not exist a relationship between the cargo owner and the
society which could support a duty of care owed by the latter to the
former. There was no dealing of any nature between them. The balance
of rights and duties between the cargo owner and shipowners had been
settled on an internationally acceptable basis and there was no good
reason for adding to or altering that by imposing on the society a like
duty. The appeal would be allowed.
LORD JUSTICE MANN, concurring, said that the critical question was
whether it would be fair, just and reasonable to impose a duty of care.
The existence of a contractual claim against the owners for breach of a
non-delegable duty as to seaworthiness was the decisive reason for
regarding it as unfair, unjust and unreasonable that the cargo owner
should have a claim against the society.
LORD JUSTICE BALCOMBE, also concurring, said that the relationship
between the cargo owner and the society was not of sufficient proximity
nor would it be fair, just or reasonable to impose a duty of care.

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