CHINA OCEAN SHIPPING CO. and Another v. PARADRAGON LTD. and Another

1989, No. AJ266

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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J U D G M E N T

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1. On 11th April 1989, the Yin He was crossing the Indian Ocean en route from Hong Kong to Antwerp. At 0358 hours, the chief officer saw smoke. This was coming from between two tiers of containers stacked on the port hatch cover of No. 4 hold and was drifting over the port side. The chief officer noted that there was no alarm from the smoke detector cabinet mounted in the bridge. He called the captain upon whose instructions he sounded the fire alarm. He then ascertained that there was a fire in No. 4 hold. The hold was flooded with carbon dioxide. The temperature in the hold dropped. The following day, the temperature having been stabilised at the ambient air temperature, the hold was ventilated and members of the crew investigated. There was a resurgence of the fire. Further carbon dioxide was introduced and eventually the fire was extinguished. On instructions from the owners, the master diverted to Djibouti where containers from No. 4 hold were unloaded and a survey carried out.

2. This fire led to these two sets of proceedings. In the first, the ship owners brought proceedings against the shippers of the container in which it was alleged that the fire broke out. They sought damages for damage to the ship and other containers and for the cost of diversion. They also sought an indemnity.

3. In the second proceedings, owners of cargo whose goods were damaged in the fire brought claims for damages against both the ship owners and the shippers. The claim against the ship owners was in tort, contract and bailment and as against the shippers it was in negligence.

4. The shippers were Paradragon as agent for their undisclosed principal, Ananda. The mischief was caused because the shippers stuffed their container with ammonium persulphate which is an oxidising agent and which is classified as dangerous goods under the International Marine Dangerous Goods Code, IMCO Class 5.1. A container stuffed with such goods must be appropriately labelled so that the ship owners can stow the container in accordance with the Code. Because it is an oxidising agent, the ammonium persulphate must not be contaminated or allowed to come into contact with any organic matter. If it does, there is a reaction which produces heat and oxygen and eventually combustion.

5. The ship owners contended, and at trial it was at last conceded, that the shippers' container was not properly marked, that they had never been notified that it contained dangerous goods and that there was no reason for them to have carried out any investigation to see whether its contents might have been dangerous.

6. It was also conceded at trial that the container had been stuffed negligently. Photographs, which can only have been taken by Ananda and which only came to light just before the trial began, showed that the woven plastic bags of the chemical had been heaped untidily in the container together with considerable quantities of loose chemical which had apparently been swept up from the ground where it had become spilled. Quite plainly, there was an accident waiting to happen.

7. The ship owners therefore alleged that they were exempt from liability because of the fire exception contained in the Hague Visby Rules which, it was not disputed, were applicable to the carriage of goods in respect of this voyage.

8. The cargo owners asserted that the fire exception was not available to the ship owners because the ship was unseaworthy. The shippers joined in this allegation which, initially, was based upon the fact that the shippers' container was improperly stowed. In 1996, however, it having become apparent that the stowage of the container met IMDG requirements, the cargo owners and shippers then alleged that the ship was unseaworthy because the smoke detection system for the cargo holds was either not in operation or was not operating properly.

9. The shippers also alleged that the failure of the smoke detection system coupled with the manner in which fire fighting operations were carried out either caused the damage to the cargo or at least materially contributed to that damage.

10. The cargo owners' case against the ship owners collapsed at trial. Mr. Fok, who appeared on behalf of the cargo owners, in the best traditions of the bar, acknowledged that his fire expert had revised his opinion and conceded that the claim would have to be dismissed. Mr. Reyes, who appeared on behalf of the shippers, although he did not expressly surrender, must sink with Mr. Fok on the question of seaworthiness. In my judgment, the evidence that caused the collapse of the case in relation to seaworthiness must also collapse any remnants of Mr. Reyes' case that the shippers were not negligent or that the ship owners were. It is fair to say, however, that at the end of the trial his final submission was very faint.

11. What caused the collapse was this. It was argued that, if the smoke detector had been working or working properly, it would have detected smoke in No. 4 hold very much earlier than it was seen by the chief officer. The flooding with carbon dioxide would have taken place earlier, the fire would have been extinguished earlier and the damage to the cargo would have been avoided or very considerably reduced. This allegation was based upon the reports of the cargo owners' fire expert, Mr. Gregory Southeard. His reports indicated that there would eventually have been combustion inside the shippers' container generating enough heat to breach the door so that hot gas, smoke and flame would have come out of the container and risen between containers stacked above it. This, combined with the burning of other containers, led to the damage to the cargo owners' container stacked above. Accordingly, if the detector had sounded an early alarm, the carbon dioxide used to fight the fire would have extinguished the flames and avoided or reduced the damage which was caused.

12. Two things caused Mr. Southeard to revise his opinion. First, the photographs showing the stuffing of the ammonium persulphate in the container. It then became obvious that the only combustible material was the nylon bags in which the ammonium persulphate was packed. There was no wooden floor and no other dunnage as Mr. Southeard had assumed. Accordingly, there was insufficient combustible material to produce flames of the quantity or indeed of any quantity at all as Mr. Southeard had postulated in his report. The only flames would have been confined within the container.

13. Second, at the end of the first day of Mr. Southeard's evidence, at my instigation, he met the ship owners' expert for the first time. He was apparently shown photographs of other containers which had been affected. These photographs were part of survey reports which had hitherto been the subject of privilege. They demonstrated that, apart from the shippers' container and a container immediately next to it, no other container had been breached. Therefore, there would have been no other source of flames to be quenched by the injection of carbon dioxide.

14. Mr. Southeard therefore conceded that there had been no flaming fire in the hold. In his opinion, what had happened was that there had been a slow reaction until ultimately the nylon bags containing ammonium persulphate had caught fire. This had generated sufficient heat to melt the seals of the container door. Oxygen under pressure was forced out through the resulting hole. This had the same effect as an oxy-acetylene burner so that the steel door burnt and melted. The reaction in the container continued and continued to produce oxygen to feed the reaction in the container. Hot gas melted a small hole in the back wall of a container immediately opposite the shippers' container. The gas also rose up between containers stacked above and "cooked" the contents of some other containers including that of the cargo owners. As a result, the cartons containing the cargo owners' jogging suits were charred and the contents damaged. Because of the nature of the this fire, that is to say that it was self-contained within the container, Mr. Southeard accepted that the injection of carbon dioxide whether sooner or later would have had no material effect upon the fire or the damage which it caused.

15. The only issues which I was left to resolve, and which are academic to these proceedings, are whether or not the smoke detector was in operation and if so, whether it was operating properly. I was asked by Mr. Sussex for the ship owners to make these findings as they are relevant to other pending cargo claims.

16. The smoke detector fitted to the ship was of the Kidde type and was manufactured by a German company, Rud. Otto Meyer. It is a comparatively simple system. Air is drawn from the hold or other compartment to be protected. It travels through a pipe to a control cabinet where it passes a photoelectric cell. If smoke is present in the air as it passes the cell, the cell will detect the obscurity and trigger an alarm.

17. In Yin He, each of the four holds was protected by this system. Each hold had eight collectors mounted just below the hatches. Air was drawn through each of these collectors, the pipes from which eventually joined in a single pipe which met the pipes coming from each of the other holds at the control box on the bridge. There the four pipes combined so that one stream of air passed the photoelectric cell before being vented outside the bridge.

18. There was a window mounted on the control box to allow inspection of the four pipes. Each pipe had a flap which would lift when air was being drawn through. It was thus possible to see whether the system was in operation, assuming that the flap had not jammed open, and whether any smoke was present in the pipes. The control box also contained a meter showing the resistance. The manufacturer recommended a setting of 0.25m. ampere, with the alarm being triggered at 0.4m. ampere. A screw mounted on the meter can be used to make any necessary adjustment.

19. Two electric motors mounted on top of the bridge drew the air through the system. Only one motor was required to operate at a time. The manufacturer recommended that the system be switched from one motor to another at intervals of not more than 24 hours. There was a toggle switch mounted on the control box for this purpose.

20. The Yin He having had its keel laid before 1986 was not required under SOLAS to have a smoke detector fitted for its cargo spaces. In so far as later vessels were required to have such a smoke detector, SOLAS stipulated that the detector should trigger an alarm when obscurity fell within a range or between 2 and 12.5%. This was later amended to a requirement that an alarm should be triggered when obscurity reached 6.65%.

21. Before the case collapsed, cross-examination by Mr. Sussex of the cargo owners' experts was devoted in part to the amount of obscurity which might have been generated by the fire. It was accepted by them that clean air being drawn from the other three holds would have diluted any smoke being drawn from No. 4 hold. Further, if smoke was being drawn through only one or two collectors in No. 4 hold the clean air being drawn through the other collectors in No. 4 hold would have further diluted the air. There was a possibility that the air might have been diluted to such an extent that it would not have reached any of the trigger thresh holds.

22. Mr. Andrew Moore, a very experienced marine consultant, gave evidence on behalf of the cargo owners. He said that the smoke detector cabinet mounted on the bridge has a tube by means of which a local test can be carried out. Such a test can be carried out with a lighted cigarette which generates sufficient smoke to trigger an alarm. When carrying out a classification test, he would simply light some material in a bucket in the hold and, in his experience, this would generate sufficient smoke to trigger an alarm. He said that, depending upon the height of the hold, the source of the smoke may be 30 or 40 feet below any collector. He said that it is also his experience that for a variety of reasons these smoke detectors can give false alarms.

23. Plainly, a smoke detector of this type is not a very precise instrument. But it is designed to detect smoke. It seems likely that the designer and manufacturer would be alive to the necessity of detecting smoke at the earliest opportunity and would be conscious of the effect of dilution. Doubtless that is why a cigarette, albeit in respect of the local test, is sufficient to trigger an alarm and why a bucket of burning material, hardly a large source of smoke, is also sufficient to set off an alarm. Accordingly, I am quite satisfied that this detector, had it been switched on, should have detected the smoke being generated by this fire.

24. In saying that, I am conscious that Mr. Southeard accepted in cross-examination that there would have been little smoke because of the oxygen rich environment in which the fire was taking place and that the principal constituent of any smoke would have been hot ammonium sulphate which is greyish white in colour. It seems to me, however, that if there was sufficient smoke, albeit light in colour, issuing from the hold to be seen from the bridge, then there must necessarily have been sufficient inside the hold to be drawn into the detector and to have triggered an alarm. In my view, this was an ingenious approach by Mr. Sussex but one which lacked any reality or practicality and was wholly unsustainable.

25. The evidence given by the master and chief officer was to the effect that the smoke detector had been switched on throughout the voyage from Hong Kong. Although the detector was the responsibility of the third officer, all officers on duty switched over the electric motors from time to time. According to the chief officer, this was at intervals not exceeding 8 hours. The captain was less precise about the intervals, suggesting not more than 24 hours as laid down in the manufacturer's manual but making somewhat vague references to instructions which he had given both orally and in writing to his officers.

26. One difficulty which the chief officer faced with his evidence was that logbook entries, made by him or by his assistant with the chief officer's authority and made by other duty officers, was to the effect "switch on smoke detection". The chief officer explained that this meant "switching over" the electric motors. However, for entries involving, for example, switching from manual to remote control of the engine and vice versa, characters meaning change or change over were used.

27. Neither officer was aware of the need for any particular maintenance or repairs of the smoke detector after the fire incident. Subsequently the ship passed its classification survey at which the smoke detector was found to be functioning normally.

28. At the time when he first saw the smoke, the log entry countersigned by the chief officer was "0358 found smoke out in port side of bay 29 start smoke detector no warning and smoke". The chief officer explained that again he meant he switched over the motors, that no alarm sounded but that he observed smoke in the pipes in the detector. By smoke, he meant some white powder in the tube.

29. The manual for the detector states that, after the detector has been switched on, it must run for 15 to 20 minutes before a true reading is obtained. That period allows time for air to be drawn from the various holds and for the photoelectric cell to operate. Nonetheless, I am wholly satisfied that the chief officer did exactly what appears to be stated in the log entry, namely switch on the smoke detector. As I have already found, there must have been a considerable quantity of smoke in No. 4 hold. No. 4 hold was nearest the bridge. It would have taken only a short time for air containing particles of ammonium sulphate, that is the white powder, to be drawn to the control box. That might be insufficient to trigger the alarm at that early stage of the detector's operation but sufficient for the chief officer to observe. The smoke detector alarm may have been triggered later but would have gone unnoticed under cover of the sound of the fire alarm and in the general noise and confusion then prevailing.

30. I find, therefore, that the smoke detector was not switched on at all times but rather was switched on from time to time by various duty officers who carried out a quick check to see that the machine was in fact functioning and no doubt to see whether any smoke was drawn from the holds. I also find that, when switched on, the smoke detector was capable of functioning properly.

31. Although Mr. Fok acknowledged that judgment must be entered against him in favour of the ship owners, he argued that the ship owners should be deprived of at least some of their costs. He said that his capitulation was only brought about because of the last minute production of the survey reports and photographs that caused Mr. Southeard to change his mind. He pointed out that recent authority is in favour of a "cards on the table" approach to litigation. He said that although privilege was claimed for these documents, that privilege had become unnecessary some years before because of the limitation imposed by the Hague Visby Rules. He asserted that, if these documents had been made available in 1996 when the issue of the smoke detector first arose, Mr. Southeard would have been better able to appreciate the true position in the hold and the ship owners would have been in a better position to consider how best to proceed.

32. I reject the suggestion that the cargo owners were ambushed as I reject the suggestion by Mr. Sussex that Mr. Southeard, had he examined the documents made available to him carefully, would not have espoused the opinion which he did for so long. In my judgment the true mischief is the failure of the fire experts to get together at an early stage in order to establish what are the true issues. That is not to blame the experts who only follow instructions.

33. I give therefore the following judgment:

AJ266 of 1989

34. Judgment for the Plaintiff against both Defendants jointly and severally in the sum of US$123,507.07. There will be interest on that sum at the rate of 10% from 1st May 1989 until today's date and thereafter at the rate prescribed by the Chief Justice.

35. The Plaintiff's claim for a declaration for an indemnity is stayed pending further order of the court.

AJ355 of 1991

36. The Plaintiff's claim against the 1st Defendant is dismissed with costs.

37. Judgment for the Plaintiff against the 2nd and 3rd Defendants for US$74,495.78 and Belgian Francs 34.380.00.

38. There will be interest on those sums at the rate of 10% from 1st May 1989 until today's date and thereafter at the rate prescribed by the Chief Justice.

39. The 2nd and 3rd Defendants are to pay the Plaintiff's costs.

40. It is my view that the shippers were not just negligent but grossly negligent in their conduct. They had damning photographs of their container. To wait until trial and then gradually make a series of concessions was unforgivable. To suggest that the ship, with a fire of questionable origin in its hold, should not have diverted but continued to Europe was breathtaking. I am satisfied I should make a Bullock order in favour of the cargo owners in this action.