[1995] Vol. 1 LLOYD'S LAW REPORTS 41 Q.B. (Adm. Ct.) The "Toledo" Clarke, J.

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1 [1995] Vol. 1 LLOYD'S LAW REPORTS 40 QUEEN'S BENCH DIVISION (ADMIRALTY COURT) July 4, 5, 6, 7, 12, 13, 14, 18 and 19, 1994 THE "TOLEDO" Before Mr. Justice CLARKE Unseaworthiness - Due diligence - Carriage by sea - Failure of shell plating on port side of No. 4 hold - Total loss of cargo - Whether vessel unseaworthy - Whether unseaworthiness caused by want of due diligence. The defendants' vessel Toledo was designed as a log carrier and as a bulk carrier and was built in accordance with the rules of the classification society Germanischer Lloyd with whom she was classed. The vessel had four holds and four hatches and was powered by a diesel engine. There were double bottom tanks underneath the tank tops and at each side there were wing or hopper tanks at both the top and bottom of the holds. At both the top and the bottom those tanks sloped away from the side plating. In order to provide it with sufficient strength the side plating was supported by internal structure consisting of frames and brackets. The frames extended from just below where the bottom of the upper tanks joined the shell plating to just above where the bottom hopper tanks joined the shell plating and they were welded to the shell plating by a fillet weld on each side of the frame. On their inboard side the frames were attached to the tanks at the top and bottom by means of trapezoidal brackets. In each case the bracket was welded to the tank and to one side of the frame. The plaintiffs were the owners of a cargo of 14, tonnes of muriate of potash in bulk. The cargo was loaded on board Toledo on Feb. 11 and 12, 1990 at St. John, New Brunswick pursuant to a bill of lading dated Feb. 13, 1990 for carriage to Fredericia in Denmark. The contract of carriage incorporated the Hague Rules. Toledo sailed from St. John on Feb. 13, On the night of Feb. 14/15 the weather became bad and remained bad thereafter. During Feb. 19 some water was found in No. 4 ballast tank and in Nos. 1, 2 and 3 holds. It was pumped out. On Feb. 20 the master noticed the vessel moving strangely and that the water astern of the ship was coloured red from time to time. Since the potash cargo was red he concluded that there must be some form of leakage and an investigation showed that there was water in No. 4 hold. He assumed that there must be a crack in the shell plating which was allowing water to get into the hold. In the events that followed the cargo was pumped into the sea and the vessel was ultimately scuttled on Apr. 28 in 3400 metres of water about 210 miles from Land's End. The plaintiffs claimed damages from the defendants in respect of the total loss of their cargo which they alleged was caused by the defendants' breach of contract. The plaintiffs contended that Toledo was unseaworthy before and at the beginning of the voyage and that the loss was caused by that unseaworthiness. The plaintiffs also alleged that the unseaworthiness was caused by want of due diligence on the part of the defendants. They argued that the defendants failed to lay down and carry out a proper system for the inspection of their vessels including Toledo with the result that they failed to detect and repair the damaged brackets and frames. The defendants contended that since class did not comment or make recommendations there could be no relevant damage requiring repairs. They further argued that their vessels were properly inspected both by their own personnel and from time to time by class; and that it was not reasonably foreseeable that damage to brackets and frames of the kind that existed would or might cause fatigue cracking of the kind or to the extent that occurred. The initial cause of the casualty was the failure of the shell plating on the port side of hold No. 4. -Held, by Q.B. (Adm. Ct.) (CLARKE, J.), that (1) the cause of the fracture of the shell plating in No. 2 hold (which had been removed from the vessel) was a fatigue fracture or fractures; the fatigue fracture or fractures was or were made possible by the fact that the shell plating was no longer supported by the internal structure as it had been initially with the result that it was able to pant and was exposed to stresses which were not contemplated when the vessel was originally designed (see p. 44, col. 1); (2) it was a reasonable inference that the cause or causes of the fractures in the shell plating in hold 4 was or were the same as the cause or the causes of the fractures in the shell plating in hold 2; it was also likely that there was distortion of frames and brackets in both holds which had the effect of weakening the structure and enabling the shell plating to flex or pant (see p. 44, col. 1); (3) the damage and deformation of the brackets and frames were significant and of the kind which required repair; the reason it had not been repaired was that the masters and chief officers had become used to damage of this kind because it was so common having regard to the trade in which the vessel was engaged (see p. 45, col. 2; p. 46, cols. 1 and 2; p. 47, cols. 1 and 2; p. 50, col. 2); (4) there was significant distortion of the frames and brackets of Toledo at the beginning of her last voyage; it was likely that there was some fatigue cracking but it was not or might not have been visible to those who carried out an inspection of the holds at St. John; however there was significant deformation of and damage to the frames and brackets which was or ought to have been visible to those carrying out a proper inspection; and in those circumstances Toledo was not in such a condition at St. John as to be reasonably fit to encounter the ordinary perils which might be expected on the voyage (see p. 48, col. 1; p. 49, col. 2; p. 50, col. 1; p. 52, col. 2); (5) the vessel was unseaworthy at the commencement of her voyage; the initial casualty was caused by the unseaworthiness because it was caused by the fracture of the shell plating on the port side of hold 4,

2 [1995] Vol. 1 LLOYD'S LAW REPORTS 41 which fracture was in turn caused by the fact that the shell plating was not properly supported so that it could not withstand the stresses to which it was exposed during the voyage (see p. 50, col. 1); (6) on the facts as to the state of the vessel at New Brunswick the owners failed to exercise due diligence properly to maintain Toledo; the owners became used to the state of their vessels because they gradually sustained more and more stevedore damage as a result of handling logs; they thus became familiar with the extent of the damage and that familiarity led to a certain complacency which in part was caused by the fact that Germanischer Lloyd at no time suggested that any of the deformed or damaged brackets or frames should be repaired (see p. 50, col. 2); (7) a reasonable shipowner would have appreciated the risk that the damage and deterioration of internal structure could have an effect on the watertight integrity of the vessel and would have set up a proper system for the inspection ascertainment and repair of damage to internals; if the defendants had had and operated a proper system Toledo would not have been in the condition in which she was at St. John; and if class had been called in to inspect particular damage it was likely that repairs would have been recommended and that the defendants would have repaired the frames and brackets as necessary (see p. 52, col. 1; p. 53, cols. 1 and 2); (8) Toledo was unseaworthy at the beginning of the voyage at St. John; the casualty was caused by that unseaworthiness; and the defendants had failed to exercise due diligence to make their vessel seaworthy; if they had exercised due diligence the casualty would not have occurred; the plaintiffs had discharged the burden imposed on them by art. III, r. 1, but the defendants had failed to discharge the burden imposed on them by art. IV, r. 1 of the Hague Rules; there would be judgment for the plaintiffs (see p. 54, col. 1). The following cases were referred to in the judgment: Hellenic Dolphin, The [1978] 2 Lloyd's Rep. 336; Torenia, The [1983] 2 Lloyd's Rep This was an action by the plaintiffs the owners of cargo lately laden on board the defendants' vessel Toledo claiming damages from the defendants in respect of the total loss of their cargo of potash which they alleged was caused by a breach of contract by the defendants in that the vessel was unseaworthy and the defendants had failed to exercise due diligence. The Hon. Peregrine Simon, Q.C. and Mr. Richard Southern (instructed by Messrs. Clyde & Co.) for the plaintiffs; Mr. Julian Flaux, Q.C. and Mr. Andrew Wales (instructed by Messrs. Middleton Potts) for the defendants. The further facts are stated in that judgment of Mr. Justice Clarke. Judgment was reserved. Wednesday, October 12, 1994 JUDGMENT Mr. Justice CLARKE: The plaintiffs were the owners of a cargo of 14, tonnes of muriate of potash in bulk which was laden on the defendants' vessel Toledo. The plaintiffs claim damages from the defendants as a result of the total loss of that cargo which they say was caused by the defendants' breach of contract. It is common ground that the cargo was indeed lost and, on the hypothesis that the whole cargo was lost as a result of the defendants' breach of contract, quantum has been agreed at U.S.$1,436, Title to sue has also been agreed. The cargo was loaded on Feb. 11 and 12, 1990 at St. John in New Brunswick in Canada. It was shipped under a bill of lading dated Feb. 13, 1990 for carriage to Fredericia in Denmark. It is common ground that the contract of carriage between the plaintiffs and the defendants incorporated the Hague Rules, which provide inter alia as follows: Article III, r. 1 provides: 1. The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to: (a) make the ship seaworthy. Article IV, r. 1 provides: 1. Neither the carrier nor the ship shall be liable for loss arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy... Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier... The plaintiffs say that Toledo was unseaworthy before and at the beginning of the voyage at New Brunswick and that the loss of the cargo was caused by that unseaworthiness. It is common ground that the burden of proving both that the vessel was unseaworthy at that time and that the loss was caused by that unseaworthiness is on the plaintiffs. It is also common ground that the burden of proving the exercise of due diligence is on the defendants. There is however one issue between the parties as to the burden of proof to which I shall return. Particulars of Toledo Toledo was built by Bremer Vulkan for the defendants, who are Alfred C. Toepfer. She was built in

3 [1995] Vol. 1 LLOYD'S LAW REPORTS 42 accordance with the rules of the well known classification society Germanischer Lloyd and was classed by them. She was commissioned in She was designed as a log carrier and a bulk carrier. She was of tons gross and tons net register with a deadweight of 15,087 tons and a timber deadweight of 15,916 tons, about 142 metres in length and about 21 metres in beam. She was equipped with cargo handling gear and was fitted with stanchions and chains for deck cargo. She had four holds and four hatches and was powered by a diesel engine. The hatches were 13.5 metres wide in order to facilitate the loading of cargoes of logs. The hatch covers consisted of steel pontoons of Macgregor design. Both her bridge and accommodation and her engineroom were aft. The design of her holds is of some importance in this action. There were double bottom tanks underneath the tank tops and at each side there were wing or hopper tanks at both the top and bottom of the holds. At both the top and the bottom those tanks sloped away from the side plating. In order to provide it with sufficient strength the side plating was supported by internal structure consisting of frames and brackets. The frames extended from just below where the bottom of the upper tanks joined the shell plating to just above where the bottom hopper tanks joined the shell plating. They were welded to the shell plating by a fillet weld on each side of the frame. On their inboard side the frames were shaped with a bulb on one side in a form which I understand to be described as a Holland profile. They were attached to the tanks at the top and bottom by means of trapezoidal (almost triangular) brackets. In each case the bracket was welded to the tank and to one side of the frame. There were also two lugs or pad eyes welded to each frame, one nearer the top and the other nearer the bottom. The casualty The primary facts are not in dispute. They are shortly as follows. Toledo sailed from St. John on Feb. 13, 1990 under the command of Captain Franke, who gave evidence at the trial. On the night of Feb. 14/15 the weather became bad. It remained bad thereafter, but it is not and could not be suggested that the weather was unforeseeable or that it was other than the kind of weather which could be expected in the Atlantic in February. During Feb. 19 some water was found in No. 4 ballast tank and in Nos. 1, 2 and 3 holds. It was pumped out. At about (G.M.T. minus 1) on Feb. 20 the master noticed the vessel moving strangely. He then noticed that the water astern of the ship was coloured red from time to time. Since the potash cargo was red he concluded that there must be some form of leakage. He altered course. Investigation showed that there was water in No. 4 hold. He assumed that there must be a crack in the shell plating which was allowing water to get into the hold. He therefore decided to alter course for Cork, although he did not at that time reduce speed. For present purposes it is not necessary to recite in detail the events which took place on board the vessel. However the master spoke to representatives of the owners and underwriters and at 2118 he decided to send out a Mayday. Speed was reduced. The wind was southwesterly force 8 to 9 with a 9 metre swell. The water level was increasing in No. 4 hold. The ship Bow Fortune arrived to stand by. The master was asked whether a helicopter was necessary to take-off the crew and he said that it was, although he says that he was confident that he could have brought the ship to Bantry Bay which was a little under 250 miles to the north-east. The helicopter arrived at about on Feb. 21. It was then intended that 14 members of the crew would be lifted off but that the other six including the master would remain. But at about the vessel was hit by a large wave, a bang was heard and the aft pontoon on No. 4 hatch was lifted up, apparently by the upward pressure of water in the hold. The master decided to ask the helicopter to take off the whole crew, which it did. The evacuation was complete by about During the morning of the same day the Irish Air Corps located the vessel and reported that there was a large hole about 10 metres in width two-thirds the way down the port side of No. 4 hold and that the vessel was listing to starboard. The Bugsier tug Simson was at some stage despatched to locate Toledo. She found her at about on Feb. 22. Bugsier were engaged to use their best endeavours to salve Toledo and her cargo under the terms of LOF. A video was taken from the tug, some of which I have seen. The video appears to show more plating lost from the port side of No. 4 hold than described by the Irish Air Corps. The condition of the port side of No. 4 hold was the same as when the vessel was subsequently beached at Gerrans Bay in Cornwall. The video suggests that the starboard side in way of No. 2 hold was intact on the morning of Feb. 23. The tug managed to establish a tow at about on that day. It was reported from the tug that there was a hole in the starboard side of No. 4 hold, although I am not sure that that is apparent from the video. The tugmaster had suggested that the casualty be towed to Cork but at about the Irish Government telexed Bugsier refusing to allow Toledo to enter Irish territorial waters. The defendants say that that refusal was unreasonable and that but for it the vessel and her cargo other than that in No. 4 hold would have been saved. There is thus an issue

4 [1995] Vol. 1 LLOYD'S LAW REPORTS 43 between the parties as to whether the loss of the cargo in Nos. 1, 2 and 3 holds was caused by any breach of contract on the part of the defendants. That issue, which is pleaded in pars. 6(b) and 10 of the defence, was adjourned by order dated June 7, 1994 save for the evidence of the master. The master accordingly gave some evidence which is relevant to it, but no submissions were made in relation to it and I shall defer any consideration of it for the time being. It was subsequently decided that the casualty should be towed to Falmouth. During the tow the weather was very bad indeed and for part of the time the tug and tow were hove to. The tow line parted at least once. The video shows that No. 2 hold was still intact on the morning of Mar. 1. Captain Knott of Messrs. Brookes Bell, who gave evidence on behalf of the defendants, thought that Toledo began to trim by the head on Mar. 2 and that cargo was escaping from No. 2 hold from some time on that day. That seems to me to be correct. It thus appears that some plating was probably lost from the starboard side of No. 2 hold some time on Mar. 2. It was decided to beach the casualty and on Mar. 3 she was beached in Gerrans Bay in Cornwall. The weather had been moderating since Mar. 1 and by Mar. 4 it was calm. The casualty remained aground until Apr. 24 when she was refloated. While aground her cargo was pumped into the sea. She was ultimately scuttled on Apr. 28 in 3400 metres of water about 210 miles from Land's End. While still aground Toledo was inspected on behalf of the various interested parties and photographs were taken. Also a video was shot between Apr. 23 and 24. When the vessel was refloated it was discovered that about 75 per cent. of the shell plating was lost from the port and starboard sides of No. 4 hold and about 40 per cent. from the starboard side of No. 2 hold. Part of the remaining plating from No. 2 hold was removed ashore for metallurgical examination. Both the video and the still photographs show significant damage to the internal frames and brackets. However both were taken at a comparatively late stage in the story. It is difficult to know to what forces the frames and brackets had been exposed between Feb. 21 and the time when the video and photographs were taken. In these circumstances it would not in my judgment be safe to draw any inference adverse to the defendants from the state of the internals as shown in either the photographs or the video and I do not do so. That conclusion applies both to the internals on the shell plating in the vessel and to the internals on the part of the shell plating from No. 2 hold which was removed from the vessel. The cause of the casualty The initial cause of the casualty was the failure of the shell plating on the port side of No. 4 hold. None of that plating was recovered. Nor was any of the remaining plating in that hold. No metallurgical examination was carried out of the fracture surface of the original fracture. The only metallurgical examination which was carried out was that conducted by Dr. Beardsley of CAPCIS and by Mr. Deegan of Atlantic Engineering, both of whom gave evidence at the trial, Dr. Beardsley on behalf of the defendants and Mr. Deegan on behalf of the plaintiffs. That examination was of the section of side plating removed from No. 2 hold. There is little dispute between Dr. Beardsley and Mr. Deegan as to the nature of the fracture in No. 2 hold or indeed as to the likely cause of the fracture or fractures in No. 4 hold. In a report dated July, 1990, which was put before the German Seeamt inquiry, Dr. Beardsley summarized her conclusions in part as follows: 8.1 Major corrosion fatigue cracks were detected in the starboard side of no 2 hold. These had initiated probably a considerable time before the vessel sustained major damage and ultimately became a total loss. 8.2 These corrosion fatigue cracks had also propagated over a period of time and had penetrated the side plating. 8.3 The large corrosion fatigue cracks originated at the toes of fillet welds between the bulb bars and the shell plating. In general, fillet welds have low fatigue endurances and clearly the cyclic loading on the side shell was responsible for the propagation of these fatigue cracks. The range of cyclic loading had exceeded the endurance of the fillet welded connections. 8.4 The fractures were clearly attributable to corrosion fatigue and there was also evidence of serious corrosion fatigue through the frames at locations where the brackets had been attached. At these locations in particular, corrosion had also led to serious wastage of the frames. 8.5 It is probable that the transverse framing of the hull along with major damage and fractures in the frames, probably as a consequence of cargo handling, contributed to the level of cyclic loading which precipitated the fatigue failure. Both Dr. Beardsley and Mr. Deegan expressed much the same view in evidence at the trial. Captain Knott expressed a rather different view, but Mr. Flaux did not seek to support his view on behalf of the defendants. In these circumstances there is in my judgment no reason to reject the conclusions of both Dr. Beardsley and Mr. Deegan as to the cause of the

5 [1995] Vol. 1 LLOYD'S LAW REPORTS 44 fractures in the shell plating in No. 2 hold. I therefore hold that the cause of the fracture of the shell plating in No. 2 hold was a fatigue fracture or fractures. The fatigue fracture or fractures was or were made possible by the fact that the shell plating was no longer supported by the internal structure as it had been initially with the result that it was able to pant and was exposed to stresses which were not contemplated when the vessel was originally designed. It does not necessarily follow that the cause of the initial fracture in the shell plating in No. 4 hold was the same. However both Dr. Beardsley and Mr. Deegan thought that it was a reasonable inference that it was. Mr. Deegan put it as follows: The fatigue cracks in the shell plating have, in my opinion, resulted from the corroded, damaged and cracked condition of the supporting frames. These would have allowed the shell plating to flex, leading to fairly rapid propagation of fatigue cracks within the shell plate, and subsequent loss of structure. In my judgment that conclusion is correct. It is a reasonable inference that the cause or causes of the fractures in the shell plating in No. 4 hold was or were the same as the cause or causes of the fractures in the shell plating in No. 2 hold. Significant local thinning was found at the top and bottom of the frames and in the brackets in No. 2 hold. Although no two holds will be the same, it seems to me to be likely that there was also thinning in similar positions in No. 4 hold. Also it is in my judgment likely that there was distortion of frames and brackets in both holds which had the effect of weakening the structure and enabling the shell plating to flex or pant as described above. That conclusion is strengthened by the evidence of the condition of the two sister ships of Toledo, Florenz and William Shakespeare. Although, just as no two holds are likely to be in the same condition, so (a fortiori) no two ships will be in the same condition, Florenz and William Shakespeare were not only sister ships of Toledo but they were also in the same ownership, had been involved in the same or a similar trade and were maintained by substantially the same personnel to the same standards. All three vessels were engaged in carrying either bulk cargoes or logs and sawn timber. The logs were very large and heavy and were carried almost every other voyage, usually if not invariably from West Africa to Europe. There is a good deal of evidence (to which I will refer in a moment) that the three vessels were indeed in a similar condition. All three vessels were subject to Germanischer Lloyd's continuous hull survey under which different parts of the hull were surveyed at different times and (if in satisfactory condition) were credited for class purposes. In addition each vessel was surveyed annually. On each annual survey the class surveyor would carry out a random inspection of any particular part of the vessel. The only other circumstances in which the class surveyor would inspect a particular part of the hull would be if he was asked to do so by the owners. The last inspection of any of the holds of Florenz by a class surveyor before the casualty to Toledo was the inspection of her No. 1 hold during an annual survey in February No recommendations for repair were made at that time. After the casualty to Toledo the defendants decided to ask Germanischer Lloyd to carry out a damage survey of the cargo holds of Florenz. The survey was carried out in Ortona in Italy in May, The surveyor reported as follows: Hold No 1. Several brackets, ps and sb, between the vertical holds frames and the lower wing tanks as well as the upper wing tanks were found slightly twisted. No cracks, neither in the welds nor in the brackets were detected. Hold No II. The following brackets were found twisted (appr 100 to 130 mm): Sb - lower wing tank, brackets fr upper wing tank, brackets fr Ps - lower wing tank brackets fr upper wing tank, brackets fr The following brackets were found to be cracked: Sb - lower wing tank, brackets fr Ps - lower wing tank, brackets fr The brackets at the lower wing tanks, ps and sb, from frame 120 to aft were not surveyed due to cargo in the hold. Hold No III. Some brackets, ps and sb, between the vertical hold frames and the wing tanks as well as the upper wing tanks were found slightly twisted. Hold frame no 84 was found heavily twisted. No cracks were detected. Hold No IV. The following brackets were found twisted (appr 100 to 150 mm): Sb - lower wing tank, brackets fr upper wing tank, brackets fr and Ps - lower wing tank, brackets fr upper wing tank, brackets fr The following brackets were found to be cracked: Ps - lower wing tank, bracket fr 53 upper wing tank, bracket fr 55.

6 [1995] Vol. 1 LLOYD'S LAW REPORTS 45 Cracks were also found in the fillet welds of the hold frames no 52-55, at the lower end, appr 100 to 250 mm long. The shell plating was found to be in order. Germanischer Lloyd recommended that the cracked brackets and welds be repaired before sailing and that the twisted brackets and frames be repaired within three months in accordance with the advice of head office. In the event there was a considerable amount of renewal, including renewal in way of brackets in No. 2 hold aft of frame 120 which could not be inspected by the surveyor. As is apparent from the above report, there was considerable deformation of the frames in the holds of Florenz. Mr. Simon accepted on behalf of the plaintiffs that it did not follow that the frames on Toledo were distorted in the same places or to the same extent, but he submitted that it was probable that there was similar distortion of the frames and brackets on her. There was no similar inspection of Toledo to that which was carried out on Florenz in May, There is however evidence of some distortion of frames and brackets. In December, 1987 a cargo gear inspection report at Libreville contained the following sentence with regard to the holds after stating that they were dry and clean and in satisfactory condition: Angle bar frames and brackets dented in a proportion of 60%, as usually admitted given the age of the vessel. The subsequent photographic evidence does not support the conclusion that the extent of deformation of the frames and brackets was as much as 60 per cent., but the report does provide some evidence that there was more than minimal damage to them, albeit of a kind which was typical for a vessel in the timber trade of her age and type. In early November, 1988 the vessel was due to load a cargo of ammonium sulphate and urea at Manfredonia. The shippers' surveyors declared that the holds were not suitable for the cargo to be loaded on the grounds that they were rusty and that they contained residues of a previous cement cargo. The holds were then cleaned. One of the surveyors who inspected the holds said: - the inspection of the holds give to the undersigned the impression of a vessel with a big lack of maintenance. This due to the fact that the vessel had been employed as LOG CARRIER. Captain Peter, who was and is the defendants' marine superintendent and who gave evidence at the trial, visited the vessel at Manfredonia in order to investigate the shippers' allegations. He took a number of photographs which show bent frames. Unfortunately none of the photographs was taken from a position at right angles to the shell plating from where it would have been possible to say precisely to what extent there was deformation of the frames. Although (for reasons to which I shall return below) Captain Peter did not regard the deformation as significant, it is in my judgment plain from the photographs that there was significant deformation of frames. It is not possible to tell from the photographs what if any deformation there was to the brackets. A limited number of photographs was taken of the holds when the vessel was in dry-dock in Gibraltar in February They appear to show some deformation of frames. Nos. 2 and 3 holds were spray painted at Gibraltar and Nos. 1 and 4 holds were painted subsequently, although I do not regard that fact as of much significance because the crew did not report the deformation of the frames and when Florenz was closely inspected cracks were found which had been painted over. Captain Seeg had been master of Toledo between February and October, 1989 before Captain Franke. He had also been master of Florenz. He at first said in evidence that he thought that the condition of Toledo was much the same as the condition of Florenz. He also initially characterized the damage to Florenz as the usual slight deformations which might be expected on a vessel engaged in the log trade. However when he was shown photographs of the damage to the frames and brackets to Florenz which were taken at Ortona in May, 1990 he said that the damage required repair and that it was very serious and even dangerous. He also said that he thought that a similar survey of Toledo would have shown similar damage. On the other hand he said that the condition of Toledo when he was on board her was satisfactory (apart from some damage which was repaired at Bata) and that there was no change in the condition of her holds while he was on board her. Moreover he said that during his time there was no damage to the side frames. It can thus be seen that Captain Seeg's evidence was somewhat contradictory. In my judgment the true explanation for that is this. He recognized that damage to frames of the kind which can be seen on the photographs of Florenz at Ortona was potentially dangerous and ought to have been repaired. That is the explanation for his reaction to the photographs when they were expressly put to him. On the other hand he had become used to damage to frames and brackets over the years because such damage was common in the log trade. Like other masters in the fleet (and indeed Captain Peter) he came to disregard distortion and deformation of frames and brackets. It was for that reason that they were not repaired. In my judgment the frames and brackets required repair from time to time. The reason that they were not repaired was that Captain Seeg and the others had become used to the

7 [1995] Vol. 1 LLOYD'S LAW REPORTS 46 situation and, in effect, assumed that all would be well without giving the kind of consideration to specific damage that he was required to do when asked specifically about particular damage when he was giving evidence. Otherwise I can see no reason why Captain Seeg did not ensure that the damage to Florenz was reported to class and repaired while he was her master. Although there was a time or times during his evidence when he said that the damage to Florenz was not typical of that on Toledo, I see no reason not to accept his basic evidence that Toledo and Florenz were in similar condition. He was after all master of Toledo from February to October, 1989 and he was master of Florenz from February to July, He was thus in a good position to be able to compare the two. On the basis of Captain Seeg's evidence taken as a whole it is in my judgment likely that the two vessels were in similar condition and that there was significant distortion of frames and brackets on both vessels even though on Toledo there may not have been cracking of the kind that was apparent on Florenz. It is fair to say that there was no, or no significant, cracking on William Shakespeare. These conclusions are supported by the evidence of deck fitter Wolf. He was employed by the defendants to travel on board their vessels carrying out such repairs as were necessary. He joined Toledo in October, 1989 and remained on board her until the casualty. He had served on board her previously. He gave evidence at the trial. After the casualty he met Captain Knott both in Falmouth and later on Florenz in Italy. Captain Knott's report includes the following: We understand that the random damages to frames and brackets noted by us in the holds of FLORENZ are considered by Captain Franke and by deck fitter Wolf to be little different in number and degree from the random damages existing in the holds of TOLEDO when the potash cargo was loaded at St John; with the exception made by the deck fitter that if any fractures had been visible to him in frames and brackets he would have taken immediate steps to make good such damage. That statement was based partly upon what Captain Knott was told by Mr. Wolf. In evidence he at first said that he could not say that the two vessels were 100 per cent. the same but that the condition of Toledo was in general better than Florenz. Subsequently he said that the condition of the frames and brackets on the two vessels were practically the same apart from the fact that there were three frames which had cracked on Florenz. That latter evidence is consistent with what he told Captain Knott. It is also consistent with the conclusion which I have reached (as stated above) from the evidence of Captain Seeg and is thus further support for the conclusion that the condition of the frames and brackets on Toledo was similar to that on Florenz, but without the cracking. It is also of interest to note that Mr. Wolf did not regard the damage as serious. In my judgment that was because he too (like Captain Seeg and others) had become familiar with it. Captain Peter said that he could not say whether Toledo was in a better or worse condition than Florenz although he expressed the opinion that Toledo was better. In my judgment, for the reasons already given, she was only better in that there was no cracking of the kind seen on Florenz at Ortona. He was shown the photographs of the damage taken at Ortona including for example Captain Knott's photograph 91, which depicts the port side of No. 4 hold in way of frames 47 to 52. Captain Knott noted the damage (shown on the photograph) to upper and lower brackets and the distortion in the body of the frames as typical of the internals on the port and starboard sides of No. 4 hold. Captain Peter described the photograph as "not serious, minor deformation, but we have to watch it". By contrast, when Captain Peter was shown a photograph (No. 94) showing distortion of the upper bracket and the top of a frame in the No. 4 hold of Florenz (also apparently described by Captain Knott as typical), he said that it was serious damage which the master should have reported to him. He was not able to explain why the master had not reported it to him. In my judgment the damage shown in both photographs was indeed typical of the damage and deformation on Florenz and it is likely that the damage and deformation of the brackets and frames on Toledo were similar. I do not accept the evidence of Captain Peter that the deformation shown in photograph 91 was not serious deformation. In my judgment it was significant damage and deformation of the kind which required repair. The reason it had not been repaired before May 1990 was that the masters, chief officers and indeed Captain Peter had become used to damage of this kind because it was so common having regard to the trade in which the vessels were engaged. That was also the reason why the damage shown on the photographs (including that shown on photograph 94) had not been reported by the master to Captain Peter. Captain Franke has served as master on the defendants' vessels including Florenz and William Shakespeare since He joined Toledo for the last time in October, It is plain from the passage from the report of Captain Knott quoted above that Captain Franke told Captain Knott that there was little difference between Florenz and Toledo so far as damage to the frames and brackets was concerned. In evidence he resiled from that to

8 [1995] Vol. 1 LLOYD'S LAW REPORTS 47 some extent. He said that the condition of Toledo was better, even much better. He gave that evidence in the light of the photographs of Florenz. When he was shown photograph No. 91 and it was put to him that that was the sort of damage which he had got used to, he said yes, approximately (or about) but that in this case he would have reported it because there were some six or seven damaged brackets in a row. He was asked whether he would have reported or mended it and he said both. He said that the damage to Toledo was not like that because measures would have been taken. It was put to him that measures were not taken because he thought that damage of that kind was normal but he said that he knew that damage can be dangerous. He would not agree that damage of the kind shown on photograph 91 was typical of the damage on Toledo because he said that if it had been some measures would have had to be taken. When he was shown photograph 94 he said that such damage should be repaired for sure. He said that it was not normal damage and that if he had seen it he would have informed the company. Despite the oral evidence of Captain Franke I see no reason to reject the statement in Captain Knott's report that he was initially told by Captain Franke and deck fitter Wolf that the damage to the frames and brackets in the two vessels was little different. In so far as the oral evidence of Captain Franke was different from what he told Captain Knott I prefer the latter. As both Captain Seeg and Captain Franke said (and as I have already concluded), the damage to the frames and brackets on Florenz depicted on photographs 91 and 94, which (as Captain Knott's captions say) was typical of the damage on Florenz, should have been repaired. The reason it should have been repaired was, as Captain Franke and Captain Seeg recognized, that it was dangerous to leave it unrepaired. In so far as Captain Knott expressed a different view I am unable to accept it. The damage must have been seen. I can see no reason why it was not repaired other than that it had come to be regarded as normal damage such that no particular thought was given to it. Captain Franke said in effect that Toledo cannot have been in the condition shown on photographs 91 and 94 because if it had been something would have been done about it. I am unable to accept that evidence because the same could have been said of Florenz yet nothing was done. It was also Captain Franke's evidence that he inspected the holds of Toledo on a number of different occasions after he became master. Those included when he took over from Captain Seeg at La Spezia in October, 1989, at Ancona after completion of discharge of a log cargo, before and after Caen and before loading at St. John (see below). I accept the evidence that some inspection of the holds was carried out on those occasions. The reason that nothing was done was not however in my judgment because there was no significant damage or deformation but that Captain Franke had come to accept it as normal. Reliance was also placed upon the various class inspections. As I have already said, Toledo (like her sister ships) was subject to a system of continuous survey under which each part of the vessel was surveyed once every five years. In addition the surveyor would choose a part or parts of the vessel for inspection at random on each annual survey. The documents appear to show that as part of the continuous survey the last survey of Nos. 2 and 4 holds of Toledo was in February, 1989 and the last survey of Nos. 1 and 3 holds was at Douala in September, There is also evidence that the class surveyor inspected all four holds at Gibraltar accompanied by Captain Peter and in the case of two of them accompanied by Captain Seeg. Moreover the class surveyor would have been in the holds many times over the years and included one or more holds as part of the annual survey from time to time. Thus many different class surveyors must have seen the state of the internals in the holds. Yet none of them recommended any repair. It was submitted that it follows that they must have been properly regarded as in satisfactory condition. I see the force of that submission but I am unable to accept it because if it is correct it is difficult to see how Florenz and William Shakespeare came to be in the condition in which they were in the summer of There is no suggestion that the damage to those vessels had only just been caused. Indeed some of the damage had been painted over. There are I think two possible explanations for the fact that no class surveyor required repairs of the frames or brackets or made any recommendations relating to them. The first is that class were somewhat slack in this respect. The second is that it was the responsibility of the owners to draw the attention of the class surveyor to any damage so that it might be considered by him and that the reason that none of the class surveyors commented on the damage was that the owners never drew their attention to such damage (with the possible exception of the repair at Bata) until they did so in the case of Florenz and William Shakespeare after the loss of Toledo. As a result the surveyors were not specifically looking for it. In The Torenia, [1983] 2 Lloyd's Rep. 210 at p. 225 Mr. Justice Hobhouse rejected as naive a suggestion that serious corrosion to a vessel could not get past the system of class surveys. Although the classification society was different in that case the same in my judgment applies here, especially in the light of the Germanischer Lloyd rules. The 1990

9 [1995] Vol. 1 LLOYD'S LAW REPORTS 48 edition of those rules provided by r. 4.4 of s. 2 inter alia as follows: If the owners or the master of a vessel are aware of any defects, deficiencies or damages to any parts of the ship... which are covered by classification, either Germanischer Lloyd Head Office or one of their representatives will have to be advised in detail. It was thus the responsibility of the defendants to draw the attention of class to any damage. Yet at no time did the defendants do so. In these circumstances it is naive for the defendants to say that because class did not comment or make recommendations there can have been no relevant damage requiring repair and it would in my judgment be wrong so to hold, especially since class did make recommendations in the case of Florenz and William Shakespeare when damage was pointed out to them. While it is true, as Captain Peter pointed out during his evidence, that the surveyor initially only recommended the renewal of cracked frames and brackets on Florenz, the surveyor recommended widespread renewal of deformed frames and brackets on William Shakespeare (see below). Moreover the defendants carried out a programme of widespread renewal of deformed internals on Florenz and William Shakespeare even if they were not cracked. Although I am conscious of the fact that no evidence has been adduced from Germanischer Lloyd, I suspect that the reason why the class surveyors did not make recommendations was that they too may have regarded the damage as normal for a vessel in the log trade. It was no doubt normal, but, as both Captain Seeg and Captain Franke said with regard to the damage shown on photographs 91 and 94 of Florenz the damage was serious and required repair because it was dangerous. In all the circumstances I have reached the conclusion that the condition of the brackets and frames in Toledo and Florenz was similar and that there was significant distortion of the frames and brackets of Toledo at the beginning of her last voyage. I will return in a moment to the question what if any cracks existed at that time. The conclusions which I have reached as to the existence of deformation appear to me to be consistent with the following further evidence. Firstly, the evidence of Dr. Beardsley was that the distortion of the top and bottom brackets on Florenz was widespread in all holds and that the distortion of frames was evident in all holds. Secondly, there was evidence from a Mr. Rittscher who was called on behalf of the plaintiffs. He went on board Toledo on Jan. 15 and 16, He did so in his capacity as port captain of the port of Brunsbuttel where the vessel was discharging part of her cargo. He said that he was struck by the difference between her external and internal condition. He said that he looked into both holds 1 and 4. His recollection was that he saw many bent brackets at the upper and lower ends of the frames and that he also saw many bent frames. While that evidence must be treated with caution for a number of reasons including that it was not Mr. Rittscher's duty to inspect the vessel, that he can have had at best a cursory look and that he had no experience of the trade in which she was operating, his evidence remains of some value as a general impression. There was also some evidence to similar effect from a Mr. Tausche who was one of the stevedores engaged in discharging the logs at Brunsbuttel. Thirdly, there is evidence as to the condition of William Shakespeare in She underwent an annual survey at Ancona in Italy in February, One of the spaces chosen by the class surveyor for inspection was No. 3 hold. No recommendations for repair were made. However after the casualty to Toledo the defendants decided to have her inspected by class just as they did in the case of Florenz. In doing so they were I think acting on the advice of Captain Knott. William Shakespeare was inspected at Taranto on June 6, The class surveyor reported as follows: In all cargo holds a great number of the connection brackets between the hold frames and the wing tank resp. double tank top were found to be bent, knuckled or cracked. Most of the damages ascertained are caused by stevedores. While it is fair to say that there was nothing like the cracking which has been found in Florenz, nevertheless a considerable amount of renewal was carried out. In No. 1 hold 17 brackets were renewed on the starboard side (six at the top and 11 at the bottom) and 20 brackets were renewed on the port side (nine at the top and 11 at the bottom). In No. 2 hold 38 brackets were renewed on the starboard side (six at the top and 22 at the bottom) and 25 brackets were renewed on the port side (all at the bottom). In addition six frames were cropped and part renewed on the starboard side and eight on the port side. In No. 3 hold five brackets were renewed on the starboard side (all at the bottom) and 18 brackets were renewed on the port side (also all at the bottom). In addition two frames were cropped and part renewed. In No. 4 hold 10 brackets were renewed on the starboard side (nine at the top and 12 at the bottom) and 37 brackets were renewed on the port side (15 at the top and 22 at the bottom). In my judgment the evidence (including the photographic evidence) shows that there was serious deformation of brackets and (to a lesser extent) of frames on William Shakespeare and it supports the conclusions which I have reached as to the likely state of Toledo.

10 [1995] Vol. 1 LLOYD'S LAW REPORTS 49 There is very little evidence which leads to a different conclusion. I must however refer to the evidence of the inspection of the holds which took place before the last voyage. The previous laden voyage had been from Africa to Europe with a cargo of logs. The vessel was discharged at Nordenham, Brunsbuttel, Amsterdam and Caen. While the vessel was at Caen Captain Franke personally inspected the empty holds to check for any significant damage from the logs. He said that he saw nothing out of the ordinary. In particular he saw no significant new damage and no cracks or tears. I accept that evidence. The vessel sailed from Caen to Halifax where she arrived on Feb. 9. During the voyage she encountered very severe weather conditions such that speed had to be reduced and the voyage took 18 days instead of the usual 10 or 11. The master said that he encountered some six storms in all, each with wind forces of 10 to 12 and with swell of nine to 10 metres or more. Before loading began in Canada the holds were inspected by a cargo inspector and the chief officer. There is some confusion in the evidence as to whether they were also inspected by the master and the deck fitter. Mr. Wolf said that he inspected them with the master. Captain Franke, on the other hand, although he said the same both in the statement prepared for this action and in the statement made for the Seeamt (where he said that all four inspected the holds the inference being that they did so at the same time), said in evidence that he did not go down to the holds with the surveyor and the chief officer. He said that he had gone down with the fitter before the vessel arrived in Halifax, principally in order to see if there was any water in the holds because of the bad weather. In these circumstances a reasonable conclusion is that the master inspected the holds at Caen. He and the deck fitter went down into the holds before the vessel arrived at Halifax. After arrival the holds were inspected by the cargo inspector, who was Captain Glover, and by the chief officer. It is possible that the deck fitter also went into the holds at that time. Nothing untoward was found. No cracks were seen. Although the chief officer did not give evidence, Captain Glover did. Captain Glover had some experience of the log trade, albeit many years earlier. Because the cargo was to be potash (which is particularly susceptible to contamination) he paid particular attention to whether there was any residue of previous cargoes, rust or water in the holds. He found none. Although it was not his duty to inspect the brackets and frames for damage he said that there was some minor deformation of the kind that one would expect on a vessel in the log trade but that none of it was out of the ordinary or in any way serious or requiring attention. Captain Glover was doing his best to recall what he had seen. He certainly did not see anything which he regarded as untoward because if he had I have no doubt that he would have drawn it to the attention of the master. On the other hand he saw some deformation. Although he did not regard it as serious or requiring attention, it was not his job to apply his mind to that question at the time. The evidence of Captain Glover is not sufficient to persuade me that there was no significant damage to the frames and brackets. On the contrary for the reasons which I have already given I find that there was both damage and deformation of the brackets and frames which required repair. On the other hand I do not think that it would be right to hold that there was any cracking which should have been observed at St. John. Both Mr. Deegan and Dr. Beardsley said in evidence that fatigue cracks were probably present prior to the final voyage, although it was I think the view of Dr. Beardsley that the cracks might not have been visible. In my judgment it is likely that there was some fatigue cracking but that it was not or may not have been visible to those who carried out an inspection of the holds at St. John. In their outline closing submissions the defendants put the position as follows: (1) With regard to the condition of the vessel's side shell plating at the load port, it is accepted that in all probability there was an incipient crack in the shell plating in way of no 4 hold PS, albeit not one discernible by any inspection. Either that crack was already propagating through the shell plating (possibly accelerated as a consequence of stresses imposed on the vessel during the ballast voyage in "exceptionally" bad weather) or the crack propagated during the voyage.... (2) It is also accepted that whatever the cause of the initial cracks, the subsequent loss of the shell plating in no 2 and no 4 hold occurred as a consequence of weakened internal structure. What is not accepted is: (a) that the vessel's condition was anything like has deteriorated as the plaintiffs seek to suggest; (b) that the visible condition of the vessel on inspection at the load port was such as to alert a prudent shipowner to the vessel's internal structure being in such a weakened state as to lead to fatigue fracturing of the side shell plating. It appears to me that even if those submissions were accepted in their entirety the correct conclusion would be that Toledo was unseaworthy at the commencement of the voyage since, as Mr. Justice Hobhouse put it in The Torenia, [1983] 2 Lloyd's Rep. 210 at p. 225:

11 [1995] Vol. 1 LLOYD'S LAW REPORTS 50...once one accepts that the weather conditions encountered would have been within the contemplation of a prudent shipowner, the proof of any pre-existing structural condition of the vessel which accounts for the loss of the vessel in those conditions must amount at the same time to proof that the vessel was unseaworthy. In any event for the reasons which I have already given I cannot accept those submissions in their entirety. Although I accept the submission that any cracks which were present were not visible to those carrying out an inspection at St. John, there was in my judgment significant deformation of and damage to frames and brackets which was or ought to have been visible to those carrying out a proper inspection. It is likely that there was also localized corrosion of the brackets and of the ends of the frames, although that corrosion would also probably not have been visible to those carrying out an inspection at the load port. In these circumstances Toledo was not in such a condition at St. John as to be reasonably fit to encounter the ordinary perils which might be expected on the voyage. It follows that she was unseaworthy at the commencement of the voyage: see e.g. Scrutton on Charterparties, 19th ed., p. 84. It follows that the initial casualty was caused by unseaworthiness because it was caused by the fracture of the shell plating on the port side of No. 4 hold, which fracture was in turn caused by fatigue caused by the fact that the shell plating was not properly supported so that it could not withstand the stresses to which it was exposed during the voyage. Before turning to the issue of due diligence I should mention two other matters which were the subject of some discussion. Firstly, there was a suggestion that the vessel was also unseaworthy because she was fitted with lugs or pad eyes on each of the frames. She was so fitted but she was not in my judgment unseaworthy as a result of being so fitted. Moreover even if she was, the existence of those lugs did not cause the casualty. Secondly it was suggested that either the lugs or pad eyes or the spaces behind the brackets were used for bull-roping, that is for pulling logs towards the frames by means of wires passed through the lugs or behind the brackets. It may well be that wires were used for such purposes from time to time, but the bulk of the damage and deformation of the frames and brackets was caused by impact from logs. In any event my conclusion that the vessel was unseaworthy depends upon the fact that the frames and brackets were damaged and deformed not upon its cause. It is not therefore necessary to consider this point any further. Due diligence The question remains whether the unseaworthiness was caused by any want of due diligence on the part of the defendants, their servants or agents. The burden of proving the exercise of due diligence is on the defendants. The plaintiffs however put forward a positive case of want of due diligence. In short they say that the defendants failed to lay down and carry out a proper system for the inspection of their vessels including Toledo with the result that they failed to detect and repair the damaged brackets and frames. The defendants, on the other hand, say that their vessels were properly inspected both by their own personnel and from time to time by class. They further say that it was not reasonably foreseeable that damage to brackets and frames of the kind that existed would or might cause fatigue cracking of the kind or to the extent that occurred. In my judgment, on the basis of my findings of fact as to the state of the vessel at New Brunswick the owners failed to exercise due diligence properly to maintain Toledo. Based upon the state of Florenz and William Shakespeare they also failed properly to maintain them. It appears to me that the reason for that was complacency. As I have stated above the owners became used to the state of their vessels because they gradually sustained more and more stevedore damage as a result of handling logs. They thus became familiar with the extent of the damage and that familiarity led to a certain complacency. That complacency was also in part caused by the fact that Germanischer Lloyd at no time suggested that any of the deformed or damaged brackets or frames should be repaired. The reasons which have led me to these conclusions are shortly as follows, although in stating them I recognize that on the facts of this case there is considerable overlap between the facts relevant to the exercise of due diligence and those relevant to the issue of unseaworthiness. The defendants' system was shortly as follows. As has been seen, Captain Peter was the defendants' marine superintendent who had responsibility inter alia for the maintenance of the vessels in the defendants' fleet. That of course included Toledo, Florenz and William Shakespeare. The vessels were classed with Germanischer Lloyd and thus inspected from time to time as described above. The defendants would follow the recommendations of class. In addition other repairs would be carried out depending upon the circumstances. To that end deck fitter Wolf went to sea on each of the vessels from time to time in order to carry out such repairs as were necessary. Captain Peter naturally relied to a considerable extent upon reports from the masters of each ship, although he himself

12 [1995] Vol. 1 LLOYD'S LAW REPORTS 51 visited each ship at regular intervals. Monthly maintenance reports (but not log books) were sent by the vessels to the defendants' office, as were reports of any work carried out. A maintenance log was also kept. The defendants' approach to internal damage was in theory as follows. The holds and other parts of the vessel were inspected from time to time, especially before each voyage. They were also inspected periodically by shore personnel and of course by class. If any minor damage was found by those on board the vessel it was either left to the next dry-docking or was repaired by the deck fitter, no doubt assisted by the crew. Any other damage was reported to the owners and to class. The distinction between minor and other damage was variously described in the evidence since the owners did not instruct their masters as to what the difference between them was, but deformation of three or more frames or brackets in a row would be regarded as serious damage. The defendants instituted a system of written reports called damage certificates. There were two types. One was for damage caused by stevedores or grabs during loading or discharging and was for all types of damage, not only for damage to internals in the holds. The second type was expressly for damage to the frames and brackets in the holds. At the bottom of the second type there is this instruction: One copy of the above had to be sent to Owners every voyage after discharging. Despite the existence of the first type of certificate I think that I am right in saying that damage to frames and brackets caused by stevedores or grabs was never reported in any certificate and despite the instruction at the foot of the second type no such certificate was ever filled in by anyone. There had at one time been an indent book, but according to Captain Peter the practice of using it stopped. No such book was produced. Moreover with the single exception of the repairs to the internals at Bata (which were necessitated by ranging damage) no repairs of any kind were ever carried out to the frames or brackets on Toledo, whether by the deck fitter or anyone else. One of the criticisms of the defendants' system which was advanced by the plaintiffs, particularly in reliance upon the evidence of Captain Beetham and Mr. Edon both of whom gave expert evidence on their behalf, was that there was no system in operation for the recording of damage. It was said that it was essential to record damage to a frame or bracket after each voyage so that when the particular hold was next inspected the condition of each damaged frame and bracket could be compared with the record of previous damage so that a clear picture of the extent and nature of the damage to the internals could be kept. I accept that evidence. In the absence of such a system it was almost impossible to keep track of the damage to the frames and brackets. There were far too many frames and brackets to make it safe to rely upon memory. The second type of damage certificate described above must have been devised with just such an end in view. Unfortunately such certificates were not used and no similar system was put in their place, although Captain Seeg did keep a notebook for his own purposes. I do not think that there would have been any difficulty in operating a proper system of the kind envisaged by Captain Beetham. It would have involved inspecting the internals for damage after each voyage and keeping a record of it. Such inspections could readily have been carried out from the tank top. I do not think that it would have been necessary to lower a pontoon or erect staging (or even use a ladder) unless something untoward was seen. In that event it might have been necessary to do so, although it would often have been possible to take a closer look from a vantage point on the cargo. In my judgment such a system should have been operated after each voyage. If significant damage was found it should have been reported to class and repaired as soon as possible. If minor damage was found its repair could no doubt be left to the next dry-docking. It was further submitted that a close inspection of the frames and brackets should have been carried out before each drydocking. Again I accept that submission. If it was not possible safely to carry out such an inspection from the cargo (as it may not have been) both the deck fitter and Captain Seeg said that there was no difficulty in rigging a pontoon and lowering it from the cargo gear. In my judgment given the importance of the internal structure it would have been prudent to carry out such an examination. It would not have been onerous if only done at each dry-docking. Some such structure must have been erected when the crew painted the holds. I can see no reason why the holds should not have been inspected in that way. The inspection itself would of course have been made much easier if a running record of damage had been kept. However it was submitted on behalf of the defendants that they could not reasonably be expected to do more than they did either by way of inspection or repair having regard to the state of knowledge in the shipping industry in late 1989 or early It is common ground that the defendants must be judged by the standards of the time and not in the light of hindsight. It is also common ground that the mere fact that the system did not detect whatever particular weakness in the internal

13 [1995] Vol. 1 LLOYD'S LAW REPORTS 52 structure led to the casualty does not make the system inadequate or amount to a failure to exercise due diligence: The Hellenic Dolphin, [1978] 2 Lloyd's Rep In their final submissions the defendants put the former point as follows: A central difference between the parties appears to be over the question what the reasonable shipowner knew or ought to have known in late 1989/early 1990 about the effect of random internal damage, consisting of slight deformation of single frames or brackets rather than three in a row, in various parts of a hold or even cracks in isolated frames or brackets. It is submitted that there is a great deal of evidence which shows that at the time, the shipowning community did not appreciate that such damage could cause fatigue cracks in shell plating and loss of such shell plating. In support of that submission the defendants relied not only upon the attitude of class in this case but also upon a study set up by Lloyd's Register of Shipping in November, 1990 which resulted in the publication of much new information of which the industry had previously been ignorant. I accept the submission that the survey of November 1990 produced much new information and that it has made a valuable contribution to the safety of bulk carriers. It was prompted by an unacceptable rise in the losses of bulk carriers. An interim report was published in about March, One of the purposes of the interim report was to heighten awareness in the industry. The whole report repays study but it is convenient to quote two short passages from it: The study reveals that it is common to find that bulk carrier main frames have suffered from highly localised corrosion on their webs adjacent to the side shell and at the bracket web connection to the hopper. In addition to this, the presence of cracking at the bracket toes has been found to be usual in regions of stress concentration. Where separate brackets are used, the cracking location is at the bracket toe of the frames, whereas with integral brackets the crack will more usually come at the toe of the hopper and topside tank. In the latter case, the cracking is almost self limiting but, where separate brackets are fitted, the fracture quickly propagates to the shell leaving the brackets intact. A little later: Available evidence revealed that the side shell rapidly loses its capability if high levels of corrosion are present or if the frames or brackets have been damaged. The value of the paper was to heighten awareness in the industry and to focus upon the existence of localized corrosion and the mechanism of failure caused by it. It was not however the first time that shipowners were or should have been aware of the risk of the effects of corrosion, since corrosion inevitably thins steel plate and internals and has been the cause of casualties in the past. The facts of The Torenia are an example of a casualty caused as a result of corrosion. Moreover shipowners have been aware of the dangers of damage to internals for many years. In all the circumstances I am unable to accept the defendants' submission quoted above. Firstly, the premise upon which it is based does not reflect my findings of fact. For the reasons already given I have reached the conclusion that there was serious deformation of frames and brackets in Toledo even if there was no cracking of the kind later seen in Florenz. This is not therefore a case of slight deformation of single frames or brackets. Secondly, there is ample evidence that shipmasters (and indeed shipowners) were aware of the importance of repairing significant damage to internals, namely that the whole purpose of internal structure is to give appropriate strength to the shell plating. It must follow from that if such damage is not repaired the shell plating will or may lose its strength with consequent risk of failure. In my judgment all the masters who gave evidence recognized that. That was the reason for the reaction of Captain Seeg and of Captain Franke to the photographs of Florenz. I accept Mr. Simon's submission that the tenor of the evidence from the masters who were called was that everyone knew that frame and bracket damage required repair because it affected the seaworthiness of the vessel, although in the case of minor damage it could be left to the next dry-docking. Mr. Simon submitted that the crucial question is whether a reasonable shipowner would have appreciated in 1989 that damage and deterioration of internal structure could have an effect on the watertight integrity of his ship. In my judgment that is indeed the correct question. I further accept the submission that it is not necessary for the shipowner to have appreciated the precise mechanism by which failure might occur. The answer to the question is that the reasonable shipowner would have appreciated the risk and would have set up a proper system for the inspection, ascertainment and repair of damage to internals of the kind discussed above. That conclusion appears to me to be supported by the fact that the defendants themselves began to institute a system of recording such damage and by the further fact that their witnesses recognized the importance of repairing serious damage. The problem is this case was not, as it seems to me, that the defendants were not aware of the importance of

14 [1995] Vol. 1 LLOYD'S LAW REPORTS 53 repairing significant damage to internals because of the state of knowledge in the industry but that the damage became so common that they allowed their own system to lapse and gave no thought to how a better system might be introduced. I can see no other explanation for the fact that no repairs were carried out to Florenz or William Shakespeare. The internals of both were in such a condition that they required substantial repair. Yet no repairs whatever were done and none would have been done but for the fact that class were called in to inspect those two vessels as a result of the casualty to Toledo. That failure cannot be because of any lack of knowledge in the industry. It can only have been because of a failure on the part of the defendants and their masters to lay down and implement a proper system for maintenance and repair. As I have already said, that failure was in my judgment caused by those concerned becoming familiar with the extent of the damage and as a result becoming complacent. In these circumstances, I am unable to accept the view of Captain Knott that the degree of shipboard and shoreside management exhibited by the defendants was exemplary. In reaching that conclusion I do not however intend to criticize the motives or general standards of the defendants and I certainly do not conclude that the defendants or their masters put their ships to sea knowing that they were in a dangerous state, but I am firmly of the view that the system on board Toledo and her sister ships for the ascertainment and repair of their internals was defective because it did not ensure that the damage was properly inspected, monitored and repaired. One indication of the fact that the system was defective is that there is no evidence of the damage to any frame or bracket being regarded as serious or indeed as other than minor. As a result (except for the ranging damage at Bata) no repairs to such damage were ever carried out, although it appears to me to be almost inconceivable that the heavy logs being carried on many voyages never once caused serious damage to the frames or brackets. Captain Peter agreed that even minor damage should be repaired at the next dry-docking. Yet it never was. Captain Knott agreed that some of the damage shown in the photographs taken at Manfredonia was moderately waved or heavily localized damage which should have been repaired. In my judgment if the defendants had had and operated a proper system Toledo would not have been in the condition in which she was at St. John and Florenz and William Shakespeare would not have been in the condition in which they were found when surveyed in the summer of When serious damage was observed class would have been called in and asked to inspect the particular damage. In my judgment if class had been called in to inspect particular damage it is likely that repairs would have been recommended and that the defendants would have repaired the frames and brackets as necessary, just as they did in the case of Florenz and William Shakespeare in During proper inspections of the frames and brackets of Toledo during her life there would thus be likely to have been extensive repairs to and renewal of them. In that event the internal strength of the structure would have been very much greater than it was. Mr. Flaux submitted that, whatever the position with regard to damage and deformation, the owners could not reasonably have been expected to predict or detect localized corrosion. I am not sure that is correct, but assuming that it is (for the reasons advanced in argument by Mr. Flaux) it follows only that it is not possible for me to hold that all the corroded frames would have been renewed. The repair or renewal of the deformed brackets and frames would have had the effect of restoring the thickness of the internals which were repaired or renewed. Since a proper system would have involved extensive repair and renewal of frames and brackets so that the internal structure would have been very much stronger it seems likely to me that if the defendants had exercised due diligence to make the vessel seaworthy so that the deformed and damaged brackets and frames were repaired this casualty would not have occurred. If that is correct it follows that it is not necessary to decide the only issue of principle between the parties as to burden of proof, since it would only arise if it were not possible to reach a firm conclusion on causation. That issue is this. If it were held: (i) that the vessel was unseaworthy because her shell plating was prone to failure by reason of the fact that internals were weakened (a) by corrosion and (b) by damage and deformation; (ii) that the casualty was caused by the failure of the shell plating as a result of the fact that the internals were weakened; and (iii) that if the defendants had exercised due diligence they would have repaired or renewed the frames and brackets which were damaged or deformed but would not have repaired those frames and brackets which were only subject to localised corrosion; but (iv) that it was not possible to say whether in those circumstances the casualty would have happened or not would the plaintiffs succeed or fail under the Hague Rules? That is no doubt an interesting question, but since it does not arise on my findings of fact I shall not further lengthen this judgment by discussing it in detail and seeking to resolve it. In all the circumstances for the reasons which I have tried to give I have reached the conclusion

15 [1995] Vol. 1 LLOYD'S LAW REPORTS 54 Q.B. (Adm. Ct.) The "Lloyd Pacifico" that Toledo was unseaworthy at the commencement of the voyage at St. John, that the casualty was caused by that unseaworthiness, that the defendants had failed to exercise due diligence to make her seaworthy and that if they had exercised due diligence the casualty would not have occurred. It follows that, whatever is the correct answer to the question of burden of proof referred to above, the plaintiffs have discharged the burden imposed upon them by art. III, r. 1 but the defendants have failed to discharge the burden imposed upon them by art. IV, r. 1 of the Hague Rules. I postpone for later consideration, if necessary, the question whether the loss of all the cargo was caused by that unseaworthiness. Subject to that, there must be judgment for the plaintiffs.

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