Cases involving General Average rarely make the law reports, but not long after the Supreme Court handed down judgement in the "LONGCHAMP", the High Court has recently decided a General Average dispute between the owners of the "CAPE BONNY" and cargo insurers Ping An.
The "CAPE BONNY" is a 2005 built oil tanker. In July 2011, on a voyage from Argentina to China, the engine broke down. The Owners contracted a tug and the vessel was towed to Yosu, South Korea, where cargo transhipment took place. The cargo was subsequently delivered on the replacement vessel.
General Average was declared and Ping An provided GA security. A GA Adjustment was produced which quantified the claim against cargo at circa $2.5m (which was later reduced to circa $2.1m). Ping An declined to contribute to GA, on the basis that the Owners were in breach of contract as they failed to exercise due diligence before and at the commencement of the voyage to make the vessel seaworthy.
Unseaworthiness and Due Diligence
Owners accepted that the vessel was unseaworthy at the commencement of the voyage because metal particles were present in the luboil system downstream of the filters. But the Owners claimed they were not in breach of the contract of carriage because they said the main engine failure was due to sudden and catastrophic damage to the no 1 main bearing. They said this damage in turn was caused by metal particles which were present in the luboil piping since 2005 when the vessel was built, and that these particles broke off and ended up damaging the no 1 main bearing. They said this was not discoverable by the exercise of due diligence.
Ping An, however, said the failure was caused by metal particles either generated by spark erosion and/or internal engine damage and/or by poor procedures when the crew were cleaning filters. They also said that the damage to the no 1 main bearing was avoidable and the crankweb deflections two months before the breakdown should have alerted the Owners to the problem, as well as the trends in the luboil analysis.
The engine manufacturers MAN reported on the damage to the no 1 main bearing. They said the root cause was either "foreign particles in the bearings" which "…may have entered the engine during new building or incorrect filter cleaning procedure…." "…or spark erosion where the electrical potential of the crankshaft through the main or thrust bearings instead of via the earthing device….". However, MAN said that "considering the signs of spark erosion, it may not be a contributing factor". MAN did also say that it might have been possible to detect the "maturing bearing failure" as a result of the crankweb deflections mentioned above.
An expert for Owners gave evidence as to what would be expected of the technical superintendent for Owners at the time when technical reports were sent in by the Chief Engineer. He was of the view that scrutiny of reports by the technical superintendent or manager of the vessel was not required unless the Chief Engineer reported a problem. However, this was contrary to the duty shipowners owe to ensure the safe and efficient management of the vessel, which cannot be discharged by relying on the master or chief engineer to exercise their own duties.
In March 2011, no warning signs were seen in the luboil analysis. On the 16th May 2011, a check of crankshaft deflections was undertaken. The deflection on no 1 was -0.28mm and on no 2 it was -0.21mm. In both cases it was -0.14 in November 2010. The deflection limit was -0.66mm, so these deflections (which denote wear) had increased but were still within limits. These readings were sent by mail to the Owner's office. Owners took the position that the wear evidenced by the crankshaft deflections did not make the vessel unseaworthy.
The auto filters were checked in May 2011. Loading of the cargo completed on the 3rd June and the voyage commenced. A lube oil sample drawn on the 11th June was analysed by Shell and was considered normal. On the 14th July, the vessel broke down and main bearing no 1 was stuck, having turned 45 degrees. The journal was also cracked.
The Court found that the history of crankweb deflections showed that the increase to -0.28mm was unusual and that this indicated abnormal wear. This was such that a prudent engineer would have taken bearing clearance measurements to check wear. The failure to do so was a causative failure to exercise due diligence before and at the commencement of the voyage.
The Court also found that this wear was most likely to have been caused by metal particles not being properly filtered because of damage to some of the filter mesh. There was evidence that the luboil filters were inspected after the casualty and no visible damage was found. However the Court found that damage found to the filters post breakdown was present before the breakdown (it may not have been easy to see). The Court also found that although there was a failure to inspect the filters properly, this was not causative of the casualty.
Burden of proof for GA expenditure
There was also a dispute as to who bore the burden of proof the expenditure was reasonably incurred in GA. Although it was not necessary to decide this question, since there was a complete defence to the GA claim, the Court did state that the burden falls to the party who is claiming the expenditure.
Although there is in our view no new law in this case, it is a useful reminder of the obligations Owners have to cargo interests under the Hague/ Hague-Visby Rules. The engine had relatively modest running hours, and the crankweb deflection readings on no 1 bearing were well within limits. Notwithstanding that, Owners are obliged to have a proper system to monitor the information provided by the ship and were expected to spot the problem well before the breakdown. Their failure to do so was a failure to exercise due diligence before and at the commencement of the voyage. That meant that their claim for General Average contributions failed.