Which insurance companies will have to bear insured maritime losses turn on whether reckless navigation increased losses after the Tasman Pioneer ran aground off Japan en route to Busan in Korea.
The vessel from the Tasman Orient Line ran aground in May 2001 in the early hours during a heavy rain storm. Cargo, including NZ Dairy Board exports, was lost as a result of the grounding and subsequent delayed salvage.
Dairy Board losses totalling some $US 498,000 arose when refrigerated reefers were left without power at some unidentified point in the voyage. If the generators failed prior to the grounding, Tasman Orient accepts liability. If they failed after the grounding, Tasman Orient says it was not liable, protected by exclusion clauses in its contract of carriage.
Standard international contracts of carriage for shipping exempt the carrier from liability for cargo losses after running aground except where losses arise from reckless management of the vessel. The actions of the Tasman Pioneer captain in taking a shortcut through the
The court was told the normal route went through the
The vessel was behind schedule. The captain elected to take a shortcut, cutting about 40 minutes off the journey. Two groundings in quick succession damaged the hull, causing the vessel to list. Instead of contacting the Japanese coastguard and looking to beach the damaged vessel, the captain steamed at full speed for the main channel in the Strait while the crew pumped water to maintain trim.
Nearly three hours after the grounding, the captain anchored and then alerted the authorities. Crew were mustered and a story fabricated that the vessel had hit a submerged container. The ship’s chart was doctored to hide the actual course travelled.
The court ruled that the decision to attempt the shortcut was “unwise”, but the captain had taken this route before, albeit in a smaller vessel. The claim of reckless navigation arose not from attempting the shortcut, but from the delay in notifying authorities of the grounding. There was evidence that this delay increased the amount of cargo damage. Salvage tugs with high capacity pumps would have reached the vessel earlier but for the late notification.
Evidence from the salvors also indicated the Dairy Board reefers were without power during the salvage. Power cables were cut. They were hindering the salvage. There were delays before replacement generators could be put on board.
The Court of Appeal found that the “outrageous” behaviour of the captain in continuing to run at full speed after the groundings and failing to notify the authorities amounted to reckless behaviour such that Tasman Orient could not hide behind the exclusion clause. It was liable for losses caused by the delay, including losses to the Dairy Board’s refrigerated cargo.
Tasman Orient v. NZ China Clays – Court of Appeal (9.4.09)
08.09.006