Guidance on causation where there may be more than one potential cause of loss
By Peter Tribe of Elborne MitchellFirst published: Shipping & Trade Law - Jan/Feb 2002 [1st January 2002]

Causation is an essential but an often problematic element of any claim. This recent case saw shipowners run a rather unusual defence to a cargo claim, and the judgment of Tomlinson J offers useful guidance on causation where there may be more than one potential 'cause' of the loss.

The facts
The claimants were the American purchasers of a cargo of ethylene being produced in Mexico, which the claimants intended to sell in the European market. They were buying the cargo on CFR terms from the Mexican producers. The nominated carrying vessel was The Atrice which was a vessel demise chartered by the defendants.
Cargo was loaded to the vessel in stages. Upon loading the initial cargo parcel, high levels of contamination were detected. After deliberation, and after verifying that the cargo in the shore tanks was pure, the cargo owners decided to continue loading cargo in the expectation that any contamination resulting from the condition of the ship's tanks would diminish as more clean cargo was loaded.

That decision by cargo owners was taken without the active involvement of the Master who, although aware of the possibility that the vessel might be the cause of the contamination, (although rejecting that possibility), had not prevented further loading of cargo, had not taken any steps to investigate whether the cargo tanks themselves were contamination and had, indeed, paid an essentially passive role in the loading process. In the event, analysis of the fully loaded cargo showed it to be within specification.

The vessel sailed from the load port, the master having issued a clean bill of lading for the whole cargo. On arrival at the discharge port, however, the entire cargo was found to be contaminated to very high levels and ultimately was sold for a heavily discounted price.
The cargo owners claimed damages against the shipowners alleging that the vessel was unfit to carry the cargo in question and that the owners had failed in their duty to exercise due diligence, before and at the beginning of the voyage, to make the vessel's tanks and lines fit to carry the cargo. The shipowners admitted that the contamination had resulted, initially, from the unclean condition of the ship. Controversially, however, they argued that once the contamination had become apparent, the cargo owners should have appreciated that the vessel was unfit and should have ceased loading. They said that the subsequent damage was in fact therefore the fault of the cargo interests and not of the ship because the unreasonable decision to continue loading broke the chain of causation.

The matter came before Mr Justice Tomlinson. Tomlinson J opened his judgment with the recognition that this was a 'cargo claim of a somewhat unusual nature'. He noted the defendants' admission of breach of contract and observed that their breach must have been particularly gross since according to their own expert witness, the extent of the contamination observed during sampling at the initial stage of loading was likely to have exceeded anything which the attending surveyor had previously experienced. However, the judge said, 'the owners seek to pray in aid the grossness of the contamination then observed in support of their contention that the bulk of the loss sustained by cargo interests is to be regarded as having been caused by their own decision to continue loading. That was, say the defendants, a decision for which there was no rational basis and which they even characterise as reckless .... That decision was, say the defendants, so aberrant that it must be regarded as breaking the causal link between the owners' admitted breach and the ensuing contamination of the balance of the ethylene parcel thereafter loaded.'

The judge acknowledged that any conduct of the claimants could not be regarded as breaking the chain of causation between the admitted breach of contract and the loss unless that conduct could be regarded as the sole cause of the loss to the exclusion of any efficacy of the breach. The court here following the decision in Heskell -v- Continental Express (1950) 1 AER. The judgment therefore proceeded on the basis that the contract breaker would be liable so long as his breach remained an effective cause of the loss, the court not being required to choose which cause was the most effective.

The shipowners argued that the decision to continue loading cargo was made by the claimants and that their master played no active part in that decision. The owners also argued that the master was effectively under the orders of charterers (not represented in the litigation) to load the cargo and that the master could therefore do nothing without the instruction or cooperation of the charterers. Tomlinson J, however, did not find himself persuaded by the owners' arguments. He said:
'A shipowner cannot in my judgement abdicate responsibility in this manner. It is no answer to an allegation of breach of the contract contained in or evidenced by the bill of lading to say that it was consequent upon performance of an inconsistent contractual obligation owed to others.'

The judge ruled that cargo damage was a matter in which a master was obliged to take an active interest. The master should not have allowed further cargo to be loaded unless confident that no further damage would result or that cargo interests would accept responsibility. The shipowners were therefore also in breach of their duty to properly and carefully load the cargo; that breach remained an effective cause of the loss notwithstanding the quality of the cargo owners' decision to continue loading.

That failure by the master and the consequent breach by shipowners meant that the cargo owners could not, in the circumstances, face criticism by the owners that they had undertaken an independent course of action which led to the damage to the cargo. But even had that not been the case, said the judge, the shipowners' argument would still fail.

The shipowners had argued that the cargo owners' decision to load beyond the coolant parcel of cargo lacked any rational basis and was negligently made. The judge characterised the cargo owners' decision to continue loading in the face of only limited analysis evidence as being no more scientific than that they decided to see what happened and to hope for the best, although, in the event, the analysis results seemed to vindicate their decision. The judge acknowledged, however, that the cargo owners faced a dilemma when cargo contamination was discovered. There was no obvious way of returning the contaminated cargo to the shore. Disposal at sea remained a theoretical, but expensive, option. The shipowners did not undertake to accept responsibility for any of this potential cost. The judge decided that the cargo owners' decision could be approached in terms of whether, on the one hand, it was a sufficiently unreasonable decision to effect a break in the chain of causation or, on the other hand, whether it should be regarded as something reasonably done in mitigation of the consequences flowing from the admitted breach of contract by the shipowners. However one looked at it, the judge concluded, the standard of reasonableness to be imposed upon the cargo owners' decision, was not a high one in view of the fact that the defendant was an admitted wrongdoer. The Judge quoted with approval the words of Lord Macmillan in Banco de Portugal -v- Waterlow (1932) AC 452:
'Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty ... the law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures.'

The judge also found the approach of Lord Hoffmann in South Australia Asset Management Corporation -v- York Montague Limited (1997) AC 191 helpful. Lord Hoffmann had put the question in terms of whether the loss could be said to be a reasonably foreseeable consequence of the plaintiff having been placed by the defendants' breach of duty in the predicament which he found himself. The judge found that the decision to continue loading cargo was not sufficiently aberrant as wholly to supplant the unfitness of the vessel as the effective cause of the contamination. In the circumstances, the cargo owners' decision was one which could reasonably be anticipated might be made consequent upon creation by the owners of the dilemma which confronted those cargo owners. The judge found therefore that the shipowners' breach of contract remained an effective cause of the contamination of the entire cargo. Two things emerge from this judgment.

Firstly, a contending cause of damage will not necessarily arise when a primary breach prompts a particular response by the injured party.
Secondly, where that response is one which might be contemplated, or is, in itself, not an unreasonable response to the primary breach, responsibility will usually remain with the person originating the primary breach.