Budget Marine Limited v Astimewa Sdn Bhd (S-02(NCvC)(W)-1003-06/2023)

NCT FORWARDING & SHIPPING SDN. BHD. (COMPANY NO.:168924-K) ... APPELLANTS AND ASTIMEWA SDN. BHD. (COMPANY NO.: 438924-H) RESPONDENT [In the matter of High Court in Sabah and Sarawak at Kota Kinabalu Civil Suit No. BKI-22NCvC-118/11-2018 (HC2) Between Astimewa Sdn. Bhd. [Company No.: 438924-H] ... Plaintiff

Budget Marine Limited (Company No.: LL07954)

Budget Marine Sdn. Bhd. (Company No.:253595-T)

NCT Forwarding & Shipping Sdn. Bhd. (Company Reg. No.: 168924-K) ... Defendants] CORAM: SUPANG LIAN, JCA COLLIN LAWRENCE SEQUERAH, JCA WONG KIAN KHEONG, JCA

We shall refer to parties as they were in the High Court.

The plaintiff company (Plaintiff) is in the business of selling scrap metal.

The Plaintiff entered into an agreement dated 1.1.2015 with Southern Steel Bhd. (SSB) wherein the Plaintiff sold scrap metal to SSB [Sale Agreement (Plaintiff-SSB)].

The first defendant company (1 $ ^{st} $ Defendant) owns -

a dumb barge, "Budget 21" (Barge); and

a tugboat, "Budget 11" (Tugboat). This judgment shall refer to the Barge and Tugboat collectively as the "2 Vessels".

The 2 Vessels are managed and operated by the third defendant company ( $ 3^{rd} $ Defendant).

The second defendant company ( $ 2^{\mathrm{nd}} $ Defendant) was the former owner of the 2 Vessels and was named as the carrier of the cargo in the two bills of lading issued in this case (2 Bills of Lading). The contents of the 2 Bills of Lading are similar. Three clauses of the 2 Bills of Lading are relevant in this case, namely:

clause 5(2) [Clause 5(2) (2 Bills of Lading)] provided as follows, among others- "The Merchant [Plaintiff] undertakes that no claim or allegation shall be made against any person or Vessel whatsoever, other than the Carrier [2nd Defendant], including but not limited to, the Carriers, servants or agents ... whether directly or indirectly, ... and if any claim or allegation should nevertheless to be made to defend, indemnify and hold harmless the Carrier against all consequences thereof. Without prejudice to the foregoing, every such person and Vessel shall have the benefit of all the provisions herein benefiting the Carrier ...” (emphasis added); and

clause 6(1)(A) incorporated the "Hague Rules" in the 2 Bills of Lading [Clause 6(1)(A) (2 Bills of Lading)]. (emphasis added).

The $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants (referred collectively in this judgment as the "Defendants") are related companies within the same group of companies.

On or about 9.10.2027, SSB issued a Purchase Order to the Plaintiff (SSB's PO) for the supply of 4,000 metric tonnes (MT) of scrap metal (Cargo). To fulfil SSB's PO-

the Plaintiff provided its own scrap metal from its stockyard in Sandakan [Scrap Metal (Sandakan)]; and

the Plaintiff purchased scrap metal from Sanaja Sdn. Bhd. (Sanaja) in Kota Kinabalu [Scrap Metal (Kota Kinabalu)].

To fulfil the PO, the Plaintiff entered into a contract with the $ 3^{rd} $ Defendant by way of a "Fixture Note" dated 13.11.2017 (FN). The FN provided for, among others, as follows:

the 2 Vessels were chartered by the Plaintiff;

scrap iron (Cargo) was to be loaded in Sandakan and Kota Kinabalu respectively;

the Cargo was to be transported and discharged in Penang Port; and

according to clauses 7(h) and 10- "7. Shipment terms: FIOST Terms

It is the shipper responsible [sic] to ensure shipment Is fully cover [sic] by marine insurance against all risk coverage at their own cost.

Shipment terms: The owner of the vessel [defined in the FN as the 3rd Defendant] is fully responsible and must Comply with the voyage recommendations as Specified by the towage surveyor Kasi Malaysia S/B or Other Surveyor in the towage survey certificate." (emphasis added).

The Plaintiff had appointed KM Marine Technical & Inspection Sdn. Bhd. (KM) to carry out-

draught surveys (to ascertain the weight of the Cargo) when the Cargo was loaded onto the Barge in Sandakan and Kota Kinabalu on 3.12.2017 and 10.12.2017 respectively (Draught Surveys). According to the Draught Surveys, there was a total of 4,399.971 MT of Cargo consisting of -

2,194.448 MT of Cargo (loaded in Sandakan); and

2,205.523 MT of Cargo (loaded in Kota Kinabalu); and

towage surveys of the Tugboat in Sandakan and Kota Kinabalu (Towage Surveys).

The Draught Surveys and Towage Surveys were conducted by KM in the presence of the Master of the Tugboat, Mr. Darius Dose (Master), and crew of the Tugboat (Crew). KM issued a "Towage Survey Certificate" which stated as follows, among others- "I [KM's "Attending Surveyor"] HEREBY CERTIFY that I have made a survey of the [2 Vessels], the cargo loaded and securing arrangements made in preparation for the voyage contemplated have been complied with and that I consider the tow fit to proceed under tug power, subject to the following voyage and towage recommendations which must be complied with:- Special Consideration:- Refer to attached list of voyage and towage recommendations (emphasis added). Attached to the Towage Survey Certificate were the following documents:

"Towage Recommendations" which were signed by KM's Attending Surveyor, the Master and the Tugboat's "Chief Engineer". Reproduced below are recommendation nos. 9 and 10 of the Towage Recommendations ["Recommendation No. 9 (Towage Recommendations)] and "Recommendation No. 10" (Towage Recommendations)]- "9. Master to take and keep abreast of daily weather report and to plan its route accordingly.

Master is advised to seek shelter in the event of adverse sea and weather conditions." (emphasis added);

the "Master's Declaration" was signed by the Master (witnessed by the Tugboat's Chief Officer). In the Master's Declaration, the Master certified that, among others, the stowage and securing arrangements of the Cargo onboard the Barge, were "adequate for the intended voyage"; and

a detailed "Passage Plan" for the voyage of the 2 Vessels (Passage Plan). The Passage Plan was signed by the Master.

At about 12 pm, 10.12.2017, the 2 Vessels departed from Kota Kinabalu with the Cargo for Penang Port.

On 13.12.2017, three days after the departure of the 2 Vessels from Kota Kinabalu, a tropical storm "Kai-Tak" (Tropical Storm) started to form in the east of Philippines and moved southwest direction across the South China Sea towards the planned voyage of the 2 Vessels.

On 18.12.2017, the 2 Vessels had the benefit of shelter from the severe effect of the Tropical Storm when the 2 Vessels sailed in the lee of Pulau Serasan.

When the 2 Vessels left the lee of Pulau Serasan on 18.12.2017, the 2 Vessels were re-exposed to the severe effect of the Tropical Storm. Consequently-

the sidewall supports at the port side of the Barge failed at about 5.20 pm, 20.12.2017; and

the entire Cargo was lost at sea (Incident).

When the 2 Vessels docked at Sritama Jetty, Pulau Carey on 27.12.2017, on the instruction of the Plaintiff, Altitude (M) Sdn. Bhd. (ASB) carried out a survey of the 2 Vessels in the presence of -

the Master; and

Mr. Ting Toh Hing (DW5), an employee of the $ 3^{rd} $ Defendant. B. Proceedings in the High Court

The Plaintiff filed this suit against the Defendants (This Suit) and claimed as follows, among others:

a sum of RM5,631,962.88, being the total loss of the Cargo [Loss (Cargo)]; and

general damages (Original Action).

In the Original Action -

the $ 2^{\mathrm{n d}} $ and $ 3^{\mathrm{r d}} $ Defendants counterclaimed from the Plaintiff for the following sums of money:

port charges and expenses of RM9,300.00; and

an amount of RM343,197.74 as freight [Counterclaim ( $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants)]; and

the $ 2^{n d} $ Defendant counterclaimed from the Plaintiff for a declaration that, among others, the $ 2^{n d} $ Defendant was entitled under Clause 5(2) (2 Bills of Lading) to be indemnified by the Plaintiff against all losses arising out of This Suit [Counterclaim ( $ 2^{n d} $ Defendant)].

The following witnesses testified at the trial of This Suit (Trial):

six witnesses were called by the Plaintiff, namely-

Mr. Siva Nair @ Abdul Rahman (PW1) from KM;

Mr. Thiyagarajah a/l Subbiah (PW2) from ASB;

Mr. Chan Kwok Piew (PW3), a director of Sanaja;

the Plaintiff's expert, Captain Jeganath a/l Subramaniam (PW4);

Ms. Pauline Leong Chiu Kiak (PW5) from Great Eastern Bhd. (GE);

Mr. Mo Kwan Chung (PW6), SSB's General Manager (GM); and

Mr. Sum Yew (PW7), the Plaintiff's director; and

the following witnesses gave evidence for the Defendants-

Mr. Brandon Joseph Capasso (DW1) from Weather Routing Inc.;

Mr. Chiew Sei Kiat (DW2) from Bureau Veritas;

Encik Muh Azhar Nandu (DW3) from Nippon Kaiji Kyokai Class NK Malaysia Sdn. Bhd.;

Mr. Ng Vui Boon @ Ng Kii Boon (DW4) from the $ 3 ^{rd} $ Defendant;

DW5; and

the Defendants' expert, Captain Bruce Gordon Even (DW6)

After the Trial, the learned High Court Judge (as he then was) adjudged as follows:

with regard to the Original Action, among others-

the Original Action against the $ 1^{\mathrm{st}} $ Defendant was dismissed because the $ 1^{\mathrm{st}} $ Defendant had parted with possession and control over the 2 Vessels to the $ 3^{\mathrm{rd}} $ Defendant's Master and Crew [High Court's Dismissal of Original Action ( $ 1^{\mathrm{st}} $ Defendant)]; and

the $ 2^{nd} $ and $ 3^{rd} $ Defendants were jointly and severally liable to the Plaintiff for a sum of RM5,631,962.88 {High Court's Judgment [Original Action ( $ 2^{nd} $ and $ 3^{rd} $ Defendants)]};

the Counterclaim ( $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants) was allowed wherein the Plaintiff was adjudged to pay to the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants an amount of RM180,898.87 {High Court's Judgment [Counterclaim ( $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants)]};

the Counterclaim ( $ 2^{\mathrm{nd}} $ Defendant) was dismissed (High Court's Dismissal of $ 2^{\mathrm{nd}} $ Defendant's Counterclaim); and

no order as to costs.

The Plaintiff did not appeal to the Court of Appeal against-

the High Court's Dismissal of Original Action $ (1^{\mathrm{st}} $ Defendant); and

the High Court's Judgment [Counterclaim ( $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants)].

All the Defendants had appealed to the Court of Appeal against-

the High Court's Judgment $ ( 2^{\mathrm{n d}} $ and $ 3^{\mathrm{r d}} $ Defendants); and

the High Court's Dismissal of $ 2 ^{n d} $ Defendant's Counterclaim (This Appeal). The Plaintiff had raised a preliminary objection that in view of the High Court's Dismissal of Original Action ( $ 1^{\mathrm{st}} $ Defendant), the $ 1^{\mathrm{st}} $ Defendant should not have filed This Appeal (Plaintiff's PO).

According to the "Broad Grounds of Decision" of the High Court (BG), among others-

the Plaintiff had proven on a balance of probabilities the total tonnage of the Cargo, ie., 4,399.971 MT - paragraphs 5 to 20 BG;

in paragraphs 21 to 36 BG, the High Court decided that the Plaintiff had property in the Cargo. Furthermore, the Plaintiff's cause of action in this case against the Defendants, was based on a breach of contract of carriage and for this cause of action, the issue of title to the Cargo, was not "pivotal" in determining whether the Defendants had breached the carriage contract - paragraph 37 BG;

the learned High Court Judge decided as a fact that the $ 2^{\mathrm{nd}} $ and 3rd Defendants had breached clause 10 FN, Recommendations No. 9 (Towage Recommendations) and 10 (Towage Recommendations) because-

the warning regarding the Tropical Storm was issued on 13.12.2017. Due to the Tropical Storm, it was heavy weather from 13.12.2017 until 20.12.2017 (date of the Incident). It was also not disputed that the months of December to January would be the monsoon rain season in the "Sabah/Malaysia" region;

the Defendants did not tender as evidence at the Trial, the "WhatsApp" messages between DW4 and the Master (WhatsApp Messages) regarding the "Daily Reports" of the voyage of the 2 Vessels from

12.2017 to 20.12.2017 (Daily Reports) paragraphs 42 to 44 and 46 BG;

the Daily Reports were not adduced as evidence at the Trial by the Defendants - paragraphs 42, 46 and 48 BG;

the Defendants did not call the Master, the Tugboat's Chief Officer and any member of the Crew to testify at the Trial regarding the Incident. Two members of the Crew, namely, Encik Saparuddin bin Masrapi and Encik Mohd. Azmi bin Rosman, are from Sabah (2 Sabah Crew Members) - paragraphs 44 to 46 BG;

paragraphs 50 and 51 BG identified the following two events-

after departing from Kota Kinabalu, the 2 Vessels deviated from the Passage Plan and went further from the coast or shore (Deviation); and

(ii) after taking shelter in the lee of Pulau Serasan, notwithstanding the severe weather conditions caused by the Tropical Storm, the 2 Vessels left the shelter of Pulau Serasan [Master's Decision (To Leave Pulau Serasan)]. In view of the Deviation and Master's Decision (To Leave Pulau Serasan), the Master had not performed his duties under the FN and Towage Recommendations. Hence, the Defendants should have instructed the Master to proceed to the closest port and relieve the Master of his duties - paragraphs 47 and 48 BG; and

clause 10 FN is "wide enough to make the carrier fully responsible even if the default and/or noncompliance with the agreed Passage Plan or [Towage Recommendations] was made by the [Master] or [Crew] or servants of the Defendant" paragraphs 49 and 52 BG;

the learned High Court Judge found the Defendants and Master to be negligent in this case - paragraphs 52 and 53 BG;

the Defendants could not rely on clause 7(h) FN {the Plaintiff did not obtain an "all risk" insurance coverage for the Cargo [All Risk Insurance Coverage (Cargo)]} to escape liability to the Plaintiff in this case because -

it was impossible for the Plaintiff to have obtained the All Risk Insurance Coverage (Cargo) paragraph 54 BG;

PW5 (from GE) had testified that in view of the poor physical condition of the 2 Vessels, GE could only offer an insurance policy which was not an All Risk Insurance Coverage (Cargo) - paragraphs 55 and 56 BG;

in paragraph 57 BG, the learned High Court Judge decided that clause 7(h) FN was not an exclusion clause which reduced or absolved the Defendants from liability for breach of the carriage contract or negligence with regard to the Loss (Cargo); and

even if the Plaintiff had obtained an All Risk Insurance Coverage (Cargo), the Defendants were not absolved from liability for the Loss (Cargo). This was because upon the insurer's payment of the insured sum to the Plaintiff, the Plaintiff would subrogate its rights under the All Risk Insurance Coverage (Cargo) in favour of the insurer and the insurer would thereafter proceed with This Suit against the Defendants in respect of the Loss (Cargo) - paragraph 58 BG;

the Defendants could not rely on the defences provided in Article 4(2)(a), (c) and (q) of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague Rules) due to the following evidence and reasons-

pursuant to Article 3(1) Hague Rules, the $ 2^{\mathrm{nd}} $ Defendant, the "carrier" of the Cargo, had to exercise due diligence to ensure the Barge was cargoworthy, ie., the Barge was able to carry the Cargo to its destination - paragraphs 75 to 79 BG;

in paragraphs 80 and 81 BG, the learned High Court Judge decided that the $ 2^{\mathrm{nd}} $ Defendant had failed to exercise due diligence under Article 3(1) Hague Rules because-

the steel sidewalls and supporting structures of the Barge were riddled with heavy corrosion (which took years to form); and

(ii) the Defendants did not have any record of maintenance of the Barge or proof of the Barge's cargoworthiness prior to the Barge's departure from Kota Kinabalu;

the $ 2^{\mathrm{nd}} $ Defendant's duty of due diligence under Article 3(1) Hague Rules could not be delegated to a third party or independent contractor;

there was a lack of due diligence on the part of the $ 2^{\mathrm{nd}} $ Defendant with regard to the failure of the Master and Crew to navigate the 2 Vessels in a safe manner during the Tropical Storm, ie., the Master should have complied with the Passage Plan and/or the 2 Vessels should have remained in shelter during adverse sea and weather conditions paragraphs 82 and 83 BG;

the Defendants failed to call the Master and any member of the Crew to testify at the Trial on what actually transpired on board the 2 Vessels at the time of the Incident - paragraph 84 BG; and

in view of the Defendants' breach of Clause 10 FN, the Defendants had failed to exercise due diligence to make the 2 Vessels seaworthy and/or properly manned - paragraph 85 BG;

in paragraphs 99 to 101 BG, the High Court held that the Defendants were not entitled to limit their liability in this case under the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships (Limitation Convention) because, among others, the Defendants had failed to supervise and advise the Master as follows-

the Defendants did not advise the Master to comply with the Passage Plan and consequently, the Deviation happened;

the Defendants did not instruct the Master for the 2 Vessels to remain in the shelter of Pulau Serasan and not to leave such shelter during the Tropical Storm; and

the Defendants should have taken appropriate steps to relieve the Master from his duties for the voyage;

according to paragraph 108 BG-

the Plaintiff was entitled to claim from the $ 3 ^{rd} $ Defendant who was the "actual carrier" of the Cargo;

the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants were jointly and severally liable to the Plaintiff for the Loss (Cargo); and

the $ 1^{\mathrm{st}} $ Defendant was not liable to the Plaintiff in this case because the $ 1^{\mathrm{st}} $ Defendant had parted with possession and control over the 2 Vessels, Master and Crew to the $ 3^{\mathrm{rd}} $ Defendant pursuant to a bareboat charter;

the Plaintiff had proven on a balance of probabilities the market value of the Cargo - paragraphs 109 to 113 BG;

paragraphs 114 to 121 BG explained why the High Court's Judgment [Counterclaim $ (2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants)] was granted; and

according to paragraph 122 BG, the High Court's Dismissal of $ 2^{\mathrm{nd}} $ Defendant's Counterclaim was premised on the following two reasons-

the $ 3^{\mathrm{rd}} $ Defendant was the actual carrier of the Cargo in this case; and

pursuant to Article 3(8) Hague Rules, Clause 5(2) (2 Bills of Lading) is void. C. Issues

The following eight questions arise in This Appeal:

whether the Plaintiff's PO should be upheld due to the fact that the High Court's Dismissal of Original Action $ (1^{\mathrm{st}} $ Defendant) was in favour of the $ 1^{\mathrm{st}} $ Defendant. A resolution of the Plaintiff's PO entails an application of a purposive construction of s 67(1) of the Courts of Judicature Act 1964 (CJA);

did the Plaintiff have property in the Cargo [Property (Cargo)]? If the Plaintiff had Property (Cargo), had the Property (Cargo) passed to SSB? In this regard, if the Plaintiff had no Property (Cargo) or if the Property (Cargo) had passed from the Plaintiff to SSB, whether the Plaintiff could maintain the Original Action for -

the $ 2^{nd} $ Defendant's breach of the contract of carriage with the Plaintiff regarding the Cargo [Carriage Contract (Plaintiff- $ 2^{nd} $ Defendant)]; and/or

a breach of the FN by the $ 3^{\mathrm{rd}} $ Defendant;

did the $ 3^{\mathrm{rd}} $ Defendant breach -

Clause 10 FN;

Recommendation No. 9 (Towage Recommendations); and/or

Recommendation No. 10 (Towage Recommendations)? Related to the above issue was the question of whether the Plaintiff's failure to obtain an All Risk Insurance Coverage (Cargo) pursuant to clause 7(h) FN, was fatal to the Plaintiff's claim against the $ 3 ^{rd} $ Defendant under the FN;

did the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants comply with Article 3(1)(a) and/or (c) Hague Rules by exercising due diligence before and at the beginning of the voyage of the 2 Vessels in this case?;

could the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants exclude liability for the Loss (Cargo) pursuant to Article 4(2)(a), (c) and/or (g) Hague Rules?;

whether the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants could limit their liability to the Plaintiff under Article 1(1) Limitation Convention;

could the $ 2^{\mathrm{nd}} $ Defendant be indemnified by the Plaintiff pursuant to Clause 5(2) (2 Bills of Lading)?; and

had the Plaintiff proven the market value of the Cargo? OUR DECISION D. The Plaintiff's PO

Section 67(1) of the Courts of Judicature Act 1964 (CJA) states as follows: "s 67. Jurisdiction to hear and determine civil appeals

The Court of Appeal shall have jurisdiction to hear and determine appeals from any judgment or order of any High Court in any civil cause or matter, whether made in the exercise of its original or of its appellate jurisdiction, subject nevertheless to this or any other written law regulating the terms and conditions upon which such appeals shall be brought." (emphasis added).

CJA has been revised under the Revision of Laws Act 1968. According to s 2(1)(b) of the Interpretation Acts 1948 and 1967 (IA), Part 1 IA applies in the construction of CJA. Section 17A IA (in Part 1 IA) provides as follows: "s 17A. Regard to be had to the purpose of Act In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object." (emphasis added). Premised on s 17A IA, s 67(1) CJA should be interpreted in a purposive manner {Purposive Construction [Section 67(1) CJA]}, namely, a party (X) can only appeal to the Court of Appeal against a High Court's "judgment or order" (High Court's Judgment/Order) if X is aggrieved by the High Court's Judgment/Order. If we do not apply a Purposive Construction [Section 67(1) CJA], X can appeal to the Court of Appeal even when the High Court's Judgment/Order is wholly in favour of X. In such event, X's right to appeal may be abused and the floodgates will be opened to frivolous or vexatious appeals to the Court of Appeal.

The High Court did not award the $ 1^{\mathrm{st}} $ Defendant any costs for the Trial [No Costs Order (High Court)]. If the $ 1^{\mathrm{st}} $ Defendant wished to appeal to the Court of Appeal against the No Costs Order (High Court), s 68(1)(c) CJA required the $ 1^{\mathrm{st}} $ Defendant to obtain leave of the Court of Appeal before the $ 1^{\mathrm{st}} $ Defendant could file an appeal against the No Costs Order (High Court). Section 68(1)(c) CJA provides as follows: "s 68. Non-appealable matters

No appeal shall be brought to the Court of Appeal in any of the following cases:

where the judgment or order relates to costs only which by law are left to the discretion of the Court, except with the leave of the Court of Appeal; ...” (emphasis added). It is not disputed in this case that the 1 $ ^{1 s t} $ Defendant had not obtained leave of the Court of Appeal to appeal to the Court of against the No Costs Order (High Court).

We have not overlooked r 8(1) of the Rules of the Court of Appeal 1994 (RCA). According to r 8(1) RCA- "r 8. Notice of cross-appeal.

It shall not be necessary for a respondent to give notice of appeal, but if a respondent intends, upon the hearing of the appeal, to contend that the decision of the High Court should be varied, he may, at any time after entry of the appeal and not more than ten days after the service on him of the record of appeal, give notice of cross-appeal specifying the grounds thereof, to the appellant and any other party who may be affected by such notice, and shall file within the like period a copy of such notice, accompanied by copies thereof for the use of each of the Judges of the Court." (emphasis added). The Plaintiff did not appeal to the Court of Appeal against the High Court's Dismissal of Original Action (1 $ ^{1 \mathrm{st}} $ Defendant). Hence, there was no room for the $ 1^{1 \mathrm{st}} $ Defendant to file a notice of cross-appeal pursuant to r 8(1) RCA. In any event, there was nothing in the High Court's Dismissal of Original Action (1 $ ^{1 \mathrm{st}} $ Defendant) for the $ 1^{1 \mathrm{st}} $ Defendant to vary in the Court of Appeal.

By virtue of the Purposive Construction [Section 67(1) CJA] (as explained in the above paragraph 26), the $ 1^{\mathrm{st}} $ Defendant was not aggrieved in any manner by the High Court's Dismissal of Original Action ( $ 1^{\mathrm{st}} $ Defendant). Accordingly, on this ground alone, we uphold the Plaintiff's PO and dismiss with costs This Appeal by the $ 1^{\mathrm{st}} $ Defendant. E. Did the Plaintiff have Property (Cargo)?

Reproduced below is s 5 of the Civil Law Act 1956 (CLA): "s 5. Application of English law in commercial matters

In all questions or issues which arise or which have to be decided in the States of Peninsular Malaysia other than Malacca and Penang with respect to the law of partnerships, corporations, banks and banking, principals and agents, carriers by air, land and sea, marine insurance, average, life and fire insurance, and with respect to mercantile law generally, the law to be administered shall be the same as would be administered in England in the like case at the date of the coming into force of this Act, if such question or issue had arisen or had to be decided in England, unless in any case other provision is or shall be made by any written law.

In all questions or issues which arise or which have to be decided in the States of Malacca, Penang, Sabah and Sarawak with respect to the law concerning any of the matters referred to in subsection (1), the law to be administered shall be the same as would be administered in England in the like case at the corresponding period, if such question or issue had arisen or had to be decided in England, unless in any case other provision is or shall be made by any written law." (emphasis added).

In the High Court case of Pacific Inter-Link Sdn Bhd v Aikbee Timbers (Sabah) Sdn Bhd [2009] 6 MLJ 673, at 681 to 682, Nallini Pathmanathan JC (as she then was) applied s 5(2) CLA as follows: "Issue (a): When, under the terms of the contract did the property in the timber pass from the defendant seller to the plaintiff purchaser? Prior to dealing with this issue, it is necessary to consider the general law applicable in this case. The substantive dispute and thereby the cause of action arose in Sandakan, Sabah. The Sale of Goods Act 1957 is, under s 1(2) applicable in the States of Peninsular Malaysia, ie West Malaysia only. In Sabah and Sarawak, by virtue of s 5(2) [CLA], the applicable law for this dispute pertaining to the sale and purchase of goods is the equivalent English law at the corresponding time, namely the United Kingdom Sale of Goods Act 1979 ('SOGA 1979'). In Low Hock Jee v Mayban Finance Berhad [1996] 2 CLJ 479 Suleiman Hashim J held: ... The Malaysian Sale of Goods Act 1957 is not applicable to Sabah and Sarawak. By reason of s 5(2) [CLA] reference has to be made to s 12 of the United Kingdom Sale of Goods Act 1979, being the law applicable to Sabah and Sarawak with effect from 1 January 1980." (emphasis added).

By reason of s 5(2) CLA and the High Court's judgment in Pacific Inter-Link, whether the Plaintiff had Property (Cargo) in this case, depended on the application of United Kingdom's (UK) Sale of Goods Act 1979 [SOGA (UK)]. According to s 16 SOGA (UK) - "s 16. Subject to section 20A below, where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained." (emphasis added). Section 20A SOGA (UK) provides for the transfer of property in an undivided share in the bulk. There is therefore no room to invoke s 20A SOGA (UK) in this case.

We are satisfied that the learned High Court Judge did not err in deciding that the Plaintiff had Property (Cargo). This decision was supported by the following evidence and reasons:

the Plaintiff had property in the Scrap Metal (Sandakan) because the Scrap Metal (Sandakan) could be ascertained in accordance with s 16 SOGA (UK) as follows-

invoices and payment vouchers evidencing the Plaintiff's acquisition of the Scrap Metal (Sandakan) from various third parties, had been adduced at the Trial;

the Plaintiff had tendered as evidence in this case weighbridge tickets regarding the Scrap Metal (Sandakan);

the testimony of PW7 (from the Plaintiff) had identified the Scrap Metal (Sandakan); and

the Defendants had not adduced any evidence to rebut the evidence stated in the above sub-paragraphs (1)(a) to (c); and

the Plaintiff had title in the Scrap Metal (Kota Kinabalu) because-

the Plaintiff had purchased the Scrap Metal (Kota Kinabalu) from Sanaja - please refer to Sanaja's "Tax Invoice" to the Plaintiff;

PW3 (from Sanaja) and PW7 had given mutually corroborative testimonies that the Scrap Metal (Kota Kinabalu) had been ascertained in the premises of Sanaja and Sanaja's suppliers within the meaning of s 16 SOGA (UK);

the weighbridge tickets regarding the Scrap Metal (Kota Kinabalu) had been adduced by the Plaintiff as evidence at the Trial;

the Draught Surveys report confirmed the Plaintiff's property in the Scrap Metal (Kota Kinabalu); and

the evidence stated in the above sub-paragraphs (2)(a) to (d) had not been rebutted by the Defendants at the Trial.

As explained in the above paragraph 33, the Plaintiff had Property (Cargo). The next question which arises is whether the Property (Cargo) had passed from the Plaintiff to SSB.

The High Court had correctly decided that the Property (Cargo) had not passed from the Plaintiff to SSB. This decision is premised on the following evidence and reasons:

clause 3.3 Sale Agreement (Plaintiff-SSB) stated that, among others, upon the delivery of the Cargo to Penang Port-

SSB had the right to weigh and inspect the Cargo; and

SSB's surveyor would conduct a survey of the Cargo [SSB's Survey (Cargo)];

according to the Sale Agreement (Plaintiff-SSB) and SSB's PO, the Plaintiff would only be paid by SSB in specified amounts upon the delivery of the Cargo to Penang Port and after the completion of SSB's Survey (Cargo); and

the Cargo did not arrive in Penang Port. Consequently-

SSB's Survey (Cargo) could not be carried out; and

the Plaintiff's Property (Cargo) could not have passed to SSB. In fact, SSB did not make any payment for the Cargo to the Plaintiff.

Even if-

the Plaintiff had no Property (Cargo); or

the Plaintiff had Property (Cargo) and the Property (Cargo) had passed from the Plaintiff to SSB the Plaintiff was still entitled to file the Original Action -

for a breach of the Carriage Contract (Plaintiff- $ 2 ^{n d} $ Defendant) by the $ 2^{n d} $ Defendant; and

a breach of the FN by the $ 3^{\mathrm{rd}} $ Defendant In this regard, we rely on the following judgment of Nallini Pathmanathan J (as she then was) in the High Court case of PT Karya Sumiden Indonesia v Oceanmasters Marine Services Sdn Bhd & Anor [2016] 7 MLJ 589, at [54]: [54] KSI's cause of action against the defendants is founded in a breach of the contract of carriage of the cargo and bailment rather than in conversion. As such the issue of title to, or property in the cargo is not pivotal in determining whether there was in fact a breach of the contract of carriage or bailment in releasing the cargo without production of the original bills of lading." (emphasis added). F. Did the 3rd Defendant breach FN?

Firstly, the FN, a charter party, was a commercial contract. Hence, the FN should be interpreted by the court in a manner which makes business common sense [Business Common Sense Construction (Commercial Contract)]. The application of the Business Common Sense Construction (Commercial Contract) has been applied by Zainun Ali FCJ in the Federal Court case of SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464, at [78], as follows: [78] Thus the nub of this appeal is, when one has to choose between two competing interpretations, the one which makes more commercial sense should be preferred if the natural meaning of the words is unclear. It is noteworthy that the same approach was taken by Lord Hodge (in the majority decision of Arnold v Britton), where His Lordship accepted the unitary process of construction in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 para 21 that: '... if there are two possible constructions, the Court is entitled to prefer the construction which is consistent with business common sense and to reject the other." (emphasis added).

Secondly, the FN was made between the Plaintiff and $ 3^{\mathrm{rd}} $ Defendant (not the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Defendants). According to the doctrine of privity of contract, the Plaintiff could only enforce the FN against the $ 3^{\mathrm{rd}} $ Defendant (not against the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Defendants). This is clear from the following three decisions of our apex courts which had applied the doctrine of privity of contract:

the Privy Council's judgment delivered by Lord Wilberforce in an appeal from Malaysia, Kepong Prospecting Ltd & Ors v Schmidt [1968] 1 MLJ 170, at 174;

the judgment of Gopal Sri Ram JCA (as he then was) in the Federal Court case of Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393, at 431; and

the Federal Court's judgment delivered by Ahmad Fairuz CJ in Suwiri Sdn Bhd v Government of the State of Sabah [2008] 1 MLJ 743, at 751 to 752.

Thirdly, we have no hesitation to affirm the High Court's decision that the $ 3^{\mathrm{rd}} $ Defendant had breached Clause 10 FN read with Recommendation No. 9 (Towage Recommendations); and Recommendation No. 10 (Towage Recommendations). Our reasons are as follows:

applying a Business Common Sense Construction (Commercial Contract) of clause 10 FN, there are two limbs of clause 10 FN, namely-

the $ 3^{\mathrm{rd}} $ Defendant was "fully responsible" to the Plaintiff $ [1^{\mathrm{st}} $ Limb (Clause 10 FN)]; and

the $ 3^{\mathrm{rd}} $ Defendant "must" comply with the Towage Recommendations $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)];

there was a breach of the $ 2^{\mathrm{nd}} $ Limb (Clause 10 FN) by the $ 3^{\mathrm{rd}} $ Defendant in the form of an infraction of Recommendation No. 9 (Towage Recommendations) and Recommendation No. 10 (Towage Recommendations) when-

the Deviation occurred;

the Master's Decision (To Leave Pulau Serasan) was made; and

the $ 3^{\mathrm{rd}} $ Defendant did not take steps to relieve the Master from his duties { $ 3^{\mathrm{rd}} $ Defendant's Breach [ $ 2^{\mathrm{nd}} $ Limb (Clause 10 FN)]}；

upon the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)] in accordance with the $ 1^{\mathrm{st}} $ Limb (Clause 10 FN), the $ 3^{\mathrm{rd}} $ Defendant shall be "fully responsible" to the Plaintiff for the Loss (Cargo);

the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)] could not be excused by the Master's alleged negligence with regard to the Deviation and Master's Decision (To Leave Pulau Serasan) (Alleged Master's Negligence). If the Alleged Master's Negligence could absolve the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)] , this would not only be contrary to the Business Common Sense Construction (Commercial Contract) of Clause 10 FN but would also destroy the commercial efficacy of the FN; and

the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)] was fortified by the $ 3^{\mathrm{rd}} $ Defendant's suppression of the following material evidence at the Trial -

the $ 3^{\mathrm{rd}} $ Defendant did not adduce the Daily Reports and WhatsApp Messages as evidence in this case; and

the $ 3^{rd} $ Defendant did not call the Master and any member of the Crew to testify at the Trial. No reason had been given by the $ 3^{rd} $ Defendant on why the $ 3^{rd} $ Defendant could not apply for court subpoenas to compel the Master and any member of the Crew to give evidence at the Trial. It is to be noted that there were 2 Sabah Crew Members who could be easily subpoenaed to testify in this case. Section 114(g) of the Evidence Act 1950 (EA) is reproduced below- "s 114. Court may presume existence of certain fact The court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. ILLUSTRATIONS The court may presume -

that evidence which could be and is not produced would if produced be unfavourable to the person who withholds it; ...” (emphasis added). An adverse inference could and should be drawn under s 114(g) EA against the $ 3^{\mathrm{rd}} $ Defendant for suppressing the above material evidence - please refer to the Supreme Court's judgment delivered by Mohd. Azmi SCJ in Munusamy v Public Prosecutor [1987] 1 MLJ 492, at 494. In the Supreme Court's judgment delivered by Hashim Yeop Sani CJ (Malaya) in Guthrie Sdn Bhd v Trans Malaysian Leasing Corp Bhd [1991] 1 MLJ 33, at 34 to 35, the court has a discretion to draw an adverse inference against a defendant in a civil case due to the defendant's failure to adduce material evidence and/or to call a relevant witness to support the defence. In this case, we note that the Counterclaim $ (2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants) had been filed. In the High Court case of The Owners of the Cargo lately laden on board the Ship or Vessel MV 'Viva Ocean' v The Owners or Demise Charterers of the Ship or Vessel MV 'Viva Ocean' [2004] 6 MLJ 134, at [26] to [28] (Viva Ocean'), Richard Malanjum JCA (as he then was), invoked an adverse inference under s 114(g) EA against a vessel owner who did not call the vessel's master and crew to testify regarding the damage to the cargo carried by the vessel- [26] The defendants gave their version on the cause of the damage to the cargo. The blame was focused on the torn tarpaulin due to rough weather during the journey thereby exposing the pontoon covers through which the seawater then found itself into the cargo holds. Unfortunately such assertion did not come from the Master or any of the crew member of the vessel at the material times. Reliance was placed on the testimonies of the witnesses who claimed to have been told by the Master and/or the Chief Officer of the vessel during their survey inspections upon being engaged by the P & I Club of the vessel. [27] It was therefore not surprising to hear learned counsel for the plaintiffs submitting that such assertion was based on conjectures as any evidence on the matter would have been plainly hearsay and inadmissible. [28] I have no hesitation to agree with such submission since neither the Master nor any member of the crew of the vessel was called to testify and no credible reason was given for their absence. This is therefore an appropriate case in which s 114(g) [EA] applies." (emphasis added).

It is to be noted that if the Alleged Master's Negligence had any basis, it was open to the $ 3^{rd} $ Defendant to commence third party proceedings against the Master under O 16 r 1(1)(a) of the Rules of Court 2012 (RC) and claim an indemnity or contribution from the Master for any liability incurred by the $ 3^{rd} $ Defendant in favour of the Plaintiff. Reproduced below is O 16 r 1(1)(a) RC: 1(1) Where in any action a defendant who has entered an appearance -

claims against a person not already a party to the action any contribution or indemnity; then, subject to paragraph (2), the defendant may issue a notice in Form 18 or 19, whichever is appropriate (which is referred to as a "third party notice" in this Order), containing a statement of the nature of the claim made against him and, as the case may be, either of the nature and grounds of the claim made by him or of the question or issue required to be determined." (emphasis added).

We have no hesitation to decide that the Plaintiff's failure to obtain an All Risk Insurance Coverage (Cargo) pursuant to clause 7(h) FN, cannot absolve the $ 3 ^{rd} $ Defendant's Breach $ [2^{nd} $ Limb (Clause 10 FN)] because-

clause 7(h) FN did not state that the Plaintiff had to obtain an All Risk Insurance Coverage (Cargo), as a condition precedent for the $ 3 ^{rd} $ Defendant's performance of the FN;

according to a Business Common Sense Construction (Commercial Contract) of clause 7(h) FN, the Plaintiff had the responsibility to obtain an All Risk Insurance Coverage (Cargo) but if the Plaintiff failed to obtain the All Risk Insurance Coverage (Cargo) {Plaintiff's Breach [Clause 7(h) FN]}, the $ 3 ^{rd} $ Defendant was not entitled to repudiate or terminate the FN. In other words, the Plaintiff's Breach [Clause 7(h) FN] -

could not be a lawful ground for the $ 3^{rd} $ Defendant to refuse performance of the $ 3^{rd} $ Defendant's obligations under the FN, in particular the $ 2^{nd} $ Limb (Clause 10 FN); and

could not absolve the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)]; and

notwithstanding the Plaintiff's Breach [Clause 7(h) FN], the $ 3^{\mathrm{rd}} $ Defendant proceeded with the performance of the FN when the 2 Vessels commenced their journey. Accordingly-

the $ 3^{\mathrm{rd}} $ Defendant had accepted the Plaintiff's Breach [Clause 7(h) FN]; and

the $ 3^{\mathrm{rd}} $ Defendant was estopped from relying on the Plaintiff's Breach [Clause 7(h) FN] as an excuse for the $ 3^{\mathrm{rd}} $ Defendant's Breach $ [2^{\mathrm{nd}} $ Limb (Clause 10 FN)]. G. Whether the Hague Rules were incorporated into the FN

The FN did not contain a "paramount clause" which incorporated the Hague Rules into the FN - please refer to the judgment of UK's Supreme Court in Alize 1954 & Anor v Allianz Elementar Versicherungs AG & Ors, The CMA CGM Libra [2022] 2 All ER 479, at [1] (Libra's Case). As such, the $ ^{3 rd} $ Defendant could not rely on the Hague Rules to absolve its liability to the Plaintiff with regard to the $ ^{3 rd} $ Defendant's Breach $ [2^{n d} $ Limb (Clause 10 FN)] . On this ground alone, This Appeal by the $ ^{3 rd} $ Defendant is dismissed with costs. H. Articles 3(1), 4(1) and (2) Hague Rules

By reason of Clause 6(1)(A) (2 Bills of Lading), the Hague Rules apply to the 2 Bills of Lading. Reproduced below are the relevant parts of Articles 3(1), 4(1) and (2) Hague Rules: "Article 3

The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to: a) Make the ship seaworthy. b) Properly man, equip and supply the ship. c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of Article 3. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this Article.

Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from: a) Act, neglect, or default of the master, mariner, Pilot, or the servants of the carrier in the navigation or in the management of the ship. c) Perils, dangers and accidents of the sea or other navigable waters. q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier not the fault or neglect of the agents or servants of the carrier contributed to the loss or damage." (emphasis added).

In this case, according to the 2 Bills of Lading, the carrier of the Cargo was the $ 2^{n d} $ Defendant. However, the $ 3^{r d} $ Defendant was the actual carrier of the Cargo.

In Libra's Case, at [1], [2] and [133] to [145], Lord Hamblen delivered the following judgment in UK's Supreme Court regarding Articles 3(1) and 4(2) Hague Rules: [1] This appeal concerns the scope of a shipowner's obligation to exercise due diligence to make a vessel seaworthy. The seaworthiness obligation is fundamental to all contracts of carriage of goods by sea. At common law the carrier was under an absolute obligation to provide a seaworthy vessel. Today the seaworthiness obligation is invariably governed by the terms of the parties' contract or by statute, such as the UK Carriage of Goods by Sea Act 1971. The present case concerns the seaworthiness obligation imposed by art III, r 1 of the Hague Rules, a 1924 international convention for the unification of rules of law relating to bills of lading. It is in the same terms under the Hague Visby Rules, the Hague Rules as amended by the 1968 Brussels Protocol. The Hague or Hague Visby Rules have been ratified by more than 95 states across the world. Where not compulsorily applicable, they are widely contractually incorporated into bills of lading, charterparties and other contracts of affreightment, often through a clause paramount. [2] The main issue raised on the appeal is whether, as the appellants contend, the carrier's obligation under the Hague Rules is subject to a category-based distinction between a vessel's quality of seaworthiness or navigability and the crew's act of navigating. It is said that there is a distinction between seaworthiness, which concerns the attributes and equipment of the vessel, and the navigation and management of the vessel, which concerns how the crew operates the vessel using those attributes and equipment. A further and related issue arises in relation to the obligation of due diligence. It is the appellants' case that so long as the carrier has equipped the vessel with all that is necessary for her to be safely navigated, including a competent crew, then the crew's failure to navigate the vessel safely is not a lack of due diligence by the carrier. [133] As the owners accept, the leading authority on the nature and scope of the due diligence obligation under art III, r 1 of the Hague Rules is the decision of the House of Lords in The Muncaster Castle. In that case the marine superintendent employed by the carrier's agents instructed a reputable firm of ship repairers to open up all the storm valves and inspection covers for the purpose of a special survey. After the inspection a fitter employed by the repairers failed to secure the nuts of the inspection covers sufficiently when closing them. This could not be detected by visual inspection. During the course of the voyage the inspection covers were loosened by the working of the vessel in rough weather as a result of which water entered the hold and damaged cargo. It was held that the carrier was liable for the negligence of the fitter and that it made no difference that the ship repairers were independent contractors or that technical or special knowledge and experience was called for or that the negligence was not apparent. The obligation on the carrier to exercise due diligence to make the vessel seaworthy requires that due diligence be exercised in the work of making the vessel seaworthy, regardless of who is engaged to carry out that task. As Lord Radcliffe explained ([1961] 1 All ER 495 at 517, [1961] AC 807 at 862): '... the question, when there has been damage to cargo and that damage is traceable to unseaworthiness of the vessel, [is] whether that unseaworthiness is due to any lack of diligence in those who have been implicated by the carriers in the work of keeping or making the vessel seaworthy. Such persons are then agents whose diligence or lack of it is attributable to the carriers. An inquiry on these lines is not concerned with distinctions between carelessness on the part of officers or servants of the carriers or their supervising agents on the one hand and carelessness on the part of their contractors or those contractors' contractors on the other. The carriers must answer for anything that has been done amiss in the work. It is the work itself that delimits the area of the obligation ...' [134] Article III, r 1 has often been described as involving a non-delegable duty. The owners criticised this description and suggested that it masked the critical question of what steps the carrier has to take to discharge its due diligence obligation. It provides, however, a useful summary of what was decided in The Muncaster Castle. The carrier is responsible for any failure to exercise due diligence by those to whom he has entrusted the task of making the vessel seaworthy. It is the carrier's contractual responsibility to ensure that due diligence is exercised in making the vessel seaworthy and he cannot contract out of that responsibility by delegation. [135] There are, however, limits to the responsibility of the carrier, as, for example, where the failure to exercise due diligence occurs at a time before the carrier has any responsibility for the vessel. In The Muncaster Castle it was held, endorsing the decision of Wright J in W Angliss & Co (Australia) Proprietary v Peninsular & Oriental Steam Navigation Co [1927] 2 KB 456, that the carrier would not be liable under art III, r 1 where the unseaworthiness is caused by non-apparent faulty workmanship by shipbuilders in circumstances where they cannot be regarded as being agents of the carrier. As Lord Radcliffe explained ([1961] 1 All ER 495 at 520-521, [1961] AC 807 at 867), Wright J's conclusion that the carrier is not liable in such a case- 'turns on the consideration that the causative carelessness took place at a time before the carrier's obligation under art III, r 1, had attached and in circumstances, therefore, when the builders and their men could not be described as agents for the carrier "before and at the beginning of the voyage to ... make the ship seaworthy". This is a tenable position for those who engage themselves on the work of bringing the ship into existence. The carrier's responsibility for the work itself does not begin until the ship comes into his orbit, and it begins then as a responsibility to make sure by careful and skilled inspection that what he is taking into his service is in fit condition for the purpose and, if there is anything lacking that is fairly discoverable, to put it right. This is recognised in the judgment. But if the bad work that has been done is "concealed", and so cannot be detected by any reasonable care, then the lack of diligence to which unseaworthiness is due is not to be attributed to the carrier' [136] Just as the carrier may not be liable for lack of due diligence which occurs before the vessel 'comes into his orbit', he may equally not be liable for lack of due diligence which occurs before the cargo 'comes into his orbit', as is illustrated by The Kapitan Sakharov. In that case the vessel was found to be unseaworthy because of the presence on board of an undeclared dangerous containerised cargo but it was held that there was no failure to exercise due diligence as the containers had been packed by the shippers and there was nothing to put the carrier on notice of the danger. In his judgment Auld LJ (with whom the rest of the Court of Appeal agreed) stated at 273: [T]he ratio of [The Muncaster Castle] was that a carrier cannot absolve itself from its personal duty of due diligence by delegating its responsibility as a carrier to an independent contractor. The shipper's and the carrier's respective orbits of responsibility are normally quite distinct and neither is agent of the other outside its own orbit ... Those responsible for the manufacture, stuffing and shipping of containers are plainly not carrying out any part of the carrier's function for which he should be held responsible. ' The carrier may nevertheless be liable if the defect or danger would be reasonably discoverable by the exercise of due diligence once the vessel or cargo has come within its control - see, for example, Parsons Corp v CV Scheepvaartonderneming Happy Ranger, The Happy Ranger [2006] EWHC 122 (Comm), [2006] 1 Lloyd's Rep 649, [2006] All ER (D) 127 (Feb). [137] The owners sought to rely on these cases, in particular The Kapitan Sakharov, arguing that the task of preparing a passage plan is the responsibility of the master and deck officers and not part of the carrier's function or within the carrier's orbit of responsibility. However, the reasoning in these cases has no application to a case such as the present. At all material times the vessel was within the owners' 'orbit'. The work of preparing a proper passage plan so as to make the vessel seaworthy for the voyage was entrusted to the master and deck officers, who are the owners' servants. It was they who were 'implicated by the carriers in the work of keeping or making the vessel seaworthy' in relation to passage planning. As such, the owners 'must answer for anything that has been done amiss in the work'. [138] The failure to exercise due diligence was not that of some third party who could not at that time be regarded as an agent of the carrier, such as in the work of a shipbuilder prior to the carrier's acquisition of the vessel, or in the work of a shipper prior to the carrier's acquisition of control over the cargo. In such cases there is no question of delegation by the carrier. The vessel or cargo are not yet its responsibility. In the present case, the vessel was at all times under the carrier's control and the failure to exercise due diligence was that of the carrier's servants in the preparation of the vessel for her voyage. As Flaux LJ observed at para [75] of his judgment, 'all the acts of the master and crew in preparing the vessel for the voyage are performed qua carrier'. [139] The fact that navigation is the responsibility of the master and involves the exercise by the master and his deck officers of their specialist skill and judgment makes no difference. The same is true of much work necessary to make a vessel seaworthy, such as work carried out by specialist ship repairers, or main engine work carried out by engine manufacturers or by the chief engineer and the engineering officers. It is commonplace for a carrier to entrust the task of making the vessel seaworthy to those with particular skills and experience. The carrier nevertheless remains responsible for any lack of due diligence in the performance of that task. [140] The fact that the carrier's due diligence obligation in relation to crewing the vessel relates to their competence takes matters no further. Where that duty is discharged the carrier nevertheless remains liable for a failure by a member of that competent crew to exercise due diligence to make the vessel seaworthy. The provision of a competent crew is only one aspect of the carrier's seaworthiness obligation. This is explicitly so under the Hague Rules which include both an obligation to 'properly ... man ... the ship' (art III, r 1(b)) and an obligation to 'make the ship seaworthy' (art III, r 1(a)). [141] In relation to passage planning, it is undoubtedly correct that the carrier's obligation under art III, r 1 means that there have to be systems in place to ensure that proper passage planning takes place, but it does not follow that that is the limit of the carrier's obligation. As with the provision of a competent crew, it is an important part of the carrier's seaworthiness obligation, but it is not definitive of it. [142] If, for example, the causative negligence consisted of errors made by the master or deck officers in the execution or monitoring stage of passage planning during the voyage then prima facie the carrier would be able to rely on the nautical fault exception. It would not be able to do so, however, if those errors were attributable to the carrier's failure to have proper systems in place for the execution or monitoring of passage planning as that would involve a failure to exercise due diligence to make the vessel seaworthy. The same result would follow if the errors were attributable to the carrier's failure to exercise proper care in relation to crew competence. If, however, the causative negligence consisted of errors in passage planning which occurred at the appraisal or planning stage and rendered the vessel unseaworthy before and at the beginning of the voyage then the carrier would be liable regardless of whether it had discharged its obligations in relation to the systems for passage planning and crew competence. [143] To the extent that the obiter passage at para [100] of David Steel J's judgment in The Torepo suggests that the carrier's seaworthiness obligation in relation to passage planning is limited to providing a proper system for such planning it is not a correct statement of the law. In any event, counsel in that case does not appear to have argued otherwise and, as Flaux LJ observed at para [66] of the Court of Appeal judgment: 'It is difficult to see how the fact that counsel there did not run a point which would have failed on the facts in any event, so that David Steel J did not have to deal with it, can have any bearing on the issues raised by this appeal.' It is also to be noted that the grounding in The Torepo occurred in 1997, which is before the Guidelines were adopted. [144] For all these reasons, in agreement with the judge and the Court of Appeal, I would reject the owners' novel and unsound case on due diligence. The carrier cannot escape from its responsibilities under art III, r 1 of the Hague Rules by delegating them to its servants or agents qua navigators, or qua managers, or qua engineers or qua ship repairers. If the task of making the vessel seaworthy has been entrusted by the carrier to those servants or agents then (if relevant) they are acting qua carriers and under art III, r 1 of the Hague Rules the carrier is responsible for any causative failure by them to exercise due diligence.

Conclusion [145] The carrier's obligation under the Hague Rules is not subject to a category-based distinction between a vessel's quality of seaworthiness or navigability and the crew's act of navigating. The crew's failure to navigate the ship safely is capable of constituting a lack of due diligence by the carrier. It makes no difference that the delegated task of making the vessel seaworthy involves navigation. In particular:

On the proper interpretation of the Hague Rules, the art IV, r 2 exception of act, neglect or default in the navigation or management of the vessel cannot be relied upon in relation to a causative breach of the carrier's obligation to exercise due diligence to make the vessel seaworthy (see paras [70]-[76]; [83]-[84]; [119]).

(ii) If the vessel is unseaworthy, it makes no difference whether negligent navigation or management is the cause of the unseaworthiness or is itself the unseaworthiness (see paras [85], [121]).

(iii) The concept of unseaworthiness is not subject to an attribute threshold requiring there to be an attribute of the vessel which threatens the safety of the vessel or her cargo (see paras [86]-[96]; [122]).

(iv) Save for exceptional cases at the boundaries of seaworthiness, the well-established prudent owner test, namely whether a prudent owner would have required the relevant defect to be made good before sending the vessel to sea had he known of it, is an appropriate test of seaworthiness, well suited to adapt to differing and changing standards (paras [97]-[101]).

The fact that a defect is remediable may mean that a vessel is not unseaworthy. This is likely to depend on whether it would reasonably be expected to be put right before any danger to vessel or cargo arose (see paras [102]-[103]).

(vi) Given the 'essential importance' of passage planning for the 'safety ... of navigation', applying the prudent owner test, a vessel is likely to be unseaworthy if she begins her voyage without a passage plan or if she does so with a defective passage plan which endangers the safety of the vessel (see paras [124]-[128]).

(vii) The fact that the defective passage plan involves neglect or default in 'the navigation of the ship' within the art IV, r 2(a) exception is no defence to a claim for loss or damage caused by unseaworthiness (see paras [118]-[119]).

(viii) The obligation on the carrier to exercise due diligence to make the vessel seaworthy requires that due diligence be exercised in the work of making the vessel seaworthy, regardless of who is engaged to carry out that task (see paras [133]-[134]).

(ix) The carrier may not be liable for lack of due diligence which occurs before he has responsibility for the vessel or for lack of due diligence which occurs before he has responsibility for the cargo. The carrier may nevertheless be liable if the defect or danger would be reasonably discoverable by the exercise of due diligence once the vessel or cargo has come within his control (paras [135]-[136]).

The carrier is liable for a failure to exercise due diligence by the master and deck officers of his vessel in the preparation of a passage plan for the vessel's voyage. The fact that navigation is the responsibility of the master and involves the exercise by the master and deck officers of their specialist skill and judgment makes no difference (paras [137]-[139]).

(xi) The carrier's seaworthiness obligation in relation to passage planning is not limited to providing a proper system for such planning (paras [141]-[143]).” (emphasis added).

The effect of Libra's Case is as follows:

a carrier of a cargo in a ship, has a duty to exercise due diligence with regard to all the matters stipulated in Article 3(1)(a) to (c) Hague Rules (Due Diligence Duty);

the Due Diligence Duty is only imposed on the carrier-

when the ship "comes into the orbit" or control of the carrier; and

before and at the beginning of the voyage (not after the commencement of the voyage);

there is a defect or danger to the ship [Defect/Danger (Ship)] which was caused by an independent third party contractor before the ship came into the orbit or control of the carrier; and

if-

the Defect/Danger (Ship) "would be reasonably discoverable" by an exercise of the carrier's due diligence when the cargo comes within the carrier's control - the carrier would be liable for the Defect/Danger (Ship) pursuant to Article 3(1) Hague Rules;

the Due Diligence Duty cannot be delegated to -

the master and crew of the ship;

the carrier's agents; and

independent third party contractors;

the concept of unseaworthiness of a ship is not subject to an "attribute threshold". In other words, a ship's unseaworthiness does not require the existence of an attribute of the ship which threatens the safety of the ship or its cargo; and

with regard to the Due Diligence Duty to make the ship seaworthy [Due Diligence Duty (Seaworthiness)] , if the Due Diligence Duty (Seaworthiness) is breached by the carrier {Carrier's Breach [Due Diligence Duty (Seaworthiness)]}-

the carrier cannot rely on the defences provided in Article 4(2) Hague Rules; and

the carrier cannot rely on the negligent navigation and/or management of the ship as-

the cause of the unseaworthiness; or

(ii) the unseaworthiness in itself. I. Did the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants fulfil the Due Diligence Duty under Article 3(1)(a) and (c) Hague Rules?

Firstly, a ship's seaworthiness includes the ship's "cargoworthiness". This is clear from the following two cases:

according to the High Court in Viva Ocean, at [49] - [49] And it follows that based on the unrebutted evidence of PW6 and PW7 in respect of their findings of cracks, severe corrosion and wastage in the cargo holds together with the photographs tendered and the presence of fresh marine cement patches, it is my finding and conclusion and I am satisfied on the balance of probabilities that the vessel was not seaworthy and not cargoworthy before and during the journey. ...” (emphasis added); and

in UK's Court of Appeal case of AE Reed and Co Ltd v Page, Son and East Ltd & Anor [1927] 1 KB 743, at 754, 755 and 756, Scrutton LJ decided as follows- "There is some confusion in the authorities as to the warranty of seaworthiness, due, I think, to two causes: first, the word "seaworthiness" is used in two senses: (1) fitness of the ship to enter on the contemplated adventure of navigation, and (2) fitness of the ship to receive the contemplated cargo, as a carrying receptacle. A ship may be unfit to carry the contemplated cargo, because, for instance, she has not sufficient means of ventilation, and yet be quite fit to make the contemplated voyage, as a ship. Secondly, the fact that there are these two meanings of seaworthiness, and that there may be different stages of seaworthiness according to different stages of the adventure, has led to some confusion in statements. On the other hand, the highest measure of liability as a cargo-carrying adventure, that is, of "cargoworthiness," is when cargo is commenced to be loaded. It has been decided that if at this stage the ship is fit to receive her contract cargo, it is immaterial that when she sails on her voyage, though fit as a ship to sail, she is unfit by reason of stowage to carry her cargo safely. ... It was argued that the doctrine of stages was only a question of difference of equipment, and that overloading was not equipment. But damages unrepaired at the commencement of a new stage, collision during loading, and starting on the voyage with that damage unrepaired, may obviously be unseaworthiness at the commencement of the voyage stage. I see no reason for defining stages only by difference of equipment." (emphasis added). Premised on the above two judgments, a carrier's Due Diligence Duty (Seaworthiness) to make the ship seaworthy on or before the voyage pursuant to Article 3(1)(a) Hague Rules, includes the carrier's duty to exercise due diligence to make the ship cargoworthy in the sense that when the cargo is loaded onto the ship (before the voyage), the ship is fit to receive the cargo. In this regard, as decided in Libra's Case, at [145(iii)], a ship's unseaworthiness of a ship is not subject to an "attribute threshold", namely, the ship's unseaworthiness does not require the existence of an attribute of the ship which threatens the safety of the ship or its cargo.

Secondly, a carrier has the Due Diligence Duty (before the voyage) to make the "holds ... and all other parts of the ship in which goods are carried, fit ... for their ... carriage" under Article 3(1)(c) Hague Rules {Due Diligence Duty [Article 3(1)(c) Hague Rules]}.

Thirdly, the learned High Court Judge had made a finding of fact that the Barge was not cargoworthy (before the commencement of the voyage) because -

the steel sidewalls and supporting structures of the Barge were riddled with heavy corrosion (which took years to form). Such defects in the Barge could be "reasonably discoverable" by an exercise of due diligence by the $ 2^{nd} $ and $ 3^{rd} $ Defendants when the Cargo came within the control of the $ 2^{nd} $ and $ 3^{rd} $ Defendants - please refer to the Libra's Case, at [145(ix)]; and

the Defendants did not have any record of maintenance of the Barge or proof of the Barge's cargoworthiness prior to the Barge's departure from Kota Kinabalu [Trial Court's Factual Finding (Barge was not Cargoworthy before Commencement of Voyage)]. The Trial Court's Factual Finding (Barge was not Cargoworthy before the Commencement of Voyage) clearly showed that the $ 2^{n d} $ and $ 3^{r d} $ Defendants had not satisfied -

the Due Diligence Duty (Seaworthiness) under Article 3(1)(a) Hague Rules; and

the Due Diligence Duty [Article 3(1)(c) Hague Rules].

Fourthly, sitting as an appellate court, we do not have the audio-visual advantage enjoyed by the learned trial judge in this case to listen to the oral testimonies of witnesses and assess their demeanour. In the Federal Court case of Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67, at [78], Zabariah Yusof FCJ had explained that an appellate panel can only set aside a trial court's factual finding which is a "plain" factual error as understood in the following two cumulative circumstances:

the trial court's finding of fact cannot be reasonably explained or justified; and

no reasonable trial judge could have arrived at the factual finding. We are not persuaded that the Trial Court's Factual Finding (Barge was not Cargoworthy before Commencement of Voyage) was a plain error of fact as understood in Ng Hoo Kui.

Premised on the reasons and evidence stated in the above paragraphs 47 to 50, we are constrained to decide that the High Court did not err in finding that the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants had failed to fulfil the Due Diligence Duty (Seaworthiness) under Article 3(1)(a) Hague Rules and Due Diligence Duty [Article 3(1)(c) Hague Rules]. Accordingly -

the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants cannot rely on Article 4(2)(a), (c) and (q) Hague Rules as a defence against the Original Action in this case - please refer to Libra's Case, at [145(i)] and [145(ix)]; and

Article 4(1) Hague Rules cannot be invoked in favour of the $ 2^{n d} $ and $ 3^{r d} $ Defendants because the Loss (Cargo) was "caused by want of due diligence" on the part of the $ 2^{n d} $ and $ 3^{r d} $ Defendants to make the Barge cargoworthy (before the commencement of the voyage). J. Whether the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants could limit their liability under Article 1(1) Limitation Convention

Article 1(1) Limitation Convention provides as follows: "Article 1(1) The owner of a sea-going ship may limit his liability in accordance with Article 3 of this Convention in respect of claims arising from any of the following occurrences, unless the occurrence giving rise to the claim resulted from the actual fault or privity of the owner:

Loss of life of, or personal injury to, any person being carried in the ship, and loss of, or damage to, any property on board the ship;...” (emphasis added).

The phrase "actual fault or privity" in Article 1(1) Limitation Convention is also found in s 360(1) of our Merchant Shipping Ordinance 1952 (MSO). In the High Court case of Newfield Peninsula Malaysia Inc v The Owners of the Ship or Vessel "Tanjung Pinang 1" [2013] 10 MLJ 650, at [103] to [108], Nallini Pathmanathan J (as she then was) explained the meaning of "actual fault or privity" in s 360(1) MSO as follows: [103] The Defendant relies on section 360 [MSO] to contend that it is entitled to a statutory limitation. The section provides as follows:- The owner of a Malaysian or foreign ship shall not, where all or any of the following occurrences take place without his actual fault or privity, namely:-

...

Where any loss or damage is caused to any property, other than any property mentioned in paragraph (b), or any rights are infringed through the act of any person, whether on board the ship or not, in the navigation or management of the ship, or in the loading, carnage or discharge of her cargo, or in the embarkation, carriage or disembarkation of her passengers, or through any other act of any person on board the ship, be liable to damages beyond the following amounts: In the recent decision of this Court in The Borcos Takdir' (referred to earlier) I had occasion to consider in considerable detail the law pertaining to tonnage limitation. I adopt the legal reasoning I have set out in that case here. In order to enjoy the benefit of tonnage limitation granted under the provisions above, a shipowner, namely the Defendant, needs to establish that the incident occurred without the shipowner's 'actual fault or privity'. The burden lies on the Defendant to establish that the incident occurred without its actual fault or privity, (see Antara Koh Pte. Ltd. v Eng Tou Offshore Pte. Ltd. [2005] 4 SLR 521; and The Sunrise Crane [2004] 4 SLR (R) 715). Actual fault or privity refers to some form of fault or blameworthy conduct which was personal to the owners of the ship or to which they consented or of which they had knowledge (see Admiralty Law and Practice, Second Edition Toh Kian Sing, SC at page 4540). Such fault or privity has to be contrasted with the constructive fault or privity of the shipowner's servants or agents for which he is not precluded from making claim for limitation, notwithstanding that he is vicariously responsible for the acts of his agents and servants. In The Eurysthenes [1976] 2 LI L R 171 Lord Denning M.R. set out a historical survey of the origin of the word 'privity' and concluded that it referred to both actual and constructive (turning blind eye) knowledge. He stated inter alia:- "... The knowledge must also be the knowledge of the shipowner personally, or his alter ego, or in the case of a company, its head men or whoever may be considered as the alter ego. It may be inferred from evidence that a reasonably prudent owner in his place would have known the facts and have realised that the ship was not reasonably fit to be sent to sea. But, if the shipowner satisfies the Court that he did not know the facts or did not realise that they rendered the ship unseaworthy, then he ought not to be held privy to it even though he was negligent in not knowing." [105] While the foregoing case speaks of 'unseaworthiness' of a vessel in relation to its physical fitness to encounter the ordinary perils of the sea, the extension of this notion which is relevant in the present context of our case is the safety management and operation of a vessel. A ship which is not safely managed or operated can be as unsafe and as dangerous as one which is not physically fit. If there are insufficient procedures or unsafe procedures adopted in the course of management or navigation of a vessel, that in itself may be sufficient to deprive the shipowner of the benefit of limitation. As stated at the outset, to obtain the benefit of tonnage limitation under section 360, the onus lies on the Defendant to establish that the incident here took place without any actual fault or knowledge on the part of the Defendant, namely without the actual fault or knowledge of those persons who can reasonably be considered as representing the directing mind and will of the Defendant and who control what it does, (see H.L. Bolton (Engineering Company Ltd. v VTJ Graham & Sons Ltd. [1957] 1 QB 159 per Denning LJ). [106] It is clear from the foregoing that if the incident occurred as a consequence of the negligent act or omission of an employee of the Defendant but without any actual knowledge or privity which can be attributed to the Defendant, then limitation of liability is available to the Defendant. If however the negligent act or incident giving rise to the damage arose as a consequence of matters which were within the knowledge or attributable to a failure on the part of the Defendant's senior management to implement a safe system of operation or navigation or management of the vessel, then limitation is broken and the Defendant will not be entitled to the benefit of the same. [107] It therefore follows that in order to determine whether the Defendant is entitled to the benefit of tonnage limitation, the issue of causation in the present factual matrix first needs to be considered, after which the issue of whether or not the ship owners had actual knowledge or were privy to the cause of the incident needs to be considered. This is because it is not possible to determine the issue of actual fault and privity without knowing in the first place what caused the incident giving rise to the damage. In other words a two tier test or analysis has to be undertaken by considering the following questions:- Within the factual matrix of the present case, what was the proximate or dominant cause of the incident giving rise to the damage, i.e. what was the proximate or dominant cause of the rupture of the oil pipeline giving rise to the damage? Can the Defendant - shipowner, on the particular facts of this case, be said to be privy to, or have actual knowledge of the events or omissions giving rise to the cause of the incident? Put another way, can it be said that the negligent act or omission of navigation and operation is attributable to the Defendant ship owner because the Defendant failed to establish or implement a sufficiently secure and efficient system of navigation, operation and management. [108] The first question, by focussing on the actual cause of the incident giving rise to the damage, narrows the scope of discussion to the particular facts of each case. It is only with this clear factual basis for the cause of the incident that an assessment can be made of whether the ship owner has in fact implemented safe operational practices and systems which in the ordinary course of events would have precluded or reduced the opportunity for the incident to occur. If the ship owner can be said to have done so, or put another way, if it is clear that the error is entirely attributable to the act or omission of an employee or agent who is not the directing mind and will of the Defendant, then the ship owner is entitled to the benefit of tonnage limitation. If however this is not the case, and it can be said that the ship owner failed to implement sufficiently safe practices and procedures or audits to ensure the safe management and operation of the vessel, then the Defendant is not entitled to the benefit of tonnage limitation." (emphasis added).

Firstly, unlike Article 3(1) Hague Rules, the "actual fault or privity" in Article 1(1) Limitation Convention is not confined to "before and at the beginning of the voyage".

Secondly, premised on Newfield Peninsula Malaysia, whether the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants could limit their liability to the Plaintiff pursuant to Article 1(1) Limitation Convention, depends on the following two questions:

what was the "occurrence giving rise to the claim" of the Plaintiff in this case, ie., what was the causa causans of the Loss (Cargo) [Cause (Loss)]?; and

whether the Cause (Loss) "resulted from the actual fault or privity" of the $ 2^{n d} $ and $ 3^{r d} $ Defendants. In this regard, the $ 2^{n d} $ and $ 3^{r d} $ Defendants bore the evidential burden to prove on a balance of probabilities that the Cause (Loss) did not result from the actual fault or privity of the $ 2^{n d} $ and $ 3^{r d} $ Defendants.

The Cause (Loss), according to the High Court, was as follows:

the occurrence of the Deviation;

the Master's Decision (To Leave Pulau Serasan); and

the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants did not take any step to relieve the Master from his duties.

The learned High Court Judge had decided as a fact that there was actual fault on the part of the $ 2^{n d} $ and $ 3^{r d} $ Defendants when the $ 2^{n d} $ and $ 3^{r d} $ Defendants failed to supervise the Master's navigation of the 2 Vessels during the voyage of the 2 Vessels from Kota Kinabalu to Penang Port [Trial Court's Factual Finding (Failure of $ 2^{n d} $ and $ 3^{r d} $ Defendants to Supervise Master's Navigation)]. We have no hesitation to uphold the Trial Court's Factual Finding (Failure of $ 2^{n d} $ and $ 3^{r d} $ Defendants to Supervise Master's Navigation) on the following grounds:

in The Owners or Other Persons Interested in the Ship or Vessel The "Red Gold" v Sarawak Shell Bhd & another appeal [2012] 8 CLJ 164, at [18] and [19], Anantham Kasinather JCA delivered the following judgment in the Court of Appeal- [18] The obligation of the owners, however, does not cease with the supply of the latest charts. The duty of the owner extends to supervising the master to ensure that he uses the charts to promote the safe navigation of the vessel. According to Lord Brandon when considering the culpability of the owner for lack of supervision, "the practices of other reputable shipowners at or about the same time is clearly relevant, although, unless the evidence of such practices is all one way, or nearly all one way, it cannot be decisive". We understand Lord Brandon's pronouncements as imposing an absolute obligation on the part of the owner to equip their vessel with the latest available equipment beneficial to safe navigation (emphasis added) but the obligation to supervise the use of such equipment by the master according to the standards followed by other reputable shipowners. [19] The extent of the burden of proof vested on the owner is spelt out in the judgment of LJ Sellers in The Lady Gwendelon. His Lordship described this burden as: In their capacity as shipowners they must be judged by the standard of conduct of the ordinary reasonable shipowner in the management and control of a vessel or of a fleet of vessels." (emphasis added). According to The Red Gold, whether the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants had failed to supervise the Master's voyage of the 2 Vessels, depends on the "standard of conduct of the ordinary reasonable shipowner". In this case, the Trial Court's Factual Finding (Failure of $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants to Supervise Master's Navigation) could be amply supported by the following evidence and reasons-

PW4 is a reputable shipowner and had given the following evidence, both as a reputable shipowner and master of a ship-

shipowners are required to have a system in place to supervise the vessels during their voyage (Supervision System). To implement the Supervision System, the shipowner should have an on-shore supervisor to monitor the voyage of the vessel from ashore (On-Shore Supervisor);

(ii) where necessary, the shipowner would advise the master to -

(ii)(a) seek or stay in shelter (when there is a storm); or

(ii)(b) comply with the passage plan; and

(iii) where the master -

(iii)(a) does not heed the shipowner's advice to seek or stay in shelter (when there is a storm); or

(iii)(b) does not comply with the passage plan - the shipowner should instruct the master to proceed to the nearest port and relieve the master of the master's duties;

the above evidence of PW4 had not been rebutted by the $ 2^{n d} $ and $ 3^{r d} $ Defendants because the $ 2^{n d} $ and $ 3^{r d} $ Defendants did not call any shipowner to testify that the $ 2^{n d} $ and $ 3^{r d} $ Defendants had adequately supervised the Master's navigation of the 2 Vessels during the voyage. It is to be noted that DW6 is not a shipowner; and

the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants had no Supervision System to supervise the Master's navigation of the 2 Vessels. Nor did the $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ Defendants have an On-Shore Supervisor to supervise the navigation of the 2 Vessels in this case;

the $ 2^{n d} $ and $ 3^{r d} $ Defendants could not have discharged their evidential burden to prove on a balance of probabilities that the Cause (Loss) did not result from the actual fault or privity of the $ 2^{n d} $ and $ 3^{r d} $ Defendants. This was because the $ 2^{n d} $ and $ 3^{r d} $ Defendants did not call the Master or any member of the Crew to testify at the Trial. As explained in the above sub-paragraph 39(5), an adverse inference under s 114(g) EA should be drawn against the $ 2^{n d} $ and $ 3^{r d} $ Defendants for their suppression of the material evidence of the Master and Crew at the Trial; and

the Trial Court's Factual Finding (Failure of $ 2^{\mathrm{n d}} $ and $ 3^{\mathrm{r d}} $ Defendants to Supervise Master's Navigation) was not a plain error of fact as explained in Ng Hoo Kui. K. Whether the Plaintiff should indemnify the $ 2^{\mathrm{nd}} $ Defendant under Clause 5(2) (2 Bills of Lading)

Article 3(8) Hague Rules states as follows: "Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connexion with, goods arising from negligence, fault, or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in this Convention, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability." (emphasis added).

As correctly decided by the High Court, Clause 5(2) (2 Bills of Lading) was void pursuant to Article 3(8) Hague Rules. Furthermore, the learned High Court Judge had found as a fact that the $ 3^{rd} $ Defendant (not the $ 2^{nd} $ Defendant) was the actual carrier of the Cargo. We are not able to agree that this factual finding was plainly erroneous. As such, there cannot be any appellate intervention regarding the High Court's Dismissal of $ 2^{n d} $ Defendant's Counterclaim. L. Had the Plaintiff proven the market value of the Cargo in this case?

We are satisfied that the learned High Court Judge did not make a plain error of fact in deciding that the Plaintiff had proven on a balance of probabilities the market value of the Cargo in this case [Trial Court's Factual Finding (Market Price of Cargo)]. The Trial Court's Factual Finding (Market Price of Cargo) was based on the following evidence and reasons:

an invoice dated 16.11.2017 was issued by the Plaintiff to SSB [Plaintiff's Invoice (SSB)]. It is to be noted that the Plaintiff's Invoice (SSB) -

contained the agreed price for the scrap metal, ie., RM1,280 per MT;

stated the total tonnage of the Cargo, namely, 4,399.971 MT. This weight of the Cargo was supported by the following evidence-

KM's Draught Surveys report; and

(ii) the testimonies of PW3 (Senaja's director) and PW7; and

was sent before the Incident (20.12.2017). In other words, there was no opportunity for the Plaintiff to inflate its claim in this Original Action by way of the Plaintiff's Invoice (SSB);

PW6 (SSB's GM) had testified on the truth of the contents of the Plaintiff's Invoice (SSB). It is to be emphasised that PW6 was an independent witness without any interest in the outcome of this case; and

the $ 2^{\mathrm{n d}} $ and $ 3^{\mathrm{r d}} $ Defendants had not adduced any evidence to rebut the evidence stated in the above sub-paragraphs (1) and (2). M. Conclusion

Premised on the above evidence and reasons, we had unanimously dismissed This Appeal with costs (subject to allocatur fee) and affirmed the High Court's decision.

A draft copy of this judgment (Draft) had been previously forwarded to Supang Lian and Collin Lawrence Sequerah JJCA. Both my learned sister and brother had agreed with the Draft. DATE: 21 OCTOBER 2025 WONG KIAN KHEONG Judge Court of Appeal Counsel for Ms. Cindy Han & the Appellants: Ms. Vanieda Shoudy Moosom (Messrs S K Ting & Co) Counsel for Mr. Brendan Fabia the Respondent: (Messrs Vilolin & Co)