Bulk Cargo Delivery

Shipowner is under a contractual obligation to deliver the cargo to a specified, or identifiable, person. Normally the requirement is to deliver to the consignee named in the bill of lading or to any person to whom the consignee has validly indorsed the bill. In the event of no bill having been issued, the consignee will normally have been designated either in the charterparty itself or in a non-negotiable receipt.

(I) Failure of consignee to accept delivery: The first problem confronting the shipowner on arrival at the port of discharge may be the absence of any consignee ready to receive the cargo. As the shipowner is under a duty to make personal delivery of the cargo, he cannot discharge that obligation at common law merely by unloading the goods and leaving them on the dockside. In such a situation he is required to allow the consignee a reasonable time in which to collect the cargo, after which he may land and warehouse it at the consignee’s expense. Even so, it is doubtful whether the shipowner can divest himself of his strict liability as a carrier merely by warehousing the goods although to counterbalance any such potential liability he will retain the protection of the carriage exceptions.
Personal delivery may be excused by the custom of the port or by express provisions of the contract. Thus in certain ports delivery to a dock company or to harbour porters may be treated as equivalent to personal delivery to the consignee. In the case of Chartered Bank of India v British India Steam Navigation Co such a clause was accompanied by a provision that the shipowners’ liability was to cease absolutely as soon as the goods were free of the ship’s tackle. These clauses were held effective in excluding the shipowners from liability when landing agents employed by them fraudulently delivered the cargo without presentation of the bill of lading. For any further protection, shipowners must rely on the terms of the individual contract of carriage. Many standard forms of bill of lading include a selection of remedies available to the shipowner in the event of a cargo owner failing to take delivery at the port of discharge. These range from the basic right to discharge and warehouse the cargo to the right, after the expiry of a stated period of time, to auction the goods and recoup any outstanding freight or other charges from the proceeds of sale

(II) Delivery to the person entitled: The shipowner is also under a duty to ensure that the cargo is handed over at the port of discharge to the person entitled to delivery. Few problems arise where the charterer is also the consignee since his identity will be known and, in any event, the cargo will normally be covered by a non-negotiable receipt, presentation of which is not required in order to obtain delivery. Where bills of lading are issued, however, the situation is more complex. The shipowner’s basic obligation is then to deliver to the consignee named in an unindorsed bill of lading, or to the person to whom the bill has been validly indorsed. If he makes delivery accordingly on presentation of the bill, he will normally be protected, provided that he is not aware of any other claims or of any circumstances which should put him on enquiry. Thus in Glyn, Mills & Co v East and West India Dock Co where goods were deliverable ‘to Cottam & Co or assigns’ Cottam deposited one bill of the set with the claimant bank as security for a loan. He later obtained delivery of the cargo at the port of discharge on presentation of the second unindorsed bill of the set. It was held that delivery had been made bona fide and in ignorance of the bank’s claim, and that no liability for wrongful delivery arose, even though only one bill of the set had been presented. If the shipowner is aware of adverse claims, he may run the risk of liability in conversion for the full value of the goods should he deliver to anyone other than the person rightfully entitled. In case of doubt he should interplead and refuse to deliver the goods until the rival claimants have resolved the issue in court at their own expense. Finally, a shipowner who delivers goods without the presentation of a bill of lading does so at his own peril, even though delivery is made to the person named as consignee in the bill. Such delivery has traditionally been regarded as a fundamental breach of contract, and, if made to the wrong person, may even prevent the shipowner from relying for protection on the bill of lading exceptions.

(III) Delivery of mixed or unidentifiable cargo: The shipowner is under an obligation to deliver to the consignee at the port of discharge the appropriate quantity of goods consigned to him in the condition in which they were shipped. Problems arise where such goods are shipped along with similar goods destined for other consignees and lose their identity during the course of the voyage. Such loss of identity may result either from the obliteration of leading marks or from the goods themselves becoming irretrievably intermixed with other cargo on the vessel. In the latter event it is apparently immaterial whether the cargoes involved are liquid or consist of grain particles or their equivalent since, in the majority of cases, it would be commercially impracticable to separate them. The liability of the shipowner in such circumstances depends on whether or not the event causing the loss of identity is covered by an exception. Thus the mixing of the cargo may result from a peril of the sea, or the charterparty may include a clause excluding the shipowner from liability for ‘obliteration or absence of marks’. In such an event while the shipowner will avoid liability, the unidentifiable cargo will become the property of the bill of lading holders who will hold as tenants in common of the whole, in the proportions in which they severally contributed to it. In Spence v Union Marine Ins Co cotton belonging to different holders had been shipped in specifically marked bales from Mobile to Liverpool. During the voyage the vessel was wrecked on the Florida Keys and a quantity of the cotton was lost. The remainder was transhipped to another vessel and conveyed to Liverpool where, on arrival, it was dis- covered that the marks on 1,645 of the 2,262 bales were unidentifiable. The claimant, who had received only two of the 43 bales consigned to him was suing his insurers alleging a total loss of the remaining 41 bales. In rejecting this argument, the court felt unable to ‘assume that the whole of the plaintiff ’s [claimant’s] 41 bales were amongst those that were destroyed, any more than we can assume that they all formed part of the 1645 which were brought home’.
Bovill J formulated the relevant principle in the following terms: ‘When goods of different owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole in the proportions which they have severally contributed to it.’ The position is different where the occurrence is not covered by an exception. The shipowner will be in breach of his obligation to deliver the specified goods to the consignee and will not be able to reduce his liability by requiring the consignee to accept an appropriate proportion of the mixed goods. The position is further complicated where part of the cargo is lost at sea, while a portion of the remainder arrives at the port of discharge in an unidentifiable state. In such circumstances it may be impossible to establish what proportion of the claimant’s missing cargo fell into either category. So in Sandeman v Tyzack a quantity of bales of jute were shipped to various consignees under bills of lading which recorded the appropriate identification marks. The bills expressly excluded the shipowner’s liability for ‘obliteration or absence of marks’. On discharge 14 bales were missing and a further 11 were not labelled as indicated in the bills and could not be identified as belonging to any particular consignment. In reply to the claimant’s claim for short delivery of six bales from his consignment, the shipowner argued that he should be required to accept an appropriate proportion of the 11 unidentifiable bales in mitigation of his loss. The House of Lords rejected this contention on the grounds that the shipowner could only succeed if he could prove that the claimant’s missing bales were to be found among the 11 unidentifiable bales. Only in such an event could he rely on the exception covering ‘obliteration or absence of marks’. In the words of Lord Loreburn, ‘Apart from the 11 unidentifiable bales, there were 14 missing bales. It may be that the six which the appellants complain have not been delivered to them were among these 14. So the shipowners cannot prove, at least they have not proved, that the failure to deliver these six was due to any absence or obliteration of marking of such bales.’ Reference must finally be made to the situation where part of a cargo shipped in bulk is lost or damaged during the voyage as the result of an excepted peril. In such a case the shipowner is not required to apportion the loss or damage between the various consignees but can deliver the full quantity of sound goods due to the first consignee to take delivery