Trans Resources Corp Sdn Bhd v Inai Kiara Sdn Bhd & Ors  8 MLJ 157 (HC)
Eng Tou 110, a dumb barge ("Barge"), was towed by tugboat Inai Teratai 86 ("the Tug") along Sungei Loba Satubah, Sarawak when the Barge collided with the river bridge under construction by the plaintiff. The plaintiff sued the owners of the Tug and Barge, respectively, for damage suffered due to the negligence of the master on board the Tug. The Barge was in fact chartered to a third party, who in turn sub-chartered the Barge to the Tug owner.
The plaintiff sought to argue that the Tug and the Barge constituted "one boat" or "one vehicle", making the Barge owner a joint tortfeasor with the Tug owner. The High Court rejected this argument. The judge held that the liability of the Tug and tow was not a question of law, but one of fact. The issue of liability depended on who had control of the manner in which the work of the tug was done in relation to the relevant act or omission. In coming to its decision, the High Court followed 'The MV Hong Leong'; Owners of the Ship MV Hong Leong v Owners of the Ship MT Man Hua No 3 & Anor1 ("MV Hong Leong").
The High Court held that the Barge was not liable for the collision, given that it was at all material times under the control and management of the Tug and therefore, the Barge owner did not owe any duty to the plaintiff. The Tug owner was found vicariously liable for the negligence of its master.
The decision raises two issues that were not specifically dealt with:
- Tug and Tow relationship; and
- Section 360 of the Merchant Shipping Ordinance 1952 ("the MSO").
Tug and Tow relationship
The "one ship" rule arose from a principle of admiralty law, developed in older cases, where one ship is in tow of another, the two ships are, for some purposes, regarded as one.2 The High Court in MV Hong Leong recognised that the "one ship" rule was not an accurate proposition. Notwithstanding that, interestingly, the High Court in MV Hong Leong and the present case continued to consider the "one boat" rule to the respective facts.
The modern and more readily accepted statement in this context is seen in The Bramley Moore,3 in which it was provided that where the tug is negligent (and those on board the tow are not), and the tow comes into collision with another vessel, then it is clear that the damage is caused through an act or omission of any person on board the tug.4 Unfortunately, this principle has not been tested by the Malaysian courts yet. The present case would have been an ideal platform for the courts to have considered the relationship between tug and tow in the Malaysian context.
Limitation of liability
This case did not deal with the issue of limitation of liability. However, if the issue did arise, it will be based on the tonnage of the tug alone since the control and management of both vessels was in the hands of the person on board the Tug.
This was observed in The Bramley Moore.5 The fact that the Tug was also the final charterers of the Barge does not provide a ground to include the tonnage of the Barge in computing the tonnage limitation.
(i) Prior to 1 March 2014
Before 1 March 2014, s 360 of the MSO — which adopts the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships 1957 ("the 1957 Convention") — provides, inter alia, that where a ship causes any loss or damage to any property, the shipowner is entitled to limit his liability for such damage to an amount based on the tonnage of his ship and calculated in accordance with the formula provided in the section.
A shipowner is entitled to limit his liability if the loss or damage caused by the negligent navigation or management of his ship took place without his "actual fault or privity". The shipowner bears the burden of proving he was in no way in fault or privy to what occurred.
A shipowner who had knowledge that the vessel was unseaworthy but did little or nothing to rectify the defect would be disentitled from limiting his liability. In this regard, "knowledge" is not limited to "positive knowledge" but includes "turning a blind eye" — The Red Gold.6
Assuming the Tug owner was entitled to rely on s 360, it could have limited its liability under s 360(1)(bb) of the MSO, read with the Merchant Shipping (Limitation of Liability) (Malaysian Ringgit Equivalent) Order 1993. The Tug owner would have limited its liability according to the aggregate limitation of 1,000 gold francs (equivalent to RM203.07) for each ton of the vessel's tonnage.
(ii) After 1 March 2014
The limits of liability were revised7 with effect from 1 March 2014.8 The amended s 360 introduced the Sixteenth Schedule to the MSO and ratified the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the Protocol of 1996 ("the 1976 Convention") in Malaysia, replacing the 1957 Convention.
Under the 1976 Convention, a shipowner shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.9
Three critical features stand out under the 1976 Convention:10
- a higher limit of liability;
- the burden of proof now rests on the party seeking to "break" the limit;
- the burden is (intentionally) a very heavy burden.
These features led Lord Philips MR to observe (in The Leerort) that:11
"These considerations demonstrate that when a claim is made for damage resulting from a collision, it is virtually axiomatic that the defendant shipowner will be entitled to limit his liability." (Emphasis added)
A summary of the applicable limits of liability under the amended s 360 is as follows:12
|Tonnage not exceeding 2,000||1,000,000|
|For each ton from 2,001 to 30,000||400/ton|
|For each ton from 30,001 to 70,000||300/ton|
|For each ton in excess of 70,000||200/ton|
1  3 MLJ 800;  4 CLJ 910
2 The Quickstep (1890) 15 PD 196 at 199; approved by the House of Lords in SS 'Devonshire' v Barge 'Leslie'  AC 634 at 645; The 'Ticonderoga' (1857) Sw 215; The 'AL Smith' and 'Chinook' v Ontario Gravel Freighting Co  SCR 39 at 70
3 Alexandra Towing Co v Millet (The Bramley Moore)  1 All ER 1054
4 The Bramley Moore, supra n 3 at 109. Followed by London Dredging Co Ltd v Greater London Council (The Sir Joseph Rawlinson)  3 All ER 590
5 The Bramley Moore, supra n 3
6 The Owners or Other Persons Interested in the Ship or Vessel the 'Red Gold' v Sarawak Shell Bhd and another appeal  4 MLJ 729. The Court of Appeal followed the test in The Eurysthenes  2 Lloyd's Rep 171.
7 Merchant Shipping (Amendment and Extension) Act 2011
8 Federal Government Gazette PU(B) 65/2014, for Peninsular Malaysia and Labuan
9 Article 4 of the Sixteenth Schedule of the MSO; see also The Leerort  2 Lloyd's Rep 291 at 293-294; Margolle v Delta Maritime Co Ltd  1 Lloyd's Rep 203, paras 16-17; and The MSC Rosa M  2 Lloyd's Rep 399, para 11.
10 Margolle, supra n 10, at para 16
11 The Leerort, supra n 10
12 Article 6 of the Sixteenth Schedule of the MSO
13 As at 27 May 2015, one unit of Special Drawing Rights (SDR) amounts to RM5.03
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