Markappa Inc. v. N.W. Spratt & Son Ltd. (The Arta) - Court of Appeal (Ackner and Robert Goff L.JJ. and Sir David Cairns) - 8 March 1985

Negligent chartering brokers not entitled to rely on post-fixture negligence of owners’ brokers

The plaintiff shipowners had successfully sued charterers in the sum of U.S.$42,934. The charterers failed to satisfy any part of the judgement. The plaintiffs therefore brought an action against the shipbrokers who had negotiated the charterparty on the charterers’ behalf. At first instance, Leggatt J. found that the defendant brokers were guilty of having made negligent mis-statements to the plaintiffs’ brokers about the financial standing and reliability of the charterers and that the plaintiffs entered into the charterparty in reliance on the assurances given by the defendants. However, the judge also found that very shortly after the fixture had been concluded, the plaintiffs’ broker realized that the charterers were not as reliable as the defendants had said. The judge held that the plaintiffs’ broker was negligent in failing to convey this information to his principals, and that if the plaintiffs had known about it, they would have repudiated the charterparty. The judge held that the defendants’ negligent mis-statement was overtaken by the default of the plaintiffs’ own brokers and therefore the chain of causation was broken. He found in favour of the defendants.