COURT LINE, LTD. v. CANADIAN TRANSPORT COMPANY, LTD.
(1940) 67 Ll.L.Rep. 161
HOUSE OF LORDS.
Before Viscount Maugham, Lord Atkin, Lord Wright, Lord Romer and Lord Porter.
Charter-party-Club insurances - Damage to cargo due to improper stowage - Liability of shipowners to receivers - Receivers paid by shipowners' club - Claim by shipowners to recover full amount from time-charterers; alternatively, £10 franchise which shipowners were required to refund to club - Implied obligation of time-charterers- Clause 8 of charter providing that "The captain (although appointed by the owners) shall be under the orders and direction of the charterers as regards employment or agency; and charterers are to load, stow, and trim the cargo at their expense under the supervision of the captain, who is to sign bills of lading for cargo as presented . . . Owners to give time-charterers the benefit of their protection and indemnity club insurances as far as club rules allow, and in case of shortage or damage to cargo, charterers to bear the franchise according to the club rules, which owners would have otherwise borne"-Club rules: "2. The members are protected and indemnified as shipowners in respect of losses or claims arising without their actual fault or privity, which they shall have become liable to pay, and shall have in fact paid as follows . . . (i) For other claims arising in respect of the shipment, carriage, discharge, or delivery of goods or merchandise arising through other causes than 'improper navigation,' the intention being to mutually protect and indemnify the members against the negligence or default of their servants or agents. The Association shall be entitled to recover for its own account from third parties any damages that may be provable by reason of such neglect. Provided that, except in respect of claims for loss of life and personal injury, the member shall bear the first £10 of any one claim attaching to either the protection or indemnity section of the rules . . .
17. No assignment or subrogation by a member of his cover with this Association to charterers or any other person shall be deemed to bind this Association to any extent whatsoever" - Interpretation of club rules - Liability under charter-party for improper stowage-Award that shipowners were entitled to recover £10 from charterers -Case stated - Whether shipowners entitled to recover full amount of damages, or £10, or nothing-Award affirmed by Lewis, J. - Decision of C. A. (Scott and Clauson, L.JJ., Goddard, L.J., dissenting) that shipowners were entitled to recover full amount of damages.