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Transport

Port not liable for stevedore damage

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Legal news
calendar 10 December 2019
globus Denmark

During discharge of a bulk carrier in the Port of Kolding, a crane perforated one of the vessel’s ballast tanks so that ballast water damaged the cargo. The subrogated cargo insurers sought a recovery against the shipowners who, in turn, presented a claim against the port that operated the crane commercially. The court, however, ruled that liability had transferred to the stevedores renting the crane and its driver who had authority to instruct the driver and had supervised the discharge operation.

A distributor of animal feed had contracted a stevedore about unloading the JANET C which had carried a cargo of maize gluten from the US. The stevedore had rented a crane and a driver from the Port of Kolding to assist in the discharge operation. The stevedore regularly did business in the port. During discharge on 14 September 2017, the crane’s grab struck a ballast tank causing a leak and water damage on the remaining cargo.

The distributor was compensated by their cargo insurers who subrogated into the claim towards the carriers. This claim was settled, and the carriers’ P&I Club then sought a recovery against the Port of Kolding. The port had rented the crane and the driver to a stevedore who performed the discharge operation.

The shipping company relied on vicarious liability as per The Danish Law of King Christian V, s. 3-19-2 since the port was the owner of the crane and the employer of the driver who had caused the damage. The port disputed liability since the stevedore had carried out the discharge operation. Furthermore, the port’s standard terms of business stated that anyone renting the equipment assumed liability for damage caused by the rented equipment.

Finally, the port alleged that the cargo insurers had not properly subrogated into the cargo owner’s claim, since the claim against not in contract and the letter of subrogation assigning tort claims was not made until a year after the claim payment and after the commencement of legal proceedings.

The Maritime and Commercial High Court: Vicarious liability was transferred to the stevedore

The court ruled that the carriers had title to sue against the port and that the letter of subrogation did not on a true interpretation entail that tort claim was only assigned on the date of signature of the form. Furthermore, the driver had been negligent.

However, the court ruled in favour of the port. The decisive issue was that the stevedore had taken the discharge operation upon them and, thereby, had the power to exercise control over the driver of the crane. In addition, this transfer of vicarious liability was supported by the port’s terms of business. The stevedore was, therefore, the correct principal of the driver.

IUNO’s opinion

This decision shows how a vicarious liability does not necessarily remain with the formal employer who has caused damage. Generally, liability is not transferred when renting out equipment and employees since the employer has an interest in the rental services considering that it receives remuneration. In this instance, however, the stevedore was the party instructing and supervising the stevedore. The decision was also influenced by the Port’s terms of business.

Accordingly, when making a claim, it is important to examine the contractual circumstances surrounding the person causing the loss, in order not to risk suing a party who is not liable.

[The Maritime and Commercial High Court’s ruling of 25 November 2019 in case BS-39035/2018-SHR]

A distributor of animal feed had contracted a stevedore about unloading the JANET C which had carried a cargo of maize gluten from the US. The stevedore had rented a crane and a driver from the Port of Kolding to assist in the discharge operation. The stevedore regularly did business in the port. During discharge on 14 September 2017, the crane’s grab struck a ballast tank causing a leak and water damage on the remaining cargo.

The distributor was compensated by their cargo insurers who subrogated into the claim towards the carriers. This claim was settled, and the carriers’ P&I Club then sought a recovery against the Port of Kolding. The port had rented the crane and the driver to a stevedore who performed the discharge operation.

The shipping company relied on vicarious liability as per The Danish Law of King Christian V, s. 3-19-2 since the port was the owner of the crane and the employer of the driver who had caused the damage. The port disputed liability since the stevedore had carried out the discharge operation. Furthermore, the port’s standard terms of business stated that anyone renting the equipment assumed liability for damage caused by the rented equipment.

Finally, the port alleged that the cargo insurers had not properly subrogated into the cargo owner’s claim, since the claim against not in contract and the letter of subrogation assigning tort claims was not made until a year after the claim payment and after the commencement of legal proceedings.

The Maritime and Commercial High Court: Vicarious liability was transferred to the stevedore

The court ruled that the carriers had title to sue against the port and that the letter of subrogation did not on a true interpretation entail that tort claim was only assigned on the date of signature of the form. Furthermore, the driver had been negligent.

However, the court ruled in favour of the port. The decisive issue was that the stevedore had taken the discharge operation upon them and, thereby, had the power to exercise control over the driver of the crane. In addition, this transfer of vicarious liability was supported by the port’s terms of business. The stevedore was, therefore, the correct principal of the driver.

IUNO’s opinion

This decision shows how a vicarious liability does not necessarily remain with the formal employer who has caused damage. Generally, liability is not transferred when renting out equipment and employees since the employer has an interest in the rental services considering that it receives remuneration. In this instance, however, the stevedore was the party instructing and supervising the stevedore. The decision was also influenced by the Port’s terms of business.

Accordingly, when making a claim, it is important to examine the contractual circumstances surrounding the person causing the loss, in order not to risk suing a party who is not liable.

[The Maritime and Commercial High Court’s ruling of 25 November 2019 in case BS-39035/2018-SHR]

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