August 2018
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Morrison Steamship Co Ltd v Greystoke Castle (Cargo Owners); HL 1946

References: [1946] 2 All ER 696, [1947] AC 265, [1947] LJR 297, [1946] 176 LT 66
Coram: Lord Porter, Lord Uthwatt, Lord Roche
A ship was damaged in a collision. Though their goods were not damaged, the owners of cargo on the first ship became liable to the owners of the ship for a general average contribution. The owners sued the other ship owners for their negligence. The primary issue was whether the cargo-owners had only a derivative claim arising from an obligation to contribute towards the expenditure of the carrying vessel or whether they had a direct claim against the non-carrying vessel.
Held: (Majority) They could recover, even though the damages were a purely financial loss. The House identified an exemption to the general rule.
Lord Porter said: ‘But it may be said that this is an answer to the contention that the damage is too remote, but does not deal with the allegation that it does not flow from the tortious act but from the contractual relationship between the ship and its cargo. Sir William McNair put this contention in the words ‘ Liability or damage arising from a ‘contract with a third party gives no ground for a claim for’ damages in an action for negligence against a wrongdoer ‘unless the liability or damage arose from physical injury’ to the plaintiff’s person or to property owned by or in the ‘possession of the plaintiff.’ For this contention there may be much to be said where the person or thing injured was not engaged, as is cargo when being carried in a ship, on a joint adventure. I do not, however, think it applies to such carriage. It is true that general average is not affected by insurance law but the outlook upon the mutual obligation entered into by ship and cargo owners resulting in the undertaking of a common adventure may be illustrated by the fact that whereas in non-marine cases there is no loss unless the thing insured is injured, in marine insurance cases the loss of the adventure constitutes a loss for which underwriters are liable though the cargo itself be safe.’
Lord Uthwatt said: ‘My Lords, under the law of the sea there is recognized a community between ship and cargo that does not obtain between carrier and customer on land. This is shown by two well settled principles. First, if a collision causing damage to cargo occurs, and the carrying ship and the other vessel are both in fault, cargo could under the old law recover only a moiety of the damage and under statute can now only recover a due proportion determined by the degree of blame. That conception finds no place in land carriage, where there would be joint liability for the whole. Secondly, the liability to contribute to general average expenditure is part of the law of the sea. The principle involved in general average contribution is peculiar to the law of the sea and extends only to sea risks. (Cf. Falcke v. Scottish Imperial Insurance Co.) The law of the sea apart, neither at law nor in equity can contribution be obtained on the ground that loss incurred by one person has delivered another from a common danger (see Johnson v. Wild (2)), or that expenditure incurred by one person has incidentally benefited another (cf. Ruabon Steamship Co., Ld. v. London Assurance (3).) Agency is not implied from the circumstances, and there is no equity to claim relief. The sufferer both at law and equity must look to gratitude and not to the courts for his recompense. Under the law of the sea, however, ship and cargo are linked together in the fortunes of the voyage and, in a loose sense, there is in some respects a compulsory partnership between ship and cargo in respect to the venture of sea carriage : Bell’s Principles, 9th ed., s. 437 ; Bell’s Commentaries, 5th ed., vol. I., p. 534. Section 66 of the Marine Insurance Act, 1906, aptly refers to the matter as ‘the common adventure.’ A breach of the duty to take care involving only damage to the ship may therefore be and in my opinion is a breach of duty owed to cargo.’
Lord Roche put it more broadly: ‘On the other hand, if two lorries A and B are meeting one another on the road, I cannot bring myself to doubt that the driver of lorry A owes a duty to both the owner of lorry B and to the owner of goods then carried in lorry B. Those owners are engaged in a common adventure with or by means of lorry B, and if lorry A is negligently driven and damages lorry B so severely that whilst no damage is done to the goods in it the goods have to be unloaded for the repair of the lorry and then reloaded or carried forward in some other way and the consequent expense is by reason of his contract or otherwise the expense of the goods owner, then in my judgment the goods owner has a direct cause of action to recover such expense. No authority to the contrary was cited and I know of none relating to land transport.’
This case is cited by:

  • Cited – Hedley Byrne & Co Ltd v Heller & Partners Ltd HL ([1964] AC 465, [1963] 2 All ER 575, UBC, Bailii, [1963] UKHL 4, [1963] 1 Lloyds Rep 485, [1963] 3 WLR 101)
    The appellants were advertising agents. They were liable themselves for advertising space taken for a client, and had sought a financial reference from the defendant bankers to the client. The reference was negligent, but the bankers denied any . .
  • Cited – D Pride & Partners (A Firm) and Others v Institute for Animal Health and Others QBD (Bailii, [2009] EWHC 685 (QB))
    The claimants sought damages after the loss of business when the defendants’ premises were the source of an outbreak of foot and mouth disease. The organism had escaped from their premises via a broken drain.
    Held: Much of the damage claimed . .

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