Discusión

If one starts from the premise that a ship’s class certificate is required by many parties, such as hull insurers and P&I clubs, traders, charterers, banks, buyers, passengers, crew and enforcement authorities, one would logically expect that these people would rely on the skills and professionalism of class societies in the performance of their duties. Taking this assumption further, any of these parties would expect that it would be implicit from a clean class certificate that the ship was in good condition, or seaworthy; therefore, they could argue that, upon reliance on the statements made on the certificate that the ship is Class A or B and/or that the certificate is free from conditions of class, they placed their goods or lives on board her, or they decided to invest in her, or to take the risks of insuring her, or to take the risk of liabilities to third parties.

Were this assumption to be correct, it would follow that a duty of care not to be negligent could arise by virtue of the issuing of the class certificate. Therefore, a

legal framework for such a duty owed to third parties in tort could, arguably, exist in law.

However, mostly for policy reasons, the above premise of reliance, in this context, is misleading, as was explained by the House of Lords in The Nicholas H ,²³⁹ in which it was held that: it would not be fair, just or reasonable to impose a duty of care on classification societies so that they would have unlimited liability in negligence to ship-owners and cargo-owners (see further below).

Starting from basic legal principles, the English courts have since

1990,²⁴⁰ applied a three-stage incremental approach to the question of whether a duty of care exists in various situations. This is comprised of three ingredients:

(a) foreseeability of damage; (b) a relationship of proximity between the parties;

and (c) that in all circumstances it is fair, just and reasonable to impose a duty of care upon the defendant.

How could this principle be applied to ascertain whether or not classification societies owe a duty to third parties, so that they can be liable in damages for financial loss caused to them, in the event of breach?

In The Morning Watch ,²⁴¹ the classification society carried out a special survey on a yacht, at the request of her owner, who intended to sell her to a prospective buyer, and issued an interim certificate. She was classed 100A1. The listed items for repairs were duly effected by her owners. The yacht was later purchased by the plaintiffs who contended that she had various serious defects, which

rendered her unseaworthy, and that these defects should have been discovered by the defendant’s surveyor. They claimed damages against the classification society (Lloyd’s Register) for economic loss suffered as a consequence of relying on the statements made negligently by the society’s surveyor on the certificate.

The court, applying the principles set out above, held: a duty of care would only arise where: (1) it was reasonably foreseeable to the defendant that the plaintiff would rely upon his statement; (2) there was the necessary proximity between the plaintiff and the defendant; and (3) it was fair, just and reasonable in all circumstances to impose a duty of care on the part of the defendant to the plaintiff. On the facts, as Lloyd’s Register had been informed that the plaintiff would be interested in buying the vessel after the survey was carried out, the first requirement was established.

However, the court was not prepared to accept the general proposition that Lloyd’s Register owed a duty of care to those who would be likely to

suffer economic loss in consequence of reliance on the negligent classification of a vessel. To accept such a proposition would be to make a substantial further advance in the law of negligence. Therefore, the plaintiffs had failed to show that the defendants owed them a duty of care, either when the special survey was carried out or on the issue of the interim certificate.

Although Phillips J (as he then was) accepted the plaintiff’s submission that Lloyd’s Register deliberately maintained a system of classification whereby parties other than the owners of classified vessels were likely to rely on the fact that a vessel was maintained in class, and that this system provided an assurance that the vessel was maintained in good condition, he made the following

observation:²⁴²

 (i) The primary purpose of the classification system is, as Lloyd’s [sic]

rules make plain, to enhance the safety of life and property at sea, rather

than to protect the economic interests of those involved, in one role or another, in shipping.

 (ii) Insofar as negligence in relation to classification is likely to harm economic interests, I can see no general ground for distinguishing between the economic interests of the charterer, the mortgagee and the purchaser. It would be reasonably foreseeable that all would rely upon the class status of the vessel - often to the extent of making the

maintenance of class a contractual obligation - and all are at risk of being caused economic loss, if classification surveys are not carried out with proper skill and care.

Referring to Caparo v Dickman, he considered the relationship between the classification society and purchasers of ships, and stated:

The relationship does not reflect any statutory scheme to protect purchasers … There is no relationship akin to contract. There is no voluntary assumption of responsibility to potential purchasers of shares … There is no greater proximity between Lloyd’s [sic] and a potential purchaser than between Lloyd’s and the bank that may advance the purchase price on the security of a mortgage on the vessel … ²⁴³

Applying the three-stage approach, he said the second and third requirements of the Caparo were not satisfied in the circumstances. In effect, the third

requirement that it must be fair, just and reasonable in all circumstances has restricted the law of negligence, unless the principle to be applied is clearly that of assumption of responsibility.²⁴⁴

The three-stage approach is now to be applied universally in cases concerned with the recovery of damages for either economic loss or physical damage, for example, whatever the nature of the harm sustained by a plaintiff. It is an overarching formula within which can be found all cases of a recognised duty of care.²⁴⁵ Recognition is given to some categories in which it is obvious that, as a matter of common sense and justice, a duty should be imposed. The difference between categories lies in the fact that it may be more difficult to satisfy the three-stage test in cases of pure economic loss than in straightforward cases of physical damage.

However, despite the physical damage of the cargo on board The Nicholas H ,²⁴⁶ from which financial loss resulted, the duty of care was not imposed by the majority of the House of Lords upon the classification society. Policy

considerations prevailed on the basis of the third requirement of the three-stage approach seen above.

The vessel was loaded with the plaintiffs’ cargo of lead and zinc for a voyage from Chile to Italy and the USSR. She had to deviate from her voyage to Europe, because a crack was found in her hull and anchored at Puerto Rico. Further cracks later developed. A surveyor from the vessel’s classification society (N.K.K.) boarded her and recommended permanent repairs at the nearest port that had such facilities. The owners, however, persuaded the surveyor that temporary repairs should be carried out at anchor, because permanent repairs would have involved dry-docking and unloading of the cargo. The surveyor then reversed his initial recommendation, allowing temporary repairs, and the vessel proceeded to the discharge port, where the repairs would be further examined after discharge. The next day, while on the voyage, the welding of the temporary repairs cracked. Six days later, the vessel sank with the loss of all cargo. The

cargo claim was settled between the cargo interests and the ship-owner at the limitation amount in accordance with the HVR, which were applicable to the contract of carriage. The cargo interests claimed the balance of their claim against the classification society on the ground of breach of duty of care owed to them, which caused the loss to their cargo.

The case reached the House of Lords on a preliminary point: assuming there was negligence of the surveyor (which the classification society denied), did a

classification society owe a duty of care to a third party - the owners of the cargo laden on the vessel - for the careless performance of a survey resulting in the vessel being allowed to sail and subsequently sink with her cargo? Counsel for the cargo-owners contended that, as the case involved physical damage to property in which the plaintiff had a proprietary or possessory interest, the only requirement was proof of reasonable foreseeability, and, therefore, the

additional requirements of proximity and considerations of whether it was fair, just and reasonable to impose a duty of care were inapplicable.

The House of Lords rejected this argument by a majority. It was held that the elements of foreseeability, proximity, fairness, justice and reasonableness were relevant to all types of harm sustained by the plaintiff. The majority of their Lordships considered that there was a sufficient degree of proximity to fulfil the requirement for the existence of a duty of care. However, it was held that the recognition of a duty would be unfair, unjust and unreasonable based on considerations of policy. Lord Steyn stated:

I conclude that the recognition of a duty would be unfair, unjust and

unreasonable as against the ship-owners who would ultimately have to bear the cost of holding classification societies liable, such consequence being at variance with the bargain between ship-owners and cargo-owners based on an

internationally agreed contractual structure. It would also be unfair, unjust and unreasonable towards classification societies, notable because they act for the collective welfare and, unlike ship-owners, they would not have the benefit of limitation provisions. Looking at the matter from the point of view of cargo-owners, the existing system provides them with the protection of the Hague Rules or Hague-Visby Rules. But that protection is limited under such rules and by tonnage limitation provisions. Under the existing system any shortfall is readily insurable. In my judgment, the lesser injustice is done by not recognising a duty of care.²⁴⁷

Unlike the judge at first instance, who did not think that there were any

considerations of policy that would justify the application of the criterion of ‘fair, just and reasonable’, both the CA and the House of Lords dismissed the claim on application of this criterion. However, Lord Lloyd (dissenting) agreed with the judge and said:

We are not here asked to extend the law of negligence into a new field. We are not even asked to make an incremental advance. All that is required is a straightforward application of Donoghue v Stevenson …

In physical damage cases, proximity very often goes without saying. Where the facts cry out for the imposition of a duty of care between the parties, as they do here, it would require an exceptional case to refuse to impose a duty on the ground that it would not be fair, just and reasonable. Otherwise, there is a risk that the law of negligence will disintegrate into a series of isolated decisions

without any coherent principles at all, and the retreat from Anns v Mertonwill turn into a rout.²⁴⁸

However, the majority were influenced by four important factors: (a) the

assumed negligence of the class surveyor had not involved the direct infliction of the physical damage on the cargo; (b) the class played a subsidiary role in

matters of seaworthiness as compared with the ship-owner, who has a non-delegable duty to provide a seaworthy vessel; (c) a recognition of a duty would cause an imbalance with the HVR; (d) class societies have important public duties to perform and they should not become the insurers of the vessels they survey. It would be a different situation if the classification society assumed a responsibility towards a third party, for example, to a buyer of a ship, by giving advice on which the buyer relied, and the society knew, or ought reasonably to have known, that the buyer would rely on their advice before he/she decided to buy the ship (on the basis of the Hedley Byrne v Hellerprinciple).²⁴⁹

The trilogy of English decisions in this area is completed by Reeman v DOT and Others .²⁵⁰

It concerned the certification of a fishing vessel by a surveyor of the Department of Trade (DOT) performing regulatory functions under the Merchant Shipping Acts (MSAs). The DOT was sued by a buyer of a fishing vessel claimingeconomic loss.

Statutory certification of fishing vessels was required by the Safety Provisions Act 1970 and the Regulations 1975 designed to ensure their seaworthiness. The vessel was inspected by a surveyor appointed by the DOT, and a certificate was issued, the validity of which was extended twice every 4 years. No British-registered fishing vessel could put to sea unless she carried a certificate issued by the DOT.

When the claimants bought the fishing vessel, she carried such a certificate, but it was based on an erroneous stability calculation made by the DOT’s surveyor, which was discovered after the purchase. The certificate was then withdrawn, as the expenditure required to be incurred by the purchasers to rectify the faults, improve her stability and satisfy the minimum statutory requirements, was beyond their means. They sued the DOT for breach of the common law duty of care alleged to be owed to them and claimed damages for the economic

loss suffered. The issue was whether the DOT owed a duty of care to purchasers of fishing vessels when issuing certificates of compliance.

The judge held that the requisite degree of proximity between the plaintiffs and the DOT was established, taking into consideration the following factors:

 (a) there was a virtual certainty that the certificate would be communicated to prospective purchasers such as the plaintiffs;

 (b) there was an extreme likelihood that such a prospective purchaser would rely on the certificate in deciding whether to purchase;

 (c) there was overwhelming probability that the purchaser would do so without independent verification; and

 (d) these facts were all facts known actually or inferentially by the DOT.

In addition, the plaintiffs did not appear to have a remedy against anyone other than the DOT; applying the criteria of fairness, justice and reasonableness, it was possible to set an acceptable limit or control mechanism that substantially avoided the mischief in question; this would be to confine the duty to persons

who actually purchased the relevant vessel during the currency of the certificate.

The DOT appealed.

The CA reversed this decision, because it thought that the judge had made a significant extension to the ambit of the tort of negligence. With regard to the relationship of proximity, the CA held that, when a British fishing vessel’s certificate was issued, those who might in the future place reliance on that certificate (when deciding whether to purchase the vessel) did not form part of a class that was capable of definition and delimitation by identifiable

characteristics; not only did potential future purchasers not form an identifiable class when the certificate was issued, but the certificate was not issued for the purposes of providing information to assist them in deciding whether or not to purchase the vessel; and foreseeability that the information might, or probably would, be relied on by others than those for whom it was provided did not suffice to constitute such persons part of a class in a proximate relationship with those providing the information.

It would always be open to a party entering into a commercial transaction in relation to a certificated vessel to take steps such as surveying the vessel, or stipulating for contractual warranties, that would provide protection against the risk that the certificate did not reflect the true condition of the vessel.

With regard to the third characteristic of the test whether a duty of care should be imposed, the CA said that the statutory framework was one designed to promote safety at sea. The protection of those whose commercial interests might foreseeably be affected by unseaworthiness of vessels formed no part of the purpose of the legislation and no part of the purpose for which the fishing vessel certificates were issued. It would not be fair, just and reasonable, the CA held, to impose a duty of care on a body such as the DOT, charged with the duty of certifying with a view to promoting safety at sea; the DOT, when performing its regulatory functions under the MSAs, performed a similar role to that of

classification societies, that is, it existed for the purpose of further safety at sea, rather than for the protection of commercial interests; and the learned judge erred in finding that the DOT had owed a duty of care to the purchasers. The appeal was allowed.

20.2 A COMPARISON WITH THE REGULATORY REGIME APPLICABLE TO THE