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Crew member deliberately starting fire & Hague rules 'fire' defence against cargo claims

Crew member deliberately starting a fire! Can the shipowner avail the benefit of the fire defence in the Hague rules to exempt itself from liability towards cargo interests? This seemingly easy question was up for appeal in The Lady M [2019].

In May’15, she experienced a fire during a laden voyage. Shipowners engaged salvors and declared GA. Cargo owners refused GA contribution of $560,000 citing breach of Art.III of Hague rules, and were also seeking to recover $3.8m they had paid for salvage.

In defence, shipowners relied on the fire exception in Hague rules, which exempts a shipowner from liability for fire damage/loss unless caused by the actual fault or privity of the shipowner. Cause of fire was not in dispute. It was started by C/E who was probably under emotional stress or anxiety due to the illness of his mother.

Cargo interests contended that fire defence is not available if started barratrously. Court found that the word 'fire' contains no qualification as to who started the fire or how it started, whether accidentally or deliberately or otherwise. The shipowner could therefore rely on it. In holding so, the court refused to follow NZ Sup Ct’s decision in The Tasman Pioneer [2010] that defences under Art.IV are not available for acts of barratry.

Diverging views of UK & NZ courts!

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