Van Leer Australia Pty Ltd v Palace Shipping KK

Van Leer Australia Pty Ltd (the appellant) appealed to the High Court of Australia from a judgment of the Supreme Court of New South Wales. The dispute concerned the interpretation of a charterparty agreement, specifically whether the charterer, Palace Shipping KK (the respondent), was entitled to claim damages for the loss of a cargo of steel coils. The appellant argued that the charterparty contained a "both to blame" collision clause, which it contended excluded the respondent's right to recover damages for the loss of its cargo in circumstances where both the carrying vessel and the vessel causing the collision were at fault.

The central legal issue before the High Court was the construction and effect of the "both to blame" collision clause within the charterparty. Specifically, the court had to determine whether this clause operated to prevent the charterer from recovering its cargo loss from the shipowner, notwithstanding the shipowner's admitted fault in causing the collision. This required an examination of the common law principles governing the recovery of damages in collision cases and the extent to which such contractual clauses could modify those principles.

Stephen J, delivering the judgment of the High Court, held that the "both to blame" collision clause did not have the effect contended for by the appellant. His Honour reasoned that the clause was intended to address the apportionment of liability between the carrying vessel and the colliding vessel in a situation where both were at fault, and to ensure that the shipowner, if held liable to the cargo owner, could recover a proportion of that liability from the colliding vessel. The clause did not, however, operate to extinguish the shipowner's liability to the cargo owner for the loss of cargo caused by the shipowner's negligence. The common law principle that a bailee is liable to the bailor for loss of goods occasioned by the bailee's negligence remained applicable, and the clause did not create an exception to this principle.

The appeal was accordingly dismissed.