Marine Deviation. Startling Consequences. Last updated 12-Aug-2014

But a sweeping general rule … will, if it be correct, have startling consequences.

…The goods owner has had for all practical purposes the benefit of all that his contract required; he has had the advantages, of the use of a valuable ship, her crew, fuel, refrigeration and appliances, canal dues, port charges, stevedoring. The shipowner may be technically a wrongdoer in the sense that he has once deviated, but otherwise over a long period he has been performing the exacting and costly duties of a carrier at sea.
Per Lord Atkin in Hain Steamship Company Ltd v Tate & Lyle Ltd [1936] 2 All ER 597 at p.612

However small …

Why deviation "however small" gives to the charterers right to treat the contract of affreightment at an end was never elucidated neither from practical nor from legal point of view. And after decisions in Joseph Thorley Ltd v Orchis SS Co Ltd [1907] 1 KB 660 it was never considered necessary. The rule devised to impeach a right of the shipowner to limit his liability hardened to the stone shape of legal maxim, and although it was operating in evident contradiction to the ordinary law of contract giving to the one side an option to throw up the contract even when contract was completely performed by the other side or when injured party suffered no loss at all, it was commonly accepted as a good law. That at least some of controversies in application of a rule had to be clarified was evident by the time of decision of the House of Lords in Hain Steamship Company Ltd v Tate & Lyle Ltd [1936] 2 All ER 597. So the rule was patched with an amendment that breach by deviation must be either accepted or waived by the injured side.

However no any convincing argument apart from "a long series of [unnamed] decisions" was provided to support the existence of the rule in the first place. Lord Atkin referred to the fact "that the insured cargo owner when the ship has deviated has become uninsured", but an independent contract with an insurer has hardly any effect on the contract of carriage. Why these "considerations do not appear to diminish the serious nature of the breach in all the circumstances of sea carriage" his Lordship did not consider necessary to explain.

Lord Wright on his part noted that loss of cargo insurance "might be remedied by means of the deviation clause which is so generally now found in policies" and equalised effect of deviation in contracts of affreightment and marine insurance as fundamental and is the same in principle in both contracts. The adventure has been changed. A contract entered into on the basis of the original adventure, is inapplicable to the new adventure. However, a contract of marine insurance policy takes into account in the first place change of risk, which factor is generally irrelevant to the contracts of affreightment (read more about Mutual Promises, Fundamentally different). Insurer enters into contract with insured to compensate the latter for damages resulted from certain risks incidental to marine adventure; therefore change of risk as a result of change of marine adventure (by deviation) is of crucial importance for the insurer.

On the other hand, main purpose of contract of affreightment is sea transportation of goods for payment of freight, as Lord Halsbury said: "to take on board at one port, and to deliver at another port a … cargo". Unlike insurance contract, minor departure, as it actually was in Hain case, even if attaches a new risk does not change the main purpose of marine adventure as it described in a contract of affreightment. Therefore, neither low and high tides nor period of the year nor advanced age of the ship, are of any critical importance to mutual obligations of the charterer and the shipowner under the contract of carriage. When the said circumstances delay performance of the contract, such risks usually apportioned and losses settled between the parties by way of liquidated damages (see Demurrage). Therefore it is difficult to see how and in what way delay of few hours spent on the wrong course by the master of the "Tregenna" , became a breach of such a serious character that the other party to the contract was entitled to treat it as going to the root of the contract and to declare himself as no longer bound by any of its terms. As we shall see further, when the matter of freight will be briefly discussed, this illogical, artificial and quasi-contractual transformation, of one contract into another of uncertain nature, is and was hopelessly at odds with the general law of contract and therefore compelled of producing questionable results.

Evident injustice

Considering the effect of a deviation in regard to freight, Lord Wright remarked an evident injustice of terminating effect of deviation on express contract and in particular on the right to claim the contract freight, especially when the voyage is completed and the goods delivered at the contract destination. His Lordship regretfully noted that he was not able to find any express decision on this point. There, however, were several direct, albeit old, decision on payment of freight in case of deviation (read more Mutual Promises): in Cole v Shallet (1797) 3 Lev 41 where the defendant pleaded that the ship made divers deviations, by which the goods were spoiled, the court held that the carrier entitled to be paid full freight and "each party is by his action to recover against the other the certain damage he sustained"; then in Hall v Cazenove (1804) 4 East 477 Lawrence J stated obiter that the charter party is an instance of mutual covenants rather than a condition precedent because its substance is that the ship shall go to [port of destination] on freight and return again; finally in Bornmann v Tooke [1811] Camp 376 Lord Ellenborough said at p.378 that trifling departure from the direct course of the voyage would not entirely destroy the plaintiff’s right to be remunerated for transporting the cargo.

Anyway, Lord Wright in his judgment, came very close to the law stated in above mentioned authorities, observing that epithets like ‘unlawful’ and ‘unauthorised’ are not apt to describe laborious and costly duties of a carrier at sea which he performed before deviation. His Lordship at p.612 gave an example of startling consequences of application a general rule:

Let me put a quite possible case: A steamer carrying a cargo of frozen meat from Australia to England deviates by calling at a port outside the usual or permitted route: it is only the matter of a few hours extra steaming: no trouble ensues except the trifling delay. The cargo is duly delivered in England at the agreed port. The goods owner has had for all practical purposes the benefit of all that his contract required; he has had the advantages, of the use of a valuable ship, her crew, fuel, refrigeration and appliances, canal dues, port charges, stevedoring.

So what was a position of law in regard to such owner? Lord Wright in his obiter suggested that in cases when the shipowner delivered goods to the destination, the court would not be slow to infer an obligation to pay at least a reasonable remuneration. Cases of Balian, Joseph Thorley and Hain Steamship all notable because in neither of them marine deviation brought any hardship on shoulders of cargo owner, which cause was arguably a main motivation to the rule. In Balian the carrier was a coaster who since Max v Roberts (1810) 12 East 89, was permitted to make as many intermediate rests and stages in the course of its voyage, … as the ordinary convenience of its employers and nature of its service may require. The carrier never went further than Smyrna (İzmir in modern Turkey) but was held liable for damage caused to the goods delivered by liner steamer from Smyrna to Liverpool and from Liverpool to London by rail. In Joseph Thorley goods were delivered in undamaged state to destination and by way of the rule pronounced in Balian the court supported cargo owner claim to recover damages bypassing express wording in the contract. In Hain Steamship Charterers’ orders were never received by master and nobody contemplated any deviation claim until cargo interests were requested to participate in general average contribution. This short analysis shows, that not only there was no legal justification nor commercial prerequisites strictly necessary to develop the rule which provided a tool to unilaterally dispose contract by way of deviation, but also it was not used to fight alleged hardship deviation brought to the cargo interest, rather it was one-sidedly invoked with purely commercial reasons to get rid of certain express provisions in contract. Even in the times of Lord Mansfield additional premium provided the cargo owner, in case of deviation, with indemnity similar to that available today under the "held covered" clauses and in fact the cargo owner usually did not suffer any adversity on which the rule was arguably based.

Secondly, it can hardly be said that a voyage actually accomplished after a minor deviation is essentially different from the voyage bargained for.

Thirdly, in instances where the goods were actually delivered to the ultimate destination, destroying a contract in toto where obviously unjust because the cargo interests did derived some advantage from partly performance by the shipowner of his obligations. Combination of radical but ill-founded measures to re-apportion liabilities of parties under express contract led to ridiculous result that ‘destroyed’ by deviation contract was still alive for both primary obligations: of the carrier to deliver the goods to destination and of the charterer to pay freight; and also for secondary obligations of the carrier to compensate the charterer for damages or loss occurred from his breach or non-performance. New ‘fundamental’ tool appeared to be a device of narrow, drastic and questionable application, serving to sweep express and implied protections of the carrier under the contract of affreightment.

Lord Wilberforce in Photo Production Ltd v Securicor Transport Ltd [1980] 1 All ER 556 at p.563, suggested to consider law of marine deviation as a body of authority sui generis with special rules derived from historical and commercial reasons, however, no special, historical or commercial reasons for creation of the doctrine ever really existed.

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