From Laws of Singapore

J Gadsden Pty Ltd v Strider 1 Ltd (The "AES Express") (1990) 20 NSWLR 57; (1990) 103 FLR 56.

Supreme Court of New South Wales

Admiralty Division

Carruthers J

[edit] Facts

During the course of a voyage, the shipowners accepted repudiation (charterer having failed to pay hire on time) of the time charter, and immediately withdrew the vessel from the charter. At the time of withdrawal, there was cargo on board the vessel belonging to the plaintiff consignees, on charterers' bills of lading, freight of which had been prepaid.

The relevant bills of lading were issued by the charterer with the shipowner's authority (as provided for in the Baltime 1939 form). They were signed by the charterer and not by the master.

[edit] Held

1. The shipowner was bailee of the shipper's cargo, and had a duty to take reasonable care of the cargo. That duty persisted after the vessel was withdrawn from the charter: Hayn v Culliford (1879) 4 CPD 182.
2. English law permits withdrawal of a vessel from a charter party whilst the vessel is loaded: The "Tropwind" [1981] 1 Lloyd's Rep 45 at 52.
3. However, the shipper is entitled to have his cargo delivered by the shipowner to the destination nominated in the bill of lading.
4. In English law if the ship is carrying cargo under bills of lading issued by a time charterer with the authority of the shipowner, the shipowner assumes, upon withdrawal of the vessel from the charter, the charterer's obligations to the cargo interests. The assumption of such obligations is a necessary incident of the withdrawal of the vessel from the service of the charter.
5. Generally speaking, therefore, if the bill of lading freight has been paid in advance, then the shipowner is not entitled to remuneration from the cargo interests. If, on the other hand, the freight is not payable until the delivery of the cargo, different considerations will apply: Wulfsberg & Co v Weardale (Owners) (1916) 85 LJKB 1717.

[edit] Reasoning

Although the defendants was bailee of the plaintiff's cargo, they were not bailees on the terms of the bills of lading: J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575 (CA).