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SOGEM - AFRIMET, INC. v. M/V IKAN SELAYANG

December 20, 1996

SOGEM - AFRIMET, INC., Plaintiff,
v.
M/V IKAN SELAYANG, her engines, boilers, machinery, etc., in rem, FEDNAV LIMITED, PACIFIC CARRIERS PTE., LTD., and CHRISHOLM TRADING PTE., LTD., in personas, Defendants.



The opinion of the court was delivered by: NEWMAN

BERNARD NEWMAN, Senior Judge : *fn1"

 Sogem Afrimet, Inc. ("plaintiff") brings this action grounded in Admiralty against Fednav Limited ("defendant") *fn2" Plaintiff seeks money damages in the amount of $ 270,161.49, plus interest and costs, for the marine miscarriage of zircon sand from Brisbane, Australia to Brownsville, Texas. After discharge at Brownsville, plaintiff maintains that there was rust found mixed with the zircon sand. Although attempts were made to purify the sand, plaintiff asserts that because of the contamination, plaintiff's buyers refused to accept the sand. Plaintiff maintains that defendant's failure to properly prepare the vessel's hold was the cause of the rust contamination.

 Defendant, a Canadian operator and time-chartered owner of the motor vessel Ikan Selayang contends that it implemented its normal procedures to prepare the vessel's hold to carry plaintiff' zircon sand. Defendant argues that the rust found on the zircon sand was not caused by any miscarriage of the cargo or deficiency of care aboard the ship. In response to plaintiff's clams, defendant suggests several alternative scenarios as to how plaintiff's sand became contaminated. In any event, defendant states that it exercised due diligence in its transport of plaintiff's sand and that plaintiff's representative had declared the hold fit to carry the cargo. Additionally, defendant argues that plaintiff failed to give it proper notice of any harm to the cargo and did not sufficiently attempt to mitigate its damages.

 THE RECORD

 Pursuant to agreement by counsel and F.R.C.P. Rule 32(a)(3)(E), the depositions of Gregory Dunn, Manager for Australian Laboratory Services; Cecil Martin, Shipping Manager for Consolidated Rutile Limited; Neal Stewart, Processing Manager for Consolidated Rutile Limited; Paul Vogel, employee of Australian Laboratory Services; Michael Pearson, Director of Plumley, Pearson & White; Hector Gonzalez, employee of Ewig International Marine Corporation; Kenneth Jones, Plant Manager of Elf Atochem; Anne Marie Philippaerts, employee of J. Haenecour & Co.; Zbigniew Stasiak, Chief Officer of the Ikan Selayang; and Captain Malcolm Gater, Master of the Ikan Selayang, were admitted into evidence.

 FINDINGS OF FACT

 Plaintiff, a New York based buyer, seller, and trader of non-ferrous minerals and metals, had an exclusive arrangement to buy zircon sand *fn3" from Consolidated Rutile Limited (hereinafter "CRL"), an Australian Company, for resale in North America and Mexico. Defendant, a Canadian operator and time-chartered owner of the motor vessel Ikan Selayang, entered into a charter party with plaintiff for the vessel to transport plaintiff's cargo (Exh. 2). The cargo, in the instant case, consisted of 700 metric tons of premium grade zircon sand to be delivered from Brisbane, Australia to Brownsville, Texas aboard the M/V Ikan Selayang. A charter broker company, M.I.D. Ship Marine Inc. ("MID"), was used to obtain the space aboard the ship for the carriage of the cargo. MID received and relayed all communications between defendant and the plaintiff. In the contract of carriage, defendant warranted that Hold 6 of the M/V Ikan Selayang its decks and its stanchions would be swept, cleaned, and be made suitable for the bulk shipment of plaintiff's zircon sand before the vessel was brought to Brisbane for loading.

 On August 20, 1991 plaintiff purchased 700 metric tons of premium grade zircon sand from CRL for A$ 340.00 (Australian dollars) per metric ton F.O.B. vessel, a total of A$ 238,000.00 *fn4" CRL operates a mill in Pinkemba, Brisbane that subjects the zircon sand to a rigorous separating process in order to meet the premium grade specifications. At the CRL mill, the zircon sand passes through several stages of electromagnetic processing to separate conductive material from nonconductive material. The zircon sand was subjected to further treatment by putting it through a vibrating screen with 2 centimeter holes and a second screen with 1 millimeter holes. After the larger material had been separated, the zircon sand was subjected to 8 high voltage electrostatic rotating rolls designed to remove the magnetic rust and iron from the non-magnetic sand. The final result of this process should result in premium grade zircon sand that contained a minimum of 66.0% zircon silicate and which has had virtually all contaminants eliminated.

 The finished premium grade zircon sand is held in "product bins" at CRL's dry mill before being transported from the mill to a storage location at the Hamilton Wharf in Brisbane. The sand was thereupon loaded into tipper trucks *fn5" inside the dry mill by pulling the cargo beds of the trucks directly beneath the product bins inside the dry mill. The product bins themselves were fully enclosed to prevent contamination of its contents. Furthermore, the dry mill was covered by a roof to prevent any contamination while the trucks were being loaded. During the transport to the Hamilton Wharf, the trucks were fully tarped in order to avoid any form of contamination of the zircon sand, and the tarps remained on the trucks during the discharge of the load at the storage facility.

 After the zircon sand was unloaded at the storage facility, it was loaded onto the ship using a series of mobile and fixed conveyor belts. Prior to the actual loading but after the sand was placed onto the conveyor belts, Australian Laboratory Services ("ALS") took samples of the zircon sand for analysis. The purpose of this analysis was to ensure that no rust or other foreign material entered the cargo beds when the trucks transported the material from the mill in Pinkenba to the Hamilton Wharf.

 Defendant contends that prior to the loading of the zircon sand onto the vessel, the sand was moved around from point to point ashore in Australia by CRL and that this travel exposed the sand to rust, iron, pebbles, and dirt from various sources including other bulk cargoes, trucks, metal roofs, and conveyor belts. The court, however, finds that the evidence fails to support this conclusion. Neal Stewart, Processing Manager for CRL, testified regarding the processing of the zircon sand prior to loading onto the ship. CRL took samples of the zircon sand every two minutes on its way to the product bins inside the dry mill, and automatic samples of the final zircon sand product were tested daily by ALS. Although CRL processes Ilmenite, as well as zircon sand, which has a 33% iron content and can be magnetic, the tests of the zircon sand taken by CRL and ALS in the twelve months preceding the loading of the M/V Ikan Selayang were within contract specifications and failed to reveal any contamination. Hence, no prior history of any contamination existed with respect to the operating procedures of the laboratory.

 Furthermore, the tipper trucks used to transport the zircon sand from the mill to the loading wharf were used only to transport zircon sand in order to avoid any contamination with other mineral sands or rust. Consequently, the proof in this case establishes that no rust contamination had ever been introduced to the tipper trucks and that they were clean and free from contaminants. CRL's Shipping Manager, Cecil Martin, testified that the trucks were covered at all times with tarpaulins to protect the material inside the cargo beds from being contaminated during transport. During the loading period of the zircon sand in the CRL mill, the trucks and the mill were protected by a roof above the mill. The tarpaulins contemporaneously remained on the trucks during the journey from the CRL mill to the Hamilton Wharf, and were designed to discharge the zircon sand at the wharf without removing the tarps covering the cargo beds.

 Nor could the contamination come from the warehouse. The roof on the warehouse and the roof covering the conveyor belts were made of galvanized iron in order to guard against rust. Further, the mobile and fixed conveyor belts were made of rubber and did not come in contact with any metal or iron that would have contaminated the zircon sand while being transported on the conveyor belts. Therefore, the court finds that the zircon sand was not contaminated prior to loading onto the M/V Ikan Selayang.

 Before the transfer of the zircon sand to the M/V Ikan Selayang, defendant and the vessel's officers prepared the vessel's No. 6 Hold for the zircon sand pursuant to defendant's "Standard Requirements" for hold cleanliness. These included the following pertinent instructions:

 
All loose rust scale must be removed from the hold prior to loading, with particular attention being given to the underside of the hatch covers, the coaming faces, the underdeck spaces at both ends of the hold, the undersides of the top tanks, the inner surfaces of the ship's shell plating, the "hidden flanges of the frames and the upper and lower frame brackets, the fore and aft'r bulkheads including ladder flanges and ledges, ventilator trunkings ledges and grills and tank tops.

 Apparently, defendant did not believe scaffolding was necessary to properly clean No. 6 Hold and thus, did not instruct the ship's crew to assemble scaffolding to reach the upper areas of the hold (Stasiak Deposition, pp. 85-89). After leaving the Phillippines, the crew of the Ikan Selayang continued to chip and scrape excess rust and paint from inside No. 6 Hold. At no time, however, were the upper regions of the hold manually chipped or scraped.

 Upon the vessel's arrival in Brisbane, CRL on behalf of plaintiff appointed Michael Pearson, an independent surveyor, to inspect the holds number 3 and 6 prior to the loading of the zircon sand. According to Pearson, he inspected both Hold number 3 and Hold number 6 within a span of approximately 10-15 minutes. His responsibilities included, among other things, inspecting the hatch coaming and drainage channels around the perimeter of the hatch opening, inspecting the outsides and insides of the hatch cover panels, descending partially down the access ladder on the forward bulkhead of one hold, and descending further down the forward bulkhead ladder to another landing and again inspect the ship's structures in the vicinity of the ladder. Hold no. 6 is 19.8 meters long and the hatch aperture is 9.6 meters long. Pearson did not bring any light into the No. 6 Hold in order to assist his inspection, despite the examination's requirement of visual inspections from distances ranging between five and thirty-five feet away. In his deposition, Pearson stated that it is possible that hard rust scale could come off the sides of the ship's hold if it was struck by a heavy object (Pearson Deposition, p. 57). He further testified that the opening and closing of hatch covers could cause prior cargo residues or rust scale to become dislodged and fall down onto the remaining cargo. After his examination, Pearson certified each of the holds to be fit for the transport of zircon sand.

 Plaintiff's expert, Captain John Alder, testified that a 10-15 minute inspection of holds 3 and 6 was "extremely cursory," and that a proper inspection of the holds should have taken one hour. Captain Alder added that without the proper equipment, such as scaffolding and man lifts *fn6" , only a spot check of certain areas could be accomplished. After observing Captain Alder in court and closely examining his testimony, the court believes him to be entirely credible and finds that the evidence suggests that the inspection performed by Mr. Pearson was wholly incomplete and unsatisfactory. From the deck to the bottom of No. 6 Hold aboard the M/V Ikan Selayang was approximately 43 feet (R. 256). It is difficult to imagine that Pearson could possibly have had adequate time to check, in any way, all areas of the two holds within 10-15 minutes, let alone examine these areas closely.

 Moreover, the record further suggests the absence of proper tools and equipment for the inspection. When this is considered in conjunction with the short time in which Pearson conducted the inspection, the evidence unequivocally supports the opinion of Alder. Therefore, notwithstanding Pearson's definitive declaration of the fitness of the holds to carry zircon sand, the court finds his opinion to be of little probative value.

 Prior to the arrival of the M/V Ikan Selayang in Brownsville, Texas, the vessel stopped in Wilmington, North Carolina in order to discharge thirty-five hundred metric tons of zircon sand. To facilitate the offloading, a crane with a bucket was used to discharge the sand from the vessel's No. 6 Hold. The delivery of this shipment was uneventful, and there were no complaints regarding the condition of any of the zircon sand delivered to Wilmington.

 On November 5, 1991, the M/N Ikan Selayang arrived in Brownsville, Texas. The following day on November 6, 1991 discharge of the zircon sand from No. 6 Hold commenced at 7:40 a.m. at which time Rigoberto Gonzalez, the dock superintendent for Dix Shipping Co., witnessed the hatches being open for the first time. Gonzalez testified that he noticed approximately 50 specks of what appeared to be rust less than three inches in size. Continuing, Gonzalez notified the chief mate of the rust specks, at which time the chief mate sent one of the crewmen down into the hold to pick up the specks. After the specks of rust had been picked up by one of the crewmen, Mr. Gonzalez testified that he had notified his boss of the discovery of the rust at the Brownsville dock. With respect to such alleged notification, the testimony of Gonzalez is unclear as to whether he notified Chapell of the spots he observed. Based upon the testimony of Chapell and her lack of reaction at the dock, the court finds that there was no effective communication respecting Gonzalez's observations of contamination in the zircon sand.

 The unloading of the zircon sand continued throughout the day by means of a clam shell bucket on a crane which emptied the sand directly into dump trucks. Prior to its use, the clam shell bucket was fully inspected by Gonzalez who testified that he did not observe any rust, dirt or debris. Furthermore, Mr. Gonzalez inspected the seven or eight dump trucks used in the transport of the zircon sand. Gonzalez also stated that he commenced inspection of the trucks at 7:45 a.m. the day of the unloading by having the beds of the trucks lifted up so that he could visually inspect the inside of the trucks. He concluded that the dump trucks did not contain any contaminants. The zircon sand that was loaded onto the dump trucks was taken directly from the Ikan Selayang to the Brownsville Gulfside Warehouse.

 Defendant contends that there was a rust mist on the outside of the clam shell buckets due to storage of the equipment outside. Specifically defendant points to a portion of Gonzalez's testimony where he stated that a red mist covered the clam shell buckets when they are about to be used early in the morning. Gonzalez also testified that the clam shell buckets contained no rust because they are constantly being used. Indeed, Gonzalez's testimony was extremely unclear, and after careful review the court believes that the fair inference which can be drawn from his testimony is that there may be some type of mist which ...


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