POST-WAR prosperity brought a growth of trade, which involved a concomitant increase in claims for short-
age, pilferage and damage to cargo. In 1953 the UK and Standard clubs joined in appointing two officers to
investigate cargo discrepancies, one in London and the other in Liverpool, which led to the creation in 1954 of
a permanent Dock Security Force. It was much needed. In March 1961 the managers produced a circular: We
would like to draw to Members’ attention the fact that in 1953 the total amount paid in respect of cargo claims was approx-
imately £825,000 which represented little more than 20 per cent of the total amounts paid by the Association. For 1959 it
is estimated that including claims not yet settled we would pay £2,250,000 in respect of cargo claims, which will represent
37½ per cent of the whole. Owing to the increased burden placed upon shipowners by many recent improved Employers’
Liability schemes, it would have been reasonable to anticipate that the cargo proportion would have decreased in the seven
years 1953 to 1959. Figures indicate that 70 per cent of cargo claims arose in ships trading to and from Northern European
ports. In an effort to prevent cargo claims Captain E. T.N. Lawrey was retained to advise members. There were
specific problems. In 1962 one of the longest, largest and most complicated cases of cargo damage was conclud-
ed. The Ioannis P Goulandris left ports in Bulgaria, Turkey and Greece for the United States in 1940. Her cargo
consisted mostly of tobacco. While she was completing loading in Piraeus the war spread to the Mediterranean
and the Greek government ordered her to sail for America via the Suez Canal and the Cape of Good Hope. She
then had to put back to Aden with tailshaft trouble, spending 33 days there. Later, she was delayed at Durban
for 10 days with condenser trouble. Finally, there was spontaneous combustion of the tobacco cargo, and she put
into Bermuda for the fire to be extinguished. She finally arrived at her destination, Norfolk, Virginia, in May
1941. The cargo owners, a group of American cigarette manufacturers and their insurers, claimed over $1mil-
lion, saying that the ship was unseaworthy when she began her voyage. In an elaborate lawsuit, the club on
behalf of the shipowners collected evidence from 12 countries. With the permission of the Trading with the
Enemy Department, arrangements were made through neutral sources to smuggle affidavits and statements out
of occupied Bulgaria and occupied Greece to England for despatch to the United States, where a stay of pro-
ceedings was granted until after the war. As a result of interest accruing because of the delays, the amount
claimed was almost doubled. The main issue was the condition of the ship’s shafting and stern tube. She had
passed a special survey at Rotterdam in February 1940, and detailed evidence was given by the owners’ superin-
tendent engineer and by a Lloyd’s register surveyor about the steps then taken on the alignment of the shafting
and relining of the stern tube. The ship had traded without any trouble from the shafting and bearings for nine
months before the voyage. It was suggested on the shipowners’ behalf that grit and sand had entered the stern
tube while she was waiting in the Great Bitter Lake for a convoy, the curious feature of the damage to the stern
tube lining being that the lignum vitae was more heavily scored and worn in its upper part than in the lower
part. The judge held that the ship was seaworthy at the start of her voyage. An appeal was taken on certain issues
but this failed, so that the case was won entirely by the shipowners. Naturally, the legal costs involved were
heavy, about $350,000, and in accordance with the American court rules they were not, except for minor court
charges, recoverable from the other side. No doubt the real causes of the heating and the fire were the prolon-
gation of the voyage through wartime conditions and the fact that the tobacco had to pass twice through the trop-
There was nothing novel about claims for damaged cargo. From the last quarter of the nineteenth century
there had been complaints about the quality of chilled and frozen meat carried in refrigerated ships. Onions pre-
sented another problem. Some onions, although in apparently satisfactory condition when loaded, were in fact
not fit for a sea voyage and were bound to arrive at their destination in a damaged condition. The shipowner was
almost certain to be blamed unless the stowage and ventilation were perfect. Also affected by ventilation were
iron and steel products, which could rust in transit. Shipowners claimed that damage frequently arose from
defective galvanising. When goods were shipped during very cold weather and the voyage was through the trop-
ics, humid air condensed on the cold galvanised iron. Salt in the sea atmosphere tended to increase the damage.
If damage was due to ordinary sweating then it was not the fault of the ship and there was no liability involved.
Liability arose if cans were stored in the vicinity of cargo such as barrels of acetic acid, which could give off
fumes causing rust.
Damage by taint affected perishable cargoes such as flour, eggs and other provisions. Items as varied as
oranges, apples, oak lumber and fuel oil were blamed. In the 1920s, with the adoption of motor engines and oil
fuel ships, there were numerous claims for cargo damaged by oil and oil taint. An obvious remedy was not to
stow perishable cargo near goods likely to give off an odour. For instance, it was inadvisable to carry flour in a
‘tween deck with oranges in the hold below or in the upper ‘tween deck. Perishable cargo such as cotton seed
cake and/or groundnuts should not be loaded on top of wet manganese ore, even if separated by ample dunnage.
Another important separation was between castor seeds and edible grain. Castor seeds contain a very poisonous
element. If at any time they were stowed close to edible grain without very efficient separation, the two were like-
ly to become mixed and for practical purposes the edible grain became worthless.
In Cuba in the 1930s there was a practice of marking parcels of sugar in stowage by painting a line across the
bags as they lay in the hold, thus damaging the foodstuff. In West Africa leakage from barrels of palm oil spoilt
other cargo. An ever increasing problem was in the transport of cars. The 1936 annual report commented: The
practice of shipping motor cars uncrated, and indeed in a completely unprotected condition is becoming a common one.
When shipowners are persuaded to accept motor cars shipped in this manner, it must be realised that the shippers have a
great deal of expense, while the risk of damage to the cars is seriously increased. Many claims have been put forward against
shipowners for damage to unprotected motor cars, usually for quite trivial damage, such as dents, scratches, breakage glass,
pilferage of radiator caps and other small parts, etc. It is safe to say that practically all these claims would not arise if the
cars were properly packed.
There were still problems with specific cargoes in the 1950s and 1960s but the main difference was the vol-
umes being carried. In the mid-1950s there was a spate of claims on tainted coffee shipped from various South
American countries to Germany. While the price of coffee was rising there were relatively few claims, but when
the coffee market collapsed the number of claims increased. German merchants, who had to appeal to discrimi-
nating palates, reckoned that the value of their affected shipments depreciated by 15-20 per cent. Like chilled
meat, unroasted coffee is a sensitive cargo, attracting and retaining other odours. A large case arose through con-
tamination by dichlorophenol, a chemical used in weedkillers. It had been carried on the outward journey of the
Cap Frio from Hamburg and the captain had the hold cleaned in Buenos Aires, satisfying himself that there was
no residual ‘hospital’ smell before proceeding to Santos, Brazil to load some 5,000 bags of coffee. No more than
a teaspoonful was enough to contaminate the whole cargo. On behalf of the club an industrial chemist, Dr
Reginald Milton, went to Brazil to study the complete process of growing, testing and transporting coffee. The
main results of the investigations were recommendations that less insecticide be used on the plantations and that
packaging for dichlorophenol should be in heavy steel drums to be carried below deck, preferably with no other
cargo. This method of going back to source and looking at all stages of production and transport were to be fol-
lowed for other products. To reduce the general level of cargo claims and help carriers meet only the obligatory
ones, an advisory committee of consultants, including a biochemist and the club’s security officer, correspon-
dents and surveyors from Amsterdam, Antwerp, Bremen, Hamburg and Rotterdam, was set up to examine gen-
eral principles of safe carriage and problems with particular cargoes.
In 1960 club rules were amended to exclude from cover liabilities for nuclear damage caused by nuclear fuels
or radioactive products or waste, other than radioisotopes, carried as cargo in an entered ship. Following tech-
nical discussions with the United Kingdom Atomic Energy Authority, the exclusion was modified to allow cer-
tain categories of materials with low radioactivity to be covered.
One of the largest groups of cases concerned
maize. David Martin-Clark explains: The
problem arose early in the 1960s with shipments of
maize primarily from Argentina but also Brazil
into Western Europe, principally Italy and to a
lesser extent into Belgium, Holland and Germany.
Transport was mainly in Liberty ships from World
War II, handy-sized tramps. On destination these
maize cargoes were turning out with considerable
mould damage not only on the surface but also in
some cases throughout the cargo. Very heavy
claims were brought by some of the principal grain
houses against the shipping companies involved.
The big issue was whether the mould was
caused by the inherent vice of the cargo or
whether it was caused by or exacerbated by
the way in which it had been carried, in par-
Columns of wet corn in a cargo of maize
ticular the way in which it had or had not
been ventilated during the voyage from South
America to Northern Europe. The club was handling a few hundred cases, the amounts of money totalling £ 1½-
2 million. These cases were a major problem and a financial threat to the club.
David Martin-Clark continues: We did a good deal of research on the causes. It was pretty clear we were talking about
inherent vice of the cargo. Even if the ship’s ventilation had not been good, the most that was likely to produce was a small
amount of surface damage. There was no way in which ventilation or no ventilation blowing gently over the surface of the
cargo was going to affect what was going on, say, 10 metres down. That was our basic theme.
We decided we would fight test cases on the issue of inherent vice, where we were helped by a decision in the English courts
in a case involving another club fought on similar issues and won.Of course English precedent was not necessarily going to
help us in Continental jurisdictions where the bulk of these cases occurred. We bad to become deeply involved in at least the
leading cases in Genoa and Naples, Antwerp, Rotterdam and Bremen. In an effort to avoid what might have been just
an interchange of expert opinion, the club decided to run through test voyages from the River Plate to Western
Europe, during which it would monitor the build-up of temperature in this cargo. At the same time as it was
fighting the legal battles it was trying to fight the battle of expert opinion. Its findings in Latin America were
that the grain coming into the elevators, at least in that particular season, was probably too wet. It had too high
a moisture content to be safely carried without self-heating. The degree of sophistication in the Argentine at that
time was not sufficient to take that moisture out of the crop before it went on hoard the ship. Their drying facil-
ities were inadequate to cope with a crop that came in too wet. A similar pattern was also found in Brazil.
It took the club the best part of that decade to see the various cases through the courts. Unfortunately it lost
the leading case in Genoa on technical grounds but then managed to win the leading case in Naples. It won in
the Netherlands, and managed to defeat on technical grounds the leading case in Bremen. At the end of the day
the total amounts paid by the club in respect of the cases was something less than 25 per cent of the damages
claimed. From 20 February 1967 a limit of liability was also applied to war-built ships, £600,000 (or $1,680,000)
each accident or series of accidents arising out of one event, or each cargo voyage in a matter of cargo claims.
War-built tonnage had deteriorated rapidly.
In 1961 the first report was issued in what was to become a series of Carefully to Carry booklets, a collection
of technical papers on methods of preventing cargo damage. The first included the adequate sep-
aration of castor seed from grain and similar foodstuffs; cargoes such as grain and fishmeal
that can heat and deteriorate; the stowage of synthetic resin in multi-wall sacks; and mould
formations on chilled beef shipped from Argentina to European ports. Other reports dealt
with ventilation of cargoes, contamination of wood pulp by foreign substances, canned
goods, insect control, ore concentrates, steel hatch covers, and potatoes. Some of the subjects
were discussed in the shipping and insurance media and attracted international interest, usu-
ally favorable; critical comment came from cargo concerns. One specialised, high value cargo
that was not the subject of a report was cars. These were now starting to be carried in large num-
bers, closely stowed and lashed on artificial decks, early examples of which were prone to collapse.
The volume of business now merited permanent arrangements.
The club was able to record in 1963: The steps taken towards reducing cargo claims are bearing fruit. The proportion
of cargo damage claims to all claims paid by the club has gone down each year, from 18 per cent of the whole in 1959 to
14.7 per cent in 1962. Unfortunately, the same is not true of cargo shortage claims, which have increased from 7 per cent of
all claims in 1959 to 8.4 percent in 1962. In the Carefully to Carry programme the club was accumulating an expert-
ise beyond that of individual ship owners, pooling knowledge about their business and providing a service that
would have been beyond their individual resources. The clubs had a wealth of information that came from the
insurance of ships and the collective experience of shipowners. Exchange of information meant that owners
heard about problems from shipowners who were in other clubs as well. The club became a clearinghouse for
problems that it saw frequently, whereas a shipowner does not expect to have problems and the thought of his
ship getting into difficulties does not necessarily occur to him. Managers were guiding their members.
A cause for concern was the rising level of claims for loss of life and personal injury, especially from the USA,
where going to law vied with baseball as a national sport. Most of these cases went for trial by
jury, which tended to be well disposed towards plaintiffs, not wanting to send them away
empty-handed. Anybody who sued was fairly certain of getting an award and, although
judges did give advice on the level of damages, juries were at liberty to ignore it.
The 1953 report of claims paid was acidic: The fact that abuses do exist was strongly indi-
cated by a resolution adopted in October 1952 by the Association of the Bar of the city of New
York asking all lawyers in the city to limit the fees they charge in personal injury cases to 35 per cent
of the amount recovered for clients instead of the now common 50 per cent. This followed a consid-
erable controversy amongst American lawyers which began with adverse comments by an Appeal Court
on the growing practice of personal injury lawyers demanding 50 per cent of any recovery. One of the
members of the Bar Association, in the course of the discussion, was reported by the New York Herald
Tribune as saying: - ‘This 50 per cent now charged goes to pay fixers, runners and the phony testimony of
Chemical insecticides have made it easier to get rid of pests such as the large grain borer, above, and the mealworm
doctors. It is indecent, unfair and unprofessiona1. It is not justified and it is high time the profession met the issue.’
Psychologists have now recognized a type of disability they have termed ‘compensation neurosis’. Apparently when a man
is convinced that payment of compensation or damages is due to him the mental effect tends to make him feel ill or feel worse
than he actually is. A ship’s Doctor recently wrote: - ‘With the introduction and enormous extension of the laws of compul-
sory insurance against accidents all over the world, this illness has spread in such a way that psychologists have felt induced
to dedicate a particular chapter to it. The appearance and course of this illness is strictly connected with the medical-legal
side. It is common experience to see how rapidly the morbid signs vanish as soon as the disabled person has received the
indemnity. However, even after payment of the indemnity, if recovery is not obtained immediately, the fact cannot be exclud-
ed that the same psychological factors continue to act and the subject may also more or less consciously desire a revision of
the sentence, or an increase of the indemnity already received.’ The UK had to wait another 10 years for attitudes on
such claims to change. In 1963, after an earlier refusal, the club somewhat reluctantly agreed to follow the lead
of other clubs in allowing the extension of their cover to include certain claims by officers’ wives, who took occa-
sional voyages with their husbands.
Late on 22 December 1963 fire broke
out in the barber’s shop of the liner
Lakonia on a Christmas cruise from
Southampton to Madeira and the
Canary Islands. Within 10 minutes it
had spread to the upper deck, which
was blazing furiously. Off Morocco, the
ship had to be evacuated. Undertow, it
sank. Altogether 908 lives were saved
but 128 passengers and crew died.
John Tilley was one of those who
came into the office that Christmas
Day: Over 600 claims were made for
loss of life, personal injury and loss of
effects. Over500 of them were amicably
settled within 12 months of the acci-
dent. Total claims were over £500,000.
There was to be a continuing rise in the The Eleni K. loaded cargo in Thenavard, South Australia, leaving number
volume of personal injury claims. three hold empty. Soon afterwards cracks appeared in the hull structure
Cruises, becoming popular, were both amidships
a wanted market and unwanted risks.
In 1965 the cruise liner Yarmouth Castle, sailing from Miami to Nassau, was gutted by fire and sank within four
hours, the lives of 88 passengers and crew being lost. Although the ship was not entered in the club it produced
a landmark legal decision in that, whatever the passenger ticket said, passengers could sue successfully in the
USA because the accident happened within its territorial waters. In 1967 the clubs unanimously agreed that
claims for the repatriation of passengers when a voyage or cruise was not completed should be excluded from
P & I cover.
Changes were also being made in the club management. In 1959, to spread the risks and for simplicity of
The front page of the Daily Express, 24 December 1963, recording the fire on the passenger ship Lakonia, in
which 128 people died.
administration, the protecting and indemnity clubs were merged into a single club. Most members were already
in both clubs, only 41 members of the protecting club not being in indemnity and five vice versa. To speed office
procedures, an electro-mechanical system of record-keeping for each member was introduced, showing premi-
ums paid and claims made as well as estimated future calls and claims. When a claim was reported an estimate
could therefore be raised. With experience, the quality of information on individual members improved. In 1961
the managers’ authority on paying claims was raised to £5,000. In 1966, following observations by some younger
managers and a study by management consultants, claims handling was reorganised into syndicates, each dedi-
cated to a specific number of owners. Previously the attitude had been that, with the exception of personal injury
claims, anybody could cope with any P & I claim under the rules. No longer was it possible for anyone person
to be up to date with all the individual owners. David Martin-Clark managed the first syndicate: It represented
for the first time a structure that reflected our internal attitudes to the business. We had two choices. We could organise by
junction so that if a claim related to cargo it went to one person, if it was a collision claim it went to a second, if it was a
personal injury it went to a third and so on. I suggested, and those who thought as I did, that it would be better for a num-
ber of reasons to have all cases, whatever the type of claim involved, go to the same group of people. This was going to build
more quickly a better relationship with the shipowners and, in particular, they did not have to introduce themselves and their
ship and their fleets and their trading patterns to maybe four or five different people in the office simply according to the type
of casualty they had. They could ring up one or two people who knew them, who knew their fleets, trading patterns and so
on, knew the history of their claims. That would immediately mean something to the person in a syndicate.
By making most people in the syndicates generalists you may be losing a specialist edge but to breed generalists is better
than to breed specialists. If you have a major casualty you can send one person instead of a team of six to deal with it. Most
generalists would be sufficiently good to know when it is they need to call in specialists, which is actually comparatively rare.
Most cases can be handled perfectly adequately by a good generalist. Being a generalist too offers career opportunities right
through the firm to the very top, whereas if you were working in a functional department and you became a very good cargo
handler, the} limit of your ambition might be to lead the cargo department. The new system made it easier to identify
patterns and for staff in a syndicate to be familiar with their counterparts in members’ offices. Continuity was
preserved by organising four syndicates around existing interests. There was no violent change that could have
upset personal relationships.
Until the mid-1960s the key managers had been mainly lawyers. The few new entrants came on recommenda-
tion, through family connections or friends at Inns of Court. Sometimes they were asked if they had private
means. Now some fresh law graduates, mainly from Oxford, were being recruited through university appoint-
ments boards and trained in-house. The first was Terence Coghlin, who was to become senior partner.
The immediate cultural change was a start in adding the expertise of master mariners. One of the first was Rex
Palmer: I could read survey reports and read about collision cases in those years immediately after I was first engaged and
I could visualise exactly what was happening. It did not affect the legal situation, but I had the mind of a mariner. I could
see where the mistakes might have come from and why they may have come that way. Given reasonable intelligence, it is
possible for somebody to learn the relatively narrow area of the maritime law that we need to know about more easily than
it would be for any lawyer trying to learn about the sea. The sea is all to do with experience. It is not academic knowledge
and you cannot gain it without actually going to sea for a considerable length of time. You can detect when you are not being
told the truth in statements. You know some things are not possible. Overall, the club management was still a gentle-
manly operation. The club was dominated by Dawson Miller, who regarded it almost as a personal fief. Many
were the stories told of ‘Sir’s’ autocracy, and they grew in the telling. Typical was his reply to the comment that
there was an alert member of the committee: ‘Thank heaven there’s only one.’ His partners were old boys
meeting over long City lunches, men who understood the unwritten rules of the game and worked accordingly,
secure in the knowledge that the managers of other clubs were more colleagues than competitors. Indeed the top
management of the Standard and UK clubs was the same. Under the non-competition agreement among the
clubs, if one club was offered a ship previously entered in another club, it was bound to quote rates and condi-
tions that were no better. In their cosy world club managers could believe that they were changing with the
times. In one year it was to change more sharply and severely than they could have expected.