Agents held liable to ship breakers for wharfage dues unpaid by owners

Agents for a ship which had been sold to breakers in Taiwan took proper steps to obtain sufficient funds in advance of the ship's arrival to meet all anticipated expenses.

However, after arrival at the yard the ship was arrested in respect of monies owed to interested parties outside Taiwan.  Eventually the owners were able to reach an agreement with the claimants and the arrest was lifted. In the meantime, additional wharfage dues amounting to US$ 26,800 had accumulated.

The ship breakers paid these dues under protest and subsequently brought an action against the ship's agents for indemnity.

Lawyers were instructed to represent the agents and although they were hopeful that the claim could be successfully resisted, the Court gave judgement in favour of the ship breakers. A decision was taken to appeal against the judgement, but this too was unsuccessful, and the Club settled the claim in full.

Meanwhile the vessel had been broken up and the owning company was found to have no other assets.  Strenuous efforts were made to recover the Club's payment from the managers of the ship and others but for various reasons these were unsuccessful.

Notwithstanding that the agent had done nothing wrong, the claim cost the Club in excess of US$ 30,000 and it is a good example of an agent being held responsible for the liabilities of his principal.  Fortunately, for the agent, the comprehensive protection offered by the ITIC's Rules covers such an eventuality.

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