Dairy Containers Ltd v Tasman Orient Line CV
| Jurisdiction | UK Non-devolved |
| Judge | Lord Bingham of Cornhill |
| Judgment Date | 20 May 2004 |
| Neutral Citation | [2004] UKPC 22 |
| Court | Privy Council |
| Docket Number | Appeal No. 34 of 2003 |
| Date | 20 May 2004 |
[2004] UKPC 22
Present at the hearing:-
Lord Bingham of Cornhill
Lord Hoffmann
Lord Phillips of Worth Matravers
Lord Carswell
Dame Sian Elias
Privy Council
[Delivered by Lord Bingham of Cornhill]
Dairy Containers Limited appeals against a decision of the Court of Appeal (Keith, Blanchard and Anderson JJ, 17 June 2002), reversing a decision of Williams J made on 27 July 2001. The short, but financially significant, issue in the appeal concerns the correct interpretation of a damage limitation clause in a contract for the carriage of goods by sea. The contract was contained in or evidenced by a bill of lading, issued on behalf of Tasman Orient Line CV as carrier, of which Dairy Containers became the holder.
The contract was for the carriage of 70 coils of electrolytic tin plate from Busan in Korea to Tauranga in New Zealand aboard the carrier's vessel Tasman Discoverer. The bill of lading form used was apt for combined transport or port to port shipment, but the notation "tackle/wharf" and the identification of Tauranga as both the port of discharge and the place of delivery, on the face of the bill, made plain that this was intended to be (as in fact it was) port to port shipment. On delivery, 55 of the coils were found to be irreparably damaged by sea water, and the carrier has accepted liability for that damage. The loss suffered by Dairy Containers is agreed to be NZ$613,667.25, a sum which would be recoverable on its construction of the damage limitation clause, and was awarded by the judge. But the carrier contends (and the Court of Appeal held) that Dairy Containers' right of recovery is limited to £100 sterling, lawful money of the United Kingdom (or its equivalent in another currency), per damaged coil, a total of £5,500 sterling.
The cargo of 70 coils was recorded on the face of the bill as:
"Accepted by the Carrier from the Shipper in apparent good order and condition (unless otherwise noted herein) the total number or quantity of containers or other packages or units indicated above (for purposes including limitation of Carrier's liability) (∗) stated by the Shipper to comprise the goods specified below for transportation subject to all the terms hereof (including the terms on the reverse hereof and the terms of the Carrier's applicable tariff) from the Place of Acceptance or the Port of Loading, whichever applicable, to the Port of Discharge or the Place of Delivery, whichever applicable. On presentation of this document (duly endorsed) to the Carrier, by or on behalf of the Holder, the right and liabilities arising in accordance with the Terms hereof shall (without prejudice to any rule of common law or statute rendering them binding on the Shipper, Holder and Carrier) become binding in all respects between the Carrier and Holder as though the contract contained herein or evidenced hereby had been made between them."
The asterisk in brackets referred to the total number of packages, 70 coils, recorded in the box immediately above this clause. No declaration of value was made.
The terms on the reverse of the bill begin with a series of definitions. On a strict application of these, the present carriage would be "combined transport" and not "port to port shipment", but the parties are content to treat it as the latter and the distinction does not affect the outcome of the appeal but only the textual route by which the outcome is reached.
Clause 5 of the printed terms is in these terms:
" Carrier's Responsibility
(1) The Carrier shall be liable for loss of or damage to the Goods occurring between the time when it accepts the Goods for transport and the time of delivery, in accordance with the provisions of Clauses 6(A), (B) and 7 of this Bill of Lading.
(2) Subject to any limitation of the Carrier's liability which is applicable under Clauses 6(A), (B) and 7, when the Carrier is liable for compensation, in respect of loss of or damage to the Goods, such compensation shall be calculated by reference to the invoice value of the Goods plus Freight and Insurance if paid and the Carrier shall not be responsible for any loss of profit or any consequential loss."
Clauses 6(A), (B) and 7, to which reference is there made, distinguish between (a) combined transport when the stage of transport where the loss or damage occurred is not known, (b) combined transport when the stage of transport where the loss or damage occurred is known, and (c) port to port shipment.
The rules governing the first of these categories (set out in clause 6(A) (1)) are plainly inapplicable in the present case, since the stage of transport where the loss or damage occurred is known. When these rules apply, the carrier is not to be liable for loss or damage caused by a series of specified causes and is to be liable only for such loss or damage as is not attributable to any of those causes, the burden of proving causation by one of the excluded clauses being on the carrier. Where, under this provision, the carrier is liable for compensation for loss or damage to goods,
"such compensation shall not exceed US$2.50 per kilo of gross weight of the Goods lost or damaged."
Mr Rzepecky, in the course of his able and attractive argument for Dairy Containers, relied on this limitation provision as being, in any ordinary transaction, more generous and commercially realistic than the limitation contended for by the carrier in the present case.
The second of these categories (combined transport when the stage of transport where the loss or damage occurred is known) is sub-divided. The carrier's liability may be governed (clause 6(B)(a))
"by the provisions contained in any international convention or national law, which provisions:
(i) cannot be departed from by private contract to the detriment of the Merchant [an expression defined to include the holder of the bill of lading, consignee and receiver of the goods], and
(ii) would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage of transport where the loss or damage occurred and received as evidence thereof any particular document which must be issued in order to make such international convention or national law applicable."
This provision has no application in the present case, since it has been common ground throughout that this carriage was not governed by any international convention nor by the law of either Korea or New Zealand. The carrier's liability was the subject of contract only, which is the subject of clause 6(B)(b)(i):
"By the Hague Rules contained in the International Convention for the Unification of Certain Rules relating to the Bills of Lading dated 25 August 1924 (hereinafter called the Hague Rules), if the loss or damage is proved to have occurred at sea or on inland waterways; for the purpose of this sub-paragraph the limitation of liability under the Hague Rules shall be deemed to be £100 Sterling, lawful money of the United Kingdom per package or...
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