Owners of cargo lately laden aboard the River Gurara v Nigerian National Shipping Line Ltd
| Jurisdiction | England & Wales |
| Judge | Phillips L.J.,Mummery L.J.,Hirst L.J. |
| Judgment Date | 15 July 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0715-5 |
| Docket Number | QBADF 97/0211/B |
| Court | Court of Appeal (Civil Division) |
| Date | 15 July 1997 |
[1997] EWCA Civ J0715-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
Royal Courts of Justice
Lord Justice Hirst
Lord Justice Phillips
Lord Justice Mummery
QBADF 97/0211/B
MR. J. KAY Q.C. and MR. C. SMITH (instructed by Messrs Hill Dickinson Davis Campbell, Liverpool) appeared on behalf of the Appellants/Defendants.
MR. J. RUSSELL Q.C. and MR. R. THOMAS (instructed by Messrs Waltons & Morse, London, EC3) appeared on behalf of the Respondents/Plaintiffs.
On the 26th February 1989 a disastrous shipping casualty occurred. The "River Gurara" was on a laden voyage from Africa to Europe, when she suffered an engine breakdown. She stranded on the coast of Portugal and subsequently broke up with a loss of life and a total loss of cargo. Consignees of the cargo have sued on the bills of lading. Those bills were subject to the Hague Rules and the issue raised on this appeal is the manner of calculating the limit of the shipowners' liability under those Rules. That issue arises in relation to cargo that was containerised. The bills of lading describe the cargo that was said by the shippers to be within the containers as constituting a specified number of "bales" or "parcels" or "bags" or "bundles" or "crates" or "cartons" or "pallets". Article IV rule 5 of the Hague Rules limits shipowners' liability to "£100 per package or unit". The principal issue to be resolved is whether, in the circumstances of this case, the packages on which the limit is to be calculated are the containers, or the individual items within them. Such an issue has been the subject of judicial decision in many other jurisdictions, but this is the first time that it has arisen for determination in this country.
The Bills of Lading
The bills of lading were on the form of the UK West Africa Line. Under that form the carriage of the goods was, by a clause paramount, made subject to the Hague Rules if they formed part of the law of the place of shipment. The law of the places of shipment of the "River Gurara"'s cargo incorporated the Hague Rules, in their unamended form, and thus the contract of carriage was rendered subject to those Rules.
Clause 9(B) of the bills of lading provides:
"Shipper packed containers
If a Container has not been packed or filled by or on behalf of the Carrier
(B) notwithstanding any provision of law to the contrary the Container shall be considered a package or unit even though it has been used to consolidate the Goods the number of packages or units constituting which have been enumerated on the face hereof as having been packed therein by or on behalf of the Merchant and the liability of the Carrier (if any) shall be calculated accordingly.
It is the shipowners' case that the containers in any event constitute the package or unit for the purpose of calculating the Hague Rules limit but that, should there be any doubt about this, Clause 9(B) resolves it in their favour. It is cargo owners' case that, on the true interpretation of Article IV rule 5 it is the items within the containers that constitute the relevant packages or units and that Clause 9(B) is rendered ineffective by Article III rule 8 of the Hague Rules, which provides:
Any clause, covenant or agreement in a contract of carriage relieving the carrier or ship from liability for loss or damage in connection with goods arising from negligence, fault or failure in the duties and obligations provided by this Article, or lessening such liability shall be null and void and of no effect.
On the application of the cargo owners, an Order was made for the trial of the following preliminary issues:
(a) Whether clause 9 of the UKWAL form of the bill of lading is contrary to Article III r.8 of the Hague Rules and hence void;
(b) If the answer to (a) is no, whether the burden of proving that any particular container is "shipper packed" rests upon the Plaintiffs or the Defendants;
(c) In circumstances where a container or pallet has been used to consolidate goods and the bill of lading states not only the number of containers and/or pallets, but also quantifies the number of goods loaded therein or thereon, whether the Defendants are entitled to limit their liability pursuant to Article IV, r.5 of the Hague Rules by referenced to (a) the number of containers or (b) the number of pallets or (c) the number of goods described by the bill of lading as having been loaded therein or thereon.
To answer issue (a) it is necessary first to address issue (c), in order to see whether there is any conflict between Clause 9 of the bills of lading and Article III rule 8.
That was the approach adopted by the trial Judge, Colman J. He held that it was the number of items described by the bill of lading as being within the containers, rather than the number of the containers themselves, that was the basis for calculation of the limit. He further held that, insofar as Clause 9 provided to the contrary, it was contrary to Article III rule 8, and therefore void. In those circumstances issue (b) did not arise. The shipowners now appeal against the Judge's decision.
Question (c) is phrased on the premise that the Hague Rules limit falls to be calculated on the cargo, as described in the bill of lading. Colman J's decision proceeded on that basis. In the course of argument it became apparent that there was an important issue between the parties as to the effect of the description of the goods in the bill of lading. For the shipowners, Mr Kay Q.C., argued that, for the purpose of Hague Rules limitation, the description of the goods in the bill of lading was the definitive basis for calculating the limit. For cargo owners, Mr Russell, Q.C., argued that the limit fell to be calculated on the cargo as actually loaded. The bill of lading would normally be of evidential value, whether simply as prima facie evidence or as a result of estoppel, as to what was loaded, but it was not necessarily conclusive.
This issue is not merely academic. It goes to the root of the approach to the calculation of the limit in this case for which Mr Kay contends. In these circumstances the parties agreed that issue (c) required to be reformulated into a number of separate questions and suggested how this should be done. Varying slightly their suggestion, I propose to consider the following questions:
(1) Where packages are shipped in containers does the Hague Rules limit, on its true construction, fall to be calculated on the number of packages or the number of containers?
(2) What is the effect of the description in the bill of lading on the basis for calculating the Hague Rules limit? In particular,
(3) What is the effect of qualifying the description of the contents of a container by the words "said to contain".
The approach to the construction of the Hague Rules
The Hague Rules were the product of international convention. They were incorporated into the domestic legislation of a large number of seagoing nations and became widely used as the terms which governed the international carriage of goods by sea. Two considerations follow from this. First, it is legitimate when construing the Rules to have regard to their objects, as disclosed by the travaux preparatoires of the Convention. Second, particular respect should be paid to decisions of other jurisdictions in respect of the meaning of the Rules, for the stated object of the Convention was the unification of the domestic laws of the contracting states relating to bills of lading—see Stag Line v Foscolo Mango & Co [1932] AC 328 at 342 per Lord Atkin and at 350 per Lord Macmillan; The Hollandia [1938] AC 565 at 572 per Lord Diplock.
The objects of the limitation provisions of the Hague Rules are considered in a number of the United States authorities to which we have been referred and in a number of learned articles. For present purposes it is helpful to note that:
"one of the main purposes of limitation was to benefit cargo owners….. The intention of the Hague Rules was to give cargo a liberal limit of liability so as to preclude shipowners from inserting clauses in their bills of lading purporting to limit liability to ridiculously low figures"
'The Hague-Visby Rules' by Anthony Diamond Q.C. 1978 Lloyds M.C.L.Q. 225.
Mr Kay did not seek to gainsay this purpose of limitation, but he submitted that there was another purpose, to which he sought to give paramount effect. He contended that one of the objects underlying the Rules was to ensure that the shipowner was able to verify the extent of his liability. Where the nature and value of the goods inside a package were not specifically declared, the limit of liability would attach to the package itself. The number of packages would be apparent to the shipowner so that he could verify the limit of his liability. It followed that if a number of smaller packages were encased in a larger package, the appropriate package for limitation purposes was the larger one, for that was the only one that the shipowner could verify. Applying this principle, where packages were put inside a container, the container was the appropriate package for limitation purposes.
Colman J. was not attracted by this argument, nor am I. The verification principle is not apparent from consideration of the travaux preparatoires of the Convention. Furthermore, as Colman J. observed, rules 3 to 5 of Article III, to which I shall refer in due course, envisage circumstances in which the shipowner will...
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