El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA
[2004] FCAFC 202
•10 AUGUST 2004
FEDERAL COURT OF AUSTRALIA
El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA
[2004] FCAFC 202ADMIRALTY AND MARITIME LAW – carriage of goods by sea – Hague-Visby Rules – Australian COGSA Art 3 Rules 3, 4 and 8 – method for assessing value of cargo – where no ‘commodity exchange price’ or ‘current market price’ – where ‘normal value’ of goods at destination not determined.
ADMIRALTY AND MARITIME LAW – limitation of liability – bill of lading – how to treat posters and prints enumerated as ‘pieces’ – whether an enumeration of packages or units – whether contractual limitation applies.
STATUTORY INTERPRETATION – construction of Carriage of Goods by Sea Act 1991 (Cth), Art 4 Rule 5(c) – meaning of ‘enumeration of packages or units’ – meaning of ‘as packed’.
Admiralty Act 1988 (Cth) ss 4, 9, 12 and 13
Carriage of Goods by Sea Act 1936 (USA)
Carriage of Goods by Sea Act 1991 (Cth) ss 7, 8 and 10, Schedule 1A, Art 3 rr 3, 4 and 8, Art 4 r 5
Carriage of Goods by Water Act 1970 (Canada)
Harter Act 1893 (USA)
Sea Carriage of Goods Act 1924 (Cth)
Sea-Carriage Documents Act 1996 (Qld) s 6
International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924 (the Hague Rules)
International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924, as amended by the Protocol of 23 February 1968 and the Protocol (SDR Protocol) of 21 December 1979 (the Hague-Visby Rules)
Vienna Convention on the Law of Treaties, Vienna, 23 May 1969 Arts 31, 32 and 33
Anticosti Shipping Co v Viateur St. Amand [1959] SCR 372; [1959] 1 Lloyd’s Rep 352 considered
Applicant A v Minister for Immigration & Ethnic Affairs (1997) 190 CLR 225 applied
Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646 referred to
Bekol BV v Terracina Shipping Corporation 13 July 1988 QBD, unreported discussed
Binladen BSB Landscaping v M.V. ‘Nedlloyd Rotterdam’ 759 F.2d 1006 (2nd CCA, 1985) considered
Chan v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 referred to
Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178 referred to
Chellaram & Co Ltd v China Ocean Shipping Co [1989] 1 Lloyd’s Rep 413 referred to
Chicago, Milwaukee & St Paul Railway Co v McCaull-Dinsmore Co 253 US 97 (1920) referred to
Dessert Service Inc v M/V MSC Jamie/Rafaela 219 F.Supp. 2d 504 (S.D.N.Y., 2002) referred toEffort Shipping Co Ltd v Linden Management SA [1998] AC 605 referred to
Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1974] SCR 933; [1973] 2 Lloyd’s Rep 469 considered
Franke v CIC General Insurance Ltd(‘The “Coral”’) (1994) 33 NSWLR 373 discussed
Hunter Douglas Australia Pty Ltd v Perma Blinds (1969) 122 CLR 49 followedLeather’s Best Inc v The ‘Mormaclynx’ 451 F.2d 800 (2nd CCA, 1971); [1971] 2 Lloyd’s Rep 476 discussed
M.B. Pyramid Sound N.V. v Briese Schiffahrts G.M.B.H. and Co. (‘The “Ines”’) [1995] 2 Lloyds Rep 144 discussed
Matsushita Electric Corp of America v SS Aegis Spirit 414 F. Supp 894 (1976) considered
Mitsui & Co Ltd v American Export Lines 636 F.2d 807 (2nd CCA, 1981) considered
Nathan Trotter v Delta Steamship Lines [1985] AMC 2783 referred to
O’Hanlan v Great Western Railway (1865) 6 B & S 484 cited
Patrick v Russo-British Grain Export Company Limited [1927] 2 KB 535 discussedRoyal Typewriter Co v M.V. ‘Kulmerland’ 483 F.2d 645 (2nd CCA, 1973), [1973] 2 Lloyd’s Rep 428 discussed
Sept Isles Express Inc v Clement Tremblay [1964] Ex CR 213 cited
Spencer v Commonwealth of Australia (1907) 5 CLR 418 followed
Standard Electrica SA v Hamburg Sudamerikanische Dampfschiffahrts - Gesellschaft 375 F.2d 943 (2nd CCA, 1967) discussed
Studebaker Distributors Ltd v Charlton Steam Shipping Company Ltd [1938] 1 KB 459 considered
The ‘River Gurara’ [1996] 2 Lloyd’s Rep 53 discussed
The ‘River Gurara’(Owners of Cargo Lately Laden on Board) v Nigerian National Shipping Line Ltd [1998] QB 610 discussed
Benedict on Admiralty, 7th edn, looseleaf, Vol 2A CH II “Basic Cargo Damage Law: Historical Background”
L Brown (ed.), The New Shorter Oxford English Dictionary, Clarendon Press, Oxford, 1993
Colinvaux, R, The Carriage of Goods by Sea Act, 1924, Stevens & Sons Limited, London, 1954
Davies, M and Dickey A Shipping Law (3rd Edn Thomson LBC 2004)
De Gursey “The ‘Container Clause’ in Article 4(5) of the 1968 Protocol to the Hague Rules”, (1970) 2 JoML&C 131
Diamond, A “The Hague-Visby Rules”, [1978] LMCLQ 225
B A Garner (ed.), Black’s Law Dictionary, 6th ed., West Publishing Co., St Paul, 1996 Gaskell, N Bills of Lading: Law and Contracts, LLP, London, 2000
Grönfors, K, ed, Six Lectures on the Hague Rules, Scandinavian University Books, Gottenburg, 1967
Knauth, A The American Law of Ocean Bills of Lading, 4th edn, American Maritime Cases, Baltimore, 1953
McGregor, H McGregor on Damages, 17th edn, Sweet & Maxwell, London, 2003
Mocatta, A, et al., Scrutton on Charterparties and Bills of Lading, 18th edn, Sweet & Maxwell, London, 1974
Mustill, M “Carriage of Goods by Sea Act 1971”, Arkiv for Sjorett vol ii issue 4/5, Oslo, 1972
Rodière, R Traité Général de Droit Maritime Vol 2
Robinson, G Robinson on Admiralty, Hornbook Series, West Publishing Co, St Paul Minn., 1939
Schmeltzer and Peavey “Prospects and Problems of the Container Revolution” (1970) 1 JoML&C 203
Schoenbaum, T Admiralty and Maritime Law, 3rd edn, Hornbrook Series, West Group, St Paul, Minn 2001
Selvig, E Unit Limitation of Carrier’s Liability: The Hague-Visby Rules Art. IV (5): A Study in Comparative Maritime Law, Oslo University Press, Oslo, Sir Isaac Pitman & Sons, London, 1960
Sturley, M The Legislative History of the Carriage of Goods by Sea Act CMI
Temperley, R et al. Carriage of Goods by Sea Act 1924, 3rd edn, Stevens & Sons Limited, London, 1927
Tetley, W Marine Cargo Claims, 3rd edn, Bleis, Montreal, 1988
Tetley, W Marine Cargo Claims, Internet edn
Comité Maritime International 2000 The Travaux Préparatoires of the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading of 25 August 1924, and the Protocols of 23 February 1968 and 21 December 1979
Treitel, G H “The Legal Status of Straight Bills of Lading”, 119 LQR 608
Treitel, G H Carver on Bills of Lading, 1st edn, Sweet & Maxwell, London, 2001
Sir Guenter Treitel and F M B Reynolds (eds.) Carver on Bills of Lading, 1st ed., LBC Information Services, Sydney, 2001
EL GRECO (AUSTRALIA) PTY LIMITED AND JOHN THEODORAKOPOULOS V MEDITERRANEAN SHIPPING CO SA
Q 116 OF 2003BLACK CJ, BEAUMONT & ALLSOP JJ
10 AUGUST 2004
SYDNEY (HEARD IN BRISBANE)
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 116 OF 2003
On Appeal from a Single Judge of the Federal Court of Australia
BETWEEN:
EL GRECO (AUSTRALIA) PTY LIMITED
FIRST APPELLANT/FIRST CROSS-RESPONDENTJOHN THEODORAKOPOULOS
SECOND APPELLANT/SECOND CROSS-RESPONDENTAND:
MEDITERRANEAN SHIPPING CO SA
RESPONDENT/CROSS APPELLANTJUDGES:
BLACK CJ, BEAUMONT AND ALLSOP JJ
DATE OF ORDER:
10 AUGUST 2004
WHERE MADE:
SYDNEY (HEARD IN BRISBANE)
THE COURT ORDERS THAT:
1.The cross-appeal be allowed.
2.The cross-respondents pay the cross-appellant’s costs of the cross-appeal.
3.The appeal be dismissed.
4.The appellants pay the respondent’s costs of the appeal.
5.The orders of the Court made on 17 July 2003 be set aside, except the order as to costs.
6.The parties file, within 7 days, a minute of order which is agreed between them to provide for judgment for the second appellant based on the application of Article 4 rules 5(a) and (c) of Schedule 1A to the Carriage of Goods by Sea Act 1991 (Cth) on the basis of there being only one package or unit, that being the container, in substitution for the orders made on 17 July 2003, and which have been set aside; and failing any such agreement, the cross-appellant and cross-respondents file and serve within 14 days forms of order which they contend dispose of the matter.
7.Otherwise, stand the matter over to a date to be fixed for the making of final orders and any argument in connection therewith.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 116 OF 2003
On Appeal from a Single Judge of the Federal Court of Australia
BETWEEN:
EL GRECO (AUSTRALIA) PTY LIMITED
FIRST APPELLANT/FIRST CROSS-RESPONDENTJOHN THEODORAKOPOULOS
SECOND APPELLANT/SECOND CROSS-RESPONDENTAND:
MEDITERRANEAN SHIPPING CO SA
RESPONDENT/CROSS APPELLANT
JUDGES:
BLACK CJ, BEAUMONT AND ALLSOP JJ
DATE:
10 AUGUST 2004
PLACE:
SYDNEY (HEARD IN BRISBANE)
REASONS FOR JUDGMENT
BLACK CJ:
I agree with Allsop J, for the reasons he gives, that the appeal should be dismissed and that the cross-appeal should be allowed. I agree the orders should be made as proposed by Allsop J.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black.
Associate:
Dated: 10 August 2004
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 116 OF 2003
On Appeal from a Single Judge of the Federal Court of Australia
BETWEEN:
EL GRECO (AUSTRALIA) PTY LIMITED
FIRST APPELLANT/FIRST CROSS-RESPONDENTJOHN THEODORAKOPOULOS
SECOND APPELLANT/SECOND CROSS-RESPONDENTAND:
MEDITERRANEAN SHIPPING CO SA
RESPONDENT/CROSS APPELLANT
JUDGES:
BLACK CJ, BEAUMONT AND ALLSOP JJ
DATE:
10 AUGUST 2004
PLACE:
SYDNEY (HEARD IN BRISBANE)
REASONS FOR JUDGMENT
BEAUMONT J:
Introduction
Appeal, and cross-appeal from orders of a Judge of this Court, in a maritime matter, in which judgment was entered for the second appellant (and first cross-respondent) in the sum of $63,570 plus interest. In the appeal, the appellants seek to increase substantially the amount of the judgment; whereas the cross-appellant (the respondent in the appeal) seeks to reduce the amount of the judgment entered.
I have had the benefit of reading, in draft, the reasons of Allsop J which outline the background facts. These reasons will first address the issues arising in the appeal itself. I will then return to the cross-appeal.
The appeal on the value of the goods
In order to understand the issues arising in the appeal, reference should first be made to the explication of the background given in Allsop J’s reasons.
By their notice of appeal, the appellants contend, in summary, that:
·Judgment should have been found for Mr Theodorakopoulos in the sum of $883,390, plus interest, in accordance with Article 4 Rule 5(b) of the Amended Rules.
·It should have been held that the price agreed between Mr Petrogiannakis (a director of the first appellant) and Mr Theodorakopoulos at arms’ length established the relevant market value of the goods, or evidence of the current market value of the goods in Greece at the time and place the goods ought to have been delivered.
·Her Honour should not have given ‘critical importance’ to the evidence of Mr Cocks, called by the respondent as an expert witness, in determining the value of the goods. Alternatively, if Mr Cocks’ evidence was to be accepted and given critical importance, damages should have been assessed at $390,000, plus interest.
·As mentioned, the appellants have also appealed against the costs order made by her Honour. I will return to this part of the appeal later.
Her Honour’s outline of the evidence describing background material
Some of the factual background to the appeal has been outlined in the preliminary observations made by Allsop J in dealing with the cross-appeal. It will, however, assist if further reference is made to her Honour’s outline of the evidence describing that background, as follows:
·No detail of the negotiations between Mr Carl and Mr Petrogiannakis was provided. Mr Carl’s prices ($250,000 for land and buildings and $150,000 for the business) were paid. This sum included a significant quantity of prints and posters, although they were not identified in the contract. Their quantity was unknown to Mr Petrogiannakis, who arranged at some point for an inventory to be taken.
·Mr Petrogiannakis said that he and his wife commenced operating the poster business after payment of the deposit. It was not clear whether they sold any of the stock prior to negotiating for the sale to Mr Theodorakopoulos. Mr Petrogiannakis said that they sold ‘quite a few’ of the prints and posters in this period, but could not indicate any figure. The records had been lost. (Reference was made to the two fires at the premises in June and September 1999). There was no evidence in respect of the number of posters lost or damaged, what proportion of the total they represented, or how their value was assessed.
·Mr Petrogiannakis had known Mr Theodorakopoulos since about 1988. At some time after Mr Petrogiannakis had (in 1999) purchased the poster business, he spoke to Mr Theodorakopoulos at the office of a solicitor whom they had both consulted. Mr Petrogiannakis knew that Mr Theodorakopoulos had sold his commercial properties and was returning to Greece. Mr Petrogiannakis told Mr Theodorakopoulos about his acquisition of the poster business. Mr Theodorakopoulos expressed some interest and later visited its premises in Brisbane.
·The negotiations between Mr Petrogiannakis and Mr Theodorakopoulos appear to have taken place over a short period, some three days. Initially, Mr Petrogiannakis sought $18 per poster or print. The negotiations concluded with Mr Theodorakopoulos’ agreement to buy all of the stock for $956,545. Evidence differed as to how this was made up. Mr Petrogiannakis said that the price for the majority of the posters was $7.00, and $5.00 for those which Mr Theodorakopoulos was not particularly keen to buy. Apparently, there was a substantial number of the latter. Mr Theodorakopoulos said that the prices agreed were $7.00 for the larger, and $5.00 for the smaller posters.
·Mr Petrogiannakis had no idea of the value of the stock when he purchased the business. Mr Theodorakopoulos also had none when negotiating with Mr Petrogiannakis. Mr Petrogiannakis said that, after he acquired the business, he obtained catalogues, finding that the value of the posters far exceeded what he had paid for them ‘and indeed, they were worth a lot more than was later sought’. (Her Honour commented:
‘If this view was reached at an early point it was without the benefit of an inventory and description of the posters and prints, which ranged over a wide number of subjects. No catalogue or price list was produced in evidence.’)
·Mr Theodorakopoulos said that he made some inquiries about the amount for which the posters and prints might be sold, claiming that it was a condition of his agreement with Mr Petrogiannakis that Mr Theodorakopoulos ‘could sell the posters and prints at a profit’.
·Mr Theodorakopoulos also made inquiries (in Greece) of gypsies who sold through stalls at flea markets. He told them ‘he had posters with different subjects, but he was not specific’. They ‘indicated that he would be able to sell them’.
·Mr Theodorakopoulos’ inquiries ‘were also said to have revealed that the total cost of the larger posters would be AUD$9.25 each, after the cost of lamination and payment of local taxes’.
·Mr Theodorakopoulos said that ‘he found that the posters could sell in Greece for AUD$25 retail’ and he ‘decided that he would sell them for AUD$20 each’. (Her Honour noted that the source of this advice and how such an opinion was reached ‘was not gone into’.) Later, Mr Theodorakopoulos added that he did not intend to sell them all at once, but a few at a time. ‘In the meantime, he intended to store them in the basement of his brother’s house’.
·Mr Theodorakopoulos communicated further with Mr Petrogiannakis (‘presumably confirming his purchase’). An invoice or invoices later issued. (Her Honour observed: ‘Two invoices, dated 10 December 1999, varying slightly in their contents, were produced in evidence. Mr Petrogiannakis did not explain how this came about. The fact of the multiple invoices and the dates when they in fact issued did not ultimately assume importance to the other issues in the proceedings. Their relevance appears to be limited to ... Mr Petrogiannakis’ ... credit’.)
·Mr Theodorakopoulos also provided an irrevocable letter of guarantee to El Greco (Australia) Pty Limited (‘El Greco’). Mr Petrogiannakis said that its purpose was to enable El Greco to sue for any outstanding monies in Greece.
·The person who undertook the inventory for the sale to Mr Theodorakopoulos (Mr Schmidt), amalgamated and packed any loose posters or prints in paper. Many, if not most, were still packed and covered in paper, as they had been when delivered to the Brisbane premises.
·The shipping documents identify some 200,945 posters and prints. (However, the appellants conceded at trial that this overstated the correct figure ‘by about 70,000’.)
·The respondent’s marine surveyor (Mr Pavlidis) described the cargo he inspected at Aigion ‘as consisting of approximately 2,000 packages’.
Her Honour’s conclusions on the value of the goods
The primary Judge noted that the appellants ‘have not produced any evidence as to the value of the posters’; and that they relied only upon the sale to Mr Theodorakopoulos as evidence of their market value. For their part, the respondents submitted that the circumstances surrounding the transaction, and other evidence of value, show the contract price to be unexplained and unreliable.
The primary Judge’s findings of fact
Her Honour made the following findings:
·There was no explanation as to how either the purchase price or the price paid to Mr Carl was ‘calculated or assessed’. No catalogues or any other documentation showing prices were produced, and no reason provided for their non-production. No evidence was given to explain the basis of the insurance settlements after the fires (at [41]).
·In view of the paucity of evidence, and because of the unsatisfactory view taken of Mr Petrogiannakis as a witness (examples of which were then given), his evidence as to the contract price having some basis in value would not be accepted without other evidence to support it (at [41]).
·Mr Theodorakopoulos was ‘a more direct and responsive witness’, but his evidence as to the inquiries made should not be acted upon ‘without some other evidence to support it and none was offered’. It was not that his conversation with the gypsies was ‘necessarily ... far-fetched’ (and an aspect of his assessment of the costing of the prints and posters found support in the evidence of Mr Cocks), but ‘[b]y itself it [was] not, however, sufficient to give his evidence as to value much weight’. Further, it was ‘difficult to accept that a businessman would agree to pay almost AUS$1M on the basis of a few cursory inquiries’ (at [44]).
·If Mr Petrogiannakis paid $150,000 and then received about $1.2 million in total, and if Mr Theodorakopoulos was going to sell the stock for twice what he had paid, the order of profit ‘necessitates explanation’. The support of other evidence from the appellants was required, and it was not given.
·The only other evidence was given by Mr Cocks, a witness having no connection with these proceedings. Her Honour could ‘see no basis for not accepting his evidence’. He had sold posters and prints, wholesale and retail for some years. He had dealt with Mr Carl, who had the licence to print and sell some of the posters in question.
·Mr Carl had dealt with both local and overseas suppliers and was familiar with their price lists.
·The subject posters and prints included (mainly) animal and landscape scenes, especially Australian ones; still lifes; old advertisements of well-known brands; vintage and classic cars; motor bikes, especially Harley Davidsons; former pop and movie stars.
·Mr Cocks said that in 1994 he was paying about $2.00 per poster (including freight cost) for imported posters. His wholesale (resale) price then was $3.00, although a retailer might sell a laminated poster for $10.00 to $15.00. For Mr Carl’s posters, such as those listed in the inventory, when purchasing in larger numbers, he would have paid $1.75 for a large poster and 95 cents for a small one.
·Mr Cocks said that Mr Carl did not publish much stock after 1994, so that most of his own stock was quite old. A lot of other stock was supplied from overseas (some of it up to 15 years old).
·Mr Cocks, who was familiar with a large number of the prints and posters, ‘considered that in September 1999 and 2000 there would have been little demand for them. He could not have sold them and he would not have purchased them. Whilst he may have purchased some of the posters from overseas sources at an earlier time, he was not buying them in 1999’.
·Mr Cocks said that, generally speaking, posters do not increase in value, contrary to Mr Petrogiannakis’ assertion: ‘Rather they go out of fashion. Some posters continue to sell, but most do not. He would be very surprised if he was able to sell twenty per cent of the posters listed. Much of it would have to be disposed of. If he had to buy the stock as a whole he would pay no more than $40,000 for it’.
Her Honour next (at [50]) summarised ‘the effect’ of Mr Cocks’ evidence as follows:
‘... [A] wholesaler might be able to sell something less than twenty per cent of the total of 130,945 posters and prints. Eighteen percent of that figure is 23,570. The cost to a wholesaler might be $40,000 and they might expect to make a profit of $1.00 for each poster or print, $23,750. The value to a wholesaler might be taken as $63,750.’
(The primary Judge also noted that a retailer would make a greater profit, over a period of time, selling at an average of $12.00 per print after paying for lamination. However, in her view, neither of the appellants could be regarded as retailers.)
The primary Judge’s application of legal principles
Her Honour next turned to the application of the Amended Rules.
(It will be recalled that Article 4 Rule 5(b) of the Amended Rules provides that –
‘(b) The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract ... .
The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according to the current market price, or if there no be commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality.’ (Emphasis added).)
The primary Judge noted that the appellants had objected to Mr Cocks’ evidence as irrelevant since Rule 5(b) ‘requires value to be assessed according to the market value of the goods at their intended destination. If this is so, the [appellants’] reliance upon the contract price of $956,545 would also appear to be misplaced’.
Her Honour then held that, even if that price were acceptable, it was ‘not evidence of market value in Greece’.
The primary Judge noted that Mr Theodorakopoulos’ evidence that he might be able to sell the goods in Greece ‘cannot be relied upon as evidence of value. Without more, it cannot establish their value, assuming for present purposes there is some such market’.
Her Honour said (at [52]):
‘Article 4 r 5(b) does permit that the value of the goods be fixed by reference to the “normal” value of the goods, where there is no current market price. This would appear to allow for assessment by the most appropriate method available. It has been suggested that the rule lays down only a prima facie measure and that the rule does not permit the case of others where the circumstances require (see A Diamond QC ‘The Hague-Visby Rules’ in (1978) LMCLQ 241 at 248).’
(In his paper, Mr Diamond had said (at 248):
‘As to the construction of Rule 5(b), it is possible to argue that it excludes all claims not based on the value of the goods at the time of delivery. This result would be so far-reaching that it cannot be right in the absence of express words of limitation. It seems that [its] purpose is to harmonise the rules as to measure of damages in all contracting States. What it does is to lay down a prima facie measure of damages. Where there are special circumstances making it inappropriate to apply the prima facie measure, then the rule does not prevent damages calculated in other ways ... .’ (Emphasis added.)
Mr Diamond did not, however, attempt to define, or even describe, his perception of ‘special circumstances’ in this context. But it is apparent that he was not suggesting that the measure was at large or for an assessment by reference to the ‘most appropriate method’.)
Her Honour then (at [53]) said that the absence of a market at the destination has often arisen in contracts of carriage, citing O’Hanlan v Great Western Railway (1865) 6 B & S 484, where, the primary Judge said, it was held that ‘one should take into account the cost price, the expenses which the seller would incur, and allow for a reasonable profit’.
(In O’Hanlan, goods sent by the defendant’s railway from Leeds to Neath were lost. Blackburn J said (at 491):
‘... [S]etting aside all special damage the natural and fair measure of damages is the value of the goods at the place and time at which they ought to have been delivered to the owner. Now the value of the goods at the place of delivery must be the market price, if there is a market there for such goods: if there is not, either from the smallness of the place or the scarceness of the particular goods, the value at the place and time of delivery would have to be ascertained as a fact by the jury, taking into consideration various matters, including, in addition to the cost price and expenses of transit, the reasonable profits of the importer, which are adjusted by what is called the higgling and bargaining of the market.’)
Her Honour continued (at [53]):
‘That is not the only method of assessment. Resale may be another: [Patrick] v Russo-British Grain Export Company Limited [1927] 2 KB 535. In the present case, the evidence permits only an assessment of the value of the goods in Australia. It would, in any event, appear to be the more appropriate, given that the claim is brought on behalf of the owner of the goods.’ (Emphasis added.)
(In The Russo-British Case, the buyers (merchants) bought Russian wheat of a specific description for delivery on a named date, and before that date resold the wheat to a third party at a profit. The sellers failed to deliver. On that date, and subsequently, there was no market for Russian wheat of that description. The sellers knew, at the time of sale, that the buyers were buying for resale. It was held that the buyers were entitled to damages as to the difference between the contract price and the resale price.
Salter J said (at 538):
‘Where a seller of goods fails to deliver, he should pay to the buyer the value of the goods at the time when they should have been delivered. This is the normal measure of damages. It is the measure prescribed by the first branch of the rule in Hadley v. Baxendale [(1854) 9 Ex. 341], and enacted in s. 51 of the Sale of Goods Act, 1893. If at the date of the breach there is an open market for goods of that kind, then the market price is obviously the value to the buyer. If there is no market the value must be otherwise ascertained, and a resale price may be some evidence of such value. But it is clear that loss of profit on resale can never be recovered unless the buyer can bring himself within the second branch of the rule and can show special circumstances and a right to special damages such as is reserved by s. 54 of the Sale of Goods Act, 1893.’)
The primary Judge agreed (at [54]) that, as a general rule, the price obtained on a sale between two people in business, at a date close to the valuation date, is ‘the best evidence of value’. However, her Honour added (at [54]):
‘That does not, however, require it to be applied where the contract price in question has no apparent basis in market prices or valuations. The transaction between Mr Petrogiannakis and Mr Theodorakopoulos, and the method by which they ascertained a price, could not be regarded as very business-like, or as usual in business, except perhaps a business of the most speculative kind. No confidence can be placed in the contract price as reflecting market value without evidence to support it. The purchase price paid to Mr Carl might have proved a useful guide. It would not support a subsequent sale price, within twelve months, of nearly $1M. I would not accept at face value Mr Petrogiannakis’ suggestion that Mr Carl sold at an undervalue. However, the two payments made by the insurers after the fires suggest that the value of the goods was higher. To give weight to them, as supporting the later price agreed between Mr Petrogiannakis and Mr Theodorakopoulos would require further explanation as to the basis upon which those payments were calculated. This was not provided.’
The primary Judge turned next to limitation and other issues, concluding her reasons thus (at [74]):
‘There will be judgment for the second applicant in a sum to be assessed. I have assessed $63,570 as the value of the goods to a wholesaler and this would appear to me an appropriate measure with respect to the interests of the Trust.’
The appellants’ first ground of appeal
On behalf of the appellants, two alternative submissions are made. For its part, the respondent has filed a notice of contention. It will be convenient to consider each in turn.
It is first submitted by the appellant that the testimony at trial disclosed that there was a proper basis in the evidence for the transaction, and unless there was an express finding that the transaction was not at arms’ length (and there was no such finding), then in accordance with the settled principles of valuation, the amount of damages is the recent sale price.
For this purpose, the appellants rely upon observations of Gleeson CJ in Franke v CIC General Insurance Ltd(‘The “Coral”’) 33 NSWLR 373. There, the seller of a dredge sought indemnity under an unvalued policy of marine insurance, following its total loss in the course of the insured voyage from Brisbane to India under tow. It was held by a majority of the Court of Appeal of the Supreme Court of New South Wales (Gleeson CJ, Sheller JA, Kirby JA dissenting) that the appropriate method of calculating the value of the vessel (so as to ascertain the insured’s entitlement under the policy), was to take the sale price and deduct from it the cost of having it towed, and the cost of insurance.
Gleeson CJ stated (at 376 – 377) the principles relevant to the ascertainment of value in that case, to the following effect.
·In its ordinary meaning, ‘value’ is exchange value; that is, the price in cash or kind which would be obtained in an arms’ length dealing between a willing but not anxious seller and a willing but not anxious buyer (citing Spencer v Commonwealth of Australia (1907) 5 CLR 418 at 431).
·Ordinarily, the best evidence of value is the price obtained on an arms’ length sale at a time close to the date of valuation where no material change in circumstances has occurred.
·At least implied in a statement of value is an assumption as to time, location and the conditions of the hypothetical sale by reference to which the exchange value is measured. For example, ‘a statement about the value of a barrel of oil, if divorced from any context, is meaningless. On the other hand, a statement that the current market value of oil is X dollars per barrel FOB Rotterdam conveys a precise meaning’.
As indicated, Gleeson CJ referred to Spencer’s Case (at 431), a case concerned with the value of land. Griffith CJ also mentioned that in the case of chattels it is often, although not always, easy to ascertain the value (at 431):
‘In order that any article may have an exchange value, there must be presupposed a person willing to give the article in exchange for money and another willing to give money in exchange for the article. When there is a large or considerable number of articles of the same kind which are the subject of daily or frequent sale and purchase, the value of the articles is taken to be their current price. Thus, in the Sale of Goods Act, the measure of damages for wrongful refusal to deliver goods is to be ascertained with reference to “the market or current price of the goods.” The foundation of this doctrine is that a man desiring to sell such articles can readily find a purchaser at a price which is fairly certain, and conversely that a man desiring to buy can find a seller at about the same price. But these considerations are not necessarily equally applicable to land.’
Counsel for the appellants then challenged her Honour’s conclusion (at [44]) (already mentioned) that she –
‘... would not be inclined to act upon [Mr Theodorakopoulos’] evidence as to the enquiries he made without some other evidence to support it and none was offered. It is not that I consider his conversation with gypsies necessarily to be far-fetched, and there is an aspect of his assessment of the costing of the prints and posters which finds support in the evidence of Mr [Cocks]. By itself it is not, however, sufficient to give his evidence as to value much weight. Further, it is difficult to accept that a businessman would agree to pay almost AUS$1M on the basis of a few cursory enquiries.’
The appellants submit that the evidence described by her Honour should, where there is no finding that the sale was not at arms’ length, be accepted. Moreover, the argument runs, further evidence to support the transaction was available: the full price of $956,545 was declared to the authorities in Greece; customs duties were paid there; and Mr Theodorakopoulos had the money in his bank account.
The respondent’s notice of contention
The respondent advances two contentions in answer to the appellants’ first ground of appeal. The contentions are:
‘1.... [H]er Honour erred by failing to find that the evidence of Mr Cocks, accepted by her Honour, was evidence of:
(a)current market price in Greece as at April 2000; or
(b)alternatively, normal value in Greece as at April 2000,
for the purposes of Article 4 Rule 5(b) of the Hague-Visby Rules.
2.... [H]er Honour ought to have found, on the evidence before her, that:
(a)the current market price in Greece as at April 2000;
(b)alternatively, the normal value in Greece as at April 2000,
of the posters was $63,570.’
Conclusions on the appellants’ first ground of appeal
As mentioned, Rule 5(b) states that the total amount recoverable shall be calculated ‘by reference to the value of such goods at the place and time at which the goods are discharged ...’, that is to say, in Greece on 12 April 2000.
However, as has been seen, her Honour directly ascertained the value of the goods by picking up –
‘[t]he effect of Mr Cocks’ evidence ... that a wholesaler might be able to sell something less than twenty per cent ... [that is] 23,570 [posters and prints]. The cost to a wholesaler might be $40,000 and they might expect to make a profit of $1.00 for each poster or print, $23,570. The value to a wholesaler might be taken as $63,570.’
By adopting Mr Cocks’ evidence, the primary Judge was proceeding, as she said, upon the basis that the relevant inquiry was to ascertain the value in Australia, not Greece. In my opinion, her Honour departed from the mandatory direction of Rule 5(b), which requires, in terms, that a valuation at the place of discharge be undertaken.
It is true, as her Honour noted, that Mr Diamond has suggested that Rule 5(b) might be departed from in ‘special circumstances’. However, no authority for this proposition exists and it appears to contradict the plain language of the Rule. In any event, it is not apparent why the present circumstances should, for the purposes of applying Rule 5(b), be described as ‘special’. There was, as has been seen, some evidence (admittedly discounted by the Judge) of Greek wholesale prices at the time. But, it does not follow from the discounting of such evidence that there was no relevant material available for making a judgment of value in accordance with the provisions of the Rule.
In my opinion, even if it were permissible to imply into Rule 5(b) a ‘special circumstance’ exception, no such exception existed here. It follows, in my view, that the Rule applied here.
It will be recalled that Rule 5(b) provided for three kinds of valuation (that is to say, in Greece and in April 2000), viz:
1.According to the ‘commodity exchange price’. (There was apparently no evidence of this.)
2.If, as here, no commodity exchange price – according to the ‘current market’ price. (It will be remembered that in Spencer’s Case, Griffith CJ observed (at 431) that ‘[w]hen there is a large or considerable number of articles of the same kind which are the subject of daily or frequent sale and purchase, the value of the articles is taken to be their current price’. Again, there was apparently no evidence of this.)
3.If, as here, there be no commodity exchange or current market price – by reference to the normal value of goods of the same kind or quality.
The Rules do not define ‘normal’ value. One of the definitions of ‘normal’ offered by the New Shorter Oxford English Dictionary (1993) is: ‘regular, usual, typical; ordinary, conventional’.
The notion of a supposed ‘normal’ transaction for valuation purposes was, it seems, described by Isaacs J in Spencer’s Case as follows (at 441):
‘To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.’ (Emphasis added.)
Considerations of the kind mentioned by Isaacs J could have been relied on here to justify rejection of the sale price on the basis that neither the seller nor the purchaser had any relevant trade experience and could not be expected to be cognisant of all circumstances which might affect the value of the posters and prints.
As has been seen, her Honour proceeded (at [52]) to make an assessment of ‘normal’ value ‘by the most appropriate method available’. If, as mentioned, this had involved an assessment of information in Greece, no difficulty would have arisen here. However, it does appear that the Judge fixed her valuation by reference to Mr Cocks’ appraisal of the Australian situation.
At the same time, in our assessment of her Honour’s approach, we need to be reminded of the observations of Lord Hobhouse in Secretary of State of Foreign Affairs v Charlesworth Pilling & Co. [1901] AC 373 (at 391):
‘... [I]n all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at.’
Yet, bearing these observations in mind, it appears that her Honour focused her attention exclusively on Mr Cocks’ views of the position in Australia, contrary to the provisions of Rule 5(b), taking the view (at [53]) that there was ‘no market at the destination’. However, as mentioned, there was some evidence of a market in Greece, even if it needed to be discounted.
Reference was made by the primary Judge to O’Hanlan’s Case, which, as has been seen, held (at common law) that in the absence of a current market price, normal value was a jury question; and to The Russo-British Case, where the special rule in Hadley v Baxendale was applied under the Sale of Goods Act. It is not clear how these common law principles could have applied, at least in any precise sense, to Rule 5(b). As Mr Diamond observed, this Rule was intended to harmonise the approach taken by many countries. But, as mentioned, the primary Judge proceeded to say (at [53]):
‘In the present case, the evidence permits only an assessment of the value of the goods in Australia. It would, in any event, appear to be the more appropriate, given that the claim is brought on behalf of the owner of the goods.’
For the reasons previously given, I cannot accept this approach. It is, with respect, contrary to the direction of the Rule where at least some evidence of ‘normal’ value in Greece should have been available in the evidence.
At the same time, I agree with her Honour’s conclusion that she was not bound, as the appellants argue, to equate the price paid under the contract between Mr Petrogiannakis and Mr Theodorakopoulos with the ‘normal’ value of the goods. For one thing, in accordance with the observations made in Spencer by Isaacs J, Mr Petrogiannakis and Mr Theodorakopoulos were not sufficiently cognisant of the market conditions. Secondly, the principles stated in The “Coral” were propounded as prima facie only, that is, ‘ordinarily’. Thirdly, the contract price was relevant only to value in Australia, not Greece. (In The “Coral”, value was to be ascertained in Brisbane.)
Before proceeding to deal with the consequences to follow from these conclusions, it will be recalled that, in connection with this ground, the appellants also advance an alternative case; that is to say, they contend that they should have ‘restitutio in integrum’ by being put back into the position in which they would have been if the respondent had not been in breach of the bill of lading.
For this purpose, the appellants rely upon the decision of Clarke J in M.B. Pyramid Sound N.V. v Briese Schiffahrts G.M.B.H. and Co. (‘The “Ines”’) [1995] 2 Lloyds Rep 144, where at 157 – 159, it was necessary to assess the current market value of goods.
Clarke J said (at 158):
‘... [T]he plaintiffs will be most fairly compensated in this case if they receive by way of damages the net amount which they would have received from their buyers and no more. If they recover any more they will receive more than restitutio in integrum and if they recover less they will not be properly recompensed for the defendants’ breach of contract. If that is correct they are entitled to recover the amount they would have received, namely U.S.$4.15 for each of the 247,660 telephones.’
Several points should be made here. First, Clarke J was not purporting to apply Rule 5(b). Secondly, the ‘restitution’ doctrine has no place in the Amended Rules. Thirdly, this argument was never advanced at the trial.
Accordingly, in my opinion, the appellants’ restitution argument cannot succeed. As mentioned, I will return later to the consequences of my conclusion.
The appellants’ second ground of appeal
The appellants alternatively submit that the figure of $S3.00 wholesale price mentioned by Mr Cocks gives ‘a truer evidence of value’ than that accepted by her Honour.
In developing this argument, the appellants submit the following:
·In arriving at the figure of $63,570, her Honour found (at [50]) (as has been mentioned):
‘The effect of Mr Cocks’ evidence is that a wholesaler might be able to sell something less than twenty percent of the total of 130,945 posters and prints. Eighteen percent of that figure is 23,570. The cost to a wholesaler might be $40,000 and they might expect to make a profit of $1.00 for each poster or print, $23,570. The value to a wholesaler might be taken as $63,570.’
·That may well be the effect. However, what he said (in his evidence), if he was buying the posters, was:
‘... if I had to take the whole lot, well, it’s very hard to say but, I mean, I just can’t imagine paying more than $40,000. I know I’d have to dump so many of them – so, just at a guess, I’d say probably about $40,000, and that is maximum.’
·This was from a witness who (in his evidence) had said moments before –
‘I certainly wouldn’t have bought any at any price.’
·Mr Cocks also said (in evidence):
‘I’d be amazed if I could sell 20 percent of these posters, to be honest. I’d be stunned. That is being generous.’
·It can only be from this evidence that her Honour finds the wholesaler might be able to sell fewer than 20 per cent of them. Her Honour’s judgment also stated (at [48]):
‘Mr Cocks said that he was paying about $2.00 for imported posters in 1994. That included freight cost. His wholesale resale price was $3.00.’
·It is submitted that the finding ‘... they might expect to make a profit of $1.00 for each poster’ is based on this evidence.
·If one did not have regard to the recent sale price, to allow $3.00 per poster must be a far more satisfactory indication of value than ‘accepting a guess’ at a value of $40,000 from someone who did not want them at any price, given that prices are a product of supply and demand. Mr Theodorakopoulos, on the other hand, was a ready, willing and able purchaser.
Although the respondent now argues, by virtue of evidence to be mentioned below, that Mr Cocks was ‘a purchaser in the international market’, it is clear from her Honour’s reasons that she focused exclusively upon the Australian market and, in that connection only, the primary Judge relied upon the evidence of Mr Cocks.
In support of its submission that Mr Cocks had access to international price lists from international suppliers, which were applicable around the world, the respondent relies upon the following evidence from Mr Cocks.
He bought supplies for his business (in 1999 and 2000) ‘from a company called Pyramid Posters that supplies internationally – throughout the world’. He also ‘referred’ to ‘Portal Publications, G B Posters, Impact Posters in the States, Angel Graphics Posters in the States, Image International which is in the UK, Anabass …’, stating ‘there’s quite a few publishers throughout the world ... and we buy from numerous [publishers] ... ’. He went on to explain that Portal was an American company; and G B was an United Kingdom company, first named ‘Athena’, and later ‘Cartel’. He said that these overseas companies sent him price lists of prints: ‘They have an international price list. Whether it’s Australia or whoever buys them, that’s set for the world’. He went on to say that he believed that some of Mr Carl’s posters were from Athena or Portal.
He then gave this evidence:
‘The prices in this industry haven’t changed dramatically from 1994 to 1999. Most of the companies overseas would be paying pretty much the same price. At that stage, in 1994, up until 1999 the most we would pay for a poster – imported – would have been $2. As a general rule, it was around about the $1.50/$1.60 mark.
And was there any discount if you bought a bulk ---?---No.
---posters?---International price list is an international price list. To justify a shipment you needed to bring in probably between 5000 and 10,000 posters, I suppose, as a gauge. You couldn’t justify it if you only bought in several because the shipping costs would be so high. So they didn’t need to give you an incentive to buy volume. You just bought whatever you – you’d always bought in packs. You had to buy a pack. Posters come in pack lots of 100.
Yes?---Pretty well all over the world. So if you bought 100 of a title, that was sufficient. And you’d get the standard price. I never inquired about – maybe there was if I had asked for 10,000 of a title, or 5000. So I can’t quite comment there. But if I ordered between 100 and 1000 posters, the standard – the price was pretty well standard; didn’t change.
Price was pretty well standard at ---?---That I paid, yes. Well, regardless of what I ordered.
Yes. And you mentioned the freight component, and on top of the $2 or so you paid for the posters---?---That’s landed.
That’s landed including---?---Yes.
---inclusive of freight?---When I say $2, the whole thing landed to me – there’s no way I would want to pay more than $2 for those posters. It would be less if anything, really, yes.’
It thus appears that this evidence is primarily directed at normal value in Australia. Her Honour so interpreted it (at [48] and [53]). On the approach taken by the primary Judge, ‘the evidence permits only an assessment of the value of the goods in Australia’ (at [53]) (emphasis added).
Whether it is possible, from Mr Cocks’ evidence about his international dealings, to infer information that might be relevant to an assessment of the normal (that is, wholesale) value of these goods in Greece in April 2000, was not the subject of any finding, or inference drawn, by her Honour on the approach, in principle, which she took. In those circumstances, since this remains an area of contention between the parties, it will be necessary to consider what orders should now be made. I shall return to this, after considering the respondent’s notice of contention.
The respondent’s first contention
It will be recalled that, here, the respondent contends that her Honour erred by failing to find that Mr Cocks’ evidence was, for the purposes of Rule 5(b), current market price in Greece as at April 2000; or, alternatively, normal value in Greece then.
As mentioned, the notion of ‘current market price’, suggests a degree of regularity which, in respect of Greece, could not, in my view, be inferred from Mr Cocks’ testimony.
Moreover, in my opinion, whilst Mr Cocks did speak generally of the position internationally, he did not give evidence in any specific way concerning the ‘normal value’ of these goods in Greece.
The respondent’s second contention
In its second contention, the respondent claims, first, that her Honour ought to have found that the current market price of the posters in Greece at the time was $63,570.
As has been said, there was, in my view, no evidence of transactions sufficient to warrant the description of a ‘current market’.
Then the respondent says that, on the evidence, the primary Judge ought to have found that the normal value in Greece was $63,570. Again, in my view, the general, ‘international’ evidence of Mr Cocks was not sufficiently specific about the situation in Greece.
Conclusions on the appeal
It follows from the foregoing that because the primary Judge did not, as Rule 5(b) directed, assess ‘normal value’ in Greece as at April 2000, the question is whether this Full Court should, ourselves, attempt to do so on the evidentiary material available. If the issue were straight forward, there would be merit in that attempt. It would save costs and shorten the disposition of the matter.
However, it is apparent from a description of the background to the sale transaction and from the absence of witnesses that might have been called, that the matter was not straightforward, and that a trial Judge must have a significant advantage over an appellate court in fixing a valuation, insofar as facts are concerned. I emphasise that my only reason for propounding any appellate intervention is because, in my view, the primary Judge departed from the dictates of Rule 5(b).
Accordingly, on the appeal, I propose that the matter be remitted to the primary Judge to determine the normal value of the goods in Greece as at April 2000. I would direct, with a view to minimising expense, that no further evidence may be given on this remitter. In the circumstances, there should be no order for the costs of the appeal. It is not necessary to consider the specific submissions made on the appeal against the costs order made by the primary Judge, since I propose that this order be set aside. However, the costs at first instance, including the costs of the remitter, should abide the judgment of the primary Judge.
Proposed Orders on the appeal
I propose that the following orders should be made on the appeal:
1.The appeal be allowed.
2.The orders made by the primary Judge on 17 July 2003 be set aside.
3.The matter be remitted to the primary Judge for determination of the issues arising on the appeal in accordance with the above reasons.
4.The costs at first instance, including the costs of the remitter, to abide the judgment of the primary Judge.
5.No order be made for the costs of the appeal.
The Cross-Appeal
As the analysis by Allsop J indicates, the circumstances of the present case do not appear to be governed by any square authority. Moreover, the earlier history of the limitation provision, fully discussed by Allsop J, does not appear to resolve the present issue.
The primary Judge placed reliance upon a passage in Mr Diamond’s article (at 241). That reference is, in my view, important, and should be cited fully:
‘I would suggest that in the Visby amendment “unit” is to be construed as referring to an individual article or piece of goods which is not a “package.”
Let me apply this to three different categories of cargo.
First category: goods which are shipped as packages or as individual articles or pieces. When dealing with goods in this category (as for example, an unboxed tractor or a case of machinery), it will not normally matter whether the shipment is a “unit” (as in the case of the tractor) or a “package” (the case of machinery). So long as the weight of each is known, there is no difficulty in ascertaining whether the limit is 10,000 francs or a limit based on weight.
…
Second category: true bulk cargo (whether bulk solids, such as grain, or bulk liquids, such as oil). Here I would say that there is no “package” or “unit” as the shipping unit and freight unit concepts would seem to be irrelevant under the amended Rules. I conclude that the only limit ought to be one based on weight.
Third category: goods which occupy an intermediate position between goods shipped as articles or pieces and true bulk cargo. Most timber cargoes fall into this category. So do bagged cargoes. Usually there will be no difficulty in ascertaining the weight of the lost cargo. The bill of lading may state the weight. If it acknowledges the cubic capacity of the cargo, as for example, the number of “standards” of a timber cargo, it should normally be possible to calculate the equivalent weight. It is tempting, therefore, to conclude that timber and bagged cargoes should be treated in the same way as true bulk cargoes. The difficulty, however, is that each piece of timber or each bag of cocoa or sugar may constitute a separate “package” or “unit” so that a higher limit may be applicable. I submit that this question ought to be answered by reference to the bill of lading. If the bill acknowledges a number of pieces of timber or a number of bags of cocoa, the latter conclusion would seem to be plainly correct. If not, I would conclude that the limit ought to be based on weight.’ (Emphasis added.)
I agree with Mr Diamond’s suggestion.
In turning to consider the specific question of ‘container limits’, Mr Diamond said (at 242):
‘The general intention of Rule 5(c) is two-fold; first, that the parties to the contract of carriage are given an option whether to treat the container or each of the parcels stuffed therein as the relevant “package or unit” for limitation purposes; second, that in order to see how the option has been exercised one must look to see “the number enumerated” on the face of the bill of lading.
There are, in theory, three possibilities, viz:-
(i)No enumeration of the contents of the container (e.g. “1 container containing machinery”). In this event the “article of transport,” the container, is the package or unit. The result is that the limitation figure will be either 10,000 francs or 30 francs per kilo of the goods lost or damaged, whichever is the higher. …
(ii)An exhaustive enumeration (e.g. “1 container containing 500 cases of machinery”). In this event each of the 500 cases will attract a separate limit of 10,000 francs.
(iii)A partial enumeration (e.g. “1 container containing 10 cases of machinery and general merchandise”). In this event each of the 10 cases will attract a separate limit of 10,000 francs and, for the remaining goods and the container, the limit will be that referred to in (i) above.”
In my opinion, the present case presents as an ‘exhaustive enumeration’ in the above sense.
In his consideration of the ‘general intention’ of Rule 5(c), Mr Diamond referred (at 242) to the explanation of the proposed limitation amendments given in February 1968 by the Chair of the drafting committee responsible for the container clause which was as follows:
‘“It is for the shipper and the carrier to decide whether they want the particular container to be treated as the package for the purpose of limitation of weight, or whether they want the smaller packages or units in it to be so treated; and no doubt when the latter alternative is taken … a higher rate of freight will be payable …. What is essential is that into whoever’s hands the bill of lading may come, the hands of the consignee, of the banker who finances the transaction, or of the insurer, it will appear on the face of the bill of lading whether the package for purposes of maximum liability is the container or the individual packages inside the container …. What we want to do is to leave open to the shipping industry, the shippers and the shipowners, to decide as a matter of business whether they want to get “per container rates” in which case the container will be treated as the package, or the ordinary freight rates in which (case) the traditional packages within it will be treated as individual packages …. Under this paragraph all you will have to do is to look at the bill of lading and see, does it contain any figures of the numbers of packages other than the containers themselves ….
“The clause is drafted in this way, because you may get in a bill of lading a variety of descriptions of goods in a container. You may get the simple one where it says a container “said to contain” so many packages, or “containing” so many packages, say 20 packages. You look at the bill of lading, you see the figure 20, and you know that each of those 20 packages is a unit for the purpose of calculating the maximum.
“It may be, on the other hand – and this is the normal form of bill of lading in the case of the European short sea trades at the moment – one container “said to contain” general merchandise. There is only one figure on the bill of lading, therefore the container is the package for the purpose of calculating the maximum. But you may get the mixed case – and we are providing for the future and we want to deal with all cases – where the bill of lading says one container containing four crates of typewriters and general merchandise. Well, what is to be done then? The answer is provided by paragraph (iv). You look at the bill of lading and you see that there is the figure 4 relating to the crates of typewriters. Each of those crates of typewriters is a unit for the purpose of calculating the maximum. You look at the bill of lading and you see that there is also general merchandise without any figure in front of it, and then the clause says the container with the general merchandise is to be treated as another package ….” ( Emphasis added.)
In my view, both this historical context, and the text of Article 4 Rule 5(c), support Mr Diamond’s suggestion of the ‘general intention’ of Rule 5(c); but, as Mr Diamond then said (at 242), the application of the provision still raises many ‘difficult’ problems. Two of these difficulties were next addressed by Mr Diamond. In my opinion, they are in point here.
Mr Diamond says (at 243):
‘If the bill of lading states “1 container said to contain 500 cases,” does this constitute a sufficient enumeration of the 500 cases? An acknowledgement so phrased does not seem to create estoppel under art. III, r. 4. But the wording of Rule 5(c) speaks simply of the number of packages enumerated in the bill; not of a binding or conclusive enumeration. There seems no reason why the parties to the contract of carriage should not opt to treat each case as the relevant “package or unit” on the assumption that each such case has been shipped but without binding themselves to the number of cases. I therefore submit that “said to contain 500 cases” is a sufficient enumeration and that in this example, each case will attract a separate limit of 10,000 francs.’
I agree.
The other difficulty is addressed by Mr Diamond as follows (at 243):
‘What if the number stated in the bill is incorrect? Rule 5(c) appears to state that the “number enumerated in the bill” is conclusive for limitation purposes. But it would be curious if it were to be held that an enumeration is binding for limitation purposes when it is not binding for the purposes of liability. Suppose a bill describes a container as “said to contain 500 cases;” suppose, after a total loss has occurred, it is found that 25 of those cases were never shipped; in such a case I submit that both liability and also limitation should be based on a figure of 475 packages or units; see the words “as far as these packages or units are concerned.” I submit that Rule 5(c) must be applied only to those “enumerated” packages for which there is liability.’
Again, I agree.
Support for the foregoing approach may also be found by Sir Guenter Treitel and F M B Reynolds in Carver on Bills of Lading, 1st ed., 2001 (at 529):
‘In contrast to the decision on the Hague Rules in The River Gurara …, it is clear that the Hague-Visby Rules specifically adopt the description of the goods in the bill of lading as the way of solving this question. Hence in order to determine whether the container is the package or unit it is necessary to see whether there has been an “enumeration” of its contents in the bill of lading. Thus if the bill of lading states “One container containing general merchandise”, there is no enumeration and the container and its contents are themselves the package. If the statement is “One container containing 400 personal computers”, the packages or units so enumerated are the packages or units for limitation purposes (and the container itself, if it is provided by the shipper, is presumably an extra package or unit).’ (Emphasis added.)
I agree.
Carver proceeds to analyse the difficulty arising if the ‘enumeration’ is ‘wrong’ (at 530):
‘If the enumeration is wrong, the liability must be calculated up to the maximum enumerated only; though if less goods are shipped than are enumerated, the enumeration should only apply to what was actually shipped. The question then arises as to whether phrases such as “stc” (“said to contain”) or “FCL” (“Full Container Load”) and the like are to be regarded as negativing any enumeration. It seems likely that they are not. They simply mean that the carrier does not admit the contents, with the result that should a dispute arise the claimant must prove what was shipped. They do however put the carrier on notice as to what is alleged to be inside the container, with the result that he can calculate his possible risk exposure.’
In Applicant A v Minister for Immigration & Ethnic Affairs (1997) 190 CLR 225, Gummow J said (of the task of construing an international convention) (at 277):
‘Regard primarily is to be had to the ordinary meaning of the terms used therein, albeit in their context and in the light of the object and purpose of the Convention. Recourse may also be had to the preparatory work for the treaty and the circumstances of its conclusion, whether to confirm the meaning derived by the above means or to determine a meaning so as to avoid obscurity, ambiguity or manifestly absurd or unreasonable results. However, as McHugh J demonstrates by the analysis of the subject in his reasons for judgment, with which I agree, it is important to appreciate the primacy to be given to the text of the treaty.’
See also per McHugh J at 253 – 255.
I turn then to the text of Rule 5(c).
The prefatory words of Rule 5(c) – ‘[w]here a container … is used to consolidate goods’ – are obviously satisfied. Consideration is next given to the words that follow, namely, ‘the number of packages or units enumerated in the Bill of Lading’.
The word ‘unit’ used here has, in my view, its ordinary dictionary definition of an individual thing regarded as single and complete, especially for the purposes of calculation; each of the (smallest) separate groups into which a complex whole may be analysed (The New Shorter Oxford English Dictionary, L Brown (ed.), 1993).
The description of goods in the bill of lading was:
‘200,945 pieces
posters and prints’.Notwithstanding the statement in the bill of ‘1’ as the ‘no. of pkgs.’, and of ‘1’ as the ‘Total Number of Packages’, the reference to this number of ‘pieces’ was, in my opinion, an enumeration of 200,945 ‘units’ for the purposes of the initial provision of Rule 5(c); that is, a statement (i.e. enumeration) of ‘the number of packages or units enumerated in the [bill]’. In principle, such an enumeration may be seen as an equivalent of Carver’s example: ‘One container containing 400 personal computers’. In other words, I would construe the reference to ‘1’ in the bill as a reference to the ‘package’ being (an extra) package (being the container), but I would also construe, as both Carver and Mr Diamond suggest, the description of the goods in this bill to mean 200,945 pieces (consisting of posters and prints). Each ‘piece’ could, I think, fairly be described as a ‘unit’.
It is then necessary to consider the words that follow in Rule 5(c), that is, the phrase ‘as packed’.
The application of this phrase also supports, in my opinion, the approach of Carver and of Mr Diamond in the related area of the consequences of an overstatement of the number of units stated in the bill. It will be recalled that Carver stated (at 530) that ‘if less goods are shipped than are enumerated, the enumeration should only apply to what was actually shipped’. (Emphasis added.)
In using the phrase ‘as packed’, the Rule is, in my view, picking up the ordinary dictionary definition of ‘as’ in this kind of context, that is to say – in the manner, or to the extent in which – the goods were actually ‘packed’, that is, again picking up the dictionary meaning of this word – to put together into a pack or package, or compactly into a receptacle, especially for transport (etc.). Likewise, the dictionary defines ‘package’ to mean: ‘A bundle of things packed up or tied up together; especially one of small or moderate size, as an item of luggage; a packet, a parcel’. (See The New Shorter Oxford English Dictionary.)
Subject to the operation (if any) of the provisos ‘as packed in such [container]’ and ‘as far as these packages or units are concerned’, Rule 5(c) stipulates that, the number of packages or units enumerated in the document ‘shall be deemed the number of packages or units …’. (Emphasis added.)
In this context ‘deems’ has, in my opinion, its usual flexible statutory meaning, that is to say: 1. ‘To treat (a thing) as being something it is not, or as having certain qualities that it does not have … . 2. To consider, think, judge or esteem’ (Black’s Law Dictionary, 6th ed., Bryan A Garner (ed.), 1996).
As Windeyer J has explained (in Hunter Douglas Australia Pty Ltd v Perma Blinds (1969) 122 CLR 49 (at 65)):
‘[T]he verb deem … can be used in statutory definitions to extend the denotation of the defined term to things it would not in ordinary parlance denote …. But that the word can be used in that way and for [the] purpose [of reducing verbiage] does not mean that whenever it is used it has that effect. After all, to deem means simply to judge or reach a conclusion about something.’
Windeyer J continued (at 65):
‘The words “deem” and “deemed” when used in a statute thus simply state the effect or meaning which some matter or thing has – the way in which it is to be adjudged. This need not import artificiality or fiction. It may be simply the statement of an indisputable conclusion, as if for example one were to say that on attaining the age of twenty-one years a man is deemed to be of full age and no longer an infant.’
His Honour added (at 67):
‘There is no presumption, still less any rule, that wherever the word “deemed” appears in a statute it demonstrates a “fiction” or some abnormality of terminology. Sometimes it does. Often it does not. Much depends upon the context in which the word appears … .’
In my opinion, the context here indicates that the ‘deeming’ provision requires that a conclusion is to be drawn, or a judgment is to be made, that the number of units enumerated in the document is, for limitation purposes, the number of units ‘as packed’ in the container.
It is common ground that the 200,945 pieces were placed into ‘approximately’ 2,000 packages for shipment. (The determination of the exact number of packages may be decided on the remitter.) Applying the foregoing reasoning, whilst there was, by way of an overstatement, an enumeration of 200,945 ‘units’ in the bill, what was ‘actually shipped’ (i.e. ‘as packed’) were ‘approximately’ 2,000 packages. By virtue of the Rule’s ‘deeming’ provision, for limitation purposes, the number of units is to be treated as 2,000 (the approximation given in evidence) if this (as appears) remains common ground; if, on the other hand, the number of packages becomes contentious, this issue will need to be determined on remitter.
To this extent, and subject to consideration of the cross-appellant’s reliance on cl 21 of the bill, I would vary her Honour’s judgment.
The operation, if any, of clause 21
There remains for consideration the operation of cl 21 of the bill.
It will be recalled that cl 21 states that where (as here) goods have been packed into a container, ‘it is expressly agreed, that [such] container shall constitute one package for [limitation of liability purposes]’.
It will also be remembered that by Article 3 Rule 8 of the Amended Rules, it is provided, inter alia, that any clause ‘lessening’ the carrier from liability for loss to goods ‘otherwise than as provided [by these rules] shall be null and void and of no effect’.
As has been seen, in my opinion, by the application of the Amended Rules, specifically Article 4 Rule 5(c), the cross-appellant’s liability is limited to approximately 2,000 packages. However, (assuming that cl 21 was not intended to increase the carrier’s liability by treating the container as an extra package), cl 21 purports to limit liability to one container, plainly a lesser liability. It must follow, in my view, that cl 21 is of no effect here.
Orders proposed on the cross-appeal
It follows that, on the cross-appeal, I would vary the judgment below to the extent mentioned. Given the outcome, no order should be made for the costs of the cross-appeal.
Accordingly, I propose the following orders on the cross-appeal:
1. Cross-appeal allowed in part.
2.Order that, upon the remitter of the matter to the primary Judge, it be declared that for the purposes of the application of the limitation provisions of Article 4 Rule 5(c) of the Amended Rules, the number of units shall be deemed to be 2,000, or such other number of packages as the primary Judge may then find in accordance with these reasons.
3. Make no order for the costs of the cross-appeal.
I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.
Associate:
Dated: 10 August 2004
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
Q 116 OF 2003
On Appeal from a Single Judge of the Federal Court of Australia
BETWEEN:
EL GRECO (AUSTRALIA) PTY LIMITED
FIRST APPELLANT/FIRST CROSS-RESPONDENTJOHN THEODORAKOPOULOS
SECOND APPELLANT/SECOND CROSS-RESPONDENTAND:
MEDITERRANEAN SHIPPING CO SA
RESPONDENT/CROSS APPELLANT
JUDGES:
BLACK CJ, BEAUMONT AND ALLSOP JJ
DATE:
10 AUGUST 2004
PLACE:
SYDNEY (HEARD IN BRISBANE)
REASONS FOR JUDGMENT
ALLSOP J
Index
Introduction and Issues [109]-[120]
Jurisdiction [121]-[122]
The Commercial Background [123]-[130]
The Carriage [131]-[132]
Other Matters not in Dispute [133]-[134]
The Relevant Parts of the Amended Rules [135]-[138]
The Approach to the Construction of the Amended Rules [139]-[148]
My Views in Summary as to the Disposition of the Matter [149]-[153]
The History and Context of Article IV rule 5 of the Hague Rules
and the Hague-Visby Rules [154]-[225]The background to the 1920s conferences [155]-[165]
The 1920s conferences [166]-[193]
The implementation of the Hague Rules [194]-[205]
The 1960s conferences [206]-[225]Judicial Approach to the Hague Rules and Cognate Legislation [226]-[244]
The Cross-Appeal [245]-[311]The approach of the primary judge [246]-[247]
The submissions of the parties [248]-[255]
The disposition of the cross-appeal [256]-[310The Appeal [311]-[318]
Orders [319]Introduction and Issues
Before the Court are an appeal and a cross-appeal from orders of a Judge of this Court in which judgment was ordered to be entered for the second appellant in the sum of $63,570 plus pre-judgment interest from 17 April 2000 until the date of the orders, 17 July 2003, plus costs up to 28 November 2002. The second appellant was ordered to pay the respondent’s costs from 28 November 2002 onwards.
The action was for damage sustained by a cargo of posters and prints loaded on board the MSC Melbourne at Port Botany, Sydney. The goods were shipped (on behalf of the named shipper, the first appellant) in one twenty foot general purpose container. The Melbourne sailed from Port Botany for Antwerp in February 2000 (not on 12 December 1999). On 26 March 2000 the container was discharged in Antwerp for transhipment to Greece and on 29 March 2000 it was loaded on board the Aquitania bound for Piraeus. The Aquitania arrived in Piraeus on 7 April and a few days later the container was unloaded and transported by road to its ultimate destination, Aigion, where it arrived on 17 April 2000.
When packed into the container the goods had been made up into about 2,000 packages. The container was carried by the respondent under a non-negotiable received for shipment through bill of lading issued by the agent of the respondent and dated 16 February 2000. The bill named the first appellant as shipper, the second appellant as consignee and a maritime agency in Piraeus as the party to notify. Given its importance to the resolution of the issues before the Court, a copy of the face of the bill is annexed to these reasons.
Of particular relevance to the disposition of the appeal and cross-appeal is the description of what was said to be within the container. As can be seen from the description of the cargo on the face of the bill, the container was said to contain:
200945 pieces
posters and printsAs can also be seen from the face of the annexed bill, the column entitled “No. of Pkgs” contained the number “1”. Further, the face of the bill contained the following clause above the signature box:
RECEIVED FOR SHIPMENT in apparent external good order and condition the containers, other packages or units bearing marks and/or numbers indicated in the “Carrier’s Receipt” above, said to contain the quantity of goods, weights and measurements indicated in the “Particulars furnished by the “Shipper” above which particulars have not been checked or varified [sic] by the Carrier. Such particulars are for Shipper’s and Consignee’s use only and are not part of the bill of lading terms and are not binding on the carrier.
Clause 21 of the bill (on the back of the bill) included the following:
Where the goods have been packed into containers by or on behalf of the Merchant, it is expressly agreed, that each container shall constitute one package for the purpose of application of limitation of the Carrier’s liability.
The word “Merchant” was defined on the back of the bill to include the shipper and consignee.
The primary judge found that the goods were damaged by seawater during the voyage and that the respondent carrier was liable for that damage. Those findings were not challenged by the respondent on the appeal or cross-appeal. The primary judge rejected the argument of the respondent that its liability under the package limitation in Article 4 rule 5 of the Amended Hague Rules, being contained in Schedule 1A to the Carriage of Goods by Sea Act 1991 (Cth) (to which I will refer, respectively, as the “Amended Rules” and “Australian COGSA”) should be assessed by reference to the one container. (The Amended Rules in this respect are relevantly identical to Article IV rule 5 of the Hague-Visby Rules.) The primary judge also found clause 21 to be null and void and of no effect by reason of the operation of Article 3 rule 8 of the Amended Rules, which rule is relevantly identical to Article III rule 8 of the Hague-Visby Rules. Her Honour, however, rejected the evidence of the appellants as to the value of the goods and found them to be worth $63,570 and not the sum near $1,000,000 contended for by the appellants. (All dollar figures in these reasons, unless stated otherwise, are references to Australian dollars.) The costs order made by her Honour reflected an offer to settle made by the respondent carrier well above the judgment sum awarded.
The appeal by the appellants and the notice of contention of the respondent raise important questions, including in particular:
(a)whether Article 4 rule 5(b) of the Amended Rules (relevantly identical to Article IV rule 5(b) of the Hague-Visby Rules) insofar as it provides for calculation of the amount recoverable by reference to value at the place and time of discharge is mandatorily applicable, or is only a prima facie approach (the primary judge having come to the value of $63,750 by reference to the value of the goods in Australia not Piraeus, the port of discharge); and
(b)whether the primary judge was entitled, as a matter of law, or of fact in this case, to disregard as unreliable the price struck between the principals for the sale of the goods in question as evidence of value of the goods in Greece.
The cross-appeal by the respondent also raises important questions, including in particular:
(a)the meaning of the phrase “packages or units” and the word “units” in Article 4 rule 5 of the Amended Rules and in particular in Article 4 rule 5(c) (relevantly identical to Article IV rule 5(c) of the Hague-Visby Rules); and
(b)the meaning of the word “enumerated” in Article 4 rule 5(c) of the Amended Rules, (and in Article IV rule 5(c) of the Hague-Visby Rules).
For reasons that will become apparent, the posing of the question in [118(a)] above in terms of the meaning of the phrase “packages or units” or the word “units” is not entirely satisfactory. It is adequate, however, for present purposes of identifying issues.
The essence of the cross-appeal was that the primary judge erred in concluding that the contents of the box under “Description of Goods”, and in particular the words and numbers “200945 pieces posters and prints”, amounted to an enumeration of units, in particular in the context of the whole of the face of the bill, or in the context of the whole of the face of the bill together with clause 21 on the back of the bill.
Jurisdiction
The Admiralty Act 1988 (Cth) provides for the conferral of jurisdiction on the Federal Court of Australia, and for the investing of jurisdiction in State and territory courts, in matters of Admiralty and maritime jurisdiction in wide and comprehensive terms: see ss 4, 9, 12 and 13 of the Admiralty Act, ss 76 (ii) and (iii) of the Australian Constitution and, generally, Owners of the Ship ‘Shin Kobe Maru’ v Empire Shipping Co Inc (1994) 181 CLR 404, 423-26 (in the High Court); (1992) 38 FCR 227, 234-35, 245-47 (in the Full Court of the Federal Court); and (1991) 32 FCR 78, 100-111 (in the reasons of Gummow J, at first instance). One aspect of that jurisdiction conferred on this Court is the quelling of controversies concerned with damage to cargo carried by sea: ss 4(3)(e) and 9 of the Admiralty Act.
Also, the disposition of the controversy here involves a matter arising under a law of the Commonwealth Parliament for the purposes of s 39B(1A)(c) of the Judiciary Act 1903 (Cth), being the ascertainment of the parties’ rights and liabilities arising under Article 4 rule 5 of the Amended Rules, which Amended Rules have the force of law in Australia in respect of the carriage in question by reason of the combined effect of ss 7, 8 and 10 of Australian COGSA.
The Commercial Background
Ritchie J then referred to Studebaker, and after referring to the passage in the reasons of Goddard J which I have earlier set out said (at SCR p 951 and Lloyd’s Rep pp 476-7):
Although it was not necessary for the decision of the case before him, it appears to me that Mr Justice Goddard was clearly indicating his view that the word “unit” as used in the Hague Rules had the meaning of an “individual piece of cargo”. It is in any event apparent from the decision in the Studebaker case and in Whaite v Lancashire and Yorkshire Railway Co., (1874) L.R. 9 Ex 67, where the Court was considering the words “parcel or package” as they occur in the Carriers Act, 11 Geo. 4 and 1 Wm. 4, cap. 6861, that the word “package” means articles which are packed or crated and it would seem illogical to me to hold that a shipper who had taken the precaution of crating his goods would be limited to $500, whereas the shipper delivering his goods to the ship “just as they came from the works” and without any wrapping, would be entitled to apply a limitation based upon the freight rate.
Whilst there are passages in Falconbridge which refer to individual pieces of cargo, the distinction that is under discussion here was not before the Court. Further, the facts in that case dealt with pieces of cargo (for the purpose of Article III rule 3(b)) which were shipping units in the sense I have discussed.
The approach also conforms with that in Cie. Générale Transatlantique c. Cies. The Marine Insurance Co., La Prévoyance, Assurances Générales et autres (1967) 19 Le Droit Maritime Français 23 referred to by Ritchie J in Falconbridge at SCR pp 952-53 (in translation). There, though the court saw a relationship between Article III rule 3 and Article IV rule 5 in dealing with the word “package”, it said (see Falconbridge p 953):
Whereas, no doubt, one of the plaintiffs claims that the term “package” implies per se the idea of a limited load, and that a crate weighing 9 tons 500 pounds, or a car, are therefore not to be regarded as packages for the purposes of the rule limiting the liability of a maritime carrier; nonetheless, if such truly was the meaning of the word “package” hundreds of years ago, when porters had to rely on the strength of their shoulders to load bales of goods, the meaning has evolved since the last decades, so that, now that lifting and handling techniques permit loading and unloading of individual loads weighing far beyond what a man could lift, the term “package”, at least in the language of persons in the maritime transport business, that is to say in the sense in which it is used in the provision the construction of which we are now dealing with, means not only a small load but any individual specialized load, presented as such to the carrier, and so accepted by him, whatever its weight or volume; …
[emphasis added]In The ‘River Gurara’ Colman J referred to the decision of Leggatt J in Bekol BV in which case, as I have said, the bill of lading described the goods under the heading “Number and kind of packages, description of goods” as “X bundles stc Y pieces”, and Leggatt J held that each bundle (not each piece) was a separate package or unit. Colman J commented as follows (at p 59):
…the conclusion is hardly surprising, but it makes little contribution to the issues before me.
It made “little contribution to the issues” in The ‘River Gurara’ because counsel for the cargo interests did not seek to argue that the package limitation should apply to individual pieces within the shipping unit of the bundle. As to this concession, see below.
However, the views of Leggatt J and Colman J (and Hirst LJ who agreed with Colman J) were clear – the packages or units were the packages or bundles not the items or pieces of cargo. That is consistent only with “unit” being a shipping or packing unit in the manner I have identified; though, it should be said, this was in the light of the way the argument was put.
The ‘River Gurara’ was disposed of as set out at Lloyd’s Rep pp 64-5. Two bills were obscure. Colman J dealt with them as follows (at pp 64-5):
Of the list which I have set out the bills of lading relating to interests 9(b) and 9(d) are obscurely worded as follows under “Number and kind of Packages; Description of Goods” heading.
9(b)“2 x 20' containers said to contain 32 pallets load TSR 10 Akelcrumb (Nigerian natural raw rubber) each weighing 36 x 33.33 kg polythene wrapped bales.”
9(d)“4 x 20' containers said to contain 60 pallets load CL 10/20 (Nigerian natural raw rubber) each weighing 36 x 33 kg polythene wrapped bales.”
The question that arises is whether this wording sufficiently indicates a mutual intention to treat each bale as a package or indicates that each pallet is to be treated as a package. Each of the pallets appears to be laden with 36 wrapped bales. The issue is simply whether the bill of lading entry is expressed so as to treat the bales as separately packed items or whether the reference to the bales is merely a convenient means of expressing the weight of the pallets.
On balance, I have come to the conclusion that there is just sufficient indication that the bales are to be treated as separate packages, there being 36 on each of the 32 and 60 pallets respectively. In the event the number of packages in relation to each interest is:
9(b):1152 bales
9(d):2160 bales
It is conceded before me on behalf of the shippers of timber that, where the bill of lading states the number of bundles and also the number of individual pieces of timber in the bundles, the unit of limitation for the purposes of art. IV, r.5 is the number of bundles and not the number of pieces of timber. However, Mr Russell reserved his client’s position should this matter go further. In the event, the relevant number of packages for limitation purposes is that set out in respect of each interest in the document headed Appendix A annexed to and forming part of this judgment. In relation to certain of the timber cargo there is an issue whether it was carried on deck and, if so, whether the relative shippers consented to such carriage, those matters having direct bearing on the applicability of the Hague Rules’ limitation provisions. That is not an issue which I have been asked to determine on this occasion.
[emphasis added]As can be seen from some of the language used in the earlier cases, the meaning of “unit” has sometimes been expressed simply as an article or piece of cargo. However, in each of those cases the article was one that was unboxed and uncrated, and was the article for shipping.
When commentators such as Mr Diamond QC (op cit p 241) express the view that in “the Visby amendment ‘unit’ is to be construed as referring to an individual article or piece of goods which is not a ‘package’”, one needs to examine with care what is meant. His discussion of the issue illuminates that he was referring to how the goods are shipped: see Diamond op cit pp 241-42. The three categories of cargo referred to by Mr Diamond included timber pieces which, if enumerated on the bill, stood as units. But Mr Diamond was positing that such articles were shipped, counted and enumerated as such. His three categories were (see p 241):
First category: goods which are shipped as packages or as individual articles or pieces. When dealing with goods in this category (as for example, an unboxed tractor or a case of machinery), it will not normally matter whether the shipment is a “unit” (as in the case of the tractor) or a “package” (the case of machinery). So long as the weight of each is known, there is no difficulty in ascertaining whether the limit is 10,000 francs or a limit based on weight.
…
Second category: true bulk cargo (whether bulk solids, such as grain, or bulk liquids, such as oil). Here I would say that there is no “package” or “unit” as the shipping unit and freight unit concepts would seem to be irrelevant under the amended Rules. I conclude that the only limit ought to be one based on weight.
Third category: goods which occupy an intermediate position between goods shipped as articles or pieces and true bulk cargo. Most timber cargoes fall into this category. So do bagged cargoes. … It is tempting, therefore, to conclude that timber and bagged cargoes should be treated in the same way as true bulk cargoes. The difficulty, however, is that each piece of timber or each bag of cocoa or sugar may constitute a separate “package” or “unit” so that a higher limit may be applicable. I submit that this question ought to be answered by reference to the bill of lading. If the bill acknowledges a number of pieces of timber or a number of bags of cocoa, the latter conclusion would seem to be plainly correct. If not, I would conclude that the limit ought to be based on weight.
As to rule 5(c) Mr Diamond stated (op cit at p 242):
The general intention of Rule 5(c) is two-fold; first, that the parties to the contract of carriage are given an option whether to treat the container or each of the parcels stuffed therein as the relevant “package or unit” for limitation purposes; second, that in order to see how the option has been exercised one must look to see “ the number enumerated” on the face of the bill of lading.
In the context of the container, Mr Diamond viewed the aim of the clause as dealing with how the bill dealt with how the container was packed – either with packages or units. I do not disagree that separate items packed as such, and described as packed as such, are separate units.
The expression of view by Sir Guenter Treitel and Mr Reynolds in Carver on Bills of Lading (1st edn) at pp 527-30 is not directly contrary to the approach which I have identified, and which is in accordance with the views of Leggatt J, Colman J and Hirst LJ (on the hypothesis of the correctness of their approach to the Hague Rules, being, prior to 1998 and the expression of views by Phillips LJ and Mummery LJ, a widely held view in different jurisdictions).
Applying the above test to the sea carriage document in question here, the relevant task is to see what the sea carriage document enumerated (if anything) by way of packages or units as packed in the container. The face of the document identified in the second column headed “No. of Pkgs” under the heading “Carrier’s Receipt” the number “1”. One way of reading the document is to understand it as saying that the container contains one package said to contain 200,945 pieces posters and prints. If that is the way to read the document, I would conclude that the parties enumerated one package, and not 200,945 units. That conclusion would be in accordance with Bekol BV and The ‘River Gurara’. However, the contents of the clause commencing with the phrase “Received For Shipment” above the signature box, in the context of the clear statements that the shipper had stuffed the container (“shipper’s load stow and count”), is a statement that the container is one package, not that it contains one package.
One then turns to the part of the face of the document under the heading “Description of Goods” and one sees that the container is said to contain 200,945 pieces posters and prints. From the evident nature of that description of the cargo one cannot tell how the cargo was made up for transport into packages or units for packing. There is no relevant enumeration, because one is not told into how many packages or units the goods have been made up for packing into the container; one is not told how many packages were packed or how many units were packed.
Further, the balance of the face of the document is relevant to the ascertainment of what, if anything, is enumerated. The document did say under “No. of Pkgs”, “1”. Though, as I have said, when one looks at the balance of the face of the document that is best understood as a statement that the container is the package. Nevertheless, this part of the document assists in understanding whether the parties, by saying “200945 pieces posters and prints”, were intending to enumerate packages or units. These words standing alone do not identify, or do not identify with any clarity, how and in what number the articles of cargo have been made up into packages or units. In those circumstances, the balance of the bill assists in understanding what was meant by such enumeration or description as there is. The balance of the face of the document makes plain what, in my view, can otherwise be taken from the enumeration – that it is not an enumeration of packages or units as packed.
The statement on the face of the bill was to the effect that according to the shipper there were present in the container over 200,000 pieces of paper or cardboard. The bill did not make clear what number of packages or units as packed there were. The nature of the cargo was such as to be obvious that the bill did not disclose how and in what number such goods had been made up for transport as packed in the container. This was only confirmed by the balance of the face of the bill which tended against any conclusion that the items had been packed as packages or units. Accordingly, there was no enumeration in the document for the purposes of Article 4 Rule 5(c) of the Amended Rules.
On this hypothesis, there appears to be no debate but that pursuant to Article 4 rule 5(a) the cross-appellant is entitled to limit its liability to either 666·67 units of account per package or unit or two units of account per kilogram of gross weight, whichever is the higher. On this basis, and calculating the special drawing rights to Australian dollars at the time the goods were discharged and calculating interest on the amounts so calculated being payable from 12 April 2000 until the date of judgment it would appear that the relevant limitation amount is $38,250. Should there be any debate about this matter the parties can put further submissions on the calculation of the limitation amount.
It is unnecessary for the disposition of the cross-appeal to consider one of the difficulties identified by Mr Diamond as caused by the focus of rule 5(c) on the terms of the bill – that of inaccuracy in enumeration. It is sufficient to say that the view that I favour is not inconsistent with Mr Diamond’s view that if there is an identification of packages or units as packed which is in excess of the number of packages or units as packed in fact within the container, rule 5(c) only applies to the packages or units enumerated for which there is liability. There may be different permutations and combinations of factual circumstances depending on the terms of a bill and the actual contents of a container. It is unnecessary to deal with circumstances beyond those raised by the terms of the sea carriage document in, and the facts of, this case. It is sufficient to say that this sea carriage document did not enumerate any packages or units as packed in the container.
The Appeal
The consequence of the cross-appeal being allowed is that the substance of the appeal must necessarily fail. Also, this conclusion on the cross-appeal undermines the appellant’s complaints as to the costs order.
Whilst my views on the cross-appeal dispose of the whole matter, including the appeal, one important aspect of the appeal, which was argued, should be noted. The learned primary judge calculated the appellants’ loss and damage by reference to value in Australia. Her Honour did this in significant part because of the perceived inadequacy of the evidence of value at the port of discharge. Her Honour felt free to use Article 4 rule 5(b) as only a prima facie measure permitting other measures to be used when the circumstances required: see [52] of the primary judge’s reasons. Her Honour relied for this proposition on what Mr Diamond said at op cit p 248. With respect, I do not think that Mr Diamond was expressing a view other than that there could be exceptional cases where the rule contained in Article IV rule 5(b) did not apply. Whether or not that view is correct, there were no exceptional circumstances in this case. On one view of her Honour’s findings, the plaintiffs (appellants here) relied solely on the negotiated “purchase price” as evidence of value in Greece. Much of their argument on appeal was to the same effect, in particular in reliance upon what Gleeson CJ said in Franke v CIC General Insurance Ltd (1994) 33 NSWLR 373, 376. To the extent that her Honour found the sum in the invoice unreliable one view is that there was simply no evidence before her Honour as to the value of the goods in Greece at the time of discharge. Her Honour did not undertake the exercise of analysing the evidence for the purpose of what could be found about value in Greece. Therefore, it may not be clear whether the findings of fact made by her Honour were such as to lead to a conclusion that there should have been judgment for the defendant by reason of the failure to prove any loss, or that there may have been sufficient evidence, the Court doing its best with the material before it, to construct some value of the goods in Greece at the time of discharge. These questions, of course, do not arise on my view of the cross-appeal, nor do they arise in the light of the terms of the cross-appeal.
In my view, giving the words of Article 4 rule 5(b) primacy, the total amount recoverable is to be calculated by reference to the value of such goods at the place and time at which the goods were discharged from the ship in accordance with the contract or should have so been discharged. The alternatives as to fixing the value are then set out in the second paragraph of Article 4 rule 5(b).
The rule that the amount recoverable is to be assessed by reference to the value of the goods at the port of discharge can be seen to clarify and harmonise by international agreement and convention previously disparate approaches. The English rule appears to have been that the damages in connection with damaged or lost goods carried by sea were to be assessed by reference to the value of the goods at the port of discharge: H McGregor, McGregor on Damages, 17th edn, Sweet & Maxwell, London, 2003, pp 896-924.
Mr Rayment QC, who, with Mr M McHugh appeared for the appellants, relied on American authority to the effect that in the final analysis what the plaintiff was entitled to was damages computed on the basis of providing full actual loss to the plaintiffs. In Chicago, Milwaukee & St Paul Railway Co v McCaull-Dinsmore Co 253 US 97, 100 (1920) the United States Supreme Court recognised that the traditional method of “actual loss” is the difference between the fair market value of the goods at the port of destination as shipped and their condition as damaged. There was, however, an exception to this general rule whereby the replacement cost was deemed to be the appropriate measure of damages: Illinois Central Railroad Co v Crail 281 US 57, 64 (1930) where the Supreme Court said that: “The test of market value is at best but a convenient means of getting at the loss suffered. It may be discarded and other more accurate means resorted to if, for special reasons, it is not exact or otherwise not applicable”. See generally Dessert Service Inc v M/V MSC Jamie/Rafaela 219 F.Supp. 2d 504 (S.D.N.Y., 2002); W Tetley, Marine Cargo Claims, Internet edn, ch 13 “Measure of Damages” pp 11-19, and W Tetley, Marine Cargo Claims, 3rd edn, pp 319 ff.
With respect to the primary judge, I do not see a basis for treating the plain words of Article 4 rule 5(b) as optional. In my view, Article 4 rule 5(b) should have been applied to the facts of this case.
(These comments, however, should not be seen as concluding argument, in an appropriate case, as to the question of consequential loss.)
Also, I agree with the views expressed by Beaumont J as to the legitimacy of the primary judge’s approach in not accepting the invoice price as reliable evidence of value for Article 4 rule 5(b).
Orders
The orders that I would make are:
(a)The cross-appeal be allowed.
(b)The cross-respondents pay the cross-appellant’s costs of the cross-appeal.
(c)The appeal be dismissed.
(d)The appellants pay the respondent’s costs of the appeal.
(e)The orders of the Court made on 17 July 2003 be set aside, except to the order as to costs.
(f)The parties file, within 7 days, a minute of order which is agreed between them to provide for judgment for the second appellant based on the application of Article 4 rules 5(a) and (c) of Schedule 1A to the Carriage of Goods by Sea Act 1991 (Cth) on the basis of there being only one package or unit, that being the container, in substitution for the orders made on 17 July 2003, and which have been set aside; and failing any such agreement, the cross-appellant and cross-respondents file and serve within 14 days forms of order which they contend dispose of the matter.
(g)Otherwise, stand the matter over to a date to be fixed for the making of final orders and any argument in connection therewith.
I certify that the preceding two hundred and twelve (212) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.
Associate:
Dated: 10 August 2004
Counsel for the Appellants:
Mr B W Rayment QC with Mr M G McHugh
Solicitor for the Appellants:
Phillips Fox
Counsel for the Respondent:
Mr A Sullivan QC with Mr G W Diehm
Solicitor for the Respondent:
Blake Dawson Waldron
Date of Hearing:
18 and 19 February 2004
Date of Judgment:
10 August 2004
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