George Fethers & Company Trading P/L v Yangming Marine Transport Corporation

GEORGE FETHERS AND CO TRADING PTY LIMITED and GUANDGONG FLOAT GLASS CO LIMITED
v YANGMING MARINE TRANSPORT CORPORATION
No. VG118 of 1991
FED No. 468/94
Number of pages - 19
Shipping and Navigation

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION IN ADMIRALTY
SHEPPARD J

CATCHWORDS

Shipping And Navigation - damage to cargo of sheet glass consigned from Hong Kong to Sydney and Adelaide - glass packed in eight containers - four containers damaged, four undamaged - whether glass properly and sufficiently packed - whether in good order and condition when delivered to defendant's agent in Hong Kong - whether damage caused by "perils of the sea" - whether vessel seaworthy in sense of being fit and safe for carriage of cargo - whether GM (metacentric height) of vessel appropriate.

Hague-Visby Rules - Article III, Rule 1, Article IV, Rule 2(c), (n).

HEARING

SYDNEY, 27, 28, 29, 30 June and 4 July 1994
#DATE 22:7:1994

Counsel for the Plaintiffs: Mr. A.W. Street

Solicitors for the Plaintiffs: Phillips Fox

Counsel for the Defendant: Mr. G.J. Nell

Solicitors for the Defendant: Norton Smith and Co.

JUDGE1

SHEPPARD J This is an action in which the plaintiffs sue the defendant for damage to a cargo consisting of four containers of sheet glass. The containers were shipped from Hong Kong pursuant to two bills of lading. In all, eight containers were shipped, four to Sydney and four to Adelaide. The two shipments were the subject of separate bills of lading. One of the containers shipped to Sydney and three of the containers shipped to Adelaide were undamaged. The glass in the remaining containers was a total loss. It is agreed by the parties that, if the plaintiffs are entitled to judgment, the amount of the judgment to which they are entitled is $58,401.37 together with interest. The rate of interest and the period for which it is recoverable are also agreed.

In each of the bills of lading the shipper was the second plaintiff which was also the consignee. Either the second plaintiff itself or a company associated with it carries on business as a glass manufacturer in Shenzen, Guandong Province in China. The containers were packed and closed in the manner later described at the second plaintiff's premises in China and transported from there by truck to a container terminal at Hong Kong.
The containers were placed on board the vessel "Oriental Knight" which is a container vessel. They were stowed below deck. Those destined for Sydney were in bay no. 37 and those destined for Adelaide in bays 49 and 51. The damaged container was in bay 49 together with two of the undamaged containers.
Each of the containers was what is described in the trade as an over height container. This does not mean that the containers were higher than containers normally are but that the packing of the glass required part of the structure, an "A" frame to which the sheets of glass were attached, to protrude above the top of each container. The container could not be closed but its top was protected by plywood over which was secured a tarpaulin. The appearance of the container when packing was complete was that of an ordinary container with a tent like top.
The containers were approximately 20 feet (about 6 metres) in length. The A frame inside each container was about 15 feet long. It in fact consisted of a structure made up of three A frames connected to each other by metal and wooden bracing. The A frames and part of the bracing were placed securely against wooden chocking which ran along the floor of each container at its junction with the side walls of it.
Glass was packed against the outside of the two legs of the A frame in much the same way as one sees glass being transported on trucks specially designed to carry sheet glass. The quantity was, however, not inconsiderable. Each container contained between 17 and 18 tonnes of glass. Around the outside of the A frame was a metal strapping which was subjected to tension of a requisite degree. There is no issue between the parties concerning this method of packing. It is a well recognised method used for the transportation of sheet glass in container vessels throughout the world. That is not to say that the defendant does not challenge the correctness of the plaintiffs' evidence that the packing was done properly. A suggested cause of the damage was insufficient packing.
Each of the bills of lading had in brackets below its title the words "(For Combined Transport and Port to Port Shipment)". There followed the words:-

"Received by the Carrier, the goods, containers, vans, trailers, palletized units or other Packages said to contain the goods specified herein, in apparent good order and condition, unless otherwise indicated herein to be transported by the vessel named herein or by any substitute at the Carrier's option and/or by other means of transport including feeder vessels, truck, barge, rail or air from the port of loading or place of receipt to the port of discharge or place of delivery as applicable, and there to be delivered, on payment of the charges thereon and on due performance of all obligations of the Merchant. When the place of receipt is an inland point, any notation on this Bill of Lading of on board, loaded on board, shipped on board, or words to like effect, shall be deemed to mean on board the truck, railcar, aircraft or other inland conveyance (as the case may be) performing carriage from the place of receipt to the port of loading. In accepting this Bill of Lading, the Merchant agrees to be bound by all the stipulations, exceptions, terms and conditions on the face and back hereof, whether written, typed, stamped or printed, as if signed by the Merchant, any local custom or privilege to the contrary notwithstanding, and agrees that all agreements or freight engagements for the shipment of the goods are superseded by this Bill of Lading.

If required by the carrier, one of the original bills of lading duly endorsed must be surrendered in exchange for the goods or delivery order."

The reference to "the Merchant" is a reference, inter alia, to the shipper or the consignee.

After these words there was a note to the effect that the terms of the bill of lading were continued on the reverse side. On the face of the bill there were references to the shipper, the consignee and the party to be notified on arrival. There was a description of the containers by reference to marks and numbers, some other information including the weight of the four containers the subject of each bill, and a statement that they were over height by 30 cms. The bills were issued in Hong Kong on 14 August 1990. Each bill was signed on behalf of the defendant by a company, Warhai Enterprises Limited, described as agents for the carrier, that is the defendant.
Of the conditions endorsed on the back of each bill it is only necessary to make reference to condition 5 which is headed "Carrier's Responsibility". Paragraph (1) of this condition provides that the carrier, i.e. the defendant, shall be liable for loss or damage to the goods occurring between the time when it receives the goods for transportation and the time of delivery. It is unnecessary to refer to the remaining paragraphs of condition 5.
In their statement of claim the plaintiffs refer to the bills of lading and say that by these the defendant acknowledged receipt of a quantity of glass in good order and condition for carriage to and delivery at Adelaide and Sydney on board the Oriental Knight. It is alleged that it was the duty of the defendant to deliver the goods in the same good order and condition as they were in when shipped - obviously a count in bailment - and further that by the bills of lading the defendant promised the plaintiffs expressly or impliedly that it would deliver the goods in the same good order and condition. The statement of claim alleges breaches of these obligations by reason of the condition of the glass on arrival in Sydney and Adelaide.
In its defence, the defendant admits the bills of lading. It says that it was not under any duty to the plaintiffs except as provided for in the terms and conditions of the bills of lading. Breaches of the defendant's obligations under the bills are denied. Paragraph 7 of the defence says that the bills of lading incorporate the Hague-Visby Rules and that under Article IV Rule 2 neither the carrier nor the ship was responsible for any loss or damage arising or resulting from perils, dangers and accidents of the sea or for the omission of the shipper or owner of the goods sufficiently to pack the goods or any other cause arising without the actual fault or privity of the carrier.
Paragraph 8 of the defence alleges that any loss or damage suffered by the plaintiffs arose or resulted from the perils of the sea and/or insufficiency of packing. At this point it may be observed that the basis for the reliance on damage arising from perils of the sea is evidence that the ship encountered extremely heavy weather as it neared Sydney on 26 August 1990.
In their reply the plaintiffs raise a number of matters not all of which need be referred to. Reference needs, however, to be made to their reliance upon Article III Rule 1 of the Hague-Visby rules pursuant to which the defendant was bound before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy and to make the hulls and all other parts of the ship in which goods were carried fit and safe for their reception, carriage and preservation. Primarily it is alleged that the defendant failed in this obligation because the vessel at the commencement of the voyage had a stability which was safe for the ship but not safe for the cargo. In technical terms it is alleged that its GM (metacentric height) was too high. I will explain this term later on. Consequential allegations were made concerning the alleged failure by the defendant to issue proper instructions to cargo planners for the obtaining of the preferred GM for the safety of the cargo and failing to issue instructions relating to the handling of over height cargo. In the plaintiffs' submission, the fact that the ship was unseaworthy in the sense which I have indicated avoids the applicability of Article IV of the Hague-Visby Rules.
The reply also alleges that, if any of the exceptions pleaded by the defendant was a cause of the damage, the exception was not the sole cause. There were alleged to be a number of other "co-operating causes". I do not now refer to the detail of these. So far as it is necessary to do so I shall mention them when I have reviewed the evidence and the detail of the submissions relied upon by counsel for the parties. The reply also asserts that the weather encountered was weather which the vessel might have been expected to encounter on the voyage.
In the way that the case developed, the principal issues which require determination are as follows:-
1. Whether the glass in the containers was properly and

sufficiently packed (see Article IV Rule 2(n) of the Hague-Visby Rules)?

Whether, during the time that the goods were at the

container terminal in Hong Kong or during the time they were being loaded on to the vessel, some incident occurred whereby the containers suffered impact damage or were heavily landed? In this respect there is no evidence of how precisely the containers were dealt with at the terminal but it should be inferred that, between the time they were taken from the trucks that brought them from the second plaintiff's premises to the time they were loaded on board the vessel, they were handled a number of times.

Whether the containers, the A frames or the glass itself

were in any way damaged or adversely affected before the vessel left Hong Kong?

Whether the vessel was seaworthy in that it was suitable (in

the sense of having an appropriate stability) for the carriage of the cargo which it had when it left Hong Kong and during the voyage? In particular, was its stability too high?

Whether the sole cause of the damage or a cause of the

damage was, to use a neutral expression, heavy weather encountered by the vessel towards the end of the voyage to Sydney?

If so, was that damage occasioned by the perils of the sea

in the sense in which that expression is understood in Rule 2(c) of Article IV of the Hague-Visby Rules?

No oral evidence was called in support of the plaintiffs' case that the glass was properly and sufficiently packed into the containers. However, the plaintiff tendered two statements by truck drivers employed by a Hong Kong transport company. Subject to what is later said, these statements were tendered without objection. The two drivers were Mr. Hing and Mr. Tak. Mr. Hing said that he had been employed by the transport company as a truck driver for about eight years. He said that he usually drove from Hong Kong into China and then back into Hong Kong. Usually his truck carried a loaded container weighing not more than 25 tonnes. He said that on 3 August 1990, he received an order to collect three containers from the second plaintiff's factory. He arrived at the factory at about 10.30 a.m. with an empty container. It was unloaded from his truck. Thereafter a loaded container, with a securing seal, was collected and placed on the trailer. Mr. Hing picked up some documents and drove to Hong Kong. He went to the container terminal. He said the employees of the container terminal checked through the "sealed" container without any external damage being noted. The container was lifted from his truck with an overhead gantry crane. Mr. Hing made similar deliveries of containers on 4 and 5 August. He said that no damage was noted by him either during the loading on to the truck or the discharge from the truck "which proceeded as normal."
Mr. Tak also carried a container from the second plaintiff's premises in China to Hong Kong on 3 August 1990. Like Mr. Hing he exchanged the empty container for one which was loaded and sealed. He drove to the container terminal in Hong Kong. As in the case of Mr. Hing, he said that no external damage was noted. On 4 and 5 August, he delivered another two containers. He said that no damage was noted to these.
It is to be observed that Mr. Hing and Mr. Tak have dealt with six, not eight containers. No point was taken in relation to that matter and I have assumed that the four damaged containers were among the six carried by the two truck drivers. For reasons which will appear, I do not think much would turn on the point if my assumption should not be correct.
Although there was no objection to the tender of the statements by counsel for the defendant, he foreshadowed that he might wish to cross-examine the two witnesses. In the discussion that followed, it was said that any cross-examination would be conducted by video link from Hong Kong. In the result, no request to cross-examine the witnesses was made.
The evidence of Mr. Hing and Mr. Tak is corroborated by the clean receipt signed on behalf of the defendant on each bill of lading. I have earlier set out the terms of the receipt, but it notes that the goods were received in apparent good order and condition. Of course, it does not speak of the condition of the glass or the A frames inside the containers. It can only speak of the condition of the containers themselves. Nevertheless, it would seem unlikely that the A frames had been distributed. It should be inferred, I think, that the tarpaulins were apparently intact and that the framework was in place in the sense of it being upright and centred in the containers.
In ordinary circumstances, counsel for the plaintiffs would have been entitled to rely on the fact that the two witnesses were not cross-examined. But, although a possible cross-examination of them was foreshadowed, but not conducted, I need to take into account a sensible agreement made between the parties which may be thought to have avoided the need for some witnesses to give oral evidence. It is not clear to me that the agreement applied to the two truck drivers, but, in the circumstances, I am reluctant to draw inferences adverse to the defendant's case by reason only that the witnesses were not cross-examined.
Those considerations aside, it seems unlikely to me that, if the two witnesses had been called, their evidence would have been very different from their statements. It is unlikely that they would have any substantial recollection of the carriage of the containers. They were not in a position to have inspected the contents of the containers and could only speak of the apparent good order and condition of them. Nevertheless, in all the circumstances, particularly taking into account the clean receipts on the bills of lading, I think that I may safely infer that the appearance of the containers was normal and that there was no apparent sign of damage when they were delivered to the terminal and the defendant's agent took delivery of them for the voyage to Australia.
That does not mean that there may not have been something unsatisfactory about the way in which the goods were packed or that there may not have been caused to the containers on loading at the second plaintiff's factory, or during the carriage to Hong Kong, some damage which may have made the contents of the containers vulnerable to further damage during the loading operation in Hong Kong or whilst the vessel was at sea.
What I need to do is to take into account the whole of the evidence of the journey from the second plaintiff's premises in China to Sydney and Adelaide and reach a conclusion on the question of insufficient packing upon the basis of the entirety of the relevant material which is before me.
There is no evidence of the loading operation in Hong Kong, but it seems quite unlikely that the containers were moved directly from the two trucks to the ship. The ship's log shows that the vessel did not arrive in Hong Kong until 14 August 1990. It commenced either discharging or loading cargo on that day. It is likely that the containers were moved more than once at the terminal before they were eventually moved on to the ship itself. It should be mentioned that the method of moving a container is usually by gantry crane being attached by hooks or chains to a framework known as a spreader. Spreaders consist of three dimensional tubular structures, rectangular in shape, designed to fit standard sized containers. They are attached to them and the crane attaches its hook to chains affixed to the spreader. In the case of over height containers, as here, an oversize spreader is used to allow for the need to avoid contact with so much of the cargo as protrudes above the top of the container. Over height containers are not unusual and over height spreaders are in common use. There is no reason to think that they were not available for use in Hong Kong. Obviously there is a question whether they were used or whether an attempt was made to lift the loads using standard size spreaders.
Cargo bays for containers in ships are fitted with cell guides. These are constructed of angle iron which is placed vertically at intervals in each cargo bay. Four angle irons make up the cell guides for one bay. The tops of the angles are splayed so as to make it easier for those loading the ship to lower the containers into the guides. The containers are placed one on top of the other. Over height containers are always placed last because it is not possible to place another container upon the unprotected top. Although there is some conflict in the evidence about the matter, I find it not to be the usual practice to fix higher containers to the lower ones in the case of cargo stowed below deck as this was. The position is different in relation to containers stacked above deck. It is customary then for each higher container to be attached to the container immediately below it.

There is no evidence which directly suggests that there was anything untoward about the way in which the containers were handled at the container terminal in Hong Kong or the manner in which they were loaded on to the vessel. But for the log, the evidence suggests that the voyage proceeded uneventfully until heavy weather was encountered on 26 August 1990. The log for that day says that by noon the vessel was encountering near gale force winds and rough seas. At 4.30 p.m. the weather was described as "ugly". The entry for 8 p.m. says that the vessel was encountering a storm. The seas were described as very high and the swell very heavy. Seas were being shipped on deck "all the time". The entry for midnight was, "Storm. Very high sea, very heavy swell. V/L labouring heavily. Shipping sea on deck all the time." The wind at all times after 8 p.m. was said to be force 10. Previously it had been force 7 and then force 8.
Force 10 winds were also recorded at 4 a.m. and 8 a.m. on 27 August. The vessel was said to be alongside a berth in the port of Sydney at 9 a.m. The log also records an unsuccessful attempt to pick up the pilot off Port Botany at midnight on 26 August. Entries include reference to "ugly weather", the vessel rolling heavily and the vessel labouring heavily. Similar words are recorded in the entry for 8 a.m.
The log would suggest that the weather encountered on 26 and 27 August 1990 was not the only rough weather the vessel encountered during the voyage. Entries for 17 August refer to a near gale and the vessel pitching roughly and, later, pitching and rolling heavily. Seas were frequently shipped over the deck. Winds were said to be force 7 throughout the day. The situation was the same on the morning of 18 August.
It should be said at this point that there is a question whether the statements in the log recording force 10 winds on 26 and 27 August should be taken at their face value. The evidence of Captain Chiang, who was the Chief Officer on the voyage, coupled with meteorological records for 26 and 27 August which are in evidence, make it unlikely that winds on these days exceeded force 8. Certainly I am not satisfied that they did.
Perhaps little turns on it, but the copy log in evidence has something of a question mark over it. It is a photostat copy of what appears to have been the original log because it purports to bear facsimile copies of the signatures of the Master and Chief Officer at the bottom of the page for each day. Yet the handwriting for numbers of days appears to be the handwriting of one person. The handwriting on other days may be that of the same person using a different pen or of a different person. The point I make is that the entries do not appear to have been the made, at least in the log, by the three officers of the watch who would have been on duty each day. Unfortunately Captain Chiang was not asked about this matter. In these circumstances, I do not draw any inference adverse to the defendant's case based on this matter.
There are a number of survey reports dealing with the damage to the containers and their contents in Sydney and Adelaide. For reasons which will emerge, I propose to deal with the Adelaide container first. The vessel travelled from Sydney to Adelaide after it had unloaded its cargo destined for Sydney. It is not suggested that the Adelaide container was damaged during that part of the voyage.
It was submitted that the damage suffered by the container was consistent with it having been suffered after the container was unloaded from the vessel in Adelaide. I reject that submission because of a statement of Mr. J.L. Lewis tendered by the defendant. Mr. Lewis was not called to give evidence. He was the personnel manager of the container terminal at Adelaide at the time the vessel arrived. Annexed to Mr. Lewis' statement is a document entitled "Container Ship Exchange Sequence Sheet." It is dated 29 August 1990 and lists the containers which were discharged from the vessel at Adelaide. The fourth container in the document is the damaged Adelaide container in question here. Written beside it is the note "Dam. in stow". Mr. Lewis said that, according to the record, the container was stowed under deck in position 490412. That indicated that it was the top container in the stack. The container was recorded as being over height. The notation "Dam. in stow", was said by Mr. Lewis to be the normal remark made on such documents when a container was observed by the person in charge of the discharge of such containers to evince some sign of damage. Mr. Lewis said that he did not know by whom the remark was made. He was unable to identify the handwriting but thought it likely that it was made by a member of the container terminal staff at the time the container was discharged on 3 September 1990. Mr. Lewis said that he was unable to ascertain from the records the type or extent of the damage to the container.
The stowage plan which is in evidence shows that the damaged Adelaide container was on the port side of the vessel in bay no. 49 and was stowed on top of other containers. Beside it were two of the three undamaged Adelaide containers. The third undamaged Adelaide container was on the port side of the vessel in bay 51. The evidence establishes that bays 49 and 51 are towards the stern of the vessel a little forward of the accommodation.
Captain E.J.C. Carr is a marine surveyor practising in Adelaide. On 7 September 1990 he carried out a survey of the Adelaide container at the premises of FMI Pty Limited at Gillman, an Adelaide suburb. The survey was thus carried out well after the container had been unloaded and after it had been transported away from the wharf.
Captain Carr said that, on arrival of the container at the premises of Chevron Glass Pty Limited, its contents were seen to be extensively broken. Delivery was refused. He said the contents of the container comprised eight blocks each containing 29 sheets of clear float glass. These were extensively broken. The supporting metal A frame was bent over against the top right rail of the container side. The inside contents of the container were displaced sideways and pushed hard against the back on its right side. The left side of the container was bowed out to about 15 centimetres at mid-length and the right side bowed out a similar amount with extensive gouge marks and scrapes on the exterior of the side panel. The cover tarpaulin was torn along the right side and jagged pieces of timber framework and metal A frame protruded through the torn tarpaulin along the right side of the top rail. Captain Carr said the actual cause of the damage was not known, but the appearance suggested that the A frame had either been struck a heavy sideways blow to the right or a heavy weight had been landed on top of it crushing the frame over to the right. The weight of broken glass moving about inside the container, no doubt because of the action of the sea, caused the sides of the container to bow outwards.
Photographs taken by Captain Carr show the extent of the damage which he described. He said that the survey was carried out in company with a surveyor employed by the defendant. Captain Carr gave evidence and was cross-examined. I accept his evidence. In particular I accept the various statements he has made in his report. I think the absence of the defendant's surveyor from the witness box is something which I should take into account adversely to the defendant, but only because it reinforces me in my conclusion that I may safely accept Captain Carr's evidence. It was not suggested by counsel for the defendant that I should not accept it. His case in relation to the Adelaide container was really based upon the damage to it being consistent with it having occurred during transport from the container terminal to FMI Pty Limited.
The appearance of the Adelaide container is, I think, significant for the outcome of this case. It seems unlikely to me that the damage to the A frame described by Captain Carr and shown in his photographs could have been caused whilst the vessel was at sea. It is possible that the container, with an already damaged A frame, was loaded on to the vessel and that the container and its contents suffered further damage because of the action of the sea during the voyage. But, if that be so, it was the initial damage that caused the problem. It was that damage which exposed a properly packed container to the risk of further damage; cf. The Shipping Corporation of India Limited v Gamlen Chemical Co (A/Asia) Pty Limited (1980) 147 CLR 142.
I think it probable that the damage to the Adelaide container occurred either at the Hong Kong terminal or during the loading operation on to the vessel. Plainly it did not occur before the defendant, by its agent, received the goods. The clean receipt on the bill of lading establishes this. It did not occur after the vessel arrived in Adelaide because, according to the note on the record referred to by Mr. Lewis, the container was damaged in the stow. It was in the condition in which Captain Carr saw it when it arrived in Adelaide.
As I have said, the damage to the top of the A frame, which is clearly visible in the photographs, was unlikely to have been caused during the voyage unless the container suffered impact damage before the voyage began. To the extent that Captain Kirkland, a marine surveyor called on behalf of the defendant, suggests otherwise, I reject the evidence. I prefer to accept the inferences which arise from the various pieces of evidence to which I have referred and the opinion of another marine surveyor called on behalf of the plaintiffs, Captain Mathias.
Another matter that I think should be taken into account - it is an important matter to be considered when I come to deal with the Sydney containers - is the absence of damage to four of the containers including the two which were immediately adjacent to the damaged Adelaide container. The fact that four containers of glass arrived safely strongly suggests that, especially bearing in mind the other evidence which there is, the damage to the Adelaide container was not the result of insufficient packing before delivery. Nor, for the reasons I have given, was it entirely due to the action of the sea.
In all these circumstances, I conclude that the Adelaide container was properly and sufficiently packed. The plaintiffs have thus made out their case in relation to it. The evidence establishes that the container was received in good order and condition by the defendant and delivered in a damaged condition. That damage was incurred in all probability because of the way in which the container was handled at Hong Kong. Certainly the defendant has not established that the damage was caused by no fault on its part or on the part of its agents. It has not brought the case within any of the exceptions provided for in Article IV Rule 2 of the Hague-Visby Rules.
I turn to the Sydney containers. The case for the plaintiff in relation to them is more difficult than it was in relation to the Adelaide container because there are not the same overt signs of damage to the Sydney containers and their contents. Whether the cause of the damage was insufficient packing or the action of the sea or a combination of both are more open questions.
Counsel for the plaintiffs relied on two matters to suggest that, although the damage was not so obviously caused before the voyage began, there were signs in relation to at least two of the containers which established that it was. The flooring of one of the containers was displaced. This is to be seen in photographs. Another had a tear in its tarpaulin and a large brown mark which counsel suggested was a scuff mark made when impact damage occurred. Counsel for the defendant relied on evidence to the effect that the alleged scuff mark was due to weather to which the tarpaulin had been exposed in the past.
The Sydney containers were inspected by Captain Mathias, another surveyor, Mr. Grant-Mitchell and Captain Kirkland. Mr. Grant-Mitchell inspected two of the containers on 6 September 1990 at the container terminal at Port Botany well after the containers had been unloaded. He found that the glass in the containers was of no salvable value. He said that he was able to establish that the frames within the containers were well supported at the base though there appeared to be little doubt that the frames had "racked" across the containers against the walls. He said there was no evidence that the frames had been shored against the container walls above centre height to prevent racking. But he added that, even if battening had been in place, the weight exerted upon the walls would have caused flexing because there is no lateral strength within the walls of an open top container. Mr. Grant-Mitchell added:-

"This would then have allowed the frame to pivot at the base and in time with transit forces of a rolling nature, the upper section of the frame repeatedly making contact with the container walls; it was observed that the welds at the base of the frames had fractured which in turn provided no vertical support for the glass and with the continuous impacting stow completely shattered.

Our further enquiries also revealed that both containers had been stowed below deck and that the vessel encountered heavy weather during the voyage to Sydney with the Master noting Protest."

The reference to the protest is a reference to a note of protest made by the Master on arrival in which he said that, during the voyage, on 26 August 1990, the vessel encountered "very ugly weather, rolling and pitching very heavily, shipping seas on deck all the time." The weather was encountered in a position off Sugarloaf Point on the east coast of New South Wales. It is roughly midway between Taree and Newcastle.
In a supplementary report, Mr. Grant-Mitchell said that he inspected the third container at the premises of a company, Pan Express. He said that the details of the packing and the cause of the damage were as stated in the earlier report. In this respect it should be said that there is no clear statement in the earlier report of Mr. Grant-Mitchell's opinion as to the cause of the damage, but the clear inference is that he thought, at least at that stage, that the damage was caused by the manner in which the goods were packed and the action of the sea particularly when the vessel encountered the rough weather referred to in the Master's note of protest.
Captain Mathias did not inspect any of the containers, but he considered the survey reports made by others which expressed opinions on the likely cause of the damage. He said that the type of damage described in the reports could be categorised "under three causes, either acting singularly or in combination". These were insufficiency or method of packing, mishandling or negligent handling of the containers and heavy weather damage during the voyage. Captain Mathias thought that the method of packing which he described was adequate and customary for the type of cargo. He said, that in his opinion, the method of chocking would have prevented fore and aft and athwartship movements.
Captain Mathias also said that all eight containers were over height by approximately 30 centimetres. He said that he had studied the stowage plans and found that there would have been adequate clearance above the containers in all bay positions. For this reason he did not think that the possibility of hatch covers striking the tops of the containers arose. Nor did the question of over stowage of cargo, that is to say, the stowage of containers on top of the damaged containers. This was an unlikely cause of the damage.
Captain Mathias then dealt with a number of possibilities. The first was the possibility that a standard sized spreader had been used. He also said that it was possible that a spreader might have been allowed to rest on the cargo for the purpose of having chains affixed to it. Similar problems could have occurred at the time of disengaging the spreader. He also said that the movement of the container, once connected to the spreader, was dependent upon the shore operator's handling of the crane controls and the adequacy of the instructions or cautions being provided to the crane operator. He said, in relation to the loading of containers into the cell guides, that the force with which the container came into contact with cell guides was dependent upon the care taken by the crane operator and the information given by radio from the staff in the hold. In the exercise of lowering the container into the cell guides, the forces to which the cargo was subjected depended upon the descending acceleration and operation of the spreader. If inadequate attention were given during the descending acceleration or in cautioning the crane operator as to the distance above the next container within the cell guides or when to stop lowering the spreader, an impact could occur that could effectively trigger the type of damage observed in relation to each of the containers and their contents.
Captain Mathias went on to give other examples of what could have occurred either to cause the damage which the container suffered or to provide a "trigger" which would make it likely that further damage would occur once the vessel encountered rough weather even if the weather was not out of the ordinary. In relation to the Adelaide container, Captain Mathias thought that the damage was more likely to have been sustained due to an impact from above or a sideways blow. He said that this made it more likely that a similar impact or blow was the trigger for the damage sustained by the cargo in the other containers.
Captain Mathias referred particularly to the observation of Mr. Grant-Mitchell that welds at the base of the frames had fractured. Captain Mathias thought that this was more likely to have been sustained at the time of the initial trigger rather than being caused by secondary damage.
Eventually Captain Mathias said:-

"I would suggest that at time of loading or just prior, the overhead spreader used to handle containers, may have come into contact with the top of the 'A' frame and caused it to deform or the impact sufficient to break outer sheets of glass, but force not sufficient to damage the tarpaulin to such a degree that it was highly visible. Breakage of glass in this scenario would be sufficient to cause slackening of the tensioning steel straps and tension arms, which in turn would cause the outer blocks to move inside the triangular shaped 'cocoon', with eventually a chain reaction occurring, especially during a rolling action of a vessel in a seaway. Similar breakage could also occur if a container was heavily landed, either on the dock or in a cellular position on the vessel, or in a 'hockney trailer', and the possibility should not be overlooked. It would be highly unlikely that ships crew or stevedores would pick up the initial damage that would have occurred to contents, if it is assumed that the triggering action occurred during loading operations in Hong Kong, and they would have only seen the results prior to discharge operations."

The evidence does not reveal the nature of a "hockney trailer". That is not a matter of any significance.

Captain Mathias' report discloses that he thought that at least initial damage was caused to each of the containers either by an impact from the top, a sideways impact, or a heavy landing perhaps during the time the containers were being lowered into the cell guides. The damage was sufficient to disturb the packing with the consequence that the contents of each container was vulnerable to further damage once the ship was at sea and encountered rough weather. The movement in the containers of the A frames and of 18 tonnes of glass would cause further damage to the glass itself, the A frames and the container walls which were bowed out on arrival.

Captain Kirkland made a report on behalf of the defendant concerning the Sydney containers. He thought that the damage was caused by the movement of the ship in the heavy weather which it encountered on 26 August 1990. He resisted suggestions that the damage was caused, or could have been caused, by heavy landing or impact damage.
Captain Kirkland's inspection took place at the container depot at Port Botany on 30 August 1990. Two containers only were inspected. Captain Kirkland said that it was difficult to reconstruct "the fine detail" regarding the means of securing the cargo. As far as could be seen, the glass was stowed on steel A frames "in the normal manner for this type of cargo." He gave an account of his reconstruction of the manner in which the glass was packed. He referred to the fact that it appeared to have been heavily chocked and described the chocking. The two containers were still on the wharf. The third container had been delivered to Chevron Glass' carriers earlier in the day. Both containers were extensively damaged with both sides bowed outwards. Details of the damage were given.
Captain Kirkland said that, when the door of one of the containers was opened, it was seen that the complete cargo had collapsed to the right hand side with all glass smashed. He took a number of photographs which are in evidence and which he described. He described the condition of the second container including the fact that its tarpaulin was torn. Its contents had also collapsed and was lying against the right side wall. Photographs of the contents of this container were taken and are in evidence.
Captain Kirkland said that, from the Master's report, it was apparent that the vessel experienced heavy weather during the voyage. He said that the Chief Officer had noted that the containers were seen to be damaged at the time of discharge. Captain Kirkland thought that the damage had been caused by a collapse of the stow brought about by the motion of the vessel during heavy weather. He said that the "securing" afforded to the glass appeared to be better than average for this type of cargo with substantial A frames being used. However, he added that, due to "the geometry of the load", it was difficult to secure it adequately inside the containers. "In heavy rolling motion" it was always possible for the glass to fall over. In his opinion that was what obviously occurred during the voyage. He referred to information he had received concerning the undamaged container. It is unnecessary to refer to the detail of this.
During his oral evidence Captain Kirkland maintained his opinion that the damage to the containers and their contents was solely the result of the heavy weather encountered by the vessel. It was his opinion that part of the problem arose because the welds at the corners of the A frames gave way simply because of the movement of the vessel in the heavy seas which were encountered.
Each of the surveyors gave evidence and was cross-examined. Captain Kirkland could not resist the suggestion put to him that the Adelaide container had probably been the subject of impact damage. In the course of his oral evidence, Captain Mathias referred to the tear in the tarpaulin on top of one of the Sydney containers and to the scuff mark. In his opinion these were consistent with impact damage also. He also considered that the disturbance of the floor in one of the other containers was or could be indicative of a heavy landing of the container which itself would be likely to cause damage.
There is a good deal of evidence to which I have not referred. Some of it tends to establish that no-one at the container terminal in Hong Kong nor on board the ship noticed anything untoward about any of the containers or the manner in which they were loaded. But the difficulty I have with this evidence is that none of the witnesses was watching the cargo all the time. Furthermore, despite suggestions to the contrary made by some of the defendant's witnesses and by counsel for the defendant, it does not seem to me necessarily to follow that damage occurring after receipt of the goods would always be noted or reported. I think that such a suggestion is unrealistic bearing in mind the large numbers and types of persons who work on wharves and who are concerned with the loading of ships.
The totality of the evidence leads me to conclude that the plaintiffs have establlished that the Sydney containers were properly packed and that the containers and their contents, when they arrived at the container terminal in Hong Kong, were in good order and condition. The accumulation of matters which I have taken into account in reaching this conclusion are as follows:-

. The clean receipts on the bills of lading. . The arrival of four of the containers in an undamaged condition.

. The general purport of the evidence of Mr. Hing and Mr. Tak. . The generally complimentary comments of all the surveyors upon the selected method of packing. . The fact that the Adelaide cotainer could not have been in a damaged condition on arrival in Hong Kong. The impact damage it had suffered would have been visible and it is unlikely that a clean receipt would have been given in respect of it. The evidence thus clearly establishes that five of the eight containers arrived at the terminal in Hong Kong in good order and condition. This makes it more likely that the other three were in a similar condition at the time of their delivery to the defendant's agent.

The obligations which the defendant had were provided for in the two bills of lading. In each case, the relevant provision was para. (1) of condition 5 which provides that the carrier shall be liable for loss or damage to the goods occurring between the time when it received them for transportation and the time of delivery. There are a number of ways in which the carrier can be relieved of liability. I have earlier referred to the relevant ones. I have rejected insufficient packing. The defendant also claimed that the damage was occasioned by the perils of the sea.
The onus is upon the carrier to establish that the damage was caused by one of the excepted causes. I do not think that the evidence enables one to say with any certainty how precisely these containers and their contents came to be damaged but I think the most likely cause is a triggering event at the terminal at Hong Kong or during loading which disturbed the packing and made the contents vulnerable to further damage caused by the movement of the vessel at sea. I have earlier held that impact damage was plainly established in relation to the Adelaide container. I think I should infer it in relation to the Sydney containers. I do so because of the tear in the tarpaulin on one of them, the fracturing of the welds, which I do not believe occurred at sea, and the disturbance of the floor boards in another. I have also taken into account the fact that four out of the eight containers arrived in an undamaged condition, that the Adelaide container clearly suffered impact damage not due to movement of the ship alone, and that the glass was packed in all cases in accordance with a well recognised and accepted method for the transport of sheet glass in containers.
Although I have found the causes to be as I have stated them, it should be observed that, once insufficient packing is rejected as a cause of the damage, the plaintiffs carry no onus in respect of this matter. It was for the defendant to satisfy the Court that the damage was occasioned by one of the excepted causes. It has not done so. Of course it is possible that Captain Kirkland is right in relation to three of the containers when he says that the damage was occasioned entirely by the rough weather which the vessel encountered, but the damage is at least equally consistent - in my opinion, more probably consistent - with there having been a triggering event at the terminal which made the cargo more vulnerable to damage when the ship encountered rough weather. That was certainly the case in relation to the Adelaide container. The damage to the other containers and their contents is consistent with the damage being caused in a similar fashion.
I have considered the evidence given by each of the marine surveyors. I do not doubt the honesty of any. I think each was an expert retained by one or other of the parties and may have had a natural, but unconscious, sympathy for the side which had retained him. But I am sure each surveyor did his best to assist the Court in coming to a conclusion. Although he did not see any of the containers, I prefer the evidence given by Captain Mathias to that given by the other witnesses.
These various conclusions accordingly lead to the further conclusion that the plaintiffs are entitled to succeed in the action which they have brought and to recover the sum of $58,401.37 together with interest for which they sue.
Before concluding, I should say something of the alternative basis upon which the plaintiffs' case was put. It was alleged that the GM of the vessel was too high with the consequence that she was too stiff. Mr. Colquhoun gave evidence about this matter. He is a most experienced naval architect. He was an impressive witness. In Mr. Colquhoun's view, the GM should have been no higher than one metre. He described how a vessel which is too stiff behaves when it rolls. It recovers from the roll very quickly; to use one of the more graphic expressions in the evidence, it is inclined to "flick" back on to an even keel. This has the effect of imposing severe strains, not so much on the ship, but on the cargo.
Captain Mathias agreed with Mr. Colquhoun's evidence that a GM of more than 1 metre was too high. Captain Kirkland had a different view. He thought 1.45 metres not an inappropriate one for the voyage.
The purpose of this evidence was to establish that the vessel in the condition in which it left Hong Kong was unseaworthy in the sense that it was not in proper condition to carry its cargo safely. This involved it, so counsel for the plaintiffs submitted, in a breach of Article III Rule 1 of the Hague-Visby Rules. Relevantly, as earlier mentioned, the Rule provides that the carrier is under an obligation, before and at the beginning of the voyage, to make the ship seaworthy. Furthermore the carrier is bound, before and at the beginning of the voyage, to exercise due diligence to make the holds and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation.
It is probably unnecessaary to refer to authorities on this question, but reference may be made to Scrutton on Charterparties and Bills of Lading, 19th ed (1984) where it is said (at 84) that the undertaking of seaworthiness, requires not merely that the ship owner will do and has done his best to make the ship fit, but the ship really is fit in all respects to carry her cargo safely to its destination, having regard to the ordinary perils to which such a cargo would be exposed on the voyage. The matter is dealt with in Rathbone Brothers v D. McIver Sons and Co (1903) 2 KB 378 where Vaughan-Williams LJ said (at 386):-

"We ought, I think, to hold that the word covers, not only the unseaworthiness of the ship in the sense that it is not fit to meet the perils of the sea, but also in the sense that the ship was not in a fit condition to carry the cargo."

The Rathbone case was decided before either the Hague Rules or the Hague-Visby Rules were in force. Reference may also be made to the decision of Staughton J in The "Good Friend" (1984) 2 Lloyd's Rep 586 at 592-3 and the decision of Hobhouse J in The "Benlawers" (1989) 2 Lloyds Rep 51 at 59-60.
The onus of establishing a breach of the Rule rested upon the plaintiffs. The matter occupied a good deal of the time of the hearing. One of the difficulties I have about it is that I did not have the benefit of the evidence of any current or recent master of a container vessel. I would not suggest that Mr. Colquhoun was a theorist; plainly he has a great deal of practical knowledge. But the evidence of the ship's first officer at the time (now Captain Chiang) has made me hesitate before accepting Mr. Colquhoun's evidence at its face value. I have the same reservation about Captain Mathias' evidence in this regard not because I do not think it was given in good faith but because he has not had recent experience at sea.
In evidence there are a number of documents about stability including a text book. Without going into a long technical explanation, it may be said that a satisfactory GM or metacentric height is a compromise reached in order to reconcile two forces, gravity which tends to force a vessel down and buoyancy which tends to force it up. I should perhaps explain that the metacentre is the point where the vertical line through the centre of buoyancy of a floating body in equilibrium meets the vertical line through the new centre of buoyancy when the body is in a slightly inclined position. The equilibrium of the body is stable when this point is above its centre of gravity and unstable when it is below it. The metacentric height is thus the distance between a vessel's centre of gravity and its metacentre. If the metacentre is above the centre of gravity, stability is positive and the vessel stable. If the metacentric height is too low, the vessel will not be stiff but it may lack buoyancy. In a heavy sea it may not recover sufficiently from a roll so care has to be taken to avoid the ship being too "tender" just as it must be taken to avoid it being too stiff.
The terminal at Hong Kong had prepared a loading plan before the vessel arrived in Hong Kong. This gave a GM of 1.45 metres. Captain Chiang's evidence establishes that the vessel left Hong Kong with a GM of about 1.45 metres although it may have been a little less due to the final positioning of the cargo and the amount of fuel and water which the vessel took on board. There are no records of calculations which were made of the GM upon departure and no satisfactory information as to the state of the vessel's double bottom tanks or wing tanks. Nevertheless, Captain Chiang agreed that the GM on departure would have been close to 1.45. As the vessel used up fuel, so the GM would reduce. There is support for the view that, as it approached Sydney and encountered the rough weather to which I have referred, the GM may have been as low as 1.25.
Notwithstanding my regard for Mr. Colquhoun as a witness and some other evidence which there is on the matter, I have come to the conclusion that I cannot be satisfied that the ship was, either at the time of its departure or at the time it encountered the rough weather, so stiff that it should be regarded as having been unseaworthy in the sense that it was not fit safely to carry the cargo which was on board. I am reinforced in this conclusion by entries in the log to the vessel "labouring heavily". It may be a straw in the wind, but it seems an unlikely way to describe a vessel under stress in a heavy sea if it was too stiff.
One other matter which I should mention, is a submission made by counsel for the plaintiffs that, failing all else, the defendant was not entitled to rely upon the exception in Article IV Rule 2(c) based on the perils of the sea because a prudent master, before or at the time the heavy weathy was encountered, would have reduced speed in order to lessen the effect of the weather on the cargo. There is support in the evidence for this submission, but I think that, if that matter had been a matter which it was necesary to decide, there would have been a question whether I could be satisfied that any reduction in the speed of the vessel would have made any difference. In the view that I take of the matter, it is unnecessary for me to reach a conclusion on this question.
In the result there will be judgment for the plaintiffs in the sum of $58,401.37 together with interest. I do not propose now to make formal orders. The matter will be stood over for a short time to enable the parties and their legal representatives to consider what I have said. When the matter is again in the list, I shall fix the amount of the judgment to be entered and deal with the question of costs.

[1994] FCA 468

22 JULY 1994