Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad

[1998] HCATrans 61

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S44 of 1997

B e t w e e n -

GREAT CHINA METAL INDUSTRIES CO LTD

Appellant

and

MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD

Respondent

GAUDRON J
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 11 MARCH 1998, AT 10.18 AM

(Continued from 10/3/98)

Copyright in the High Court of Australia

GAUDRON J:   Yes, thank you, Mr Sullivan.

MR SULLIVAN:   I think my learned friend, Mr Macfarlan, wishes to hand something up to your Honours before I start.

GAUDRON J:   Thank you.

MR MACFARLAN:   I am content to do that after my learned friend has finished, but seeing he has mentioned it I will do it now, if I may.  It is an article by Mr Sturley concerned with the Hague Rules formulation.  If I could hand innumerable copies to the Court.

McHUGH J:   I think we have got it.

MR MACFARLAN:   Your Honour has it.  We have not supplied it before, but your Honours may have otherwise obtained a copy.

McHUGH J:   Yes, I think we have all read - although I am only up to page 23.

MR MACFARLAN:   It is called The History of COGSA and the Hague Rules by Mr Sturley.

GUMMOW J:   But it is not the preface to the travaux.  It is separate.

MR MACFARLAN:   Well, perhaps if I could hand it up and your Honours could throw it away if your Honours have it already.

GUMMOW J:   Yes.  I think it is a separate thing.

MR MACFARLAN:   It is in the Journal of Maritime Law and Commerce published in 1991.

GAUDRON J:   Yes, thank you.

KIRBY J:   Anything else of that character would be helpful to me, that is to say if there are any academic reviews of this material, because they have more time to read every ocean wave and analyse these things than we do.

MR MACFARLAN:   Yes.  Well, your Honour, there are some ‑ ‑ ‑

McHUGH J:   I spoke too quickly.  It is different, I think.

MR MACFARLAN:   Yes.  There are some useful passages in it.  Your Honours, at page 15 of the article this is said:

Although the United States stood alone with the Harter Act for a decade, eventually other countries where cargo interests were strong followed the US lead.  New Zealand’s Shipping and Seamen Act, 1903, included provisions that were substantially identical to the central provisions of the Harter Act -

with one exception:

In 1904, Australia passed its first Sea‑Carriage of Goods Act, primarily in response to pressure from Tasmanian fruit growers and other shippers of perishable products.  The Act was intended to be an “improvement” of the Harter Act by being more generous to cargo interests.  The carrier’s obligation to furnish a seaworthy ship, for example, was absolute, rather than being in effect an obligation to exercise due diligence to furnish a seaworthy vessel.

And, your Honours, at the top of page 16 third line it is indicated that:

The Canadian Senate first considered a private member’s bill based on the Australian legislation in 1908.

There is a footnote 118 which says something about that.

KIRBY J:   All of this is a potted version of the material that Justice Gummow distributed to us which is, I think, the introduction to volume 1 of the major work on the travaux.

MR MACFARLAN:   Yes, I see.

KIRBY J:   But it is useful to have it.

McHUGH J:   It is also a little bit more expansive on some issues.  For example, the reference to the Tasmanian Fruitgrowers or the footnote to King O’Malley does not appear in the material that we have.

MR MACFARLAN:   No.  At page 17, your Honours, about 10 lines down at the end of the paragraph:

The resulting legislation -

this is the Canadian legislation -

finally took effect as the Water Carriage of Goods Act 1910, and ultimately served as the principal model for the Hague Rules.

So in reality the Australian legislation was the ultimate model, it having found its way into the Canadian and thence into the Hague Rules.  On page 21, about 10 lines down, in speaking of the Canadian Act, the Hague Rules followed section 6 of the Canadian Act:

the carrier was required to exercise due diligence to make the ship seaworthy.  The carrier was also liable for “the proper and careful handling, loading.....of the cargo.  In return, the carrier was not liable for faults or errors in the navigation or management of the ship.  All but one of the remaining specific exceptions to liability in the draft were taken essentially verbatim from section 7 of the Canadian Act.

GUMMOW J:   There does not seem to have been much debate at any stage about perils of the sea.  It seems to have been treated as understood.

MR MACFARLAN:   Yes, that is so.  The Canadian Act used the expression “perils of the sea” together with the other wording and, although The Guilia was an American decision, as I mentioned yesterday, it dealt with a bill of lading which had the term “perils of the sea” in it and one could conclude that that was a background against which the convention decided to adopt the Canadian provision.

KIRBY J:   How does this help your case?  I mean, it is helpful as historical background to see how this came about, but I do not quite see how it elucidates these magical words, which I think were originally in the Book of Common Prayer - perils of the sea.

MR MACFARLAN:   It really illustrates that these immunities came from the cargo interest side, in that the Australian cargo interests led to the 1904 Australian Act, which found its way into the Canadian Act and, thence, into the Hague Rules, and the inference can be drawn that it was the North American approach to immunity, such as the perils of the sea, that was intended to be adopted by the Convention.

McHUGH J:   While you are on your feet - have you finished on this aspect?

MR MACFARLAN:   Yes, I have, your Honour.

McHUGH J:   Can I ask you a point that occurred to me after Court yesterday, and it is this; much of your argument yesterday was structured on the basis that one starts with the ordinary rules of bailment, including a general obligation to deliver safely, or in the same condition, what you have received.  But why is not the proper approach to the problem that the rules, so far as relevant here, state exhaustively the obligations.  After all, section 6 says that contract has effect subject to the provision of the rules, and the rules are to apply and, when you turn to the responsibilities and liabilities of the carrier, it is to make the ship seaworthy, and in Article III, rule 2:

the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.

Now, why is it not the proper approach, in a case governed by this Act and these rules, that to make out a prima facie case you have to show a breach of these rules - these articles?  So, when I said to you yesterday, paragraph 7, I think it was, might have been superfluous, far from it being superfluous, it may have been essential, and it was the earlier rules, or the earlier paragraphs in the pleading that were irrelevant.

MR MACFARLAN:   Yes.

McHUGH J:   And that makes sense of the Article IV and its inter‑relationship with Article III 1 about seaworthiness and explains the decision in The “Tilia Gorthon”.  The plaintiff has to show a breach of the obligation to make the ship seaworthy.  However, Article IV says that proof of that breach does not result in the carrier being liable unless the carrier establishes due diligence so that the whole structure of the rules is that the plaintiff has to make out a breach of the responsibilities laid down in Article III.

MR MACFARLAN:   Yes.  Your Honour, that does not seem to be the way  ‑ ‑ ‑

McHUGH J:   I know.

MR MACFARLAN:    ‑ ‑ ‑Justice Samuels approached the matter in the Court of Appeal in Gamlen but I accept Article VI does cause some problems in mounting a contrary argument.  That really touches on what her Honour Justice Gaudron raised with me yesterday.

McHUGH J:   Yes, I know it does, yes.

MR MACFARLAN:   On some further reflection overnight I would like to put an answer to it if I could in this way, that the delivery in a damaged condition, which occurred here, is prima facie evidence of a breach of Article III.  The onus is then on the carrier to make out an immunity under Article IV  ‑ ‑ ‑

GUMMOW J:   A breach of which part of Article III?

MR MACFARLAN:   In particular, rule 2, your Honour.

McHUGH J:   That may be accepted but it still means that you are not suing on your common law contract of bailment which is - I do not know, maybe the rules in the civil countries are very different from common law rules concerning bailment but you would be suing for breach of Article III rule 2.

MR MACFARLAN:   Yes.

GAUDRON J:   Which in fact you did in this case.

MR MACFARLAN:   We did.  I do not want to concede the contrary.  We submit the way Justice Samuels approached it in Gamlen is the preferable way, that is that the general bailment obligation still subsists but, as an alternative approach to it, we put it in this way that the delivery of damaged goods is prima facie evidence of a breach of Article III, and rule 2 in particular, and if the carrier then said nothing the plaintiff would be entitled to judgment.

So the carrier is required to embark upon a case of establishing one of the immunities.  If we are correct about the construction of rule 2(c), and we assume for the moment that is the only one the carrier seeks to rely upon. the carrier has to show the taking of care on its part in the sense that it was not able to guard against the occurrence of the peril that occurred.  If it is unable to do that, then it leaves intact a prima facie case of a breach of Article III and we have judgment.  That is the way we would see it happening.

GAUDRON J:   But what - and that really is the question in this case, or it may be the question in this case:  what if the ship shows a prima facie case for Article IV 2(c)?  Can you displace it by going outside Article III?

MR MACFARLAN:   Well, on the first argument arising out of what Justice Samuels said, yes, but on the alternative approach I have just been dealing with, no.

GAUDRON J:   Yes.  And that, it seems to me, leaves your argument that it should have stayed in port, dead in the water.  Because I cannot find anything in Article III to say that you have to stay in port if there is a storm coming.

MR MACFARLAN:   Your Honour, that involves an assumption as to the meaning of the expression “perils, dangers and accidents of the sea”.

GAUDRON J:   So does your argument, perhaps.

MR MACFARLAN:   So does our argument.  We take the approach, we say is evident in what Justices Mason and Wilson said early in their judgment, that these various legs of Article IV rule 2, with a couple of exceptions, bespeak of events occurring without negligence.

In other words, one cannot show that such an event has occurred unless one shows at least two things, that there was a pounding and that the pounding occurred after all due care had been taken.  The concept of care in this context must involve not only the immediate steps taken by the vessel, such as turning the vessel into the wind or the waves, or whatever might be appropriate in the circumstances, but the more remote steps that it could have taken if it anticipated what was going to happen, and if it saw a realistic risk that the vessel could not handle the conditions that were to be encountered.  Assuming the conditions are anticipated, it is then for the carrier to say this particular pounding and the damage that resulted was not reasonably foreseeable.  It did not embark on that; it did not discharge that onus.  But, assuming that the evidence ‑ ‑ ‑

KIRBY J:   They did call evidence of the weather warning they had, and it was just a gale warning, which I assume ships will get every third night, especially in the Great Australian Bight.

MR MACFARLAN:   The critical evidence, we submit, was the evidence of the expert called by the defendant carrier to say, having looked at the deck log which recorded the conditions that were encountered as described by the master or deck officer from time to time, that those conditions were to be expected in that area at that time of year.  So, the carrier made an election to proceed into those conditions ‑ ‑ ‑

GAUDRON J:   What, he have had to wait till another time of year, on your argument?

MR MACFARLAN:   Or get a better ship, your Honour.  If there is a foresight of damage, then the carrier decides to run the risk ‑ ‑ ‑

GAUDRON J:   You did not contract with this ship as such?

MR MACFARLAN:   We contracted with the carrier.  The carrier was not under any particular time limit to get the goods to the destination promised.  It is just like saying to a road carrier, or the road carrier saying, “Well, I could drive at 100 miles an hour.”  He cannot do that; he, or it, has to drive at a speed that is suitable to the conditions and at a speed which would enable the vehicle to cope with the conditions.

McHUGH J:   But you may have to go so far as to say that the loss does not arise or result from the peril of the sea, because although that may have been the immediate cause yet for the purpose of legal theory, the sole cause was the voluntary act of the carrier in deciding to encounter whatever the peril.

MR MACFARLAN:   That is really our alternative argument, your Honour, the causation one.  It is not the first way we put it.

McHUGH J:   I do not think it would be sufficient on that basis for you to simply to say, “Well, it did result and our act, our voluntary act, was a contributing - was our decision”.  You may have to go so far as to say that for legal purposes the voluntary act was the sole cause.

MR MACFARLAN:   No, we would not accept that, because - - -

McHUGH J:   I know you would not accept that.

MR MACFARLAN:   The carrier has to show that the peril was the sole cause and if there is a contributing cause constituted by its election to proceed, then that negates the finding that the peril was the sole cause.

Your Honours, on that question of pleading particularly raised by his Honour Justice McHugh, could I hand your Honours copies of the decision in Canadian National Steamships v Bayliss (1936) SCR 261, a Supreme Court Canada decision. It is just there was a short passage which may elucidate matters slightly. At 263 about point 3 it is said, it is counsel for the appellant:

His main contention was that the appellants having established at the trial a prima facie case of loss by a peril of the sea within this definition, the burden of proving negligence consequently rested on the respondent on the authority of The Glendarroch.  At the trial the defence raised under this head was that the heavy seas that were encountered.....were of such a character as to bring the damage within the words -

which are now familiar.

The issue raised by this defence was, of course, an issue of fact and it was incumbent upon the appellants to acquit themselves of the onus of showing that the weather encountered was the cause of the damage and that it was of such a nature that the danger of damage to the cargo arising from it could not have been foreseen or guarded against as one of the probable incidents of the voyage.

And that is the onus, a description of what the onus is on the defendant and what the defendant would have to plead to exculpate itself from the liability.

McHUGH J:   It is a curious statement having regard to the fact that earlier up the page his Lordship has referred to The Glendarroch.  What he says, it seems to me at the moment anyway, to be a departure from what was said in The Glendarroch.

MR MACFARLAN:   The reason we would suggest is the concept that the peril of the sea itself embodies the notion of the taking of care as we have suggested in our first argument, and that Bayliss decision was followed in the Goodfellow decision in the Canadian Supreme Court.

McHUGH J:   On this point?

MR MACFARLAN:   I think generally.  I am not sure about that point particularly, your Honour, but that was the effect of the Goodfellow decision, that peril of the sea involved that concept which is stated there in Bayliss.  Yes, if your Honours please.

GAUDRON J:   Yes, thank you, Mr Macfarlan.

KIRBY J:   May I just ask one last question?  Is not the consequence of your construction for international shipping against the peril of liability that every time a vessel had a warning of weather it just has to lay by in a port?  It seems a rather unfortunate consequence.

MR MACFARLAN:   No, that would not be the consequence, your Honour, because, in most cases, the vessel and its owners could reasonably expect that the vessel could handle the weather.  It is only where, in a case such as this, the vessel owners cannot prove that they had a reasonable basis for thinking that this vessel could properly handle the weather that they would have to resort to the ultimate avoidance measure of staying away.  But that is part of their onus.

KIRBY J:   How would you know?  It would depend on the unpredictable uncertainties of the weather blowing up to a couple of notches up the

Beaufort scale.  There is just no certainty.  I mean, there are predictions, but no certainty in this.  I suppose you have to say it is a question of fact in each case and you just have to look at the forecasts and weather patterns and decide on that basis.

MR MACFARLAN:   Your Honour has seen the deck log, which contains a detailed description of the weather, the height of the waves, the force of the wind and the like.  The carrier called an expert mariner, who looked at the log and the other circumstances of the case and said, “This is the sort of weather you would have to expect there.”

KIRBY J:   He was the respondent’s expert, was he?

MR MACFARLAN:   Yes, the carrier - the respondent’s expert.  And, as well as that, there is the passage in the master’s evidence that I referred to.  So, knowing this severe weather was going to occur, the vessel has either got to make a decision that its vessel is capable of handling that weather, or it has got to stay away.  It cannot take the third option of plunging on regardless, its onus to show that it had a reasonable basis for thinking that the vessel could handle that weather.  If the Court pleases.

GAUDRON J:   Thank you, Mr Sullivan.

MR SULLIVAN:   Your Honours, may I address the three points raised today before I resume my submissions lest I forget them, in due course.  First, although we submit we do not need to take our case as high as what your Honour Justice McHugh indicated in your question to Mr Macfarlan this morning, namely that Article III effectively is a Code for the obligations of a carrier, we respectfully adopt those thoughts as a submission but, in our respectful submission, we do not need to take the matter as highly as that, but we would adopt that as an alternative.

The second matter my learned friend raised, in answer to Your Honour Justice Gaudron, was that there was no specific contract to carry goods on a particular ship.  That is inconsistent with the bill of lading.  One of the three functions of a bill of lading, which your Honours will recall, is that it sets out or evidences the terms of the contract of affreightment.  On the bill of lading, in the present case, the ship nominated is specifically said to be The “Bunga Seroja”, and that appears from appeal book volume 2 at page 357.

So, just as it is a term of the contract of affreightment, subject to other terms that there be a particular port of loading and a particular port of destination, it is a particular term of the contract here that a particular vessel, being The “Bunga Seroja”, would carry the cargo.  Of course, there are provisions in the bill of lading which provide in certain circumstances for the shipowner, the carrier, to substitute a vessel.  The third point my friend raised was an attempt to ‑ ‑ ‑

KIRBY J:   It is doubtful that the fame of your vessel would have spread to the appellant and then it was only concerned to get its good ship to not - with the identity of vessel.

MR SULLIVAN:   That is right, your Honour but, nonetheless, it was a term of this particular contract that that was the vessel - absent rights otherwise in the bill of lading, that that was the vessel to carry it.

KIRBY J:   I cannot see how that can relieve you of your liability at law, whatever that may be.

MR SULLIVAN:   I am not suggesting it does, your Honour.  It is just in response to something our learned friend raised in answer to Justice Gaudron.

McHUGH J:   Well, indeed it may increase your obligations.  It might give some strength to Mr Macfarlan’s argument because if that is the vessel you are going to use and it is not safe to take to sea, then that is your problem, is it not?

MR SULLIVAN:   It is our problem if it was proved that that vessel was not safe to take to sea.  But here, as the trial judge found, there was no question of the seaworthiness of the vessel.

McHUGH J:   I know, and it also seems to me to strengthen the argument for saying that all the rights and liabilities of the parties are basically to be found within the rules, because the onus is on you to show unseaworthiness and if you fail on that issue, then your approach in the “perils of the sea” argument, on the basis that - I am sorry, that the plaintiff fails to prove unseaworthiness, then you approach Article 2(c) on the basis that you have a seaworthy vessel.

MR SULLIVAN:   Yes, your Honour.  We see the force of what your Honour says.  Your Honour’s view has not manifested itself in the authorities to date including Gamlen, and that was the reason we have not raised it as ‑ ‑ ‑

McHUGH J:   As Sir Owen Dixon once said, the failure of lawyers to see these points is only a reason for caution.  It does not mean that they are not right.

MR SULLIVAN:   Indeed, your Honour.

GUMMOW J:   We do not seem to have the full bill of lading.  We only have the front; we do not have the back.

MR SULLIVAN:   Your Honour might also need a magnifying glass if you had the back.

GUMMOW J:   I managed to see that it refers to “subclause (2) on the back hereof”.

MR MACFARLAN:   Your Honours, we have a blown‑up copy of those which we can provide if it is of assistance.

GUMMOW J:   Including the back?

MR MACFARLAN:   Yes, I think of the back.  They are upstairs.  We will have them brought down.

GUMMOW J:   That would be of great assistance to actually know what the constituent document says.

MR SULLIVAN:   I am grateful.  Your Honours, the third point arising out of the discussion with Mr Macfarlan ‑ ‑ ‑

GUMMOW J:   It is a contract case; it is good to see the contract in writing.

MR SULLIVAN:   The third matter arising out of what your Honours discussed with Mr Macfarlan this morning concerned my learned friend’s discussion of Bayliss and his attempt to use that as an authority to overcome the order of proof referred to in Glendarroch.  There are two flaws, with great respect, in that submission to the extent that it goes.

First of all, the reasoning of Chief Justice Duff in Bayliss is premised upon the definition of “perils of the sea” which he gives and sets out, which was accepted from Scrutton, at the top of page 263, being:

Any damage to the goods carried, by sea‑water, storms, collision.....which could not be foreseen and guarded against by the shipowner or his servants as necessary or probable incidents of the adventure.

So that the court there accepted this expanded version of the definition of “perils of the sea”, and understandably, having done that, the burden of proving the exception, since that is an exception to exception, was said to fall upon the carrier.  That is the explanation, apparently, of those otherwise surprising comments at the foot of page 263.  In any event, if that was the view of the Canadian Supreme Court in 1937, by 1942 they had recanted upon it, because in the case of Keystone Transport Limited v Dominion Steel (1942) SCR 495, the Supreme Court makes it plain that once the peril of the sea has been established it is then upon the respondent, the cargo interest, to disprove that peril by proving that negligence caused the loss. The relevant passages in the judgment of the Supreme Court are at page 505 to 506. It is conveniently summarised in the headnote.

Your Honours, before I resume where I left yesterday, might I, as an aide‑memoire, or assistance, hand up an appendix from Tetley which sets out the various scales on the Beaufort wind force scale and the conditions which are anticipated with each and the speeds of winds and the like which are inherent in the definition of each of the various numbers on the Beaufort scale.

McHUGH J:   It is set out in Benedict on Admiralty.  I think some of us have a copy of it.

MR SULLIVAN:   Just by way of passing here, before I resume my substantive submissions, the finding of the trial judge was that the winds reached force 11 - the log said forces 10 to 11 - and your Honours can see from there the expected sea criteria which accompany such winds and the typical speeds or average speeds of the winds which fall within those levels.

McHUGH J:   Can I just ask you this:  where do you get your document from?

MR SULLIVAN:   The document we have comes from - it is an appendix to Tetley, Marine Cargo Claims.

McHUGH J:   I see.  The reason I say that is that in the description of “wind”, a force 10 wind, on your scale, is simply “storm”.  In Benedict it is “heavy gale”.  Force 11 in Benedict is “storm”.  In yours it is “violent storm”.  So, is there an official publication of this?

MR SULLIVAN:   Your Honour, I will have to take that on advisement.  Just looking at - - -

McHUGH J:   I must say, yours looks more official-like than the description that appears in section 153 of Benedict on Admiralty.

MR SULLIVAN:   Your Honour, the third edition of Tetley, from which this is taken, does not reveal the source, I regret to say.  The third edition was published in 1988 and I am not sure what is the year of publication of Benedict which your Honour is looking at.  Your Honour, we will endeavour during the course of the morning to ascertain the source and reliability of the appendix we just handed up to your Honour.  Whilst I am in the process of handing things up, and to save my learned friend the problem, may we hand up to your Honours copies of a bill of lading blown up, with the second page attached; however, it is not the actual bill of lading in the present case, because there is no printing or typewritten entries on the front page; it is a pro forma.  It is a document which was the agreed pro forma at the trial, your Honour, I am told by my learned junior.

GUMMOW J:   There will be no reference to Hague Rules here.

McHUGH J:   Clause 3.

MR SULLIVAN:   I think there is reference maybe in clause 3, your Honour.  Your Honours, yesterday I was beginning on an analysis of the Hague Rules - - -

GUMMOW J:   Where is there an express provision, that is what I am looking for, in terms of section 6 in the Sea-Carriage of Goods Act?  I realise it refers in general to the Hague Rules, but where does it refer to section 6?

MR SULLIVAN:   Would your Honour just pardon me one moment while I take the assistance of my learned friend.

MR MACFARLAN:   It resembles the Magna Carta, your Honour.

McHUGH J:   Indeed, clause 3 is contrary to section 9 of the Commonwealth Act, is it not, because it says that  ‑ ‑ ‑

MR SULLIVAN:   Any repugnancy is cured, your Honour, by clause 3(5).

McHUGH J:   Which clause is it?

MR SULLIVAN:  

If any provisions of this Bill of Lading be to any extent repugnant to legislation hereby made applicable or other -

legislation -

in force in a place where any such action or proceeding is brought that provision shall to the extent only to which it is repugnant to such legislation and not further, be deemed -

et cetera.

McHUGH J:   Yes.

GUMMOW J:   It does not deal with section 6.

MR SULLIVAN:   Your Honour, the provisions of section 6 apply in this case and the bill of lading has incorporated into it by reason of section 6 in this particular case the Hague Rules because the contract of carriage was one which was within the ambit of the  ‑ ‑ ‑

GUMMOW J:   It says:

Every bill of lading.....shall contain an express statement.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   It does not do that.

MR SULLIVAN:   Well, to the extent that it does not, your Honour, it would, in our respectful submission, not alter the substantive matters before your Honour.

McHUGH J:   Why?  The contract is unlawful.

MR MACFARLAN:   These copies have arrived, your Honours, if they would be of assistance.  They are blown up copies of that page your Honours are looking at.

MR SULLIVAN:   Your Honours, it is not necessarily apparent to us that - and I say this without full consideration - a breach of section 6 renders the contract of affreightment unlawful.  It certainly makes it invalid or a no contract.  It certainly means that there is an infringement of section 6 but we will take that on advisement, but as far as I am aware there is no authority for the proposition that that means that there is any legal contract as a result and no point has been taken on that matter below.

Your Honours, if I may then resume where I left off yesterday.  It is our submission that a proper approach to consider the proper construction and ambit of the Hague Rules is to analyse the rules, themselves, in the scheme in much the same way as your Honour Justice McHugh alluded to this morning.  With the honourable exception of this Court in Gamlen, it appears to be something which none of the previous authorities has done.  The previous authorities, as we will come to briefly later on, in the large part, both in England, America and Canada, seem to proceed upon a priori assumptions, or the like, without giving a detailed analysis of the structure and content of the Hague Rules.

When one looks at Article IV of the Hague Rules, one sees, as has been said in rule (2), a series of exemptions.  If I could take the exemptions as group between (a) and (p), and then deal with (q) separately, we respectfully submit they reveal a clear and effective scheme.  Given that the Hague Rules were, as again discussed yesterday, a compromise - an intended compromise between the interests of cargo owners and interests of shipowners, it is not surprising that the incidents - or some of the normal incidents of bailment, as known in common law countries, have been expressly displaced or modified.

The situation, as your Honours will appreciate, before the Hague Rules, was that, absent contractual provision, a ship carrier was almost a common carrier, with very great liabilities.  To overcome that, the device, or the response of the shipowners was to engraft into their bills of lading exceptionally extensive lists of exceptions or exclusions, and the Hague Rules came about as a compromise between those two extremes and, as a result thereof, on the one hand, the freedom of the shipowner to contract was severely curtailed and, on the other hand, quite plainly, the normal common law incidents of bailment were altered in obvious respects:  no more obvious respect, for instance, than in Article III, and Article III(2), which clearly cast the onus of proving failure to properly and carefully keep and care for goods upon the owner of the goods, completely contrary to any notion of bailment.

One then goes to Article IV rule (2) and, in our respectful submission, the pattern or scheme which emerges is this:  the framers of the rules set out in (a) to (p) all of those matters which were typical matters which cause loss or damage but which did not, as identified by Justices Mason and Wilson in Gamlen, ordinarily connote any fault, or negligence, or want of care on behalf of a shipowner.

McHUGH J:   There is a more general statement.  Is it not accurate to say that the rules were designed to effect a compromise in which ordinary matters such as stowage and the care of cargo were the responsibility of the carriers, but that accidents of navigation, using that in the widest sense to include perils of the sea, “act of God”, “act of war” were not to be the responsibility of the carrier?

MR SULLIVAN:   Your Honour, that would be a correct generalisation, we agree, and underlying that, in our respectful submission, is the notion that those matters of stowage and the like were matters clearly within the control or capacity to control of the shipowner and, therefore, properly should be a matter for its responsibility, whereas these other matters were matters which were, as your Honour says, accidents or typical perils of the inherently dangerous concept of a voyage by sea and not ordinarily matters which would arise by reason of carelessness on the part of the shipowner. 

Indeed, as Justice Mason said in Gamlen, it would be absurd to put words to the effect of “act of God caused by the negligence of the shipowner” and that is why, as Justice Mason and Justice Wilson said in Gamlen, those words are not engrafted on.  My learned friend has sought to overcome that in his very cultivated and thoughtful submissions by seeking to engraft onto the words of rule 2(c) - and it will follow, as we will submit, has to be engrafted onto most of the other subparagraphs in rule 2 - a phrase such as this.  My learned friend’s construction submission really means that Article IV rule 2(c) has to be read as reading, “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:  perils of the sea which could not be foreseen or reasonably guarded against.”

McHUGH J:   There is some authority that supports that proposition.

KIRBY J:   Quite a bit.

MR SULLIVAN:   There is American authority which supports that proposition and Canadian authority.

McHUGH J:   And textbook writers.

MR SULLIVAN:   And textbook writers, but it requires the additional words to be read in as part of the definition.

McHUGH J:   Could I just get your assistance on a point that may be really fundamental.  How should we approach the construction of these rules:  as common lawyers against the background of the common law or should we have regard to the effect that although English shipping interests were mainly responsible for their drafting, nevertheless they were to apply in civil countries as well as common law countries and we should forget all about the common law background?  What do you say about that?

MR SULLIVAN:   Your Honour, in Gamlen, their Honours Justices Mason and Wilson grappled with that concept and said that one has to do it on a generally accepted basis.  That, of course, with great respect, begs the question as to how your Honours are to approach it.  In our respectful submission, the only approach which is conveniently available to the Court is to adopt the municipal law principles which are applicable in Australia as to construction issues and it is only if it is found that those principles would offend or contravene the obvious purpose and content of the Hague Rules that consideration should be given to adopting a different or broader approach and ‑ ‑ ‑

KIRBY J:   Is that the correct principle?  I thought that where our municipal law has incorporated an international treaty - rule - that the common law principle is that you then seek to construe the international instrument according to international principles:  Vienna Convention on Treaties and so on.

MR MACFARLAN:   One does.  One takes into account the intention - and this is what happens with many treaties.  One can think of the treaty which was the genesis for the Racial Discrimination Act, and the cases like Gerhardy v Brown, which have discussed the way it approaches.

KIRBY J:   I think the Court has looked at the issue recently in relation to the refugee definition incorporated ‑ ‑ ‑

McHUGH J:   In A I dealt with.

GUMMOW J:   And the speech of Lord Wilberforce is in Fothergill v Monarch, which is on the same point. 

KIRBY J:   It would be rather absurd, would it not, if every domestic country, Sierra Leone and Gambia and so on, were interpreting it in their own funny little way.

MR SULLIVAN:   It would be absurd, your Honour.

KIRBY J:   This is an international, global economy, with an international industry with international rules.

MR SULLIVAN:   But the problem one reaches, your Honour, if there is not a universal international principle for the interpretation of a particular treaty or code which is apparent, and that appears to be the present case, resort then must be had to what the Court has available to it.  That is the common law situation, in our respectful submission.

McHUGH J:   That is what really troubles me.  Take the principle for which you contend in this case, that it is the cargo owners who have the obligation of showing negligence.  Now, to a large extent, you rely on
The Glendarroch, and cases which follow that approach, but which themselves depend very heavily, if not entirely, on the common law system of pleading as to where onuses lay in those particular types of issues.  I do not know whether such an approach would apply in the civil countries.  I suspect the answer to that would be, no.

MR SULLIVAN:   I cannot, I regret to say, your Honour, answer your Honour as to what the approach of the civil countries to that is, but inevitably, your Honours - we are dealing principally here with an Act of Parliament of the Commonwealth and the interpretation which the Australian Parliament is presumed to have intended in respect of its legislation.  Now, it is true to say that it is not in an international context but absen,t in my respectful submission, some universal standard or some universal approach the proper approach must be to interpret an Australian Act of Parliament, including the schedule thereto, in conformity with the domestic law principles, with the possible caveat that unless that would produce a result which is completely contrary to the purpose and intention of the treaty and ‑ ‑ ‑

GUMMOW J:   That is just inconsistent with what Justice McHugh said about the double taxation treaty which has been brought in legislatively here in Thiel v Commissioner of Taxation, 171 CLR 356.

MR SULLIVAN:   I have not got that in my mind but I will certainly look at that.  Your Honour, may I, because on my feet I cannot give your Honour a definitive answer to that question, take that on board and come back to it later on in the morning?

KIRBY J:   One thing that leaves you a little bit disquieted in this - and I can understand exactly why it has happened - is that we have been taken to United States, Canadian and British authorities, but some of the biggest - probably the biggest shipping in the world now is done by Germany, the Netherlands, Japan, and we really have no clue as to how they approach these matters.

MR SULLIVAN:   No, your Honour. 

KIRBY J:   That is just a feature of our language and of our traditions, but it would seem to me that we have to grow up in these areas of international trade and have regard - there must be writings on this that could be made available to the Court.

McHUGH J:   As pointed out to you yesterday, the English cases reflect, or perhaps reflect, the view of a shipping nation.  The United States cases reflect the views of a nation which is a heavy importer/exporter, so they tend ‑ ‑ ‑

KIRBY J:   We are a cargo nation.

McHUGH J:   They are a cargo nation.

KIRBY J:   Like us.

McHUGH J:   And Australia is - we are not a shipping nation in any ‑ ‑ ‑

MR SULLIVAN:   Your Honour, that, with great respect, is first of all a generalisation.

McHUGH J:   I know it is a generalisation.

MR SULLIVAN:   I am sure the United States would regard itself as a major shipping country as well. 

McHUGH J:   Quite so, yes.

MR SULLIVAN:   It is both a great user of ships and a great supplier of ships now.

McHUGH J:   Except if you look at the history of these rules, the Americans fought these rules for what, 15 years, before they decided to accept them, because they thought they were too favourable to the shippers and that they were giving up rights that the cargo owners had under the Harter Act.

MR SULLIVAN:   Yes.  There was a leading American lawyer, a Mr Haight who was the proponent of the Hague Rules, as is pointed out in Sturley at page 10, I think, of the introduction, who was a person who went around propounding the adoption of those rules in their present form throughout the world.  So that one can be, in my respectful submission, beguiled and misled by the broad generalisations of the law of England reflecting the fact that it is a shipping country, a great shipping country, as opposed to the United States being a great user of ships.  It, with great respect, tends to identify judges exercising judgment on matters and interpreting matters with the economic or policy interests of their country.  Whilst one can understand - - -

McHUGH J:   That is hardly surprising.  I mean, judges become conditioned by the culture in which they operate, including the economic culture, if there is such a thing.

MR SULLIVAN:   Your Honour, that no doubt can be true, but one should axiomatically think or take the view that any particular judgment is coloured by such considerations unless they are expressed.  Justice Stephen, of course, raises that point in Spraggon’s Case, but indeed this Court, for instance, expressly, in our respectful submission, rejected that approach because Justice Salmond in Spraggon, for instance, was talking about whether, because of that policy reason - - -

McHUGH J:   Justice who?

MR SULLIVAN:   Justice Stephen, in Spraggon, was talking about whether, in respect of an exclusion clause applying discharge from the ship, it should be given an expansive interpretation or a non-strict interpretation, and doubted whether it should by reasons of matters of policy which have been adverted to today.  Of course, this Court recently in the case of Nissho Iwai v Malaysian International Shipping Corporation expressly came to the conclusion in respect of precisely such a clause, that such a clause should be given its ordinary natural meaning in accordance with the principles in Darlington v Delco.  So that is an example, if your Honours like, of a court, notwithstanding an expression of policy interests by one judge, demonstrating that it is deciding a matter contrary to that expression of policy.

KIRBY J:   But the problem is that the words “peril of the sea”, they do not have any ordinary and natural meaning.  They are a term of art, because on one view they mean any little peril - just a tiny little wave is a peril of the sea, and we all know that it does not mean that.  So that it therefore has a jurisprudence that has grown up around it, and to appeal to the ordinary and natural meaning does not really take you very far.

MR SULLIVAN:   It is a term of art, or it has been said to be a term of art, but when these rules were introduced, it was a term of art as far as we know from the rules, which was confined to the Anglo‑American common law.  That was where the expression arose, and it is quite apparent that it is in Anglo‑American common law that the genesis of all these expressions is.  Therefore, if one is looking at the term of art in that matter one has to have regard to what was said and what was the existing state of law in respect of ‑ in Anglo‑America, with the caveat again, of course, as said by this Court in Gamlen, that you cannot be slavishly bound by that, recognising the international nature of the rules which were incorporated.  But it is still, in our respectful submission, the cases to date have proceeded upon the basis that that is the basis to adopt and, at the moment, both parties here have obviously put submissions to your Honours to the effect that we cannot see any better basis, conformable with principle, which your Honours can presently adopt.

GUMMOW J:   At least it should be construed in its context of the rules as a whole.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   Which a number of the cases do not do.

MR SULLIVAN:   We, respectfully, would adopt completely what your Honours say.  We respectfully submit that one has to look at the rules as a whole, all the articles, in the task of construction.  Another point which arises, which is a matter the Court has to grapple with in the question of construction, of course, and my friend touched upon this, is whether we construe these rules as we would contractual terms, or whether we construe them as part of the statute, or whether they are some sort of hybrid, if the principles differ.  We think, for the reasons we will develop, it does not matter which approach of construction is adopted, and we think the scheme and the obvious purpose of the Hague Rules dictates, in this case, one conclusion as to construction, and one only.  Because, irrespective of the law, or the relevant principles to be applied, one must come back, in our respectful submission, in the main, to the words and the way they are used.  Even allowing for your Honour Justice Kirby’s comment that “perils of the sea” may be a term of art, in our respectful submission, when one sees what the gloss which made it the art was at the time these rules were enacted, it was effectively as set out in The “Xantho”, which was to the effect that something had to be fortuitous as opposed to being inevitable.

GUMMOW J:   Article III is headed, “Responsibilities and Liabilities”.  Article II is “Risks”.  Article III is “Responsibilities and Liabilities”.  Article IV is “Rights and Immunities”.  Does that tell you anything about the relationship between Articles III and IV.  Does IV 2 have any relationship back to Article III?

MR SULLIVAN:   Your Honour, it, in our respectful submission, gives force to the comments which Justice McHugh made this morning, that we are dealing here with a situation where the intention is the obligations of the parties, and the responsibilities and liabilities of a shipowner are set out in Article III.  Article IV provides for rights and immunities of the shipowner if it gets within various gateways.  Article V demonstrates that the carrier can assume greater obligations but not lesser ones, as a matter of policy.  Article VIII, which is the one which has caused a lot of concern over the years determines, as a matter of a code, the limit of liability and, of course, Article IX which has been the subject of decision in many places, sets out what ‑ how you determine the limit of liability.

GAUDRON J:   On one view, as you go through it, Articles III and IV - well, Article IV, really - is definitional in a negative sense of Article III that is - or another way of saying it would be to say different sides of the one coin, rather than Article IV being an exception to the responsibilities and liabilities set out in Article III.

MR SULLIVAN:   Your Honour, I am not sure of the distinction your Honour is seeking to make.

GAUDRON J:   Well, it may have some bearing on the way in which, within this legal system at least, we regard questions of onus.

MR SULLIVAN:   Yes, your Honour.  But if they are the other side of the coin, there is one thing which is clear, both on all the authorities to date and, indeed, I think it is common ground between parties, is that the plaintiff, a shipper or owner of the goods, has the onus of proving breaches of Article III.  If, as your Honour suggests, it is the other side of the coin - and if that be the case - - -

GUMMOW J:   Article III 2 actually says it.

MR SULLIVAN:   Yes, your Honour, it does, indeed, and, in our respectful submission, that is one of the great keys to who is to bear the onus under the Hague Rules.  Leaving the common law aside at all, the rules, themselves, in our respectful submission, make it plain what is the regime which is to be imposed as to onus.  But before we get to the onus point, when one is talking about the definitional matter in what comprises a peril of the sea, an important point to make when looking at these rules is to avoid, with respect, the confusion your Honour Justice McHugh identified yesterday.

It is one thing to say in what circumstances may a carrier rely upon the exception of a peril of the sea, it is another thing to say, what is a peril of the sea?  As your Honour Justice McHugh, and others, rightly, with respect, observed yesterday, there is a confusion in the cases between those two concepts.  What my learned friend’s submissions entail, on the construction issue, is a construction of the phrase “perils of the sea”, as opposed to a determination of in what circumstances a carrier can ultimately succeed on the defence of “peril of the sea”.

McHUGH J:   Mr Sullivan, if your voice - the direction of your face is away from the microphone it does not - - -

MR SULLIVAN:   I am sorry, your Honour.  So, as I was seeking to point out yesterday, your Honour, in Article IV rule 1, which deals with unseaworthiness, there is an express statement of upon whom the burden of proof is where there is reliance upon due diligence to avoid a claim of unseaworthiness.  Ditto with Article IV rule 2(q).  We respectfully submit ‑ ‑ ‑

KIRBY J:   It is a very odd result though, is it not? 

MR SULLIVAN:   Yes, your Honour.

KIRBY J:   Take (q) especially, that you end up with paragraph (q) with the burden of proof being specifically referred to, but all those other exceptions left to inference.

MR SULLIVAN:   Your Honour, we do not see it - if I can just expand upon, in my answer, why we do not see it as an odd result.  We think that that really reflects what was regarded as being obvious by the drafters of the Hague Rules.  The purpose, in our respectful submission, of setting out - and if I could leave aside, for present purposes, (a) and (b), which, as discussed yesterday, have particular historical connotations - of setting out those matters in subparagraphs (c) through to (p) was to list those matters which it was thought were beyond the control of the carrier so that they did not arise - those particular perils did not arise - as opposed to loss or damage arising from the perils - those particular perils were things that were brought about by the carrier, and they say there, “You satisfy us on those and you have made out the peril,” in our respectful submission.  The framers, however, in our respectful submission, recognised that there may be other matters which could cause loss or damage.

GUMMOW J:   Yes, but I think what (q) is saying is that it rather assumes that with the other paragraphs one can take it as read that there will not be “actual fault or privity of the carrier”, et cetera, and that if there were, you would not fall within acts of God and so on, and that is in conformity with some of the cases mentioned yesterday pre‑Hague Rules as to what an act of God was.

MR SULLIVAN:   Your Honour, if that was the case, there would be a very odd result because, if that was the result, you would not need any of the subparagraphs before (q).

GUMMOW J:   Why is that?

MR SULLIVAN:   All you would need to put in after (a) and (b) would be something of this sort:  “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:  (c) any other cause”, and then repeat (q).

GUMMOW J:   I am sure that is right, but the term “act of God” was an understood one.

MR SULLIVAN:   No, but what I am saying to your Honour is that ‑ ‑ ‑

GUMMOW J:   And it was understood as ‑ ‑ ‑

MR SULLIVAN:   If engrafted - I am sorry, I did not mean to interrupt your Honour.

GUMMOW J:   No, go on.

MR SULLIVAN:   If engrafted into each of the paragraphs (c) and onwards was intended to be an obligation to negative negligence along the lines of (q), then one might ask rhetorically:  what is the necessity for each of those specific paragraphs?

GUMMOW J:   What I say to you is because people for a hundred years and more have known what a restraint of princes was or what an act of God was, what an act of war was.  They were well understood ideas and they certainly did not involve any fault.

MR SULLIVAN:   But if the phrase to be engrafted on is this phrase, “which could not be foreseen or reasonably guarded against”, that phrase would have to be engrafted onto not only (c) but indeed to (d), to (e), to (f) because, to take “act of war”, for instance, there are obvious circumstances where it could be foreseen that to sail a ship into an area where there was a war on, the goods could be lost or seized by reason of restraint of princes or the like and hence that exception would come into play.  My submission to your Honour is this, that even accepting those phrases were thought to be well known and well understood phrases, if indeed there was inherent in the definition of each of those phrases the concept of an obligation of negative negligence, all you would have to do to draft the rules, after you had made specific provision in (a) and (b) for matters which for historical reasons you wanted to take specific regard to or, to put it in a “CA” catch‑all, which is exactly what (q) is now.

Why would, one asks rhetorically, a shipowner take upon itself the necessity to have to prove an extra hurdle, namely, not only absence of neglect on its part but also that the threshold activity or incident had occurred?  Sometimes, as the cases demonstrate, it is not particularly easy to prove an act of war.  There are cases in the books about where war is imminent but has not yet commenced or where war has not been declared but hostilities have started.

If it had been intended, in other words, to have a general obligation to negative negligence inherent in the definition of each of the excepted perils then, in our respectful submission, the express statement of each of those excepted perils was otiose and superfluous.

KIRBY J:   But in the statement that you rely on at the end of 1 it is described as an exemption and normally an exemption has to be established by the person who is seeking to be exempted and, similarly, 2(a) to (p) are exemptions.

MR SULLIVAN:   Yes, your Honour.

KIRBY J:   Normally one would think that that is for the person claiming the exemption and the structure of the rules with the responsibilities and liabilities in Article III, then the rights and immunities with the various exemptions in Article IV seems to favour that.  I agree with you that you can point to a textual indication to the contrary, but it seems an odd result.

MR SULLIVAN:   Your Honour, leaving the textual indication to the contrary, it is common ground in this appeal and, indeed, in all the authorities we know of to date, that the carrier has the onus of coming within the exception as is conforming with ordinary principle.  If you rely upon the exception to liability, you must come within it.  You must prove ‑ he or she or it who asserts must prove the general concept and, similarly, and this is the foundation of The Glendarroch, of course, where there is an exception to an exception, the person relying upon the exception to the exception must prove. 

So that what we are dealing with here, your Honour, is not who bears the onus of proving whether the exception under clause 4(2) is made out, but what is the content of that exception.  We are looking at what is the definition.  If my learned friend’s construction is correct, quite clearly the carrier would bear the onus of showing that the peril could not be foreseen or reasonably guarded against, if those words are actually engrafted in the definition of a statute, because the exception only applies if they are perils of a particular kind but, in our respectful submission, that was not the intention of the framers of the Hague Rules nor of the legislature in incorporating those because, if it was, in our respectful submission, then it does violence to the language of Article IV 2, it does not conform with the scheme of Article III which provides for negligence on matters of duty of care effectively to be proved by the cargo interest.

GAUDRON J:   Article III limits the duty to “before and at the beginning of the voyage”, Article III 1.

MR SULLIVAN:   Yes, your Honour, but Article III 2 is more extensive.

GAUDRON J:   Yes.

GUMMOW J:   It goes to “care for and discharge”.

HAYNE J:   And to carry, “properly and carefully” carry.

MR SULLIVAN:   Yes, and, indeed, in our respectful submission, there is a symmetry there ‑ ‑ ‑

GAUDRON J:   And is Article IV 2 either an exception to or perhaps definitional of Article III rule 2?

MR SULLIVAN:   Your Honour, Article IV rule 2  ‑ ‑ ‑

GAUDRON J:   Did they link up?  Does Article IV 1 link to Article III 1 and Article IV 2 link to Article III 2?

MR SULLIVAN:   No, your Honour, because there are many cases which establish that if unseaworthiness is proved as a concurrent cause, then one cannot rely upon Article IV 2 and the exceptions.

GAUDRON J:   I do not think that is contrary to what I have said.  I think that may be in favour of what I have said.  That may be why you cannot rely on perils of the sea for unseaworthiness.

MR SULLIVAN:   Your Honour, in our respectful submission, unseaworthiness on the authorities ‑ if the shipowner does not establish that due diligence has been exercised, on the authorities would defeat any of the claims for an accepted peril under Article IV 2.

GAUDRON J:   Yes, because you would never get there.

MR SULLIVAN:   No, your Honour.  You could get there, for instance, if a ship was unseaworthy but you could demonstrate that the unseaworthiness was not a cause of the loss or not the complete cause of the loss.

KIRBY J:   Could you explain to me how Article IV 2(a), which is said to have a long history, how that is reconciled with the obligation of due diligence in Article III rule 1?  Is the principle different from the common law?  The vessel is not liable for the act of the master or officers of the vessel.

MR SULLIVAN:   It is an express attempt to avoid the common law principle or the civil law principle that normally you are vicariously liable for the acts of your employees or agents but the link is in Article III 1(b), for instance, where the obligation is to properly man, equip and supply the ship.  If it was demonstrated, for instance, your Honour, that an incompetent captain had been engaged, a captain who had a propensity to be drunk on duty, if that was established then, notwithstanding, and for instance, in respect of an error of navigation, reliance was placed upon the exception in Article IV 2(a) in response a cargo interest could raise Article III 1 and say that you are in breach of your duty because the person who was in negligent management was someone who should not have been on the ship in the first place.  Therefore you have failed to discharge the breach under Article III 1.
That is an example, in answer to Justice Gaudron, of where items within III 1 can be relevant to the availability of the exceptions in Article IV 2.

GAUDRON J:   I do not think it does answer my problem, I have to say.  You would never get to Article IV 2 on one view, you would just never get there if there was a failure of the duty in Article III 1.

MR SULLIVAN:   Your Honour, with respect, we would agree, but only if it was incumbent upon the cargo interest to prove its case, to make an affirmative case in that regard, in‑chief, so to speak.  It is the point I know, that Justice McHugh has averted to this morning, which we have adopted as a submission, but in the normal course of events to date anyway, what is traditionally done, has been for a plaintiff ‑ a cargo interest, to plead non‑delivery or damaged delivery of the goods.  That is met, in the normal course of events, by either denial of that fact or an admission of the fact coupled with reliance, if available, on one of the exclusions.

KIRBY J:   Do I understand it that you do not dispute that the onus fell upon you to fit yourself within 2(c), what you dispute is that the onus fell upon you to fit yourself within these words that are not there?

MR SULLIVAN:   Yes, your Honour.

KIRBY J:   But is not that to throw away the structural argument that you have relating to that paragraph at the end of 1 and the special paragraph at the end of (q), because if, in fact, you accept that the onus is on you to establish the exemption, then it is on you to establish the exemption, whatever it may mean.  If it means that the perils referred to are those which are unexpected, exceptional, et cetera, then that is part of peril.  If you bear the onus on that, you bear the onus on the whole paragraph.

MR SULLIVAN:   Yes.  If it, properly construed, has the meaning, attributed by my learned friend, and they say the words “perils of the sea” in effect mean “perils of the sea which could not be foreseen or reasonably guarded against”.  Then, unless we demonstrated the perils of the sea could not have been foreseen or, alternatively, if foreseen, could not have been reasonably guarded against, we would fail to establish our right to rely on the exemption.  But what we are saying is that inherent in the construction advanced by my learned friends is the concept that the definition involves an obligation to a burden of proof to show that the loss was not caused by your negligence.

The point we are making, as an aid to the construction, and to indicate that that construction should not be accepted, is that where the rules in other parts have sought to say, “The burden of proof is on the carrier in that regard”, it has spelt it out.  Absence that, one would think, with great respect, that the intention was that the exception was not to having grafted on to it an inherent obligation to disprove negligence because the framers of the rules have made it clear, in the circumstance in which they say, the carrier shall bear the burden of proof.

And, indeed, to take up that point, in our respectful submission, is emphasised by the discussion Justice McHugh led this morning on behalf of the Bench with Mr Macfarlan.  If, indeed, the situation be that the rights of the cargo interest are confined to, and limited to, those in Article III rule 1, upon which they bear the onus of proof, then it would be, in our respectful submission, not only incongruous, but completely inconsistent with that regime, to have an obligation under Article IV 2 to negative negligence, because you would have a situation where, on the one hand, there is an obligation of the cargo interest to prove negligence - and we would not get past that stage if they did not - and then, if they did not get past that stage - sorry, if they did get past that stage in proving negligence, then, on the construction put by my learned friend, you would never get to the perils, because if there was a proof of negligence under Article III, then, by definition, you would never get to Article IV, and that cannot be - so that you would not need to have engrafted on the words that my friend contends for.

If they cannot prove negligence, in our respectful submission, then, again, the same situation applies.  And, indeed, in our respectful submission, even if Article III is not a complete code as to the rights and obligations, or the responsibilities and liabilities of a shipper, even if there is still some fundamental implied obligation over and above what is said in rule 3(2) to rest upon a carrier to take reasonable care for the safety of the goods whilst in his control, it would be incongruous in the extreme, in our respectful submission, if a different onus of proof applied to that implied obligation than the Hague Rules have set out in respect of the express obligations to take care, as reflected in Article III.

HAYNE J:   I do not understand the implied obligation that you posited.  Article III 2 speaks, amongst other things, of the carrier properly and carefully carrying the goods carried.

MR SULLIVAN:   Yes, your Honour.

HAYNE J:   What is the implied obligation that you posit in order that you knock it down?

MR SULLIVAN:   Your Honour, in some of the cases there has been a suggestion that there is an overarching implied obligation in every contract of carriage that the carrier, whilst the goods are in his possession, or custody, or control, take reasonable care for their safety.  What I am putting to your Honour is that if, contrary to our submission, that duty had a broader base than the express matters referred to Article III rule 2, it would be incongruous in respect of that broader ambit if the duty of care to negative such matters of negligence rested upon the shipowner, as opposed to the cargo interest.

We are not saying, your Honour, it has a wider ambit but, if it does, it would be incongruous and, in our respectful submission, as we have said, without wishing to unduly repeat myself, the scheme of the Act imposing the burden to prove negligence, if you like, upon the cargo interest is the strongest possible indicator that within the definition of Article III - in the definition of Article IV there was no intention that those definitions incorporate themselves an obligation on the carrier to negative negligence.  It would just produce, with respect, an absurd result.

Your Honours, in our respectful submission, that policy, or that scheme, was recognised and adopted by this Court in Gamlen.  When looks at the joint judgment of Justices Mason and Wilson as a whole it is apparent, in our respectful submission, that the approach we have indicated falls clearly and plainly from the language of the Hague Rules is that which was in fact adopted in this Court.  Indeed, in our respectful submission, apart from the reservation expressed by Justice Stephen, his approach also is consistent with the approach which would come from reading the Hague Rules unaided by previous authority. 

Your Honours, if I could take you to Gamlen, 147 CLR 142, to demonstrate the efficacy of the submissions I have just made.

KIRBY J:   Is not your logic to deny that this is a prerequisite of the exemption rather than if it is a requirement of the exemption suggesting that somehow you cut it up and you have to prove some things in the exemption and not others.  It just seems to me if you accept the onus of proving the exemption, then you have to prove whatever it requires.  If it requires not foreseen or guarded against, then that is just something you have got to prove.  You have to meet it head on and say it is not something you have got to prove; it is not part of the exception.

MR SULLIVAN:   Your Honour, I am sorry, if I may try to make myself clear.  My submissions at the moment are dealing with the construction of the expression “perils of the sea”. 

KIRBY J:   Yes.  You accept that you have to prove that you come within that exception.

MR SULLIVAN:   Yes, your Honour.  What I am suggesting to your Honours is that when one looks at the scheme of the Hague Rules it is apparent, in our respectful submission, that it could not have been intended that engrafted into the definition of “perils of the sea” was a negative obligation to disprove negligence, because that would be inconsistent with the scheme of the Hague Rules as set out in Article III rule 1 and the other indicators set out in Article IV rule 1 and Article IV 2(q).  Those factors, those textual matters, in our respectful submission, indicate that the intention of the framers of the Hague Rules was that the expression “perils of the sea” - and, indeed, each of the other accepted perils, was not having grafted upon it words to the effect of which I have quoted already.  Indeed, the reason for that, in our respectful submission, is obviously, because if negligence could be proved in accordance with Article III rule 1 the exception could not be relied upon in any event, so there was no need to engraft the words in there.  All that is being done is the Hague Rules make explicit, in our respectful submission, what was the situation prior to at common law where the onus of proof lay in respect of negligence, prior to the Hague Rules?

KIRBY J:   How do you formulate the, as it were, silent clause that identifies what “peril of the sea” means?

MR SULLIVAN:   Your Honour, we say that the “perils of the sea” definition is really akin to what appears in the schedule to the Marine Insurance Act, which is, in itself, a synthesis of what the common law position was.  We refer to this at paragraph 20 of our written submissions:

“The term ‘peril of the sea’ refers only to fortuitous accidents or casualties of the sea.  It does not include the ordinary action of the winds and the waves.”

That is what “Xantho” said.  In other words, a peril of the sea, which is, as “Xantho” says - I will take your Honour to it - “the natural and inevitable consequence of the waves.”  If you have a wooden boat sitting on the water and the timber rots because of the continued immersion in water without treatment, that is a peril of the sea in the sense of the action of water upon the hull causing rotting of the timber.

It is something which is inevitable if something is not taken and “the perils of the sea” definition has that gloss or something added to it because that is something ‑ ‑ ‑

McHUGH J:   Not “that gloss” so much, is it, as a requirement that it is not peril unless it is fortuitous?

MR SULLIVAN:   Fortuitous, your Honour, and fortuitous means ‑ ‑ ‑

McHUGH J:   And, therefore, as in Hamilton Fraser v Pandorf, the peril of the sea may be no more than the entry of seawater into the hull damaging the cargo.

MR SULLIVAN:   When it is unexpected, yes.

McHUGH J:   Yes, when it is unexpected because it has been brought about by rats.

MR SULLIVAN:   Yes, your Honour.

KIRBY J:   So you accept unexpected.  What is the difference between that and “not foreseen”?

MR SULLIVAN:   Your Honour, the casualty has to be unexpected.  I will come to this in a moment.

KIRBY J:   You take your own time.

MR SULLIVAN:   One of the matters which has been, with great respect, blurred in my learned friend’s submissions is what has to be unexpected or foreseen.  It is the casualty or the accident which has to be unforeseen or fortuitous according to the authorities, not the sea condition which gives rise to the casualty.  Indeed, even the cases which my learned friend relies upon, the Canadian cases, make that distinction clear and in Justice McHugh’s statement in Pandorf the unexpected aspect was the entry of the seawater in circumstances where you would not expect the seawater to enter.

The fortuity of the rats gnawing at the lead pipes was the event which led to something which was unexpected and rats, of course, on board a ship are foreseeable.  One knows that.  That is why every ship has those rat guards on their anchors and so on when they come to moor.  So, in our respectful submission, as we said, the scheme and the purpose of the Hague Rules makes it plain that in effect the common law order of proof as expressed in The Glendarroch is confirmed, indeed, is enshrined by reason of Article III rule 1.

GAUDRON J:   I am wondering whether onus of proof has any relevant role to play when it comes to perils of the sea and if that is not the explanation of statements such as you find in Gamlen and, indeed, in all the cases that the question is to be answered by all the circumstances of the case.  “Perils of the sea” might just be a convenient way of saying “no want of due diligence in these circumstances”.

MR SULLIVAN:   Your Honour, with respect, is right.  The approach your Honour expresses is, with respect, similar to that of what is said in Gamlen, upon which we rely.  What we say was the correctness of Gamlen, was that, for the first time, clearly, in our respectful submission, avoided the confusion that Justice McHugh referred to previously and, with great respect, the American cases and the Canadian cases and, indeed, the few decisions in which case my learned friend referred to, seemed to have.  The High Court in Gamlen, in our respectful submission, identified that there were two stages, and both hurdles that a shipowner had to establish in order to avail themselves of the exception.

First of all, it had to demonstrate that something was “a peril of the sea”, as properly defined.  We will leave aside that definition at the moment.  We submit the High Court’s approach and the approach, of course, as to that definition is correct.  But, secondly, to answer your Honour’s question, it pointed out that the protection otherwise afforded by proving that you suffer loss by reason of that, could be lost if there was another concurrent cause which was not an accepted peril, in the case of Gamlen, unsatisfactory stowage, which we might call negligence.  What the High Court said, and correctly said ‑ ‑ ‑

GAUDRON J:   You could call it breach of Article III 2.

MR SULLIVAN:   Yes, breach of Article III 2.  It is a breach of the duty to take care of the goods by reason of improperly stowing or a breach, within the words of Article III 2 ‑ ‑ ‑

HAYNE J:   Of carefully stowing them.

MR SULLIVAN:   Of carefully stowing the goods, yes.  Thank you, your Honour.  What the High Court said, is that you do not take the American approach, although often that will achieve the same result.  What you do is to identify it as a question of causation and say where the shipowner has proved one cause, one breach which falls outside the accepted perils, III 1, and there is another one which falls within Article IV, then as a matter of causation the carrier cannot rely on the exception because a concurrent cause of the loss has been the proven breach of Article III 2.  That is what the Court said, with respect, correctly, indeed, I think, what, with respect, your Honour is saying to me.  We embrace completely that approach.

That is why we say the court below and the Court of Appeal below, were completely correct because they approached the matter in an identical fashion to what Gamlen did, and Gamlen, in our respectful submission, in turn, is completely consistent with the scheme, purpose and policy of the Hague Rules.  In a nutshell, that is our case.  What my learned friend would have you have, is that despite the onus being upon his client under Article III to demonstrate negligence, it somehow or other, absent being able to do that, he can still cast an onus upon the shipowner to negative negligence under Article IV.  In our respectful submission, that completely confounds the purpose and intent of the Hague Rules.

As I was saying, before answering that question, the order of proof thus set forth in the Hague Rules conforms with the common law order discussed in Glendarroch.  Article III, in our respectful submission, makes that abundantly clear.

That is why, in our respectful submission, the principles in Glendarroch were accepted, and accepted correctly, by the High Court and by the Court of Appeal in Gamlen because the Hague Rules in fact confirm those principles rather than in any way modify them.  Indeed, it may be argued that ‑ ‑ ‑

GUMMOW J:   How, as a matter of structure of the articles, do they confirm Glendarroch?

MR SULLIVAN:   They confirm Glendarroch, in our respectful submission, because they make it plain ‑ ‑ ‑

GUMMOW J:   Just reading the language, how does it work; step by step?

MR SULLIVAN:   Step by step, leaving aside proving definitions and proving ownership and the like, your Honour, it is as follows:  the obligation which would need to be proven by a cargo interest who had suffered loss was that the goods within Article III - I am sorry, I withdraw that.  The first stage of the substantive pleading would be that goods in good order and condition were delivered to the ship.  The second stage would be that they did not arrive at the destination or, alternatively, did not arrive at the destination in the same good order and condition as they were when shipped.

The third stage would be to set out that the obligation of the carrier was, in conformity with Article III rule 2 or Article III rule 1, to make the ship seaworthy and/or to properly, carefully load and handle, care for the goods.  The fourth stage would be to say in breach of that obligation, the carrier failed to properly care and stow for, or failed to provide a ship which was properly seaworthy.  The fifth stage would be to say that the plaintiff thereby suffered damage.  That would be the pleading.

GUMMOW J:   How does Article IV fit into that when there is an answer about perils of the sea?

MR SULLIVAN:   Article IV would fit in this way, your Honour, that in the event that those matters were demonstrated, none of the perils could be relied upon.

GUMMOW J:   Why not?

MR SULLIVAN:   Because in such a circumstance there would be at least concurrent causes of loss.  There would be a loss due to your own fault, improper stowage or the like, and a loss due - so that it would be immaterial, whether it was due to a peril of the sea as well because, as Gamlen educates us and other cases, unless you can demonstrate the loss is caused where there are two causes established - and that is an important point - two or more causes established, unless you can demonstrate that the real cause of the actual loss was the accepted peril, you cannot rely upon it.  So that if a cargo interest ‑ ‑ ‑

GUMMOW J:   I just cannot find that in the language, that is all.  It does not say anything about concurrent causes.

MR SULLIVAN:   Well, the High Court in Gamlen’s Case ‑ ‑ ‑

GUMMOW J:   Just forget about what has been said.  Just get it out of the language of the articles.  That is what I am trying to do at the moment.

GAUDRON J:   Why would not the carrier, not the cargo owner, plead by way of defence a denial of the breach of any duty asserted and say - well, the pleading would go that the carrier denies the breach of any duty as asserted in paragraphs 2, 3 and 4 and says that the loss or damage arose or resulted from perils of the sea, and just leave it at that.

MR SULLIVAN:   The defence would do that.  In answer to Justice Gummow, I indicated what the plaintiff, the cargo owner, would do.  The defence would plead, as your Honour says, denial of the breach of duty and we would plead further, in the alternative, that any loss or damage which was suffered arose from or resulted from one of the exceptions.

For instance, if one of the matters raised on the affirmative obligation by the cargo owner had been lack of seaworthiness, breach of Article III rule 1, a further defence may well be that if, which is denied, the vessel was unseaworthy, nonetheless the carrier exercised due diligence to make the ship seaworthy.  In other words, it would avail itself of the defence under Article IV rule 1.  It would then have the positive obligation, by reason of Article IV rule 1 of establishing that which it had pleaded, namely exercise of due diligence.  That pattern, in our respectful submission,  ‑ ‑ ‑

GAUDRON J:   And that would be the end of the pleadings?

MR SULLIVAN:   Yes, your Honour.  That would be the end of the pleadings.

GUMMOW J:   Where do we get concurrent causes and relative importance of causes?  Where does that come in?

MR SULLIVAN:   It comes, your Honour, and in The “Xantho”  ‑ ‑ ‑

GUMMOW J:   Where does it come out of the text?  I know there are all these cases.  They are great barnacles on my mind at the moment - from the text.

MR SULLIVAN:   It does not come out of the text.  It does not directly come out of the text, your Honour.  Indeed, if one was reading the text literally, one would say, as was sought to be said in Gamlen and rejected by the High Court in Gamlen, that once you approve the accepted peril then it does not matter if you were negligent or not because the accepted peril is an exception which would come within.

Indeed, your Honour, the confirmation from the literal text of Article IV for the question implicit in your Honour’s question is in - if your Honour compares Article III 1 and 2, and this, of course, exercised the Court’s mind in Gamlen, but Article III 2 expressly starts with the proposition that, “Subject of the provisions of Article IV”.

GUMMOW J:   Yes.

MR SULLIVAN:   That was an argument as we say, your Honour appreciates, was unsuccessful in Gamlen.

GUMMOW J:   Regardless of how it was successful or unsuccessful, how would it work, on the text of this Act?

MR SULLIVAN:   On the text of this Act, your Honour.

GUMMOW J:   Yes.

MR SULLIVAN:   In our respectful submission, it would work this way, that read literally - - -

GUMMOW J:   III 2 seems to be subordinated to -

MR SULLIVAN:   Subordinated to IV, so that if the peril was made out, then irrespective of whether the carrier “properly and carefully” loaded, handled, et cetera, “the goods” there would be no liability.

GUMMOW J:   Yes.

MR SULLIVAN:   But we respectfully submit that the interpretations the courts have placed on that and which, although it does not assist us in the present case but we submit has been adopted to date and not challenged, namely that the obligations set out in Article III really are pre‑eminent obligations that, conformably with the principle, that someone cannot profit by their own wrong.  Indeed, that was the language which was used in The “Xantho” both in the submissions and, indeed, at least in two of the judgments as I recall, that that was ‑ ‑ ‑

HAYNE J:   That submission seems to read out “Subject to provisions of Article IV”.  It seems to have just blue pencilled it.

MR SULLIVAN:   Yes, your Honour.  That is the effect of what is said in Gamlen.  If that is incorrect, then the situation arrived at in the present case, we must succeed because if, indeed, you cannot as a matter of principle blue pencil those out, then having established the peril of the sea, negligence is irrelevant.

CALLINAN J:   Mr Sullivan, do the other words in Article IV 2(c) colour the meaning of the word “peril”?

MR SULLIVAN:   In our respectful submission, the word “accidents” may, but “dangers” does not.  “Dangers”, in our respectful submission, is a true synonym for peril.  One uses the words “perilous” or “dangerous” interchangeably and as two synonyms and, in our respectful submission, the nouns “perils” and “dangers” are also true synonyms.

CALLINAN J:   What about “accidents”?

MR SULLIVAN:   “Accidents”, in our respectful submission, gives a clue to the fortuitous nature which has to be stated.  Fortuitous in the sense, I think Justice McHugh said, as opposed to deliberate.  We would respectfully submit it is fortuitous as opposed to either deliberate or inevitable.  In other words, there has to be an element of chance in it because if it is something which is inevitable or natural and deliberate acts generally are inevitable unless unsuccessful, then it confirms what might otherwise be inherent in the words “perils” and “dangers” on an ejusdem generis basis, that there has to be some fortuity in those events.

Your Honours, I was going to take you briefly to the approach which the Court adopted in Gamlen which, in our respectful submission, accords with the ordinary and natural scheme and pattern and construction of the rules.  Before I do that, let me say two matters in respect to what my friend puts as a matter of principle as to why the construction which we urge upon your Honours and which has been adopted below was wrong.  My learned friend came back, as we understand his submissions, to two propositions.  One, as a matter of principle, you should not adopt the construction adopted below but you should have the expanded definition because of the traditional strict construction of exclusion clauses.  The second limb was because it was incompatible or inconsistent with the normal incidence of bailment.

Each of those, if we are applying municipal law, in our respectful submission, is unfounded.  First of all, in Australia, at least since the decision of this Court in Darlington v Delco and particularly in respect of bills of lading in Nissho Iwai v MISC where Darlington v Delco was expressly followed, it is plain that exclusion clauses in a bill of lading are not to be construed strictly but are to be given their ordinary natural meaning.  So the first of my learned friend’s two planks is directly inconsistent with the authority of this Court expressed on two occasions.

The second plank, being an incompatibility with the normal rules of bailment, assumes wrongly, in our respectful submission, that the Hague Rules are intending to enshrine Anglo-Australian concepts or incidents of bailment and for the reasons we have already given, the very structure and the very nature of Article III, particularly, and Article IV rule (1), demonstrate an intention and an effect of the Hague Rules of displacing at least some of the normal instances of bailment, including, most particularly, the onus of proof requirement, the reverse onus of proof which is inherent in a bailment situation as our law knows it.

Your Honours, one then descends from higher principle to the next highest matter of law in this country, being the decisions of this Court.  In our respectful submission, the High Court’s approach in Gamlen, be it strictly speaking obiter or be it strictly speaking part of the ratio, correctly expresses the principles of law in respect of what constitutes a peril of the sea and the definition of “peril of the sea”, and the circumstances in which a carrier can avail itself of that principle.

KIRBY J:   Do you concede that the points you are now going to take us to are not necessary for the holding, that they are obiter?  Because it does still have a - - -

MR SULLIVAN:   Your Honour, there are various theories of what ratio decidendi the case is.  However, we would concede this:  it would have been open for Justices Mason and Wilson to assume there had been a peril of the sea without finding it and say, nonetheless, the shipowner must fail because, even if we assume there was a peril of the sea, there was a concurrent cause of negligence.  That being so, strictly speaking, it was unnecessary to make a finding as to whether or not the events constitute a peril of the sea.  However, having said that, there was a substantive argument before the Court as to whether or not something was a peril of the sea, and it was an essential plank in the argument put forward by the appellant and the Court dealt with it.

There is conflicting authority as to whether or not, in such circumstances, a determination - and conflicting theories, I might add, as to whether or not the statements of the High Court as to whether it is a peril of the sea and the reasons therefore are ratio or obiter.  We say, it does not matter because your Honours are not - ratio really is something which is applicable, more particularly, on the doctrine of precedent and the doctrine of stare decisis and that this Court is not, strictly speaking, bound by so many decisions, in any event, so that ratio or otherwise, does not concern this Court so much.  Indeed, so far as subordinate courts are concerned, there is no doubt that, even if obiter, it has been regarded as binding by the courts - that is certainly clear from both the trial judge and the Court of Appeal’s decision in Gamlen, and quite obviously would be the case where you have four Judges of this Court expressing an opinion upon an important point of law.

Indeed, the significance of the judgment, in our respectful submission, is revealed by the fact that Sir Harry Gibbs just did not agree with Justice Mason but expressly, having noted the reservation by Justice Stephen, added his own agreement to the principle as expressed by Justices Mason and Wilson.  So that it was a considered viewpoint of the Court and in practical terms, in our respectful submission, will have the same binding character upon courts lower in the judicial hierarchy of Australia as if it was clearly ratio or not.  We respectfully submit that the principles on which your Honours would consider disturbing such a statement of the law really should be the same, whether it be regarded as ratio or obiter.

I was going to take your Honours then very quickly, because I do not mean to overlap what my learned friend Mr Macfarlan did, to the decision in Gamlen.  My learned friend touched upon the judgment of Justice Stephen but, in our respectful submission, the statements of Justice Stephen are consistent, particularly in the order of proof matter, with that which was expressed by the other four Judges.  At the bottom of page 152 of Justice Stephen’s judgment his Honour, after discussing the appellant’s argument that the Hague Rules amounted to an exclusive code, said that:

The post-1924 authorities do not bear this out.  In particular, they continue to treat proof of a breach of those obligations imposed on a carrier by Art III, r 2 as denying to the carrier immunities such as those afforded by Art IV 2(c), the perils of the sea exclusion.  Many do so by reference to what Tetley, in his Marine Cargo Claims, 2nd ed (1978), describes, at pp 54-55, as the order of proof which prevails in all Hague Rules cargo claims:  a cargo owner must prove his loss, the carrier may then establish facts entitling him to rely upon exculpatory clauses, of which peril of the sea is one, but the cargo owner may then nevertheless succeed by proof of negligence, for example, proof of improper stowage.

That is in a nutshell a summary of the Glendarroch principle.  Indeed, his Honour then goes on in the next paragraph to refer to some cases immediately after the adoption of the Hague Rules and at about point 5 of the page says:

What Wright J said in that case -

that is Grosse Millerd -

about the onus of proof resting upon the carrier has been much criticized in later cases, but the disqualifying effect of proof of the carrier’s negligence has remained a constant theme of the cases.

That matter of proof indicates the onus situation of his Honour’s judgment.

His Honour then goes on to discuss at pages 154 to 155 a number of cases including two cases which your Honour Justice McHugh referred to in the Cambridge Credit decision when your Honour was on the Court of Appeal, namely, the Smith, Hogg & Co v Black Sea and Baltic Case and the Monarch Steamship v Karlshamns Case, and then goes on at page 156 to accept the proposition which my learned friend would deny or would have the Court not accept in this case as an aid to his construction argument, that the phrase “perils of the sea” has long been said in the English authorities to have the same meaning in bills of lading as it has in marine insurance and then to go on to identify the distinction:  although they may have the same meaning, they may have different consequences.  The reason is as a matter of causation and as a matter of the construction of the nature of the various documents.  In a marine insurance policy if accompanied by negligence, that negligence will usually be immaterial.

If I might interpolate, if the inherent assumption in your Honour Justice Gummow’s questions to me is correct as to the true meaning to be given to the opening words of Article III, rule 2, it would also be immaterial in a bill of lading case.  Then his Honour leaves open the point of reservations but his Honour’s approach, with the exception of the reservation, is completely consistent with on the onus of proof and on the need to have the same meaning attached to the phrase in each of the bills of lading and insurance cases, the same as that which the other four judges come to.

Justices Mason and Wilson, before the passages which my learned friend took your Honours to, set out in some length the approach to construction of the Hague Rules given the fact that they are an international document, and those passages start at page 158.  Their Honours say at the top of page 159 the following:

It has been recognized that a national court, in the interests of uniformity, should construe rules formulated by an international convention, especially rules formulated for the purpose of governing international transactions such as the carriage of goods by sea, “in a normal manner, appropriate for the interpretation of an international convention, unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation” -

and that quotes the words your Honour Justice Gummow referred to about what Lord Wilberforce said.  What is meant by “broad principles of general acceptation” I will have to take on board to answer your Honour Justice McHugh’s question.  Their Honours go on to say:

It is important that we should adhere to this approach when we are interpreting rules which have been formulated for the purpose of regulating the rights and liabilities of parties to international mercantile transactions where great store is set upon certainty and uniformity of application.

To say this is not to assert that we should exclude from our consideration of the rules settled by an international convention the meaning which has been consistently assigned by a national court to words and expressions commonly used in the documentation by which international trade is transacted, when the convention, in seeking to regulate the rights and liabilities of parties to international trading transactions, uses those words and expressions.  There is a high probability that when such words and expressions have been incorporated in a convention, they have been incorporated with knowledge of the meaning which has been given to them by national courts.

That is why, with respect, we say that, given the antecedent nature of this, when one looks at the uniformity of approach, the fortuity matter discussed by the House of Lords both in The “Xantho” and Pandorf.  They are matters which are relevant to the construction.  The municipal law is there expressed and indeed, in Australia, of course, prior to the incorporation of the Hague Rules we had our own case in Victoria, the Commonwealth v Vacuum Oil Case, a judgment of Justice McArthur, which we rely upon which supports our construction.

Their Honours then set out the Hague Rules and make the finding at page 163, point 7, after reference to various cases, that there was a breach of Article III, rule 2 by reason of improper stowage, and then go on to discuss the defence:

that it is not responsible for the damage because it resulted from a peril of the sea.

the argument being in that case that, notwithstanding that there was a breach of Article III, rule 2, because of the opening words of Article III, rule - subject to Article IV, but if a peril of the sea could be proven, then the carrier escaped liability.  Their Honours rejected that argument first of all on a limited or narrow basis of causation on the concurrent cause approach, which is set out from the foot of page 163 over to page 164.  Their Honours note this:

The appellant argued that it is not responsible for the damage because it resulted from a peril of the sea.  But is this an accurate statement of the findings of the learned trial judge?  These findings were that the goods were not adequately stowed, that the ship encountered heavy weather which constituted a peril of the sea, that if the goods had been properly stowed the damage would not have occurred, and that the negligence of the carrier and the peril of the sea were concurrent causes of the damage.

They were concurrent causes, in a sense, your Honours, because of this:  without one the other would not have caused damage; both of them had to be present for the damage to occur.  Their Honours say:

It seems to us that an accurate reflection of these findings requires one to treat the two concurrent causes of the loss as inseparable, and therefore joint.  The loss would not have occurred but the for the faulty stowage, but on the other hand, the faulty stowage did not cause the loss by itself.  On this view, and treating the matter strictly as a matter of construction of the rule, it cannot be said that the damage resulted from a peril of the sea, and the appellant fails.

That is because of the established rule that if there are two causes shown and one of those is not an accepted peril, then the traditional - - -

GUMMOW J:   Philosophers would laugh at this.  In the nature of things, there is going to be a whole multiplicity of causes.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   It would be very rare that any philosopher would say there is going to be one cause.  What are we talking about?

MR SULLIVAN:   Your Honour, one appreciates the difference in philosophy and law in the concept of causation.

McHUGH J:   As I have said more than once in judgments, the purpose of legal doctrine of causation is to allocate responsibility, not really to prove how in fact things happen.

GUMMOW J:   Exactly.  Here one is allocating responsibility in a context of the rules, and on the face of it IV prevails over III.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   We are then reading down IV by giving a particular slant to this expression “damage arising or resulting from”.

GAUDRON J:   The decision does seem to assume that a peril of the sea is something that cannot be guarded against.

MR SULLIVAN:   In Gamlen, your Honour?

GAUDRON J:   Yes.  If you give priority to Article IV rule 2 you accept that had the goods been properly stowed, which they could have been, it would not have occurred.  So, it was, in fact, something that could be guarded against by proper stowage.

MR SULLIVAN:   Yes, your Honour.

GAUDRON J:   So, although not so expressed, the notion does seem to be running around in there, in the very analysis by reference to concurrent causes which seems to be there.

MR SULLIVAN:   Yes, your Honour, the notion is there but they are saying if it can be proved that there is improper stowage, you cannot rely on Article IV rule 2.

GAUDRON J:   But why?

MR SULLIVAN:   I accept, with respect, the logical difficulty which has been expressed by Justice Gummow, and the textual matter in Article III rule 2.

GUMMOW J:   I am just trying to find an answer, that is all.

MR SULLIVAN:   The answer the Court gave ‑ ‑ ‑

GUMMOW J:   Beyond assertion.

MR SULLIVAN:   If the views inherent in your Honour’s question are correct then we will gratefully adopt them because it would mean that the appeal is over, but the answer the High Court gave was to - sorry, let me withdraw that.  The approach adopted at the bottom of pages 163 to 164 is consistent with the traditional English approach.  It is consistent with the traditional Australian approach as witnessed, for instance ‑ ‑ ‑

GUMMOW J:   That may be a defect.

GAUDRON J:   It comes to this question in Gamlen, what if they had been improperly stowed but would have been lost or damaged even if they had been properly stowed?

MR SULLIVAN:   In that case, your Honour, if the carrier could prove that, even on the analysis in Gamlen, the carrier would succeed.

GAUDRON J:   Why?

MR SULLIVAN:   Because the carrier would demonstrate that the loss truly arose from the accepted peril, in that it would have occurred irrespective of the stowage.

GAUDRON J:   Because it could not have been guarded against by properly stowing.

MR SULLIVAN:   No, your Honour.  It could have.  That is right.  It could not have been guarded against by proper stowage or by any other means.  But, it is because there would be, in the absence of that, no negligence; or no negligence which is causative of a loss.  There has to be an element of causation in the negligence, and if the negligence, itself, did not cause the loss because the loss was inevitable irrespective of the matter, then the causation element would not be established.  They would not be truly concurrent causes in the sense identified in that passage from Gamlen.

To give your Honour an example, a silly example, I suppose, is that if in the middle of a storm there was improper stowage and that was likely to cause loss of goods but the ship hit an iceberg and sank at the same time so that the goods would have been lost anyway, that would be accepted, in our respectful submission, because there were not concurrent causal loss in that circumstance.  To put it another way, the failure to deliver the goods was caused by the effect, of course, being the sinking of the ship.

In answer to your Honour Justice Gummow, the response which was given by the Court to why notwithstanding the opening words of Article III rule 2, they did not have that meaning is set out from midway through 164 onwards.  It is the passage my learned friend said he expressly relies upon and their Honours start with a proposition that the result is so extraordinary that it has to be untenable.

GUMMOW J:   I am not sure it does not misstate Mr Beaumont’s argument.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   Having misstated it, destroys it.

MR SULLIVAN:   I will pass judgment on that one, your Honour.  Their Honours point out at 164 point 6 that to accept the argument, if they have correctly characterised it, it would denude those obligations of much of their substance and say:

There is a more persuasive answer ready to hand to explain why Art IV, r 2 does not expressly preserve liability -

and that is basically because, as we say, that they point out that all those matters are beyond the control or ordinarily beyond the control of the carrier and that it would be inappropriate in those circumstances to have any reference to negligence and they gave the example ‑ ‑ ‑

GUMMOW J:   I am not sure about that either because I am not sure that one can rely on an act of God against which one could have taken some precautions but did not, simply as within the concept of what an act of God was as a plea.

MR SULLIVAN:   Your Honour, we would respectfully submit that the approach to an act of God would be the same as to a peril of the sea and to give ‑ ‑ ‑

GUMMOW J:   You were referred yesterday to that judgment of the New South Wales Full Court which seemed to say that.

MR SULLIVAN:   Yes, your Honour.  But may I put an example this way, that to take your Honour Justice McHugh’s lightening example yesterday - lightening being an act of God - if a contract was to supply tomatoes in 12 months time from a green house in Sydney, and if lightening struck that green house, thereby destroying or making supply of those goods impossible, assuming that an exemption clause to say “not liable for non‑delivery or non‑supply by reason of act of God”, in our respectful submission, the act of God would set up the defence and, then, what would occur is that the person claiming damages would have to show that that was caused by negligence - the loss was, in fact, caused by the negligence of the defendant, such as by, for instance, failing to have a lightening rod, or a lightening conductor, or something, on the green house.

That conforms with justice and equitable principles.  Lightening, of course - and lightening strikes are plainly foreseeable incidents, especially in Sydney, in a 12 month period, and ought to be guarded against.  But that does not mean one engrafts into the definition of “act of God” something which cannot be guarded against, in our respectful submission, because, theoretically, one can guard against - sorry, theoretically, all acts of God are foreseeable.  We know now about lightening, wind, rain and the like.  One can reasonably guard against many of those acts of God in normal circumstances, but that does not bring it within the definition of “act of God” as such; rather, it would be conforming with an Australian principle, in our respectful submission, something which we raised as a means of avoiding reliance upon an exclusion clause, and that is sought in exactly the same way, in our respectful submission, as the High Court approached the matter in Gamlen as a matter of causation.

And indeed, your Honour, in our written submissions, we gave the example of a case called Dunn v Bucknall, which is a “restraint of princes” cases, where, what occurred was, a ship was carrying goods to South Africa and the Boer War broke out and the goods were seized, or other goods were seized and the court, in that case, held that it came within the excepted peril, but the peril could not be relied upon by reason of the fact that it was foreseeable that this would happen and no steps were taken to carry it out - to avoid the situation, therefore, there was negligence.  It is an example, if you like, of the two‑stage approach being applied to other provisions of Article IV rule 2, as well as to Article IV rule 2(c).

Having said that, that this was a case which was decided before the Hague Rules came into force, that the principle, in our respectful submission, must be the same, with respect to each of the sub ules in Article IV 2, with the exception of (a) and (b), which provide expressly for limiting words.

McHUGH J:   It was applied in (1966) 2 QB 695, do you know?

MR SULLIVAN:   Dunn v Bucknall was ‑ ‑ ‑

McHUGH J:   Yes.  Do you know ‑ ‑ ‑

MR SULLIVAN:   No, I did not know that, your Honour.  I am grateful to your Honour.

McHUGH J:   And in (1969) AC 350.

HAYNE J:   Czazrnikow v Koufos, in its various stages.

MR SULLIVAN:   In our respectful submission, that confirms the approach, because it shows that in - and again it gives symmetry to the Hague Rules - it shows that perils of the sea should not be treated any differently to the other provisions and the other exceptions within the Article IV rule 2.  And, your Honours, the passage my learned friend relies upon from pages 164 to 165, we rely upon also.  My learned friend asserted in his submissions that that passage was somehow or other inconsistent with the passage at page 166 and the concluding passage in the judgment of their Honours, at page 168, where The Glendarroch is embraced.

In our respectful submission, there is no inconsistency whatsoever between the two passages.  What occurs in this judgment is a development of argument to the final conclusions which are expressed, and what occurs at pages 164 and 165 is a development of the argument and the conclusions subsequently arrived at.  If one looks at the top of page 165, their Honours say, as we say, with respect, that:

paragraph (q) -

of the Hague Rules -

is of the greatest assistance in the task of construction, because in our opinion it expresses the fundamental scheme of the rules.     The scheme is to impose certain responsibilities and liabilities on the carrier of goods by sea, from which he cannot contract out (cf Art III, r 8) but to give him immunity in respect of loss or damage caused otherwise than by negligence for which he is responsible, save in the special cases to which we have referred.

Those special cases being (a) and (b).  Now, that passage my learned friend says is inconsistent with what occurs following, and especially with the onus of proof point.  With great respect, it does not, for two reasons.  First, their Honours recognised the scheme in Article III, rule 1, where the onus of proof is plainly upon the cargo interest and, secondly, the paraphrase of the scheme of Article IV, rule 2, namely, to give him immunity in respect of loss or damage caused otherwise than by negligence for which he is responsible, does not say anything about the onus of who has to prove such negligence.

So that their Honours do not say expressly, or by implication, in that paragraph who bears the onus of proving negligence or negating negligence.  They deal with that subsequently.  What they are saying there is that the scheme is, in a nutshell, very much the way we outlined it in our submissions this morning.

They note, by the way, that arguably, by use of the word, “properly”, Article III rule 1 and 2 imposes a more onerous obligation than that of negligence because it is used in juxtaposition with the word “carefully”.

GUMMOW J:   Well, (q) uses the phrase “contributed to”; it does not talk about “cause”, does it?

MR SULLIVAN:   I am sorry, your Honour?

GUMMOW J:   (q).  It does not say “cause”, it just says “contributed to”, whereas (b) talks about “unless caused”, and rule 1 talks about “unless caused”.  There seems to be some distinction in that.

MR SULLIVAN:   The words “contributed to” in (q) is demonstrating that, indeed, that if there is any fault which does contribute - and, of course, the contribution may be 100 per cent - to the loss or damage, then you cannot rely on the exception.  It is a distinction from “cause”, we concede that; but, it is wider in the sense that it demonstrates that if you do not come within any of the accepted perils, then you have to show not even that the loss was caused by you, but it was not even contributed to by you.  We do not, with respect, see that as in any way impinging upon the scheme which, we submit, is apparent from the totality of the rules.

Your Honours, reverting to Gamlen, in our respectful submission, their Honours having dealt with the scheme of the rules then properly dealt with the concept of the English and American approach at page 166 and properly drew the distinction between causation and interpretation which the American approach, in our respectful submission, confuses.  As was indicated yesterday, their Honours came to the view, rightly, that in many, many cases the result would be exactly the same because, in effect, as my learned friend said yesterday, in practical terms the difference is who bears the onus of proof and in many, many cases the onus of proof will not be a matter which will decide the case.

Indeed, in this case it is notable that his Honour the trial judge made an express statement that he did not think this case turned on any question of onus at all and that is at page 629 of the judgment and I will come to that in due course when we deal with our submissions in the alternative, but their Honours’ approach at page 166, in our respectful submission, is correct that under Anglo‑Australian law the cases all establish that conditions which may be reasonably foreseen and guarded against may constitute a peril of the sea. 

So that, in our respectful submission, not only have you the rules themselves on their interpretation supporting that approach; you have the High Court saying that, in our respectful submission, correctly also identifying what the previous cases have said and that is that reasonably foreseeable loss and loss which may be guarded against is nonetheless a peril of the sea.

GAUDRON J:   One of the difficulties with the submissions thus far is the expression “reasonably foreseen and guarded against” because you have to say by what means guarded against.  Is it guarded against by actions extending beyond the responsibilities and liabilities specified in Article III or is it guarded against in any event by responsibilities and duties specified in Article III?

MR SULLIVAN:   It is guarded against by responsibilities and duties, in our respectful submission, specified in Article III.  One of those responsibilities is a duty to “properly and carefully” keep the goods, and within that there may be various - depending on the facts of the case, that that phrase may have varying content.  The obligation to reasonably guard has to be something which would fall within Article III, rule 2 because otherwise it would not be reasonable to impose upon the carrier an obligation which is greater than that which the Hague Rules provide for.  So, in our respectful submission, that is the answer to your Honour’s question.

The concept of foreseeability as being something which does not stop something being a peril of the sea was first discussed in the English cases in the 1890s.  In The Pandorf (1887) 12 AC 518 it is expressly referred to by Lord Fitzgerald, as my learned friend said. The approach which was adopted by the High Court is consistent with the opening words of what Lord Halsbury says at page 522 of that judgment, which my learned friend did not take your Honours to. Lord Halsbury, at page 522, point 7, said this:

My Lords, in this case the admissions made at the trial reduce the question to this:  whether in a seaworthy ship the gnawing by rats of some part of the ship so as to cause sea‑water to come in and cause damage is a danger and accident of the sea.  That this happened without any negligence of the shipowner is material in determining the rights of the parties in this particular case, but, in my judgment, has no relevancy to the question whether the facts as I have stated them constituted a danger or accident of the seas.

That is the approach which is adopted by the High Court, in essence, as well.  Negligence is obviously relevant, according to the High Court, to determine the rights in parties; whether you can come within the exception because there is no other concurrent cause, but it is not relevant to whether something is, in fact, “a peril of the sea”.  Lord FitzGerald in the same case at page 528 point 7 - - -

KIRBY J:   I think we were read this passage and it was conceded  ‑ ‑ ‑

MR SULLIVAN:   Yes, made the same comment.  I will not take your Honours to it.  Your Honours, that is also consistent with the authority of The “Xantho” which my learned friend took your Honours to yesterday and I will not repeat, except to point this out.  When their Lordships use in The “Xantho” the concept of “extraordinary” or “fortuitous, they are using it in contrast to the expression “the natural and inevitable action of the wind and waves”.

A passage which reflects that and shows that is that of the speech of Lord Herschell from the foot of page 508 over to halfway down page 509.  At the foot of page 508 His Lordship poses the question and then sets out the then current learning and current view on the subject at the top of page 509, in our respectful submission.  His Lordship said:

I think it clear that the term “perils of the sea” does not cover every accident or casualty which may happen to the subject‑matter of the insurance on the sea.  It must be a peril “of” the sea.  Again, it is well settled that it is not every loss or damage of which the sea is the immediate cause that is covered by these words.  They do not protect, for example, against that natural and inevitable action of the winds and waves, which results in what may be described as wear and tear.

That is what wear and tear is, something which will naturally occur.  It occurs naturally and inevitably. 

There must be some casualty -

it is not “some action of the waves” but: 

some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. 

This is where, with great respect, my friend blurred the matter yesterday.

This is where, with great respect, my friend blurred the matter yesterday.  It is not the weather which should be foreseen, but it is the casualty in consequence of the weather which must be foreseen as one of the necessary, not as a probable, but:

one of the necessary incidents of the adventure.  The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen.

This concept of having to be fortuitous.  And then it was said:

It was contended that those losses only were losses by perils of the sea, which were occasioned by extraordinary violence of the winds or waves.  I think this is too narrow a construction of the words, and it is certainly not supported by the authorities, or by common understanding.

What is plain there, and in the other judgments therefore, is that when the word “extraordinary” is being used, it is being used in contrast to what is called the natural and inevitable action of various elements.  Now everything - the natural and inevitable action of winds and waves is clearly foreseeable.

GAUDRON J:   Perhaps we might leave it there until 2.15 pm.  The Court will adjourn until 2.15.

AT 12.49 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GAUDRON J:   Yes, Mr Sullivan.

MR SULLIVAN:   Your Honours, may I address two matters which your Honours raised with me this morning, just before going on.  First of all, in answer to your Honour Justice Gummow concerning the possible breach of section 6 of the Sea-Carriage of Goods Act, by reason of the bill of lading not containing an express statement, your Honour, in our respectful submission, the bill of lading does contain the required express statement in clause (1) under the heading “The Hague Rules Governing Law and Jurisdiction,” which reads:

This Bill of Lading shall have effect subject to the provisions of any legislation giving effect to the International Convention for the unification of certain Rules of Law -

the Hague Rules

or to similar effect which is compulsorily applicable to the contract contained or evidenced herein. “If this Bill of Lading is issued at a place where legislation giving effect to the Protocol to amend the Hague Rules signed at Brussels on February 28, 1968 or any other International Convention on the carriage of goods by sea, is compulsorily application to the contract contained -

I am sorry, I am having trouble reading my copy -

or evidenced in or the carriage covered by this Bill of Lading, then this Bill of Lading will also have effect subject to the provisions of and rules contained in the Protocol or Convention as applied by that legislation.”

GUMMOW J:   I know it is; that is its vice.

MR SULLIVAN:   Yes, your Honour.  We would respectfully submit that it can be read distributively but in any event ‑ ‑ ‑

GUMMOW J:   Anyhow, there is not much point wasting time on it.

MR SULLIVAN:   No.  In any event, your Honour, we would say the Hague Rules would apply independently of that by reason of section 4 of the Act.

GUMMOW J:   It is really section 6 that is the problem.

MR SULLIVAN:   Section 6, I am sorry, your Honour, yes, section 4 of the Act.

GUMMOW J:   Yes:

express statement that it is to have effect subject to the provisions of the Rules as applied by this -

Australian -

Act.

MR SULLIVAN:   Yes, your Honour.  I appreciate the point your Honour makes.  The second matter which was raised was the proper approach to construction of the convention.  We would adopt, with respect, the reasons for judgment of your Honour Justice McHugh in Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338. It is not on our list of authorities, I am sorry. The relevant passage appears at page 356 starting at point 5 which reads:

The Agreement is a treaty and is to be interpreted in accordance with the rules of interpretation recognised by international lawyers.  Those rules have now been codified by the Vienna Convention on the Law of Treaties to which Australia, but not Switzerland, is a party.  Nevertheless, because the interpretation provisions of the Vienna Convention reflect the customary rules for the interpretation of treaties, it is proper to have regard to the terms of the Convention in interpreting the Agreement, even though Switzerland is not a party to that Convention.

Your Honour quotes Fothergill and the Tasmanian Dam Case and Golder and then goes on:

Article 31 of the Convention requires a treaty to be interpreted in accordance with the ordinary meaning to be given to its terms “in their context and in the light of its object and purpose”.  The context includes the preamble and annexes to the treaty:  Art 31(2).  Recourse may also be had to “supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion” to confirm the meaning resulting from the application of Art 31 or to determine the meaning of the treaty when interpretation according to Art 31 leaves its meaning obscure or ambiguous or leads to a result which is manifestly absurd or unreasonable.

Those principles, in our respectful submission, do not differ substantially or significantly from the ordinary municipal principles which would be applied in the present case.  They give primacy to the natural meaning of the words in their context and in the light of their object and purpose and that is really the approach which would be adopted by an Australian court, in our respectful submission, anyway, applying domestic law and, equally where there is obscurity or capricious or absurd results, then the court would take account of that on the purpose of the approach to construction.

In our respectful submission, the rules by which the Hague Rules are to be interpreted, be they domestic or the international rules just referred to, are effectively the same and the same results would be arrived at.  Your Honours, I was going through, before the luncheon adjournment, some of the early English cases to demonstrate the proposition that the decision of this Court in Gamlen, or the relevant passages, was consistent with earlier English authority.

In order to save time I do not propose to take the Court, unless the Court wishes me to, to any further passages in those decisions but would simply, with respect, refer the Court to our written submissions and, in particular, to paragraphs 15 and 39 to 42 thereto.  If I may, in respect of paragraph 15 which deals with the same meaning being applied to the expression “perils of the sea” in bills of lading as in marine insurance policies, in addition to the references we have there given, your Honours, could I give an additional reference to Gamlen, being in the judgment of Sir Ninian Stephen, at page 156 point 2 and also references to the judgments in Pandorf being references at pages 525, 527, 528 and 529.

GUMMOW J:   What volume?

MR SULLIVAN:   I am sorry, (1887) 12 App Cas 503, your Honour.

GUMMOW J:   Yes.

MR SULLIVAN:   It is in the same volume as  ‑ ‑ ‑

GUMMOW J:   Yes, just before the rats.

McHUGH J: 12 App Cas 518.

MR SULLIVAN:   Yes, thank you.  They look as though they were handed down on the same day, indeed, both those cases.  Your Honours, in our respectful submission, the approach, therefore, of the High Court, conforms with previous authority if that be - of English authority and Australian authority.  It is consistent, of course, with, as we say, the decision of Justice McArthur in the Vacuum Oil Case which we have referred to in our written submissions and it accords with the scheme and purpose of the Hague Rules.

It is also, in our respectful submission, a manifestly fair approach.  It does not shut out a plaintiff who can demonstrate that there is negligence on the part of the carrier.  It does not produce, therefore, the odd result my learned friend contended for, rather, it obliges the plaintiff to prove what it asserts, namely, negligence in order to defeat the peril of the sea exception.  In our respectful submission, therefore, the courts below, comprised of very experienced Admiralty judges in each instance, correctly followed and correctly applied the correct principles adopted in Gamlen, and we respectfully submit there is no reason for this Court in departing from the principles enunciated in Gamlen in the joint judgment of Justices Mason and Wilson.

That leaves me to deal next with the causation argument which has been mounted by my learned friends, and we could deal with that very simply.  The causation argument mounted in the alternative by my learned friends, in our respectful submission, will not trouble your Honours very much.  If, in fact, our construction and the construction preferred below of the expression “perils of the sea” is correct, then the causation argument of  my learned friend must fail, because if that is the case it is not incumbent upon the shipowner to disprove negligence, the onus is on the plaintiff, the cargo owner, to prove negligence. 

Here, there was a finding of only one cause of loss, namely, perils of the sea.  The cargo owner failed to discharge the onus of showing any other breach.  So if we are right, they cannot win on causation.  Moreover, in our respectful submission, if the construction argument contended for by the appellant is correct, nonetheless, in our respectful submission, the result in this case would have been the same.  In the first place, in that regard, might I remind your Honours that at page 629 of his judgment his Honour Justice Carruthers expressly stated that this was not a case which turned on questions of onus.  In his conclusion, at line 45, his Honour found:

This is not a case which, in my view, turns upon any nice questions of onus of proof.  Unlike many perils of the sea cases, the defendant is able to identify with some precision the actual perils of the sea which caused the subject damage.  In summary, the evidence satisfies me that, bearing in mind the anticipated weather conditions:

and then his Honour goes on to make three very important findings of fact:  (i) to summarise it was sea worthy:

(ii)  the defendant properly and carefully loaded, handled, stowed, carried, kept and cared for the subject cargo;

(iii)  there was proper seamanship, “there was no neglect or default”.

McHUGH J:   I am not sure that his Honour’s view is correct about this matter, nor am I sure that the statement in Gamlen that you get the same result whether you apply the English or the American view is correct.  It seems to me that if Mr Macfarlan’s submission is correct, the defendant has a much more difficult task, and not merely as a question of onus, because negligence never comes into it; you fail at the threshold if, whether it be the casualty or the peril or whatever it happens to be, is foreseeable.

MR SULLIVAN:   No, your Honour.  Negligence does come into it on Mr Macfarlan’s test.  As he rightly paraphrased it, that the effect of his test is you have got to exclude negligence because it is not only foreseeable, but something which can be reasonably guarded against and that in that circumstance the attention of the Court will have to be addressed within the definitional phase as to whether something could be reasonably guarded against or not and absent proof of that, that there was steps taken to reasonably guard against, the definition will not be satisfied.

So that what Mr Macfarlan’s test does, with respect, is to remove the test of negligence from the question of causation to the question of definition and that is, indeed, recognised by that passage Mr Macfarlan quoted to your Honours today in Bayliss’ Case because they said you cannot make that out because of all these findings which were inherent in the necessity to find the definition.

McHUGH J:   Yes, but you can have other forms of negligence which might defeat the defence and I am not sure that they are one and the same thing.  As long the defendant can show that it is not reasonably foreseeable, it has got to be guarded against, although there are authorities which seem to suggest that is not the case, then the defendant, it seems to me, to be in a better position than ‑ ‑ ‑

MR SULLIVAN:   Your Honour, the problem about leaving it as not reasonably foreseeable is that if one applies what we understand in Australia as what is foreseeable and what is not foreseeable, it is something which is not far‑fetched or fanciful.  It has been called the undemanding test of foreseeability and, indeed, your Honours have recently considered this in cases such as The Pyrenees and Romeo and the like, but if it is confined to just mere foreseeability then, with great respect, the “perils of the sea” defence in respect of weather conditions will be virtually obliterated from the statute.

McHUGH J:   That is right.

MR SULLIVAN:   And that could not have been the intention and, indeed, even the cases my friend principally relies upon in that regard, The Verreault and the like, expressly put it in terms of those two matters.  The test which my friend appears to favour is the test which the Canadian court enunciated in Verreault which is, in essence, very similar to the test which was apparent in Bayliss which his Honour quoted this morning.  We set that test out, your Honour, as we understand it in paragraph 54 of our written submissions.  It is a reference from Verreault at page 191 and that is really for peril of the sea to be established:

the respondents assume the onus of showing that the weather encountered was the cause of the damage and that it was of such a nature that the danger of damage to the cargo arising from it could not have been foreseen or guarded against -

If it could not have been foreseen then, of course, one does not need to prove guarding against because there could be no possible breach of duty of care.  A duty of care would not arise unless there is foreseeability.

If there is to be mere foreseeability, then it would impose, with great respect, an impossible burden upon a shipper and, as we say, mere peril of the sea - mere foreseeability would mean that “the peril of the sea” defence was, effectively, never able to be relied upon in heavy weather conditions and even the Canadian authority does not go that far, in our respectful submission.  But if the Verreault test be a proper approach, in our respectful submission, it focuses on the danger of damage to the cargo.  It is the casualness, or the accident, as Lord Herschell referred to it in “Xantho”, which has got to be the foreseeable matter occurring.  It has to be foreseeable as one of the probable incidents of the voyage.

In our respectful submission, where you have findings of proper stowage, proper seamanship, seaworthyship and proper navigation, even if one can foresee violent weather, it does not follow that there is danger of damage to the cargo which could have been foreseen, given those matters already in place ‑ ‑ ‑

HAYNE J:   But it is foreseen as one of the probable incidents of the voyage.

MR SULLIVAN:   Yes, one of the probable incidents.  Not one of the certain incidents, but one of the probable; not one of the possible incidents though, with great respect.

HAYNE J:   Just so.

MR SULLIVAN:   In our respectful submission, if you have all those things in place where you have proper stowage, proper packing, proper seamanship and a seaworthy vessel, it would not be seen as a probable incident of the voyage that there would be damage to the cargo.  So that even, in our respectful submission, on the Canadian test, on the facts as found here, there would be no finding of exclusion from the ability to rely on perils of the sea.  Indeed, so far as proper seamanship is concerned, we would submit that my learned friend, having assumed the affirmative onus under Article III 1 of proving those matters, cannot now say, “Well, there are other aspects which should have been taken into account, such as, you could return to port, or you could have found a safe port, or you could have delayed your journey”.

Reasonableness is the component.  As far as delaying the journey is concerned, we would respectfully adopt the remarks of Justice Kirby from the Bench, that one cannot see, within the meaning of Wyong Shire Council v Shirt, that being a reasonable response, given the other matters being adequately dealt with.  So far as the matters are concerned of turning back or going to a safe port, with respect, they are part and parcel of allegations of not properly steering the ship or altering its course or the like.  They were specifically raised by my friends.  They did not raise this particular issue.  In our respectful submission, in those circumstances, it is really not a matter which is open to them to raise now.  It was not raised, as I am reminded, in the Court of Appeal, as well.  In support of that matter, may I ‑ ‑ ‑

McHUGH J:   Just before you go on, I notice from an American case, General Motors Overseas Operation v SS Goettingen 225 F 902, Judge Feinberg says that:

The interpretation of what is a “peril of the sea” apparently differs under German law from the usual interpretation in American law -

He goes on to refer to an -

affidavit of an expert on German law.....“a storm of a certain force is regarded as a peril of the sea. * * *”

GUMMOW J:   It does not have to be an extraordinary event.

McHUGH J:   No.

MR SULLIVAN:   We have a German lawyer in court, your Honour, but I do not know if I can confirm that.

McHUGH J:   But it does indicate that we really should not be confining ourselves to the English‑speaking jurisdictions.

MR SULLIVAN:   With great respect, your Honours, the problem arises if your Honour’s judgment in Thiel be correct, as we respectfully submit that it is, when one ascertains for the purposes of the convention what is the ordinary meaning.  If there is a conflict of ordinary meanings of expressions such as “perils of the sea” between Australian law, German law, English law, American law, we have seen a conflict already between American and Australian and Canadian and English, and internal conflicts, it is rather difficult, with respect, to determine where one should start and where one should stop.

McHUGH J:   It may be, but the German law appears to favour your ‑ ‑ ‑

MR SULLIVAN:   I appreciate that, your Honour.  I am sometimes a bit beware of High Court Judges bearing gifts, but it does seem to favour us, your Honour.  But, we will certainly look at that, your Honour.  The difficulty, in our respectful submission, is knowing where to start and where to stop.  Does one look at the law of every signatory to the Hague Convention.

McHUGH J:   Yes; when you come up here the answer to that question is “Yes”.

MR SULLIVAN:   But of course, whatever happens, your Honour, sometimes these cases almost invariably run in the County Court or the District Court, and the same matters would have to be applied over very small amounts of money.  But, we will check that matter out.

Apart from the references we have given your Honours already and on this question of whatever test is applicable, the result, in our respectful submission, would be the same.  We would refer your Honours to the decision which my learned friend referred to but did not take your Honours to, that of Neter & Co Ltd v Licences and General Insurance Co Ltd (1944) 1 All ER 341. It is a case on which substantial reliance was placed both by the trial judge and by Justice Sheller. It was a case where the shipowner ultimately failed. However, it contains useful statements of principle, in our respectful submission. The case concerned, as appears from page 342C to D, bags of ‑ ‑ ‑

GUMMOW J:   It is a marine insurance case.

MR SULLIVAN:   A marine insurance case, your Honour.

GUMMOW J:   It is not construing the Hague Rules.

MR SULLIVAN:   I am sorry, your Honour, it is construing the expression “the perils of the sea”.

GUMMOW J:   Exactly.

MR SULLIVAN:   In our respectful submission, under Anglo-Australian law it has been held to be the same meaning to date, and we would respectfully submit that there is no reason to depart from that, especially for the very strong reasons of principle and policy which are given by the Australian courts.  Indeed, at least one American court also has the same view.  If I could hand up to your Honours ‑ ‑ ‑

GUMMOW J:   But, like any phrase, it may take its meaning from its context.

MR SULLIVAN:   Of course, your Honour.

GUMMOW J:   The context of the Hague Rules is extremely specific, as we spent some time this morning trying to work out.

MR SULLIVAN:   Extremely specific, but the concepts are so interrelated, your Honour, because often one would be construing these events in the light of the very same conditions which occurred, the very same incident.  Could I hand up to your Honours a photocopy of a refreshingly brief American case, being New Zealand Insurance Company v Hecht, Levis and Kahn (1941) AMC 1188.  It is a decision of the Court of Appeals for the second circuit with Judges Learned Hand, Chase and Clark.  It is again, with respect, a marine insurance case.  One can read very quickly the whole judgment:

The action was upon a policy of marine insurance and was tried by consent without a jury to a judge who made findings of fact.  The defendant somewhat faintly argues that even though the rubber was injured by the ship’s unusual pounding in the storms she encountered (a whole gale on December 2 and 3, and very heavy weather earlier, though never quite so bad) the damage was not caused by a “peril of the sea.”  At times it seems to have been thought that that phrase means something different in a bill of lading from what it does in a marine policy.

GUMMOW J:   This is not a bill of lading; this is a bill of lading that we are worried about controlled by the Hague Rules under the Australian Act.

MR SULLIVAN:   Yes, your Honour.

GUMMOW J:   I understand the English decisions before the Hague Rules were introduced. 

MR SULLIVAN:   This is a decision of the United States after the Hague Rules were incorporated in America.

GUMMOW J:   It may be but I do not think it answers the point that is being put to you.

MR SULLIVAN:   No, but, your Honour, the statement which is made there is that they do not, as they say - at times it has been held to mean something different, but we need not say so.  There would be no reason, and much inconvenience, in holding that the words have different meaning in two kinds of commercial contract.  In our respectful submission, that policy reason is the policy reason which is stated in all the earlier authorities and, in our respectful submission, still holds good today, and absent some compelling reason, we would respectfully submit that the meanings should be the same in both bills of lading and in policies of marine insurance and especially, in our respectful submission, as the Marine Insurance Act in the schedule seems to have intended, in Australia, to have encapsulated what it understood to be the common law meaning of the expression “perils of the sea”.

But, your Honour, reverting to the Neter, there was a claim in respect of damage to the china when it arrived.  The allegation was that it was due to perils of the sea.  At letters G to H on page 342, the weather was described as heavy, but at letter G the finding was:

This weather was, however, such as was normally to be expected on a voyage round the Cape in the month of June.

And his Honour goes on to consider other facts, which are not presently relevant.  And then, at page 343, letter D, his Honour says:

In my opinion the evidence which I have outlined above is not sufficient to justify me in drawing these inferences.

about the peril of the sea -

It appears to me equally consistent with defects in the casks, accidents during loading, bad stowage, rough weather, or accidents during or after discharge, and I am unable to hold that the plaintiffs have discharged the burden that lies on them of proving to my satisfaction that the proximate cause of the loss was the rough weather.

In case I am wrong as to the proper inferences to be drawn from the evidence, I think I ought to deal with the defendants submission that in any event damage so caused could not constitute loss due to a peril of the seas.  This point was fully argued on both sides, and is one of some importance.  The defendants say there was nothing abnormal or unexpected in the weather experienced on such a voyage in the month of June, there was nothing fortuitous in what occurred, the damage was solely due to the ordinary action of wind and waves, and there was no peril.  They contend that a  distinction should be drawn between the incursion of sea water in normal weather through some aperture wrongly left open, which is fortuitous, and the ordinary rolling and pitching of a vessel in heavy, but not unexpected, weather, which is wholly lacking in any fortuitous element.

Having regard to the -

Xantho, Pandorf -

and the recent Privy Council decision in Canada Rice Mills, Ltd. v. Union Marine & General Insurance Co., Ltd., I think it is clearly erroneous to say that, because the weather was such as might reasonably be anticipated there can be no peril of the seas.  There must, of course, be some element of the fortuitous or unexpected to be found somewhere in the facts and circumstances causing the loss, and I think such an element exists when you find that properly stowed casks, in good condition when loaded, have become stoved in as a result of the straining and labouring of a ship in heavy weather.  It is not the weather by itself that is fortuitous; it is the stoving in due to the weather, which is something beyond the ordinary wear and tear, of the voyage.  This appears to me to be “something which could not be foreseen as one of the necessary incidents of the adventure.”

And that is a quote, of course, from The Xantho -

It was an “accident which might happen, not an event which must happen,” to quote the language of LORD HERSCHELL in The Xantho.  In the Canada Rice Mills case LORD WRIGHT says, at p. 69 ([1940] 4 All E.R., at p.177)

On any voyage a ship may, though she need not necessarily, encounter a storm, and a storm is a normal incident on such a passage as the Segundo was making, but if in consequence of the storm cargo is damaged by the incursion of the sea, it would be for the jury to say whether the damage was or was not due to a peril of the seas.

If the words “by the incursion of the sea” there are substituted the words “by the action of the sea,” the above passage is applicable to the present case on the assumption that the casks of dye-stuff, though properly stowed and loaded in good condition, had been stoved in as the result of the action of the sea in stormy weather

causing the straining and labouring of the vessel.  On such facts, sitting as a jury I should have found that this was a loss due to a peril of the seas. 

So, in our respectful submission, there the approach was quite an obvious one; that if you dismiss, or reject the other elements which could have caused loss, such as bad seamanship, bad stowage and the like, then, even a foreseen element can be a peril of the sea and, so, we respectfully submit that, in those circumstances, even on the American approach, on the Canadian approach, on the facts of this case, the result would have been the same. 

Your Honours, so far as matters in our notice of contention are concerned, we are content to rely upon what we have stated in our written submissions and I do not wish to address your Honours further.  Unless your Honours have any questions for me, they are our submissions.

GAUDRON J:   Yes, thank you, Mr Sullivan.  Anything in reply, Mr Macfarlan?

MR MACFARLAN:   Yes, your Honour.  Your Honours, the first matter I would like to mention is in connection with Bayliss.  Your Honours will recall I handed that up at the commencement of today.  My learned friend then referred to Keystone, a later Canadian decision, and I mention that Bayliss itself had been referred to with approval in Goodfellow, which is the 1971 Canadian Supreme Court decision we rely upon.  I can inform your Honours that the particular passage in Bayliss which I relied upon is quoted in Goodfellow, the 1971 case.

GUMMOW J:   We looked at that Goodfellow yesterday, did we not?

MR MACFARLAN:   Yes.

GUMMOW J:   That is when we first saw Bayliss because it says that is the relevant extract.

MR MACFARLAN:   Yes, I am just reminding your Honours that that ‑ ‑ ‑

GUMMOW J:   We know we have done it twice.

MR MACFARLAN:   Perhaps it is not necessary to remind your Honour but that passage is referred to with apparent specific approval.  Your Honours, in terms of Justice McHugh’s question about resort to the common law background we would put these points.  We submit it is appropriate to have regard to it as a background matter and the particular background matter is the nature of the rules of bailment at common law.  One of the matters that leads to that conclusion is that the source of the Hague Rules, we submit, was largely, if not wholly, in the common law system.

The second is that if no one else in the world, so far as one is aware, has yet taken the lead in interpretation in resolving doubts which exist, there is no reason why this Court could not and should not take that lead and utilise such materials as are available to it.  If the materials, by way of background, are confined to the common law then so be it and they should be taken into account.  If those materials can be enlarged, all the better, but at the moment the relevant source of information appears to be the background constituted by the common law rules concerning bailment.

MR MACFARLAN:   Your Honours, as to what was said about The Glendarroch, where it is said that there is an exception to an exception and the plaintiff bears the onus of proof as to the exception upon the exception, we raise the question, rhetorically, how does one get to that point?  There are really only two ways, we would suggest, ways in which the carrier’s negligence could disqualify the carrier from relying upon an exception such as 2(c) in Article IV.  One is because it is part and parcel - or absence of negligence is part and parcel of the definition, which is our first argument.  The second is that it is involved in the carrier proving causation that the loss resulted from or arose from the peril.  Again, in that case, the onus is on the carrier.  We do not, with respect, see any third basis upon which one could engraft a negligence disqualification upon the carrier’s immunity in the way that The Glendarroch seems to have done.

CALLINAN J:   Mr Macfarlan, could I just ask you a question.  You have said on a number of occasions that the master should either, in effect, turn back or put in at Adelaide.  That, factually, is what you say was what should have been done to guard against something that you say was foreseen; is that right?

MR MACFARLAN:   We do not take on that onus of saying what the vessel should have done; it is one of the possibilities we can conceive that the vessel might have wanted to deal with when discharging its onus; perhaps by saying, “It was not possible to go to a port of refuge in Adelaide, or it was not possible to remain in port.”

CALLINAN J:   Leaving aside any question of onus, was that issue really litigated at the trial, whether the ship should have been turned around or should not have set out?

MR MACFARLAN:   Your Honour, the way it was put was this, that there was a general submission that the vessel - and this is alternative to other submissions - should simply have stayed away from the area of the south‑west tip and that is recorded in the judgment and there are a couple of passages in the oral submissions that are recorded in the transcript.

KIRBY J:   Was it put to the captain?  Was it put to the master?

MR MACFARLAN:   No, your Honour.  No, it was not our onus to do so.

CALLINAN J:   It was not pleaded either, was it, anywhere in those terms because your particulars relate to absence of diligence in stowage in effect; is that not right?

MR MACFARLAN:   I am not sure about the latter, but certainly the former is correct.  It was not pleaded in those terms which I have described, but, your Honour, the fact that we might choose to put certain specific allegations of negligence in our case in‑chief does not absolve the carrier from discharging its onus and enable the carrier simply to confine its attempt to discharge its onus to what we have specifically raised.  It is not for us to direct the carrier as to what type of evidence it should lead.

CALLINAN J:   But it is all tied up with the issue of what is a peril of the sea, is it not?  You cannot divorce that matter from the issue because you have to identify what the peril is and in the same way and in the same context as you have to deal with the question of foreseeability and measures that might be taken to guard against the foreseen problem.

MR MACFARLAN:   We agree, with respect, with what your Honour has just said, but we would add to it the reason why we led some evidence as to specific areas of negligence was because we sought to make out a positive and specific case under rule 3, but that left for dealing with by the carrier the matters that your Honour has just described when it attempted to discharge its onus.

CALLINAN J:   I am not sure about that myself.  I am just not sure about that.  The other members of the Court may be, but there is that passage in the judgment of their Honours Justices Mason and Wilson which talks about all of the circumstances of the case and surely one of the circumstances inevitably is, when you are debating whether there has been a peril of the sea, what should have been done in respect of that event, leaving to later the question whether you define it as a peril of the sea or not.

MR MACFARLAN:   Yes, and it is for the carrier to take the initiative in respect of the leading of evidence in that respect and, as I say, we put a general submission that it should have avoided the south‑west tip.  I was going to say that the judge dealt with that general submission in a narrow sort of way in inquiring of himself whether the master should have changed course on 13 or 14 October, but that is when the vessel was in the midst of this very heavy storm and did not deal with the more general import of the submission that steps could have been taken earlier to avoid that area.

CALLINAN J:   And I take it that had the master changed course at that stage that may or may not have resulted in damage.  It would have depended how long it would have taken him to get out of the area of difficulty and matters of that kind.

MR MACFARLAN:   That question was decided against us, your Honour.  The judge held, on the 13th or 14th, it was too late to do anything much by way of changing course, but that does not deal with the full breadth of the submission.  I should give your Honours the references in support of what I just put.  In the oral argument, one can see in the appeal book the submission being put in volume 2, page 303 at point 5, and 303 at point 50.  The judge refers to the submission in his judgment in volume 4 of the appeal book at 622, line 29, but only deals with the submission in the limited way by reference to the 13 and 14 October, as I have mentioned, at these pages in volume 4 622, line 37 through to 623, line 17 and 627, line 12.  I am in a position to take your Honours to those if it is appropriate.  Without any indication that your Honours would like me to do so, I will press on.

What I was putting about The Glendarroch, your Honours, we submit, gives some explanation of why a concurrent cause, such as identified in Gamlen, can defeat a “perils of the sea” defence.  There is nothing in the rules that says if there is negligence, then that is going to defeat one of these immunities.  The way it comes in is either because “peril” incorporates that concept, or through the causation question that arises.  When the carrier seeks to prove that the damage resulted from the peril, in the sense that that was the effective cause, then that will involve the carrier excluding reasonably open, concurrent causes, or non-fanciful concurrent causes.

Your Honours, a submission was put as to the interrelation of Articles III and IV of the Hague Rules and it was said, in effect, that as one had to prove negligence or something similar to it, in relation to Article III, if the appellant was right that one had to disprove negligence to succeed on the immunity, one would never get to the immunity.  We make two points about that.  One is that that comment could equally be made about (q), immunity (q), where it is spelt out that there has to be an absence of negligence, so if there is attention - attention is there and it does not arise simply because of our construction of (c), but the other answer is that there really is no tension because what happens is that the production of damaged goods at the other end by the carrier raises a prima facie case of breach of Article III, and then that can be dispelled in appropriate cases by proof of the applicability of one of the immunities.

In that way the Hague Rules work in a very similar, if not identical, fashion to the rules of bailment, at common law.  If a question of fairness comes into it, as my learned friend submitted it may, and the bailment rules point the way, because the bailee carrier has undertaken to carry the goods and to deliver them at the other end.  The bailee knows what has happened to them and it is only fair in that circumstance that the bailee have to explain what happened to them that led to them being damaged and show that that occurred without the carrier’s fault.

KIRBY J:   What is your explanation of why in some paragraphs or subparagraphs onus is specifically addressed and not in others?

MR MACFARLAN:   It is the explanation given by Justices Mason and Wilson, your Honour, that, with a couple of exceptions, each of the immunities bespeak of absence of negligence.  I have put it much less elegantly than their Honours did, but the expression their Honours use, which is much more elegant, is that the events there specified of their nature:

occur independently of negligence on the part of the carrier.

That is in Gamlen 164 about point 8.  So it would be tortologous, in our submission, your Honour, for there to be a statement in 2(c), for example, perils of the sea not caused by the fault of the carrier.  What would not be tortologous would be for 2(c) to state damage arising from action of the sea not caused by fault of the carrier, because there is nothing in action of the sea which necessarily connotes an absence of negligence, but “perils, dangers and accidents” does have that connotation and it intrudes through this concept of fortuity, which is recognised in, I think, all the cases and in the Marine Insurance Act as being somehow embodied deep within that expression, “perils, dangers and accidents of the sea”.  Your Honours, while I am with - - -

KIRBY J:   Not very deep in Germany, apparently.

MR MACFARLAN:   Yes, we do not know too much about German law, your Honour, but I doubt there are exceptions.  While I am with Gamlen, your Honours, the question of whether the statements are obiter or not we suggest, as my learned friend really conceded, it does not matter much.  What is perhaps more important is a factor such as mentioned by Justice Stephen, that this matter was not argued at any length on appeal.  He says it was argued only briefly on appeal.  That is at 155 point 9 of Gamlen.  If one looks at counsel’s arguments in Gamlen one can see the force of Justice Stephen’s comment, because counsel’s arguments are not directed to this point.

Your Honour Justice Gaudron inquired of my learned friend whether the obligation that we submit is there to show that the event could not be guarded against if it were anticipated was limited to acts that the carrier was obliged to perform in accordance with its obligations in Article III.  First, we would say, no, there is no reason why it should be.  Secondly, even if it were, Article III, rule 2 is very broad in its scope and covers everthing that might relevantly arise and certainly which has been the subject of reference in this appeal.  One needs to refer in this context to what the bill of lading says as to the liberties of the carrier.  I will come to it in a moment but, in essence, the bill of lading says it is completely within the discretion of the carrier as to what route it takes, as to the timing of the carriage, as to which port it goes to and the like.

So its decisions on those matters bear upon its obligations under Article III and, if it makes the wrong choice about those, it can put itself in breach of Article III and also it can fail to prove that it could not have guarded against an event alleged to be a peril of the sea.  I do not know whether your Honours can read the copies your Honours have of the bill of lading, but I have a much larger copy, if that is of any assistance to the Court.  I see one nod, so perhaps if I send it in the Court’s direction.  I think Justice Gummow would appreciate a copy.  I do not know if anyone else would.

GAUDRON J:   Yes, thank you.

MR MACFARLAN:   It is certainly very good drawing paper, your Honour.

KIRBY J:   Do we really need all of that or is there some ‑ ‑ ‑

MR MACFARLAN:   It is just one sheet.  There are multiple copies of the same thing, your Honour.

GAUDRON J:   It may help in due course.

MR MACFARLAN:   Yes.  If I could ask your Honours to refer to whichever your Honours ‑ ‑ ‑

KIRBY J:   It would have been cheaper to give us a magnifying glass.

MR MACFARLAN:   Indeed, but much less fun, your Honour.  I wanted to refer your Honours to clause 5 of the bill in the fine print, “The Scope of Carriage and Carrier’s Liberties”:

(a) Goods may be transported and/or forwarded by the Carrier from the place of receipt to the place of delivery by any route or routes whatsoever (whether or not the customary or intended or advertised or shortest route or routes) via any place or places whatsoever (whether or not including the Port of Loading -

and I have difficulty reading the next part, even on this copy.

GAUDRON J:  

(Ocean Vessel) if that is not the place of receipt, or the Port of Discharge (Ocean Vessel) if that is not the place of delivery).

MR MACFARLAN:   Yes, I am grateful to your Honour.

GAUDRON J:   I was reading from the small copy.

HAYNE J:   The legible one.

MR MACFARLAN:   I concede defeat, your Honour.  It says there also that any vessel may be used.  I think it is the next couple of lines to those I have just referred to:

Any Vessel or Conveyance may at any time and for any reason and without any notice ‑ ‑ ‑

GAUDRON J:  

to any Merchant proceed and carry Goods to and call and remain for any length of time at any place or places whatsoever (whether in or out of the -

et cetera.  Do we need to go through it in detail?

MR MACFARLAN:   No, your Honour.  They can do anything.  The other clause is clause 23 which says under (1) that there is to be no liability for delay.  As I said, there is no time specified for delivery.  One would expect some notion of reasonable dispatch would be imported, but there is no liability for delay.  With the concept of reasonable dispatch, if the vessel anticipated a storm which it could not weather, then no doubt it would be saying reasonable dispatch in the circumstances permitted it to delay the voyage.

As to the suggestion that it would not have made any difference if our arguments were correct and his Honour’s comment that this was not a case which turned on onus, we submit no significance is to be given to that because it was said in the context of his Honour’s approach, which involved the anticipation of the weather conditions being considered by his Honour, to be quite irrelevant as a result of Gamlen.

Your Honours, as to the submissions concerning fortuity, my learned friend accepted that there is a notion of fortuity in the “perils of the sea” expression and that that was in contradistinction to the ordinary action of the wind and waves and one sees that in the cases and in the Marine Insurance Act so one has to look at that concept of ordinary action of the wind and wave and the question of whether the damage has resulted from that.  When one does, one sees that those two concepts are relative ones.  Ordinary action of the winds and waves is obviously relative to where the vessel is and when it is there.  The ordinary action of the wind and waves is, no doubt, very different on Sydney Harbour to what it is on the Great Australian Bight.

The evidence indicated that these conditions were to be expected.  They were, therefore, within the range of what was ordinary for the Great Australian Bight.  Certainly, the carrier did not prove the contrary.  In fact, the carrier led that evidence.  Likewise, the question of whether it is the ordinary action of the wind and waves which inevitably leads to damage is relative to the vessel that one is talking about.  If one sends the QE2 into the Great Australian Bight, a storm of the magnitude with which we are concerned here, one would not expect, would trouble it particularly, but if one sent a row‑boat out there, obviously one would expect damage or a sinking of the vessel.

Now it was for the carrier here to prove where, in that spectrum, its vessel fell.  The carrier might have set out to show, “We anticipated the storm but we reasonably anticipated that our vessel could handle it and we reasonably anticipated that the pounding would not cause damage.  Your Honours will recall the Hecht Levis decision my learned friend just referred to.  It is interesting that in that decision, the 1941 decision, the storms were said to be no more than could be expected but the pounding was said to be unusual.  Now that is something that the carrier could have embarked upon here.  It could have said, “All right, we expected the storm but there was something about the pounding here that was unexpected” and therefore it was not anticipated, the particular casualty was not anticipated in the sense referred to in the American authorities.

Alternatively, it could be put in this way, that in Neter, to which my learned friend just referred, the judge said, “Well, there must be something fortuitous in the circumstances”, and what he said was there fortuitous was the damage that actually occurred.  The carrier here did not set out ‑ ‑ ‑

McHUGH J:   Well, that is not quite what he says.

MR MACFARLAN:   It is a summary, your Honour, hopefully an accurate one.

McHUGH J:   Did he not say that it was the stowing due to the weather and which was beyond ordinary wear and tear that constituted the peril of the sea?

MR MACFARLAN:   Yes.

McHUGH J:   It is really using the harm‑causing act as a compound conception to embrace.....damage to something by reason of something.

MR MACFARLAN:   Yes.  The corresponding events here would be the pounding of the vessel on the sea causing the coils in the container to dislodge and thereby damaging the coils and the containers.  It would have been open to the carrier here to embark on an attempt to prove that that was fortuitous in the sense of being unforeseen in these types of weather conditions, that these conditions, severe as they were, could not reasonably have been expected to cause that sort of damage.  There again, the carrier would not have got to the guarding against option because there would not have been an anticipation of damage being caused by the event of the sea.  But, not having done all that, it really had to resort to the final point which was that it had to show that it had an excuse for being there.  If one finds that there weree ordinary seas, expected seas as here, and damage occurs, it is virtually a res ipsa loquitur situation.

McHUGH J:   Yes, but your problem is this, is it not, that the hypothesis is that the ship is seaworthy, that the goods have been properly stowed and there is no negligence in their packing?  So, if you have a seaworthy ship and nevertheless damage is caused, why is that not itself powerful evidence that the damage was a result of the peril of the sea?

MR MACFARLAN:  Because, your Honour, the finding of “seaworthiness” was by reference not to the seas that were encountered but to another standard, because obviously the vessel was not seaworthy by

reference to the seas that were both expected and encountered because it did not handle them.  That may not have been the fault of the carrier.  It could not handle these seas, and that is obvious.  That is the problem.  The vessel was either unable to handle the seas, in which case it should not be in the area at all, as we suggested is one possibility, or something more can be done with the vessel to make sure it can handle the seas.  But one or the other of those explanations has to be proffered and proved by the carrier.  That is what I want to put in the case in‑chief, your Honour.

So far as the notice of contention is concerned, there is an insufficiency of packing point taken, but the point seems to be - the finding was that this was the usual sort of packing, and somehow the shipper, the cargo owner, should have anticipated these seas.  But the cargo owner sitting there in Sydney does not know which way the ship is going to go, or there is certainly no evidence that it is going to be heading across the Great Australian Bight into seas that might be expected by a carrier at that time of year in that place.  But there is no occasion to criticise the shipper for not doing something beyond the normal to cater for that sort of situation in which the carrier has elected to put itself. 

The other matter raised in the notice of contention that I need to advert to is rule 2(q) - some reliance on that.  But there has been no discharge of the onus of showing absence of fault in relation to (q) in the same way that I have put that there has been no discharge of the obligation to show that the event said to be a peril of the sea could not be guarded against in relation to 2(c), so it does not really add anything.  If we are right about 2(c) then we are also right about 2(q).  If the Court pleases.

GAUDRON J:   Yes, thank you.  I suppose you have a right to reply on the notice of contention, have you?

MR SULLIVAN:   Yes.  I do not wish to exercise that though, thank you, your Honour.

GAUDRON J:   Thank you, Mr Sullivan.

MR SULLIVAN:   Before we adjourn, we refer in our written submissions to some Singaporean cases.  May we hand up copies of those to your Honours.

GAUDRON J:   Yes, thank you.  That can be done when the Court adjourns.  The Court will consider its decision in this matter.

AT 3.20 PM THE MATTER WAS ADJOURNED