Shipping Corp of India Ltd v Gamlen Chemical Co A/Asia Pty Ltd
147 CLR 14232 ALR 609
(Decision by: STEPHEN J)
Between: SHIPPING CORP OF INDIA LTD
And: GAMLEN CHEMICAL CO A/ASIA PTY LTD
Judges:
Gibbs J
Stephen JMason J
Aickin J
Wilson J
Subject References:
Shipping
Judgment date: 12 December 1980
Canberra
Decision by:
STEPHEN J
This appeal involves interpretation of the Hague Rules. During heavy weather in the Great Australian Bight, the severity of which was unusual but not unforeseeable, a number of drums of cleaning solvent stowed in a ship's hold broke adrift, were damaged and their contents lost. The means of securing them in place in the hold had been inadequate.
The trial judge held that the heavy weather was a peril of the sea and that the carrier should escape liability despite its failure properly to stow the drums. It was entitled to rely on Art. IV, r. 2 (c) of the Hague Rules, which relieves a carrier from responsibility for loss or damage arising from perils of the sea. The Court of Appeal held to the contrary and allowed the cargo owner's appeal. Hence the carrier's present appeal to this Court.
The Hague Rules, scheduled to the Sea-Carriage of Goods Act 1924 (Cth), applied. Accordingly the carrier was, under the contract of carriage, "subject to the responsibilities and liabilities, and entitled to the rights and immunities" set out in the Rules: Art. II. By Art. III r. 2 one of its responsibilities was, "Subject to the provisions of Article IV", to "properly and carefully . . . stow" the drums. By Art. IV, r. 2 (c) one of its immunities was freedom from responsibility for "loss or damage arising or resulting from . . . perils, dangers and accidents of the sea". The trial judge held, correctly as the appellant contends, that the effect of the opening words of Art. III, r. 2 is to subordinate that rule to the provisions of Art. IV.
The precise nature of the carrier's breach of responsibility is of importance. What is proper stowage will, in any particular case, depend on all the circumstances, including the nature of the particular goods and the conditions of weather and of sea likely to be encountered on the voyage. The trial judge found that the stowage was not proper and careful because the carrier failed so to secure the drums in the hold that they would not break loose in heavy weather, such as might from time to time be experienced in the Bight and which ought therefore to have been anticipated as something to guard against. His Honour accepted the expert evidence of a Captain Downes that these drums, stowed as they were in a forward hatch, should have been well secured "in view of the expected rough weather"; also the expert evidence of a Captain Goodson that properly stowed cargo would have withstood weather such as the ship experienced. His Honour's conclusion was that "for a voyage through the Great Australian Bight, the stowage of the goods was inadequate. This is particularly so where the voyage was in winter when bad weather was more likely to be encountered ".
It is significant that the measure of the carrier's duty of proper stowage was related to the kind of heavy weather which might be anticipated. It is surely curious that that very weather, when in fact encountered, should operate to excuse the carrier from responsibility for the improper stowage.
The consequences of such an outcome are farreaching. Because of the opening words of Art. III, r. 2, "Subject to the provisions of Article IV", the carrier's responsibility for proper stowage will have no practical significance if damage to cargo occurs in conditions which amount to a peril of the sea. As heavy weather, although anticipated and not unusual, will be such a peril, it seems to follow that no carrier need ever be concerned to stow cargo so as to protect it against such anticipated weather. Carriers will, under Art. IV r. 2 (c), always be excused from responsibility for any shifting of cargo in heavy weather, however inadequate the stowage.
To state these propositions is enough to raise doubts whether the Hague Rules indeed produce consequences such as these, which have, I believe, been unappreciated to date and which appear to receive no express recognition in the decided cases.
There are, I think, three underlying features of the appellant's argument which need to be examined: the effect sought to be attributed to the opening words of Art. III, r. 2; the notion that in the present case improper stowage and heavy weather were concurrent causes of the damage to the drums; the related contention that, regardless of the existence of the first of these causes, the second might be relied upon to invoke the immunity conferred by Art. IV, r. 2 (c). Each I regard as involving error; each contributes to the consequences contended for by the appellant. The meaning of "perils of the sea" in the context of Art. IV, r. 2 (c) also calls for brief mention.
The opening words of Art. III, r. 2, "Subject to the provisions of Article IV", provide the substantial basis for the appellant's argument. To give them the operation contended for reliance is principally placed upon some observations by Lord Pearson in Albacora S.R.L. v. Westcott & Laurance Line Ltd. (1966) 2 Lloyd's Rep 53, at p 64 . His Lordship there said:
"There is no express provision, and in my opinion there is no implied provision in the Hague Rules that the shipowner is debarred as a matter of law from relying on an exception unless he proves absence of negligence on his part. But he does have to prove that the damage was caused by an excepted peril or excepted cause, and in order to do that he may in a particular case have to give evidence excluding causation by his negligence. It was proved in this case that the shipowner was not negligent."
This passage is manifestly concerned with onus of proof. It does not say that if the carrier is negligent, he may nevertheless rely on an exception; rather the contrary, it stresses that the carrier must prove that the damage was caused by an excepted peril so that where it was negligence that caused the damage the exception will be of no avail .
The appellant also relies upon what was said by their Lordships in Maxine Footwear Co. Ltd. v. Canadian Government Merchant Marine Ltd. (1959) AC 589, at pp 602-603 :
"Article III, rule 1, is an overriding obligation . If it is not fulfilled and the non-fulfilment causes the damage the immunities of article IV cannot be relied on. This is the natural construction apart from the opening words of article III, rule 2. The fact that that rule is made subject to the provisions of article IV and rule 1 is not so conditioned makes the point clear beyond argument."
The passage does, with respect, do no more than draw attention to the difference between rr. 1 and 2 of Art. III, only the latter being expressed to be subject to the provisions of Art. IV. It says nothing about the significance of the subjection of r. 2 to Art. IV.
As against such support for the appellant's contention as these passages may be thought to provide, there is a long line of authority to the contrary. It holds that an exemption such as Art. IV r. 2 (c) provides cannot be relied upon where there has been what the cases commonly describe as negligence on the carrier's part, that is, breach of a term of the contract by the carrier, nowadays of a term requiring diligence or the exercise of care. Authority to this effect begins well before the Hague Rules. The cases include Steel v. State Line Steamship Co. (1877) 3 App Cas 72 ; The Xantho (1887) 12 App Cas 503 especially per Lord Herschell (1887) 12 App Cas, at pp 510-511 and per Lord Macnaghten (1887) 12 App Cas, at pp 516-517 , Hamilton Fraser & Co. v. Pandorf & Co. (1887) 12 App Cas 518 especially per Lord Halsbury (1887) 12 App Cas, at p 524 , and per Lord Watson (1887) 12 App Cas, at p 526 ; The Glendarroch (1894) P 226, at pp 231-234 especially per Lord Esher M.R. In Paterson Steamships Ltd. v. Canadian Co-operative Wheat Producers Ltd. (1934) AC 538, at p 545 , Lord Wright described the position before adoption of the Hague Rules as being one in which "If then goods were lost (say) by perils of the seas, there could still remain the inquiry whether or not the loss was also due to negligence or unseaworthiness. If it was, the bare exception did not avail the carrier."
The appellant agrees that this was so but contends that, with the advent of the Hague Rules, which it says forms an exclusive code, a quite different situation arose as is shown by the opening words of r. 2 of Art. III. 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.
Soon after the adoption of the Hague Rules, Viscount Sumner spoke of this order of proof in a case not in itself involving the Hague Rules, F. C. Bradley & Sons Ltd. v. Federal Steam Navigation Co. Ltd. (1927) 27 DLR 395 , at p 396 but which, in the same year, Wright J. described as summing up "principles equally relevant" to the Hague Rules - Grosse Millerd v. Canadian Government Merchant Marine Ltd. (1927) 2 KB 432 , at p 437 . What Wright J. said in that case 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 - Goodwin, Ferreira & Co. Ltd. v. Lamport & Holt Ltd. (1929) 34 L1L Rep 192, at pp 194-195 per Roche J.; Stag Line Ltd. v. Foscolo Mango & Co. (1932) AC 328 , a deviation case, especially per Lord Buckmaster (1932) AC, at p 335 , per Lord Atkin (1932) AC, at p 340 , per Lord Russell (1932) AC, at p 347 , and per Lord Macmillan (1932) AC, at p 348 ; the Paterson Steamships Ltd. Case (1934) AC 538 ; Canadian National Steamships v. Bayliss (1937) 1 DLR 545 , at p 547 ; Svenska Traktor Akt. v. Maritime Agencies (Southampton) Ltd. (1953) 2 QB 295 , at p 302 per Pilcher J.; Leesh River Tea Co. Ltd. v. British India Steam Navigation Co. Ltd. (1967) 2 QB 250 , at p 271 per Sellers L.J. and per Salmon L.J. (1967) 2 QB at p 278 Three Canadian decisions supply very recent authority: Charles Goodfellow Lumber Sales Ltd v. Verreault, Hovington & Verreault Navigation Inc. (1971) 1 Lloyd's Rep 185, at p 188 ; Falconbridge Nickel Mines Ltd. v. Chimo Shipping Line (1973) 2 Lloyd's Rep 469, at p 473 ; and The Washington (1976) 2 Lloyd's Rep 453, at p 459 .
These cases, while they may disclose interesting differences of view concerning what is a peril of the sea and where in particular cases the onus lies, are at one in treating the existence of a breach of the carrier's obligations, if relevant to the damage to the goods, as preventing successful reliance upon an excepted peril such as that of perils of the sea. None reveals that dramatic change in the carrier's position in this regard which the appellant contends occurred when the Hague Rules were adopted. Some indeed, such as Stag Line, especially at p. 340 per Lord Atkin and at p. 346 per Lord Russell, specifically advert to and deny it. The Court of Appeal has in the present case not only also denied it but has convincingly demonstrated why it has not occurred.
To reject the appellant's contention is not to treat the opening words of Art. III, r. 2 as nugatory. As was pointed out on behalf of the respondents, the opening words of Art. III, r. 2 do have useful work to do quite apart from the role which the appellant's argument would assign them: their proper field of operation may be seen from an examination of the terms of r. 2 (a) and (b), and rr. 4, 5 and 6 of Art. IV.
The two further features of the appellant's argument concerned its approach to causes of damage to the drums. It treated the heavy weather and the improper stowage as concurrent causes, each of which was an equally efficient cause of the damage to the drums. The appellant also contended that if both were indeed causes, the carrier could rely on one, the heavy weather, to invoke the exceptions, despite the existence of the other, the improper stowage. Now, what happened in this case was that the stage was set for damage to be suffered by the drums as soon as they had been stowed in the hold without adequate restraint. Were heavy weather to be encountered, they would break loose and suffer damage. In these circumstances what was said by Lord Wright in Smith, Hogg & Co. v. Black Sea and Baltic General Insurance Co. (1940) AC 997, at p 1004 is much in point. His Lordship there said of contracts for the carriage of goods by sea:
"From the nature of the contract, the relevant cause of the loss is held to be the unseaworthiness or the negligence as the case may be, not the peril of the sea, where both the breach of the fundamental obligation and the objective peril are co-operating causes. The contractual exception of perils of the seas does not affect the fundamental obligation, unless the contract qualifies the latter in express terms."
His Lordship went on to point out that if the carrier's negligent act is "a" cause of the damage, then that is enough to saddle the carrier with liability. He referred to the judgment of Scrutton L.J. in The Christel Vinnen (1924) P 208 and said (1940) AC, at p 1007:
"The sole question, apart from express exception, must then be: 'Was that breach of contract "a" cause of the damage'. It may be preferred to describe it as an effective or real or actual cause though the adjectives in my opinion in fact add nothing. If the question is answered in the affirmative the shipowner is liable though there were other co-operating causes, whether they are such causes as perils of the seas, fire and similar matters, or causes due to human action, such as the acts or omissions of the master, whether negligent or not or a combination of both kinds of cause."
Monarch Steamship Co. Ltd v. Karlshamns Oljefabriker A/B (1949) AC 196, although again a case of unseaworthiness, is also much in point since the improper stowage in the present case was a condition which, like unseaworthiness, existed long before the happening of the damage to the cargo. Accordingly, while noting the observations of Devlin J. in Heskell v. Continental Express Ltd. [1950] 1 All ER 1033 , at pp 1047 1048 , Lord Wright's views in this case, like those of his Lordship in Smith, Hogg (1940) AC 997 , can, I think, be treated as directly applicable. Lord Wright said in Monarch Steamship (1949) AC, at p 227 :
"But unseaworthiness as a cause, operates immediately whenever it comes into effect; it has until then only been dormant. The maxim causa proxima non remota spectatur is either meaningless or misleading until 'remota' and 'proxima' are defined. Thus unseaworthiness as a cause cannot from its very nature opeate by itself; it needs the 'peril' in order to evince that the vessel or some part or quality of it, is less fit than it should have been and would have been if it had been seaworthy, and hence the casualty ensues. A fitter ship would have passed through the peril unscathed. In this way unseaworthiness is a decisive cause or as it is called a dominant cause."
To regard both of the causes in the present case as of equal effectiveness is therefore mistaken. The inadequate stowage was here the decisive or dominant cause, only waiting upon heavy weather before it might take effect. The damage to the drums was not such damage "arising or resulting from" a peril of the sea as Art. IV, r. 2 speaks of; the effective cause of that damage was the inadequate stowage.
It only remains to refer to the trial judge's characterization of the heavy weather encountered by the vessel as a peril of the seas. This was a critical step in his Honour's analysis which, if departed from, would provide another and quite distinct ground upon which to uphold the dismissal of this appeal. The matter was not argued at all before the Court of Appeal and was dealt with quite briefly on this appeal. In Skandia Insurance Co. Ltd. v. Skoljarev (1979) 142 CLR 375 Mason J. has very recently examined in considerable detail the concept of perils of the sea but has done so exclusively in the context of marine insurance. The phrase has long been said in the English authorities to have the same meaning in bill of lading cases as it has in marine insurance. However it is equally well-established that the result of identifying an event or circumstance as such a peril will not be the same in each of the two cases; if accompanied by negligence on the part of an insured, that will usually be immaterial; but a carrier's accompanying negligent breach of duty may be critical. No doubt in neither need an event or circumstance be extraordinary for it to qualify as a peril of the sea. But whether or not, in bill of lading cases, it can qualify as a peril of the sea if it is foreseeable and could have been guarded against is a matter upon which there is modern conflict of authority, as reference to the discussion in the Goodfellow Lumber Sales Case (1971) 1 Lloyd's Rep 185 discloses. For present purpose I find it unnecessary to do more than expressly reserve my opinion on the issue, which the trial judge determined in a manner different from that of the Canadian Supreme Court in the last mentioned decision.
I would dismiss this appeal.