Court of Appeal, Singapore
Wee Chong Jin CJ, Lai Kew Chai, AP Rajah J
28 April 1983
KEYWORDS
Bill of Lading – Cargo Claim – Breach of agreement to store goods in ‘strong room or locker room’ – Goods lost and damaged – Fundamental Breach and Deviation argued – Entitlement of Carrier to Rely on Liability Limitation in s. 4(5) of US Carriage of Goods by Sea Act 1936 – Effect of ‘in any event’ in s. 4(5) similar to Art. IV(5) of Hague and Hague Visby Rules
FACTS AND DECISION
Seventeen packages of Parker writing instruments were carried from San Francisco to Singapore under a bill of lading. It was agreed that the goods would be carried in ‘strong room or locker room’. However, it was not carried in such room. The value of the goods were not declared in the bill of lading. Five packages were lost and three were damaged resulting in loss of more than USD86,000. The consignee sued the carrier for the loss.
The applicable law was US Carriage of Goods by Sea Act 1936, which had largely adopted the Hague Rules (although US is not a subscriber of the Rules). Sec. 4(5) of the Act provided for liability-limitation in the sum of USD500 per package when value was not declared. The s. 4(5) read as follows:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States or in case of goods not shipped in packages per customary weight unit or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
The carrier sought to limit its liability to $500 per package as per the section. The consignee argued that this was a case of fundamental breach or deviation, that is, the carrier embarked on a performance that was different from that contracted for, so that the carrier should not be entitled to rely on the statutory liability-limitation.
However, the court disagreed. The court placed emphasis on the words ‘in any event’ in the section and held that it covers the scenario in question. Hence, the court held that the carrier was entitled to rely on the liability limitation in the section.
OBSERVATION
A similar decision was reached by the English Court of Appeal in Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd, The Kapitan Petko Voivoda [2003] EWCA Civ 451; [2003] 1 All ER (Comm) 801; [2003] 2 Lloyd’s Rep 1; (2003) Times, 17 April; [2003] All ER (D) 46 (Apr) where the contract provided for carriage ‘under deck only’ but the goods were carried on deck and damaged. The court held that despite this serious breach, the carrier was entitled to rely on the Hague Rules Art. IV(5) liability-limitation because it was applicable ‘in any event’. The Art. IV(5) is materially similar to the s. 4(5) except in the amount of the liability limitation.
The Art. IV(5) reads as follows:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding £100 per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
It is opined that despite the appellate courts having favoured a literal reading of the words ‘in any event’, the doors for judicial ingenuity to refuse the liability-limitation regime in cases of serious breach is not closed. Arguably, the agreement such as to carry under deck or in a strong room can be treated as a collateral contract separate from the main carriage contract but embodied in the bill of lading that will be transferred with the bill.
Overview by ARUN KASI