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[1956] HCA 57
High Court of Australia
1956-07-01
Taylor J
Original judgment source is linked above.
For the reasons which have been given I am of opinion that this Court has no jurisdiction to entertain this action. But since the merits of the case have been litigated before me and my view on this point may be held to be erroneous I propose, briefly, to express the conclusions which I have reached on the other issues in the case.
In so far as the claim for damages is based upon the allegation that due diligence was not exercised in caring for the goods whilst they were at Glebe Island and Pyrmont no substantial question of law arises; there is no doubt that the plaintiff would be entitled to recover upon proof of this allegation in any competent court. But it is not so clear that the plaintiff would be held entitled to damages, merely, in respect of deterioration in the goods occurring during the period of delay consequent upon the collision. No doubt the plaintiff considered that it was entitled to recover damages in respect of any loss resulting from this delay but the statement of claim as originally drawn did not, in my view, make such a claim and it was not until the evidence had been concluded that such a claim was expressly added. As already indicated the plaintiff maintained that the question of the shipowner's liability should, in the circumstances of the case, be determined on the basis that he was a common carrier of the goods in question. This result was said to flow from the rescission by the plaintiff of the contracts of carriage after it had been discovered, on 20th October 1952, that the goods had been improperly stowed on deck. In support of this contention reliance was placed on the decision in Hain Steamship Co. Ltd. v. Tate & Lyle Ltd. [1] and on the passage already referred to in Scrutton on Charter Parties and Bills of Lading, 16th ed. (1955), p. 298. In the case referred to the House of Lords was concerned with the position of a cargo owner who, with full knowledge that the ship upon which his goods were being carried had, in breach of the contract of carriage, deviated from the contract voyage, had expressly waived the breach. The result of the waiver, according to their Lordships, was that the contract of carriage remained in full force and effect notwithstanding the deviation. In the action the cargo owner had sought the return of moneys deposited on account of a liability to make a general average contribution and, in the result it was held that it was not entitled to recover such moneys. In the present case it seems to have been assumed that the case is an authority for the proposition that where there has been a deviation, or other fundamental breach of a contract of carriage, the cargo owner will remain bound by all the terms of the contract and the shipowner will be entitled to rely upon any relevant term of the contract for his protection unless the contract is rescinded. But the decision in that case in no way detracts from the rule that where, unknown at the time to a cargo owner, there has been a wrongful deviation, the shipowner is not entitled to rely upon the exceptions prescribed by the rules under the Sea Carriage of Goods Act. In such a case he will not escape liability for loss of or damage to cargo, unless he can show that the loss or damage was occasioned either by an act of God or by the Queen's enemies or as the result of inherent vice in the goods and, in addition, that such loss and damage would have occurred even if there had been no deviation (see Joseph Thorley Ltd. v. Orchis Steamship Co. Ltd. [2] ; James Morrison & Co. Ltd. v. Shaw, Savill & Albion Co. Ltd. [3] ; A/S Rendal v. Arcos Ltd. [4] ; Stag Line Ltd. v. Foscolo, Mango & Co. Ltd. [5] ). "Practically", as the learned authors of Scrutton on Charter Parties and Bills of Lading, 16th ed. (1955), p. 298, observes, "proof of the second proposition is hardly possible as regards any cause of loss except inherent vice of the goods."
Upon what I conceive to be a mistaken view of the decision in the Hain Steamship Co. Ltd. Case [1] , counsel for the plaintiff sought to establish that the contracts of carriage had been rescinded. This, in my opinion, the plaintiff failed to establish for at the time it purported to rescind them the contracts had already been rescinded by mutual agreement. On 23rd October 1952, the parties agreed that the goods should be sold in Sydney and this was sufficient to put an end to the contract of carriage. It was of no consequence, on this aspect of the case, that the agreement between the parties was that the goods should be sold without prejudice to any rights or claims of the parties for an agreement was made which had the effect of bringing the contracts of carriage to an end. The only matters which were left outstanding, and which were not affected by that agreement, were the outstanding claims, if any, which the plaintiff, in fact, then had against the shipowner. It was however unnecessary for the plaintiff to establish that the contracts had been rescinded for no situation had previously arisen which required him to elect, either, to affirm the contracts or to treat them as at an end.
It was contended at the hearing that, although the principles applicable in cases of deviation apply generally to cases where goods have, in breach of the contract of carriage, been carried on deck a shipowner will escape liability in the latter circumstances if he is able to show that the loss or damage complained of would have occurred even if the goods had been properly stowed. Whether or not the same consequences follow in each case may, perhaps, be open to doubt but it is clear that a breach of the latter character constitutes sufficient ground upon which a cargo owner may, in the language of Lord Atkin in the Hain Steamship Co. Ltd. Case [1] , elect to treat the contract as at an end and, further, the decision in Royal Exchange Shipping Co. Ltd. v. W. J. Dixon & Co. [2] is sufficient authority for saying that, where no case for election on the part of the cargo owner has arisen, the shipowner is precluded from relying upon any excepted cause of damage. There is, it may be observed, every reason why this should be so for improper stowage on deck must operate to give an entirely different significance, in the performance of the contract, to the exceptions - or at least many of those - specified in art. IV, r. 2 of the Rules of the Sea Carriage of Goods Act. It was however pressed upon me by counsel for the defendant that in cases where it can be established that the loss or damage resulting from an excepted cause would have occurred even if the goods had been stowed below deck the shipowner is entitled to rely upon the exception. This, it is said, is such a case but I confess that I can find no warrant for the suggested qualification upon the liability of a shipowner in such circumstances. It is, however, unnecessary to pursue the matter for, in my view, no damage to the goods resulted from the delay consequent upon the collision.
I have already indicated that the evidence satisfied me that no damage was caused to the plaintiff's goods by the manner of their stowage on the deck of the Shahzada and that when re-landed at Glebe Island they had not suffered damage from water or any other cause. To this should be added - though it seems scarcely necessary - that the delay which supervened upon the collision in which the vessel was involved, was in no way a consequence of or connected with the improper stowage of the plaintiff's goods on her deck. Nevertheless, it was a consequence of the collision and if damage was thereby caused the plaintiff would be entitled to recover. So far as the subsequent storage at Glebe Island and Pyrmont is concerned I should, except for one significant fact to which no reference has yet been made, have been disposed to think that there was some undue deterioration in the condition of the goods at the time when it was decided that they should be sold at auction. But I do not mean by this statement that they had suffered water damage or that the form of storage adopted did not constitute a sufficient external protection to them; if damage did result during this period it was because the manner of their storage was unsuitable for perishable goods of this character and not because of any lack of diligence in sufficiently maintaining the form of protection which, in fact, had been provided. If damage did ensue it was because they were perishable goods and their deterioration was accelerated by a lack of ventilation and consequent excessive warmth. But when the plaintiff's hides were sold on 4th December 1952 they realised prices commensurate with those then current for prime quality hides sold for export and the hides were, in fact, thereafter exported. A hide and skin merchant, who was the successful bidder for nearly three hundred of the plaintiff's hides, gave evidence in the case and he says that on the day before the sale he inspected the total offering. According to his evidence the hides showed no signs of deterioration which affected their value and that the prices realised for the plaintiff's hides on the following day were "just about the top mark that day". There were, it should be noticed, large quantities of hides other than those which had been removed from the Shahzada submitted for auction on that occasion. The same witness also said that the hides purchased by him were subsequently exported to Europe. The evidence of a representative of the Farmers & Graziers' Co-op. Grain Insurance & Agency Co. Ltd., however, seems to suggest that the prices obtained were slightly below those prevailing for hides of prime quality sold for export. He said that the prices may have varied by one and one half-penny per pound though evidence given by him earlier tends to show that there was no such disparity at all. But the purport of his evidence is not that the condition of the hides was responsible for any diminution in their value; on the contrary it is said that the fact that the hides were being offered for sale for export a second time might well have produced this result. It seems clear enough that it was known to the trade that the plaintiff's hides had been removed from the Shahzada after the collision in September and then stored pending transhipment and these circumstances were not calculated to enhance the prices obtained for them at auction. All in all, the prices obtained seem to indicate that they had suffered no material damage and the fact that they were then fit for export is demonstrated by the fact, which sufficiently appears, that all of the hides sold on the plaintiff's account that day were subsequently exported.
In answer to these considerations the plaintiff points to the fact that, in October 1952, it was agreed that the hides should not be transhipped but should be sold in Sydney. The fact that the parties so agreed, it is contended, is the strongest possible evidence that the hides were not then in a fit condition to be exported. Indeed the plaintiff goes further and asserts that the parties then agreed that this was so. But the evidence does not establish that either party formed any such judgment or that they so agreed; at the most the evidence shows that they were prepared to adopt the course suggested by Mr. Tulloch whose view, it may be said, appears to have been influenced substantially by factors other than the apparent condition of the hides. As already appears the only evidence of what occurred when the inspection was made on 20th October 1952 is that given by Mr. Jarvis. The inspection, itself, appears to have been a spot or random check and, though according to the evidence, some of the hides exhibited small patches of salt burn - which were not necessarily due to improper methods of storage - no comment was made by Mr. Tulloch concerning the others which were examined. His final observation appears to have been that he "could not recommend the hides being forwarded on to Japan having regard to the length of time they had been in the bags and the further fact that at least another month would elapse before they would be available for delivery there." "By that time" he felt "serious depreciation could take place." Thereupon Mr. Jarvis said that the shipowner was prepared to accept that advice and added that if the owners agreed and wished the hides to be disposed of in Sydney they should let him have instructions in writing and he would make the necessary arrangements. The letter of 23rd October followed and arrangements were thereafter made for the sale of the goods. This oral evidence is in no way disputed and, though it may show that the parties were prepared to act upon the advice tendered to them, it does not establish that they agreed that the hides were then unfit for export, or, that they had been damaged as the result of some default on the part of the shipowner. Primarily, it was for the plaintiff to say if its hides should be retained for sale in Sydney though, in view of the fact that the shipowner was asserting a general average claim, it was necessary that both parties should agree. But the fact of their agreement that this course should be adopted in the circumstances did not involve the conclusion that there had been any default on the part of the shipowner or conclusively establish that the hides were then in such a condition as to be unfit for export.
In my view these matters were left open by the agreement of the parties. Nevertheless, as I have already said, if the facts relating to the inspection on 20th October stood alone they might well constitute evidence upon which a finding might be made for the plaintiff. But what weight can this evidence carry when the conclusion which it suggests is completely opposed to testimony that a subsequent thorough examination of the hides disclosed no damage? I refer of course to the evidence of Mr. Davis who, on the day after the examination, was prepared to back his judgment by bidding for the hides and by purchasing a large quantity of them at top prices. These, with the balance of the plaintiff's hides, which also realised approximately current prices for prime quality hides, were subsequently exported. These circumstances, at the very least, strongly suggest that Mr. Tulloch was mistaken and the fact that he was not called to give evidence in the case can lend no assistance to the plaintiff in attempting to establish that he was not. In all the circumstances I am of opinion that the plaintiff failed to make out a case and that, even if this Court has jurisdiction, the action should be dismissed.
F Kanematsu & Co Ltd
The Shahzada
High Court of Australia Taylor J. F Kanematsu & Co Ltd v The Shahzada [1956] HCA 57