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

High Court of Australia|1998-10-22|Before: Callinan JJ, Hayne JJ, Wilson JJ, Carruthers J

High Court of Australia Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad [1998] HCA 65

In 1989, forty cases of aluminium can body stock in coils were consigned from Sydney to Keelung, Taiwan. The respondent issued a bill of lading dated 5 October 1989, acknowledging receipt of the goods in apparent good order and condition. The vessel named in the bill as the intended vessel was the MV Bunga Seroja.

The shipper named in the bill was Strang International Pty Ltd (Strang) as agent for Comalco Aluminium Ltd Strang packed the containers in which the cargo was shipped. The appellant was named in the bill as "the notify party" and property in the goods duly passed to it.

The bill provided that it should have effect subject to legislation giving effect to the Hague Rules. By the Sea-Carriage of Goods Act 1924 Cth [1] , the Hague Rules applied to the carriage of the goods. The parties to the bill of lading were deemed by ss 4(1) and 9(1) of that statute to have intended to contract according to the Hague Rules.

s 4(1). This has now been replaced by the Carriage of Goods by Sea Act 1991 Cth, which incorporates the Hague-Visby Rules,

In the course of its passage across the Great Australian Bight, the vessel encountered heavy weather. That weather had been forecast before the vessel left port. Some of the goods were damaged.

Although, as will appear, it is not determinative of the outcome of the appeal, the question to which submissions primarily were directed is the meaning and effect of Art IV, r 2(c) of the Hague Rules that:

Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from -

The appellant contended that: this exception (the "perils of the sea" exception) does not apply if damage to cargo results from sea and weather conditions which could reasonably be foreseen and guarded against; the weather encountered by the Bunga Seroja was foreseen; and the statement of Mason and Wilson JJ in Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd [2] that "sea and weather conditions which may reasonably be foreseen and guarded against may constitute a peril of the sea" is wrong and should not be followed. 1. Gamlen Chemical Co (1980) 147 CLR 142 at 166.

The appellant pleaded that the respondent had failed to meet its responsibility under Art III, r 1 of the Hague Rules to exercise, before and at the beginning of the voyage, due diligence to make the ship seaworthy, to properly man, equip and supply the ship and to make the holds and all other parts of the ship in which the goods were carried fit and safe for their reception, carriage and preservation. It also pleaded failure by the respondent to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried (Art III, r 2). By its defence, the respondent relied upon various immunities specified in Art IV, r 2. In particular, the respondent pleaded that it was not responsible for any loss or damage to the goods arising or resulting from perils of the sea and that any damage to the goods resulted or occurred by reason of that matter.

The trial judge (Carruthers J) entered judgment for the respondent. His Honour concluded [3] :

In my view, the [respondent] has established to the requisite degree that the damage to the subject cargo was occasioned by perils of the sea In summary, the evidence satisfies me that, bearing in mind the anticipated weather conditions: (i) when the Bunga Seroja sailed from Burnie she was fit in all respects for the voyage; (ii) the [respondent] properly and carefully loaded, handled, stowed, carried, kept and cared for the subject cargo; and (iii) there was no neglect or default of the master or other servants of the [respondent] in the management of the ship or cargo.

I am satisfied that the damage to the subject cargo was occasioned by perils of the sea, in that, the pounding of the ship by reason of the heavy weather caused the coils within the container to be dislodged and thereby sustain damage.

The New South Wales Court of Appeal [4] dismissed an appeal. The appeal to this Court also should be dismissed. 1. The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 470-471. 2. Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation, Berhad (1996) 39 NSWLR 683

The facts giving rise to the appeal, and the course of the proceedings below are set out, in detail, in the reasons of other members of the Court and we do not repeat them.

In understanding the operation of the Hague Rules, there are three important considerations. The rules must be read as a whole, they must be read in the light of the history behind them, and they must be read as a set of rules devised by international agreement for use in contracts that could be governed by any of several different, sometimes radically different, legal systems. It is convenient to begin by touching upon some matters of history.

By the early nineteenth century, shipowners had come to be regarded as common carriers by both English and American law [5] . Accordingly, the carrier was strictly liable for damage to or loss of cargo that was damage or loss occurring in the course of carriage unless the carrier could prove not only that its negligence had not contributed to the damage or loss, but also that one of four excepted causes (act of God, act of public enemies, shipper's fault or inherent vice of the goods) was responsible for the loss [6] .

At least where the ship was a "general ship", that is, a ship put up to carry goods for anyone wishing to ship them on the particular voyage on which the ship is bound: see, eg, Laveroni v Drury (1852) 8 Ex 166 at 170[155 ER 1304 at 1306]; Liver Alkali Co v Johnson (1874) LR 9Ex 338 at 340-341. 2. Benedict on Admiralty, 7th ed (rev), vol 2a s11, par 2-1. See also Laveroni v Drury (1852) 8 Ex 166 at 170[155 ER 1304 at 1306]; Nugent v Smith (1876) 45 LJ(CL) 697 at 701; Propeller Niagara v Cordes (1859) 62 US 7 at 22-23

To avoid this liability (sometimes spoken of as tantamount to that of an insurer [7] ) carriers began to include more and wider exculpatory clauses in their bills of lading. In England, it was held that carriers and shippers could agree to terms by which the carrier assumed virtually no liability, even for its own negligence [8] . In Australasian United Steam Navigation Co Ltd v Hiskens [9] , Isaacs J said:

Common law relations based on reasonableness and fairness were in practice destroyed at the will of the shipowners, and as fast as Courts pointed out loopholes in their conditions, so fast did they fill them up, until at last the position of owners of goods became intolerable. In the United States, however, the federal courts held that contractual clauses which purported to exonerate carriers from the consequences of their own negligence were void as against public policy [10] , and strictly interpreted clauses which attempted to exonerate carriers for the failure to provide a seaworthy ship [11] . This did not help United States cargo interests when much of their trade was carried on British ships pursuant to bills of lading containing choice of forum clauses nominating England as the place in which suit must be brought. 1. Forward v Pittard (1785) 1 TR 27 at 33[99 ER 953 at 956], per Lord Mansfield. 2. In re Missouri Steamship Co (1889) 42 Ch D 321. 3. (1914) 18 CLR 646 at 671. 4. See, eg, New York Central Railroad Co v Lockwood (1873) 84 US 357 at 384 Phoenix Insurance Co v Erie and Western Transportation Co (1886) 117 US 312 at 322 Liverpool and Great Western Steam Co v Phoenix Insurance Co (1889) 129 US 397 at 441-442 Compania de Navigacion la Flecha v Brauer (1897) 168 US 104 at 117 5. See, eg, The Caledonia (1895) 157 US 124 at 137; The Carib Prince (1898) 170 US 655 at 659.

These problems led, in the United States, to the Harter Act 1893 [12] . This Act was a compromise between the conflicting interests of carriers and shippers. A carrier could not contract out of its obligation to exercise due diligence to furnish a seaworthy vessel [13] or to relieve it from "liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care or proper delivery of any and all lawful merchandise or property committed to its or their charge" [14] .

46 USC App ss190-196. 2. Harter Act s2, 46 USC App s191. 3. Harter Act s1, 46 USC App s190.

New Zealand, Australia and Canada each passed legislation modelled on the Harter Act: the Shipping and Seamen Act 1903 NZ, the Sea-Carriage of Goods Act 1904 Cth [15] and the Water Carriage of Goods Act 1910 Can. All of these Acts, although modelled on the Harter Act, made some changes to the model. Thus the 1904 Australian Act was, in some respects, more generous to cargo interests than the Harter Act [16] .

Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646 at 672, per Isaacs J. 2. For example, under the Harter Act, statutory exemptions from liability were available if the owner exercised due diligence to make the ship seaworthy and properly manned, equipped and supplied (s3, 46 USC App s192). By contrast, under the Sea-Carriage of Goods Act 1904 Cth, the statutory exemptions were available only if the ship was at the beginning of the voyage seaworthy and properly manned, equipped and supplied (s 8(2)).

Pressure grew for uniform rules. In February 1921, the British Imperial Shipping Committee recommended uniform legislation throughout the British Empire based on the Canadian Act [17] . Draft rules were prepared, considered and amended. By 1922 the Comité Maritime International had adopted a draft. The Diplomatic Conference on Maritime Law then took up the matter and in August 1924 the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading was concluded and opened for signature [18] . Australia enacted the Sea-Carriage of Goods Act 1924 Cth as soon as the final diplomatic steps had been taken [19] .

Sturley (ed), The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 2, p 138. 2. Benedict on Admiralty, 7th ed (rev), vol 2A s15, par 2-14. 3. The Act received the Royal Assent on 17 September 1924; the Convention was concluded and opened for signature on 25 August 1924.

The new rules quickly gained international acceptance, although United States legislation was not passed until 1936 [20] . By the start of World War II "the overwhelming majority of the world's shipping was committed to the Hague Rules" [21] .

Sturley, The History of COGSA and the Hague Rules, Journal of Maritime Law and Commerce, vol 22 (1991) 1, at pp 36-55. 2. Benedict on Admiralty, 7th ed (rev), vol 2A s15, par 2-17. See also Sturley, The History of COGSA and the Hague Rules, Journal of Maritime Law and Commerce, vol 22 (1991) 1, at p 56.

The Hague Rules represent a compromise about the allocation of risk of damage to cargo (a compromise which was different from what had been represented in domestic statutes). Thus, to take only one example, shipping interests gained the advantage in Australia and the United States of elimination of the rule established in McGregor v Huddart Parker Ltd [22] and The Isis [23] . In those cases, the High Court of Australia and the Supreme Court of the United States held that a carrier could claim exemption from liability on the bases set out in the 1904 Australian Act and the Harter Act if (and only if) the carrier had complied with its obligation relating to the seaworthiness of the vessel, regardless of whether the cargo's loss or damage was caused by lack of seaworthiness. Under the Hague Rules, however, some causal connection must be shown between the loss and the matter in respect of which due diligence was not demonstrated (Art IV, r 1).

(1919) 26 CLR 336. 2. May v Hamburg-Amerikanische Packetfahrt Aktiengesellschaft (1933) 290 US 333

The complexity of the history which we have touched on is such that, as Dixon J said in William Holyman & Sons Pty Ltd v Foy & Gibson Pty Ltd [24] , "[t]he case law, English, Australian and American, dealing with other legislation thought to be in pari materia cannot be applied to the Hague Rules, except with great care and discrimination".

Similarly, it may be that similar care and discrimination must be shown in applying decisions about marine insurance to the Hague Rules. Many of the issues which arose under the exempting provisions of bills of lading issued before the Hague Rules find parallels with issues arising under policies of marine insurance. Whether, however, principles developed in connection with one area should be applied in the other was open to argument for many years and may still be so. In Arbib & Houlberg v Second Russian Insurance Co [25] , the Court of Appeals for the Second Circuit identified as follows the distinction drawn in the United States between the two areas:

The phrase "perils of the seas" occurs in bills of lading, where it is used as a ground of the carrier's exemption from liability, and it is also employed in policies of insurance in stating the ground of the insurance company's liability. In the interpretation of the phrase when used in bills of lading, the courts have adopted great strictness, as the carrier is seeking exemption of liability; but in the interpretation of the phrase when used in insurance policies, the courts in many cases have given to it great elasticity of meaning. [26] Further, given the importance of obligations of utmost good faith in insurance law but the absence of any such obligation in a contract for carriage of goods, the possible difficulty resulting from any unthinking application of the decisions made in one area to problems arising in the other is obvious. In addition, the term "perils of the seas" is given a defined meaning in the "Rules for Construction of Policy" contained in the Second Schedule to the Marine Insurance Act 1909 Cth [27] . These are not, however, issues which fall for decision in this case. 1. (1923) 294 F 811 at 816 (2nd Cir). 2. See also Couch, Cyclopedia of Insurance Law, 2nd ed (1982), vol 11, s43:93. 3. Rule 7 states: "The term "perils of the seas" refers only to fortuitous accidents or casualties of the seas. It does not include the ordinary action of the winds and waves."

It is necessary to recall that the rules were reached as a matter of international agreement. Several things follow from their origin.

First, the rules necessarily take a form different from domestic statutes like the Harter Act (and equivalent Australian, Canadian and New Zealand Acts) because, while those domestic acts "were written to be read in the context of domestic law, the new rules were designed to create a self-contained code (at least in the areas it covered) that would not require reference to domestic law" [28] .

Benedict on Admiralty, 7th ed (rev), vol 2A s15, par 2-12.

Secondly, because the rules were created by international agreement, it is not desirable to begin from an assumption that they are to be construed like a contract governed by Australian law or some other common law system.

Thirdly, while any action brought in a national court on a contract of carriage governed by that nation's law will be framed in a way that reflects that law, it cannot be assumed that the rules take the form which they do in order to reflect some particular cause of action or body of learning that is derived from, say, the common law. Thus questions of burden of proof and the like are questions that may well arise in any action brought in a common law court but it cannot be assumed that the Hague Rules reflect, say, the rules about burden of proof as between a bailor and bailee for reward at common law. For this reason, we very much doubt that principles established in cases like The Glendarroch [29] can be used as an aid to construing the Hague Rules [30] . They are principles which apply in common law actions between bailor and bailee but that is very different from using them as some guide to understanding what the Hague Rules mean.

[1894] P 226. 2. cf The "Torenia" [1983] 2 Lloyd's Rep 210 at 216.

At common law, the contract of carriage is one of bailment for reward and under the common law system of pleading the plaintiff sufficiently pleaded its case by alleging non-delivery of the goods. It was for the carrier to set up a contractual exception, such as perils of the sea. To that, the plaintiff might plead a contractual proviso to the exception, namely that the loss was the result of negligence of the carrier. This meant that "negligence" as a matter of construction of the contract "came in as an exception on an exception" [31] . Accordingly, there must be real difficulty in construing the Hague Rules by reference to the common law rules of pleading, particularly when it is understood that, as to the substantive law, "pro tanto the Hague Rules upon their enactment displaced the common law" [32] .

The "Torenia" [1983] 2 Lloyd's Rep 210 at 217. 2. Effort Shipping Co Ltd v Linden Management SA [1998] AC 605 at 622, per Lord Steyn.

The "perils of the sea" exception cannot be properly understood if it is divorced from its context. It is an immunity created in favour of the carrier and the ship and it is necessary, then, to consider what are the responsibilities of the carrier.

Article III is headed "Responsibilities and Liabilities" and Art IV is headed "Rights and Immunities". The responsibilities cast on the carrier by Art III, rr 1 and 2 may be seen as central to an understanding of the Hague Rules and their operation [33] . Those rules provide:

The carrier shall be bound before and at the beginning of the voyage, to exercise due diligence to -

(c) make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.

Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589 at 602-603

Unlike r 2 of Art III, r 1 is not expressed as being subject to the provisions of Art Iv However, the text of r 1 of Art IV indicates that the carrier may establish a claim to exemption in respect of loss or damage that has resulted from unseaworthiness, by proving the exercise of due diligence on its part to make the ship seaworthy. Article IV, r 1 states:

Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of Article III.

Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this section.

The phrase "loss or damage arising or resulting from" appears also in Art IV, r 2. The obligation of the carrier to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried, which is imposed by Art III, r 2, is subject to the denial by par (c) of Art IV, r 2 of responsibility of the carrier for loss or damage arising or resulting from perils, dangers and accidents of the sea or other navigable waters.

Several things may be noted about the obligation imposed upon the carrier by Art III, r 1 to make the ship seaworthy. First, it fixes the time at which the obligation operates as "before and at the beginning of the voyage". It therefore resolves the dispute that had been litigated in relation to time policies and voyage policies of marine insurance about whether a warranty of seaworthiness implied in such a policy was a warranty about the condition of the vessel at the time of sailing, or at the commencement of each of several distinct and different parts of a voyage, or was a warranty extending to the whole of the period of the policy [34] . Secondly, it is not an absolute warranty; the obligation is to exercise due diligence [35] . In cases where loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence is on the carrier (Art IV, r 1). Thirdly, however, seaworthiness is to be assessed according to the voyage under consideration; there is no single standard of fitness which a vessel must meet [36] . Thus, seaworthiness is judged having regard to the conditions the vessel will encounter [37] . The vessel may be seaworthy for a coastal voyage in a season of light weather but not for a voyage in the North Atlantic in mid winter.

Dixon v Sadler (1839) 5 M& W 405 [151 ER 172]; affd (1841) 8 M & W 895 [151 ER 1303]; Gibson v Small (1853) 4 HLC 353[10 ER 499]. 2. cf Dixon v Sadler (1839) 5 M& W 405 at 414 [151 ER 172 at 175], per Parke B; McFadden v Blue Star Line [1905] 1 KB 697 at 703, per Channell J. 3. cf Burges v Wickham (1863) 3 B& S 669 at 683 [122 ER 251 at 256], per Cockburn CJ; at 689-696 [258-261], per Blackburn J (implied warranty of seaworthiness in voyage policy of marine insurance); Kopitoff v Wilson (1876) 1 QBD 377 at 380-381, per Field J (implied warranty of seaworthiness in contract of affreightment); Gibson v Small (1853) 4 HLC 353 at 373[10 ER 499 at 507], per Martin B (implied warranty of seaworthiness of owner of a "general ship"). 4. Huddart Parker Ltd v Cotter (1942) 66 CLR 624 at 663, per Williams J; McFadden v Blue Star Line [1905] 1 KB 697 The Southwark (1903) 191 US 1 at 9.

Thus, definitions of seaworthiness found in the cases (albeit cases arising in different contexts) all emphasise that the state of fitness required "must depend on the whole nature of the adventure" [38] . The vessel must be "fit to encounter the ordinary perils of the voyage" [39] ; it must be "in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured" [40] .

Burges v Wickham (1863) 3 B& S 669 at 695 [122 ER 251 at 260], per Blackburn J. 2. McFadden v Blue Star Line [1905] 1 KB 697 at 703, per Channell J. 3. Dixon v Sadler (1839) 5 M& W 405 at 414 [151 ER 172 at 175], per Parke B; affd (1841) 8 M & W 895 [151 ER 1303].

Further, if the question of seaworthiness is to be judged at the time that the vessel sails, it will be important to consider how it is loaded and stowed [41] . If the vessel is overladen it may be unseaworthy. If it is loaded or stowed badly so, for example, as to make it unduly stiff or tender [42] it may be unseaworthy [43] .

Kopitoff v Wilson (1876) 1 QBD 377 at 379, per Field J. 2. The trial judge found that (The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 463): "A tender ship will be much easier to incline and is slow and sluggish in returning to the upright position. Therefore, the time period taken to roll from side to side will be comparatively long A stiff ship tends to be comparatively difficult to incline and will roll from side to side very quickly. If a ship is thought to be too tender, this can be corrected by raising the ship's centre of gravity. Conversely, if a ship is thought to be too stiff, this can be corrected by lowering the centre of gravity." 3. Kopitoff v Wilson (1876) 1 QBD 377 at 379, per Field J.

Nor is the standard of fitness unchanging. The standard can and does rise with improved knowledge of shipbuilding and navigation [44] .

Burges v Wickham (1863) 3 B& S 669 at 693 [122 ER 251 at 260], per Blackburn J; Tidmarsh v Washington Fire & Marine Insurance Co (1827) 23 FedCas 1197 at 1198 (DC Mass), per Story J; Phillips, A Treatise on the Law of Insurance, 4th ed (1854), p 399; Arnould on Insurance, 2nd ed (1857) s256, pp 712-713.

Fitness for the voyage may also encompass other considerations as, for example, the fitness of the vessel to carry the particular kind of goods or the fitness of crew, equipment and the like. The question of seaworthiness, then, may require consideration of many and varied matters.

Some of these matters find direct expression in the Hague Rules. The obligations to "properly man, equip and supply the ship" and to "make the holds and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation" are found in Art III, r 1(b) and (c).

What is important for present purposes is not the detailed content of the obligation to make the ship seaworthy, it is that making the ship seaworthy (or, as the Hague Rules provide, exercising due diligence to do so) requires consideration of the kinds of conditions that the vessel may encounter. If the vessel is fit to meet those conditions, both in the sense that it will arrive safely at its destination and in the sense that it will carry its cargo safely to that destination, it is seaworthy.

Further, under the Hague Rules, not only must the carrier exercise due diligence to make the ship seaworthy (Art III, r 1) with the burden of proving the exercise of due diligence whenever loss or damage arises or results from unseaworthiness (Art IV, r 1), but "[s]ubject to the provisions of Article IV", it "shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried" (Art III, r 2). Whether the goods are properly and carefully stowed must also depend upon the kinds of conditions which it is anticipated that the vessel will meet. The proper stowage of cargo on a lighter ferrying cargo ashore in a sheltered port will, no doubt, be different from the proper stowage of cargo on a vessel traversing the Great Australian Bight in winter.

Thus, the performance of the carrier's responsibilities under Art III, rr 1 and 2 will vary according to the voyage and the conditions that may be expected.

In the present case, the trial judge found that when the Bunga Seroja sailed from Burnie she was fit in all respects for the voyage and that the respondent had properly and carefully loaded, handled, stowed, carried, kept and cared for the subject cargo [45] . It followed from those findings that the respondent, the carrier, had discharged its responsibilities under Art III, rr 1 and 2. There was thus no loss or damage to the goods arising or resulting from unseaworthiness of the ship and no question arising under Art IV, r 1 as to whether such loss or damage having occurred it had been caused by want of due diligence on the part of the carrier to make the ship seaworthy. Nor if, as Carruthers J found, the carrier had properly and carefully loaded, handled, stowed, carried, kept and cared for the subject cargo (thereby discharging its responsibility under Art III, r 2) did any question arise of the immunity from what otherwise would be the responsibility of the carrier, by reason of the loss or damage having arisen or resulted from any act, neglect or default of the master in the navigation or in the management of the ship (Art IV, r 2(a)) or from perils of the sea (Art IV, r 2(c)). Nevertheless, his Honour went on to make express findings both that the damage to the cargo was occasioned by perils of the sea and that there was no neglect or default in the master or other servants of the respondent in the management of the ship.

The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 471.

Notwithstanding the above, as the meaning and application of the "perils of the sea" immunity conferred by par (c) of Art IV, r 2 was put in issue on the appeal, it is appropriate to deal further with it.

Because the Hague Rules are intended to apply widely in international trade, it is self-evidently desirable to strive for uniform construction of them. As has been said earlier, the rules seek to allocate risks between cargo and carrier interests and it follows that the allocation of those risks that is made when the rules are construed by national courts should, as far as possible, be uniform. Only then can insurance markets set premiums efficiently and the cost of double insurance be avoided [46] .

Sturley, International Uniform Laws in National Courts: The Influence of Domestic Law in Conflicts of Interpretation, Virginia Journal of International Law, vol 27 (1928) 729, at p 736.

In Gamlen [47] , Mason and Wilson JJ note that:

[t]here is a difference between the Anglo-Australian conception of "perils of the sea" and the United States-Canadian conception. According to the latter, "perils of the sea" include losses to goods on board which are peculiar to the sea and "are of an extraordinary nature or arise from irresistible force or overwhelming power, and which cannot be guarded against by the ordinary exertions of human skill and prudence": The Giulia [48] adopting Story on Bailments, s 512(a). In the United Kingdom and Australia it is not necessary that the losses or the cause of the losses should be "extraordinary" [49] . Consequently sea and weather conditions which may reasonably be foreseen and guarded against may constitute a peril of the sea. When reference is made to occurrences identified as "extraordinary", the question arises as to the nature of the relativity which is contemplated. Thus it has been said that the events which occurred "may be considered extraordinary as compared with an even voyage upon a placid sea; and yet [they] may be an entirely ordinary occurrence as compared with transportation by sea generally" [50] . 1. (1980) 147 CLR 142 at 165-166. 2. (1914) 218 F 744 (2nd Cir). 3. Carver, Carriage by Sea, vol 1, 12th ed (1971), s 161; Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 386-387The Court was construing r 7 of the Rules for Construction of Policy set out in the Second Schedule to the Marine Insurance Act 1909 Cth. Mason J stated (at 384) that this provision is identical with r 7 of the First Schedule to the Marine Insurance Act 1906 UK which was a codification of the antecedent common law. 4. Clinchfield Fuel Co v Aetna Insurance Co (1922) 114 SE 543 at 546(SC).

It may be that the difference between Anglo-Australian and American-Canadian construction of the "perils of the sea" exception is less than might appear from reference to cases such as The Giulia [51] or The Rosalia [52] - both decisions of the Second Circuit Court of Appeals. In The Rosalia a peril of the sea was described [53] as "something so catastrophic as to triumph over those safeguards by which skillful and vigilant seamen usually bring ship and cargo to port in safety" [54] . More recent authority in the United States has, perhaps, placed less emphasis on whether what happened was extraordinary and catastrophic [55] . But whether or not that is an accurate reflection of more recent developments, there is great force in what Judge Learned Hand said in Philippine Sugar Centrals Agency v Kokusai Kisen Kabushiki Kaisha [56] :

The phrase, "perils of the sea", has at times been treated as though its meaning were esoteric: Judge Hough's vivid language in The Rosalia [57] has perhaps given currency to the notion. That meant nothing more, however, than that the weather encountered must be too much for a well-found vessel to withstand [58] The standard of seaworthiness, like so many other legal standards, must always be uncertain, for the law cannot fix in advance those precautions in hull and gear which will be necessary to meet the manifold dangers of the sea. That Judge Hough meant no more than this in The Rosalia is shown by his reference to the definition in The Warren Adams [59] as the equivalent of what he said. That definition was as follows: "That term may be defined as denoting "all marine casualties resulting from the violent action of the elements, as distinguished from their natural, silent influence." " It would be too much to hope that The Rosalia will not continue to be cited for more than this, but it would be gratifying if it were not. 1. (1914) 218 F 744 (2nd Cir). 2. (1920) 264 F 285 (2nd Cir). 3. The Rosalia (1920) 264 F 285 (2nd Cir) at 288, per Judge Hough. 4. See also The Warren Adams (1896) 74 F 413 (2nd Cir); Duche v Brocklebank (1930) 40 F 2d 418 (2nd Cir). 5. J Gerber & Co v SS Sabine Howaldt (1971) 437 F 2d 580 (2nd Cir); Nichimen Co v MV Farland (1972) 462 F 2d 319 (2nd Cir); Taisho Marine & Fire Insurance v MV Sea-Land Endurance (1987) 815 F 2d 1270 (9th Cir); Thyssen Inc v SS Eurounity (1994) 21 F 3d 533 (2nd Cir); Complaint of Tecomar SA (1991) 765 F Supp 1150 (SDNY). 6. (1939) 106 F 2d 32 at 34-35 (2nd Cir). 7. (1920) 264 F 285 at 288 (2nd Cir). 8. Duche v Brocklebank (1930) 40 F 2d 418 (2nd Cir). 9. (1896) 74 F 413 at 415 (2nd Cir).

We agree, with respect, that perils of the sea should not be treated as having some esoteric meaning. Nor can its meaning be identified in a single all embracing definition capable of unvarying application to all circumstances. There is no single criterion which, standing alone, will identify whether what happened is or is not properly to be called a peril of the sea.

It would be an odd reading of the "perils of the sea" exception to read it as exempting the carrier from liability only if the loss or damage were caused by something that was wholly unforeseen or unpredicted. If the ship was fit to encounter the ordinary perils of the voyage, it was fit to encounter sea and weather conditions which could reasonably be foreseen and guarded against. If, despite being fit to encounter those conditions and despite proper stowage and handling of the cargo, the cargo is damaged when the foreseen conditions happen, the question is which interests, carrier or cargo interests, are to bear the loss. Holding the carrier liable would be to transform the obligation to use due diligence to make the ship seaworthy into an obligation very like the obligation of the owner of a general ship, which the whole history of the development of the rules in this area would deny.

The conduct of the trial in the present case illustrates the point that whether the "perils of the sea" exception applies will seldom be the only question in issue in a proceeding about loss of or damage to cargo. The very fact that cargo has been damaged does not demonstrate want of seaworthiness. At most it presents a case for inquiry - why has the cargo been damaged? Was it for want of seaworthiness? Was it for want of proper and careful handling and stowage? Was it for reasons beyond the control of the carrier? Evidence that is called at the trial of the proceeding will, inevitably, tend to emphasise particular features of the weather that was encountered and the way that the ship, its master and crew dealt with it. Often there will be great emphasis upon whether the conditions were foreseeable (or as the United States cases say, "expectable") [60] . If they were foreseeable or expectable, the cargo interests will point to the fact that the cargo was damaged and say that it follows that the ship was not fit to encounter those conditions or that the goods were not properly stowed and so on. Often there will be emphasis upon whether the vessel suffered structural damage (as this vessel did) [61] . The suffering of structural damage may be eloquent testimony of the force of conditions encountered [62] .

Complaint of Tecomar SA (1991) 765 F Supp 1150 at 1175 (SDNY). 2. cf Philippine Sugar Centrals Agency v Kokusai Kisen Kabushiki Kaisha (1939) 106 F 2d 32 (2nd Cir). 3. Benedict on Admiralty, 7th ed (rev), vol 2A s153, pp 15-8-15-12.

It is, then, hardly surprising that the features of evidence led at trial which were emphasised by one side or the other receive similar emphatic treatment in the reasons for judgment. But all of the matters we have just mentioned are matters which show the need for very great care before extracting statements made in reasons for judgment about the operation of the "perils of the sea" exception and, divorced from the context in which they were written, seeking to apply them to different circumstances. Expressions like "extraordinary", "catastrophic", "not foreseeable" or "not expectable" will often find a place in describing why properly stowed cargo on a ship fit for the ordinary perils of the voyage was damaged. But they are not to be understood as limiting the "perils of the sea" exception to those events which are beyond the ordinary experience of mariners.

Again, as the Second Circuit Court of Appeals said of perils of the sea, in a marine insurance case, New Zealand Insurance Co v Hecht, Levis & Kahn [63] :

We may concede arguendo that they cover only "extraordinary occurrences, [64] " but if so, while they do not include those injuries which are the run of all voyages, they certainly do include occasional visitations of the violence of nature, like great storms, even though these are no more than should be expected. Thus there are statements to be found in the United States authorities that a "perils of the sea" exception may apply even if the weather encountered was no more than expected. 1. [1941] AMC 1188 at 1189, per Judges Learned Hand, Chase and Clarke. 2. Hazard v New England Marine Insurance Co (1834) 33 US 557 at 585

Nor should statements made in the many English cases dealing with perils of the sea be read divorced from their context. Some can, we think, be seen as no more than decisions about particular facts [65] . Others examine questions of onus of proof [66] and concurrent causation [67] which do not arise in this case. Particular reference need be made to only two of the English cases - The "Xantho" [68] and Hamilton, Fraser & Co v Pandorf & Co [69] . Both cases predated the Hague Rules and concerned the construction of an exception in bills of lading in favour of "dangers and accidents of the seas". We mention The "Xantho" for the distinction drawn by Lord Herschell between perils of the sea and other losses of which the sea is the immediate cause. He said [70] :

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. There must be some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. The distinction drawn by his Lordship is important and must be borne in mind when considering the operation of the "perils of the sea" exception. 1. eg, The "Tilia Gorthon" [1985] 1 Lloyd's Rep 552. 2. The "Torenia" [1983] 2 Lloyd's Rep 210 at 216. 3. The "Torenia" [1983] 2 Lloyd's Rep 210 at 218-219; Gosse Millerd Ltd v Canadian Government Merchant Marine Ltd [1929] AC 223 at 241, per Viscount Sumner. 4. (1887) 12 App Cas 503. 5. (1887) 12 App Cas 518. 6. Hamilton, Fraser & Co (1887) 12 App Cas 503t 509.

The second case, Pandorf , is worthy of note because it shows that there may be damage resulting from a peril of the sea despite there being no great catastrophic event. It was held, there, that a cargo was damaged by "dangers and accidents of the seas" when, during the voyage, rats gnawed a hole in a pipe thus allowing water into the hold. It is important to note, however, that it was admitted or proved that the ship was seaworthy and that the damage occurred without fault on the part of the crew [71] . Those facts being accepted, what other explanation for the occurrence could be given save that it was a peril of the sea? If the decision appears strange to the modern eye, its oddity lies not in the conclusion reached but in the premises from which that conclusion proceeded: that the ship was seaworthy and that the loss was not caused by default of the crew. But we need not say whether those findings of fact would now be regarded as open.

Hamilton, Fraser & Co (1887) 12 App Cas 518t 530, per Lord Herschell.

Many other cases were mentioned in argument or can be found in the books. We think it desirable to touch briefly on only three other streams of authority. First, it seems that in German law, a peril of the sea need not be an extraordinary event and that a storm of a certain force is regarded as a peril of the sea [72] . Similarly, in French law a peril of the sea need not be "unforeseeable and insurmountable" [73] . Finally, the Supreme Court of Canada held in Goodfellow Lumber Sales v Verreault [74] that:

even if the loss is occasioned by perils of the sea, the ship owner is nevertheless liable if he failed to exercise due diligence to make the ship seaworthy at the beginning of the voyage and that unseaworthiness was a decisive cause of the loss [75] . 1. General Motors Overseas Operation v SS Goettingen (1964) 225 FSupp 902 at 904-905 (SDNY). 2. Tetley, Marine Cargo Claims, 3rd ed (1988), p 441. 3. [1971] SCR 522 at 528. 4. See also Canadian National Steamships v Bayliss [1937] SCR 261

How then are these disparate streams of authority to be brought together? In our view one must begin by recognising that the inquiry is, in large part, a factual inquiry - is the carrier immune in respect of what otherwise would be its failure to discharge its responsibilities under Art III, because the loss or damage to the goods arose or resulted from a cause which brings the carrier within the immunity conferred by Art IV, r 2?

If cargo has been lost or damaged and if the vessel was seaworthy, properly manned, equipped and supplied, what led to the loss or damage? Did it arise or result from want of proper stowing (Art III, r 2)? Did it arise from the "act, neglect or default of the master or the servants of the carrier in the navigation or in the management of the ship" (Art IV, r 2(a))? Or, did it result from some other cause peculiar to the sea? The last is a peril of the sea.

In Gamlen , Mason and Wilson JJ said that "sea and weather conditions which may reasonably be foreseen and guarded against may constitute a peril of the sea" [76] . The fact that the sea and weather conditions that were encountered could reasonably be foreseen, or were actually forecast, may be important in deciding issues like an issue of alleged want of seaworthiness of the vessel, an alleged default of the master in navigation or management, or an alleged want of proper stowage. Similarly, the fact that the conditions encountered could have been guarded against may be very important, if not decisive, in considering those issues. (Their decision may then make it unnecessary to consider the "perils of the sea" exception.) But if it is necessary to consider the "perils of the sea" exception, the fact that the conditions that were encountered could reasonably be expected or were forecast should not be taken to conclude that question. To that extent we agree with what was said by Mason and Wilson JJ in Gamlen . Such an approach, even if it is different from the American and Canadian approach, better reflects the history of the rules, their international origins and is the better construction of the rules as a whole.

In the present case the trial judge held that there was no breach of Art III, r 1 or r 2. That is, the trial judge rejected the contentions that due diligence had not been exercised to make the ship seaworthy, to properly man, equip and supply the ship and to "make the holds and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation" (Art III, r 1(c)). Indeed the trial judge found that in fact the vessel was fit in all respects for the voyage when it left port. Further, the trial judge rejected the contention that the carrier had not properly and carefully stowed the goods. It follows, as we have indicated earlier in these reasons, that the owner having failed to prove any breach of the carrier's responsibilities under Art III, the applicability of the defence of perils of the sea within the meaning of par (c) of Art IV, r 2 did not strictly arise. However, in the light of the findings made at the trial, the conclusion that the damage to the cargo was occasioned by perils of the sea was correct. The fact that the weather encountered had been forecast before the vessel left port does not deny that conclusion.

It was submitted by the appellant that the master should not have left port or should have diverted so as to avoid the weather which was forecast. The former contention appears not to have been made at trial. The latter was, but was rejected. The trial judge, having heard the evidence of experts called by both parties, said that he was "unable to conclude that any deficiencies in the conduct of the ship and her cargo by [the ship's master] have been demonstrated" [77] . There is no basis for departing from that finding. Once it was made, the trial judge's conclusion that there was no neglect or default of the master or other servants of the carrier in the management of the ship or cargo was inevitable. To the extent that the appellant now seeks to expand its contention to include the proposition that the vessel should not have left port, it is enough to say that, if the judge's finding does not meet the contention, it is a contention that could be made only with evidence to support it and there was none.

The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 469.

Contrary to the appellant's contentions, nothing in this case turned on the allocation of the burden of proof. The trial judge made the findings which he did in light of the evidence that was called on the issues. As his Honour said, the case did not turn "upon any nice questions of onus of proof" [78] . It is, therefore, not necessary to consider those questions.

The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 471.

The failure of the submissions by the appellant makes it unnecessary to consider grounds urged in support of the decision of the Court of Appeal by the respondent in its notice of contention.

Special leave was granted in this case to determine whether the carrier of cargo, which was damaged after striking heavy weather in the Great Australian Bight, could rely on the immunity from liability given by Art IV, r 2(c) of The Brussels Convention for the Unification of Certain Rules of Law Relating to Bills of Lading [79] . That Article gave immunity for damage "arising or resulting from perils, dangers and accidents of the sea". The cargo in question had been shipped from Sydney to Keelung in Taiwan pursuant to bills of lading which incorporated the Hague Rules. Those Rules regulate international contracts for the carriage of goods by sea and determine the responsibilities, liabilities, rights and immunities of the carrier [80] . They are incorporated into bills of lading issued in respect of cargo carried from an Australian port to overseas destinations by the Sea-Carriage of Goods Act 1924 Cth [81] .

25 August 1924; 51 Stat 233 TS No 931; 120 LNTS 155. 2. Art II, the Hague Rules. 3. Now repealed and replaced by the Carriage of Goods by Sea Act 1991 Cth which incorporates the Hague Visby Rules, being the 1924 Hague Rules as amended by the Visby Protocol of 23 February 1968.

Upon the facts of the case, I think that the damage to the cargo did result from the perils of the sea. Given other findings of fact by the trial judge, it was unnecessary for the learned judge to decide that issue. Nevertheless, I could not accept the argument of the appellant, the cargo owner, as to the circumstances in which the perils of the sea defence is inapplicable. The owner submits that the perils of the sea defence is applicable only when the perils, dangers or accidents of the sea "could not be reasonably foreseen and guarded against by the carrier". Such a construction does not accord with the text of the Article which provides the immunity, and it is incompatible with the general scheme of the Hague Rules [82] . The foreseeability of a peril which results in damage is not determinative of whether a carrier can rely on the perils of the sea immunity conferred by those Rules. The foreseeability of the peril and the possibility of guarding against its consequences are relevant factors in determining whether the damage results or arises from the perils of the sea. But that is all. In an appropriate case, the foreseeability of the peril and the failure to guard against it may show that the effective cause of the loss was the negligence of the carrier rather than the perils of the sea [83] . But foreseeability of the peril does not by itself prevent the carrier relying on the perils of the sea exemption from liability.

Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 2. Gamlen (1980) 147 CLR 142

The appeal is brought by the owner of cargo against an order of the Court of Appeal of the Supreme Court of New South Wales. That Court dismissed the owner's appeal against an order of the Supreme Court, Admiralty Division, entering a verdict for the carrier in an action brought by the owner for damages. In the Supreme Court, the trial judge, Carruthers J [84] , held that the carrier had not breached any of the obligations imposed upon it by the Hague Rules and was immune from liability because the damage to the cargo resulted from the "perils of the sea". The Court of Appeal upheld his Honour's findings on fact and law.

The owner contracted with the carrier to carry a cargo of aluminium coils of about five tonnes each from Sydney to Keelung. The contract of carriage was evidenced by three bills of lading [85] each of which incorporated the Hague Rules. The cargo was stowed in forward hold 5. On the Burnie to Fremantle section of the journey, the ship encountered a series of violent storms while crossing the Great Australian Bight. During the storms, eight above deck containers were swept overboard and the cargo of the owner, which was stowed below deck in containers, was damaged.

The Master of the ship gave evidence that, at the height of the storm, "we had about ten metres of a swell coming onto us and then we pitched into the sea So that was one of the serious points and at one juncture I think we have recorded we rolled 25 degrees and at that juncture the edge of the ship actually was parallel to the sea. The deck edge was immersed by water". The Master said that: "the weather and the wind was tremendous. It was not good and safe to send any men, any of the seamen out, anybody out there because we would extremely endanger their life and chance of accident or of being swept overboard." The wind was described as being force 11 on the Beaufort Scale of Windforces. Force 11 indicates a "violent storm". Force 12 is a hurricane.

The Master knew that the Great Australian Bight is renowned for severe weather. For that reason, he said that, before leaving Sydney on 5 October 1989 he had planned for the worst possible weather conditions. Before leaving on the Melbourne to Burnie section of the journey on 8 October 1989, he had received a weather bulletin containing a gale warning for the oceans south of the Australian continent. The ship departed Burnie bound for Fremantle on 9 October 1989. Further weather reports were received by the Master on 12 and 13 October 1989 during the journey from Burnie to Fremantle. Those reports warned of gales, rough to very rough seas and a moderate to heavy swell.

The damage to the cargo appears to have occurred at the peak of the storms on 14 October 1989. The ship also suffered some structural damage during the storms. The immediate cause of the damage to the cargo was the pounding which the carrier's vessel suffered as the result of the very heavy weather which it encountered. For that reason and because there was no negligence or breach of the Hague Rules on the part of the carrier, Carruthers J and the Court of Appeal held that the damage arose from or resulted from the perils of the sea.

The owner contends that the perils of the sea defence is applicable only when the perils, dangers or accidents of the sea "could not be reasonably foreseen and guarded against by the carrier". The heavy weather in this case was both reasonably foreseeable and actually foreseen by the carrier. That being so, the owner contends that the carrier cannot rely on the perils of the sea defence and is not exempt from liability for the damage which the cargo suffered.

In its action in the Supreme Court [86] the owner pleaded that the damage was caused by the carrier's breach of its obligations under Art III, rr 1 and 2 of the Hague Rules which require the carrier to exercise due diligence to make the ship seaworthy and properly man, equip and supply the ship and, "[s]ubject to the provisions of Article IV", to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. In its defence, the carrier relied upon Art IV, r 2 which provides that a carrier is not responsible for damage "arising or resulting from: (a) act, neglect or default of the master or the servants of the carrier in the navigation or in the management of the ship, (c) perils, dangers and accidents of the sea, (n) insufficiency of packing".

Carruthers J held that the correct approach in determining the perils of the sea issue was to consider whether any negligence by the carrier had been demonstrated. He held that the two issues of negligence and perils of the sea had to be considered together [87] .

The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 462.

His Honour rejected the argument of the owner that the test for determining whether a storm constitutes a peril of the sea is whether the storm was expectable [88] . In rejecting this argument, his Honour relied upon this Court's approach in Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd [89] and in particular on the passage in the joint judgment of Mason and Wilson JJ [90] which concludes:

Consequently sea and weather conditions which may reasonably be foreseen and guarded against may constitute a peril of the sea. 1. The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 462. 2. (1980) 147 CLR 142. 3. Gamlen Chemical Co (1980) 147 CLR 142 at 166.

[T]he evidence satisfies me that, bearing in mind the anticipated weather conditions: (i) when the [ship] sailed from Burnie she was fit in all respects for the voyage; (ii) the defendant properly and carefully loaded, handled, stowed, carried, kept and cared for the subject cargo; and (iii) there was no neglect or default of the master or other servants of the defendant in the management of the ship or cargo.

The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 471.

The Court of Appeal [92] affirmed the findings of the primary judge and held that he had correctly adopted and applied the reasoning of this Court in Gamlen [93] .

Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation, Berhad (1996) 39 NSWLR 683 2. (1980) 147 CLR 142.

The Schedule to the Sea-Carriage of Goods Act enacts the Hague Rules as domestic law. Prima facie, the Parliament intended that the transposed text should bear the same meaning in the domestic statute as it bears in the treaty [94] . The guiding principles of treaty interpretation are found in the Vienna Convention on the Law of Treaties [95] . Article 31 provides that a treaty must be interpreted in good faith, in accordance with the ordinary meaning of the terms in their context and in the light of its object and purpose. Under Art 32, interpretative assistance may be gained from extrinsic sources in order to confirm the meaning resulting from the application of Art 31 or to determine the meaning of the treaty when the interpretation according to Art 31 leaves the meaning "ambiguous or obscure" or "leads to a result which is manifestly absurd or unreasonable". Those extrinsic sources include the travaux préparatoires and the circumstances of the conclusion and history of the negotiation of the treaty. Primacy must be given, however, to the natural meaning of the words in their context, as I recently pointed out in Applicant A v Minister for Immigration and Ethnic Affairs [96] .

Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 265, per Brennan J. 2. The principles of interpretation of Treaties as contained in the Vienna Convention on the Law of Treaties may properly be considered even though the Vienna Convention entered into force after the Hague Rules because the Vienna Convention is a codification of the customary law rules of the interpretation of treaties: Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338 at 356 3. (1997) 190 CLR 225; see also Koowarta (1982) 153 CLR 168 The Commonwealth v Tasmania (the Tasmanian Dam Case ) (1983) 158 CLR 1 at 93.

International treaties should be interpreted uniformly by the contracting States, especially in the case of treaties such as the Hague Rules whose aim is to harmonise and unify the law in cases where differing rules previously applied in the contracting States. So far, however, uniformity of interpretation has not been a feature of the Hague Rules. In particular, courts in the United States and Canada on one hand and in France, Germany, England and Australia on the other have diverged in their approach to what causes of damage can be described as perils of the sea for the purpose of the Hague Rules. It may be, as Mason and Wilson JJ suggested in Gamlen , that the result of the United States and Canadian approach is not much different from that adopted in England and Australia. Nevertheless, the approach in principle in the United States and Canada is different from that which exists in this country.

If uniformity of interpretation could be achieved by abandoning the approach taken by this Court in Gamlen , I would be in favour of overruling Gamlen . But to overrule that decision would not yield uniformity - the approach of courts in England, Germany and France would remain different. Moreover, the approach laid down in Gamlen for Australian courts is, in my opinion, in accordance with the text of the Hague Convention and probably accords with the intention of those who drafted the Convention.

The historic development of the Hague Rules and the travaux préparatoires [97] is described in some detail in the reasons for judgment of other members of the Court. The aim of the Rules was to harmonise the diverse laws of trading nations and to strike a new arrangement for the allocation of risk between cargo and carrier interests. However, the Hague Rules were a compromise rather than a codification of any accepted and uniform practice of shippers. Consequently, one needs to be cautious about using the pre-existing law of any country in interpreting the Rules. But that said, the fact is that the "immediate impetus for the Hague Rules came from the British Empire" [98] . Furthermore, British lawyers and representatives of British carrier and cargo interests dominated the Committees responsible for the drafting of the Rules which eventually became the Hague Rules [99] . That being so, it seems likely that the English common law rules provided the conceptual framework for the Hague Rules - certainly the key terms of Arts III and IV are the subject of much common law doctrine. The Rules should be interpreted with that framework in mind. That conclusion is strengthened by the fact that there appears to have been very little discussion at the Convention of Arts III, r 2 and IV, r 2(c). In particular, there was no discussion indicating that the perils of the sea defence was intended to be restricted in the manner for which the owner contends [100] .

Collected in Sturley, The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vols 1-3. 2. Sturley, The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 1, p 8. 3. Sturley, The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 1, pp 8-14. 4. The perils of the sea defence was dealt with in two lines during the proceedings at the Hague. See Sturley, The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 1, p 259.

At common law, a shipowner who operated a "general ship" [101] was a common carrier, strictly liable for any loss or damage occurring during the voyage. The only defences available were act of God, the inherent vice of the goods, act of public enemies, shipper's fault and perhaps necessity to jettison cargo to save the ship. Moreover, even when a shipowner did not hold itself out as a common carrier, contracts for the carriage of goods by sea were subject to warranties which practically equated the shipowner with common carriers. Thus, there was an implied warranty that the ship was seaworthy [102] . The warranty commenced with the voyage, and the ship had to be fit to carry its cargo safely and ride out any weather likely to be encountered on the voyage [103] . When it sailed, the vessel had to be in such condition and its cargo so stowed that it was reasonably fit to encounter the ordinary perils that might be expected at that time of the year [104] .

A general ship was one where the ship was available to carry the goods of anyone wishing to ship them on the voyage in question: Laveroni v Drury (1852) 8 Ex 166 at 170[155 ER 1304 at 1306]. 2. Lyon v Mells (1804) 5 East 428[102 ER 1134]; Kopitoff v Wilson (1876) 1 QBD 377 Steel v State Line Steamship Co (1877) 3 AppCas 72. 3. Cohn v Davidson (1877) 2 QBD 455 4. Steel (1877) 3 AppCas 72 at 91; see also Stanton v Richardson (1875) 33 LT 19345 LJCP 78 where ship pumps were unable to remove molasses which might be expected to drain from a cargo of wet sugar with the result that the sugar was damaged: Kopitoff (1876) 1 QBD 377where armour plates being carried became loose in heavy weather and went through the side of the ship.

The shipowner was therefore liable for failure to deliver goods in the state in which they were received unless it could bring itself within one of a number of narrowly defined exceptions. But even these defences were not available if the shipowner had contributed to the loss by negligence [105] , by deviation [106] or by providing an unseaworthy ship [107] .

The "Freedom" (1871) LR 3 PC 594; 8 Moore NS 29 [17 ER 224]; Notara v Henderson (1872) LR 7QB 225. 2. Davis v Garrett (1830) 6 Bing 716[130 ER 1456]; Internationale Guano en Superphosphaatwerken v Robert Macandrew & Co [1909] 2 KB 360 3. Lyon (1804) 5 East 428[102 ER 1134]; Steel (1877) 3 AppCas 72.

To overcome their potential liability, carriers naturally sought to exempt themselves by exculpatory clauses in the bill of lading. A clause exempting the carrier from loss or damage resulting from the perils of the sea became common, as did many of the immunities later set out in Art IV, r 2 of the Hague Rules [108] . From early in the history of the common law of insurance, marine policies had also specifically exempted the carrier from liability for losses arising from perils of the sea, the standard "perils" clause for Lloyd policies having been settled as long ago as 1779 [109] . The law reports of the United Kingdom and the United States during the nineteenth century contain numerous cases concerned with bills of lading and marine policies raising the issue whether loss or damage to goods resulted from the perils of the sea. Consequently, those who drafted the Hague Rules had available to them a vast body of case law indicating the circumstances in which the perils of the sea immunity could exempt the carrier from liability. Consciously or unconsciously, the effect of the common law rules must have shaped the Convention's thinking as to when and in what circumstances immunities such as the perils of the sea would exempt the carrier from liability.

This defence sprang up gradually after the reign of Elizabeth I. It was certainly known by the reign of Charles I (see Pandorf v Hamilton (1886) 17 QBD 670 at 684). 2. Parks, The Law of Marine Insurance and Average (1987) vol 1, p 272.

For a loss to fall within the exception, the peril had to be "of the sea" and not merely on the seas [110] . A peril of the sea was something which was fortuitous, accidental or unexpected and not something that was usual such as the damage caused in the ordinary course of navigation by the natural action of the sea, wind or waves [111] . As Scrutton LJ pointed out in P Samuel & Co v Dumas [112] :

[T]here must be a peril, an unforeseen and inevitable accident, not a contemplated and inevitable result; and it must be of the seas, not merely on the seas. The ordinary action of the winds and waves is of the seas, but not a peril. 1. Cullen v Butler (1816) 5 M& S 461 [105 ER 1119]; The "Xantho" (1887) 12 App Cas 503; Hamilton, Fraser & Co v Pandorf & Co (1887) 12 AppCas 518 at 527; P Samuel & Co v Dumas (1922) 13 Lloyd's Rep 503 at 505. 2. The "Xantho" (1887) 12 App Cas 503 at 509. 3. (1922) 13 Lloyd's Rep 503 at 505.

In Canada Rice Mills Ltd v Union Marine and General Insurance Co [113] , Lord Wright gave some examples. His Lordship said:

Where there is an accidental incursion of seawater into a vessel at a part of the vessel, and in a manner, where seawater is not expected to enter in the ordinary course of things, and there is consequent damage to the thing insured, there is prima facie a loss by perils of the sea. The accident may consist in some negligent act, such as improper opening of a valve, or a hole made in a pipe by mischance, or it may be that sea water is admitted by stress of weather or some like cause bringing the sea over openings ordinarily not exposed to the sea or, even without stress of weather, by the vessel heeling over owing to some accident, or by the breaking of hatches or other coverings. These are merely a few amongst many possible instances in which there may be a fortuitous incursion of seawater. It is the fortuitous entry of the seawater which is the peril of the sea in such cases. 1. [1941] AC 55 at 68-69.

In England, the term "perils of the sea" had the same meaning in bills of lading as it had in policies of marine insurance [114] . That seems to have been the position in the United States although in that country the burden of proof is different in insurance cases from that in contracts of carriage [115] . Furthermore in marine policies, if the peril of the sea was the immediate or proximate cause of the loss, the insurer would be liable even though the entry of seawater or other harm causing act was the result of negligence unless the policy provided otherwise [116] . In an action on a bill of lading, the perils of the sea immunity also exempted the carrier from liability even though its negligence had contributed to the loss if the bill exempted the carrier from its own or servants' negligence. In The "Freedom" [117] , the Judicial Committee of the Privy Council said:

The words in the Bills of lading - "dangers of the Seas" - must, of course, be taken in the sense in which they are used in a Policy of Insurance. It is a settled rule of the Law of Insurance, not to go into distinct causes, but to look exclusively to the immediate and proximate cause of the loss. Thus, damage to cargo by the entry of seawater arising as the result of the negligence of the shipowner or its servants was held to be damage from a peril of the sea where the bill of lading excused the negligent acts of the servants [118] . 1. The "Freedom" (1871) LR 3 PC 594 at 601-602; 8 Moore NS 29 at 39 [17 ER 224 at 227]; Hamilton, Fraser (1887) 12 App Cas 518 at 524-528; The "Xantho" (1887) 12 App Cas 503 at 510, 517; Canada Rice Mills [1941] AC 55 at 67-68. 2. Parks, The Law of Marine Insurance and Average (1987) vol 1, p 274. But see Arbib & Houlberg v Second Russian Insurance Co (1923) 294 F 811 at 816(2nd Cir). 3. Davidson v Burnand (1868) LR 4CP 117; The "Xantho" (1887) 12 App Cas 503; Trinder Anderson & Co v Thames and Mersey Marine Insurance Co [1898] 2 QB 114 Mountain v Whittle [1921] 1 AC 615 4. (1871) LR 3 PC 594 at 601-602; 8 Moore NS 29 at 39 [17 ER 224 at 227]. 5. Blackburn v Liverpool, Brazil and River Plate Steam Navigation Co [1902] 1 KB 290, where the ship's engineer negligently allowed seawater to enter a tank and damage sugar.

At common law, the real question was whether the peril of the sea or the action of the shipowner or those for whose acts the shipowner was responsible was the proximate cause of the loss or damage [119] .

The "Freedom" (1871) LR 3 PC 594 at 601-602; 8 Moore NS 29 at 38-39 [17 ER 224 at 227]; and see the direction to the jury given by Blackburn J in Kopitoff (1876) 1 QBD 377 at 379-380

Furthermore, at common law, damage arising from perils of the sea was not confined to damage caused by the entry of seawater into the ship. Thus, damage resulting from a collision occurring at sea without fault on the part of the master could be caused by the perils of the sea [120] . However, loss or damage caused by a collision which is the result of negligence of the master was not caused by a peril of the sea [121] . Other causes of loss or damage to goods or to the ship which have been held to be caused by perils of the sea include piracy [122] , rats gnawing a hole in a pipe causing seawater to escape and damage cargo [123] , overheating causing damage to cargo as the result of lack of ventilation brought about by the necessity to close the ventilators for seven days during a storm of exceptional severity and duration [124] , grounding in a harbour by reason of a heavy swell [125] , taking in seawater while being towed as the result of strong swells [126] , listing of a ship while being loaded causing loss of portion of cargo [127] , the unexplained sinking in smooth water of a ship shortly after leaving port [128] and running aground [129] .

Buller v Fisher (1799) 3 Esp 67[170 ER 540]; Martin v Crokatt (1811) 14 East 465[104 ER 679]; The "Xantho" (1887) 12 App Cas 503; Reischer v Borwick [1894] 2 QB 548 William France, Fenwick & Co Ltd v North of England Protecting and Indemnity Association [1917] 2 KB 522(collision with wreck which had been torpedoed shortly before the collision). 2. cf Lloyd v General Iron Screw Collier Co (1864) 3 H& C 284 [159 ER 539]. 3. Pickering v Barkley (1648) Style 132[82 ER 587]. 4. Hamilton, Fraser (1887) 12 App Cas 518. 5. The Thrunscoe [1897] P 301. 6. Fletcher v Inglis (1819) 2 B& Ald 315 [106 ER 382]. 7. Hagedorn v Whitmore (1816) 1 Stark 157[171 ER 432]. 8. The Stranna [1938] P 69. 9. Reynolds v North Queensland Insurance Co (1896) 17 LR(NSW) 121; Langley (W) & Sons Ltd v Australian Provincial Assurance Association Ltd (1924) 24 SR(NSW) 280; Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 10. The "Zinovia" [1984] 2 Lloyd's Rep 264; cf Board of Management of the Agricultural Bank of Tasmania v Brown (1957) 97 CLR 503

Causes of loss or damage which were held not to be caused by perils of the sea included imperfect insulation causing seawater to disable a transatlantic telegraph cable [130] and the grounding of a vessel when the tide ebbed [131] .

Paterson v Harris (1861) 1 B& S 336 [121 ER 740]. 2. Magnus v Buttemer (1852) 11 CB 876[138 ER 720]. But see Fletcher (1819) 2 B& Ald 315 [106 ER 382] where the vessel grounded in a harbour whose bed was uneven and the ebbing of the tide was accompanied by a heavy swell.

The Hague Rules set out the responsibilities and liabilities, rights and immunities of the carriers in relation to the loading, handling, stowage, carriage, custody, care and discharge of goods (Art II). They apply to every contract of carriage of goods by sea (Art II). Article III describes the responsibilities and liabilities of the carrier and the cargo interests while Art IV establishes the relevant exceptions and immunities to these responsibilities and liabilities. The "perils, dangers and accidents of the sea" exception in Art IV, r 2(c) must be construed therefore within the overall scheme of the Hague Rules. To the scheme of those Rules, I now turn.

The relevant Articles of the Hague Rules are as follows:

The carrier shall be bound before and at the beginning of the voyage, to exercise due diligence to -

(c) make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.

Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of Article III.

Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this section.

Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from -

(a) act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship;

(b) fire, unless caused by the actual fault or privity of the carrier;

(g) arrest or restraint of princes, rulers or people, or seizure under legal process;

(i) act or omission of the shipper or owner of the goods, his agent or representative;

(j) strikes or lock-outs or stoppage or restraint of labour from whatever cause, whether partial or general;

(l) saving or attempting to save life or property at sea;

(m) wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods;

(p) latent defects not discoverable by due diligence;

(q) any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

Article III imposes a positive obligation on the carrier to exercise due diligence to make the ship seaworthy. This obligation is an overriding obligation which is not subject to the exceptions to liability listed in Art IV, r 2 [132] . This interpretation is consistent with the omission to make Art III, r 1 subject to Art IV, r 2, in contrast with Art III, r 2, which deals with the proper care of goods carried and is specifically expressed to be "[s]ubject to the provisions of Article IV". It also seems consistent with the understanding of the parties at the time of agreement of the convention as recorded in the travaux préparatoires [133] .

Paterson Steamships Ltd v Canadian Co-operative Wheat Producers Ltd [1934] AC 538 at 548 Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589 at 602-603Note that Art III, r 2 is subject to Art IV, r 1, but this clause merely restates the obligation in the negative form. 2. See the discussion by Mr Rudolf and Lord Phillimore during proceedings at the Palace of Peace, The Hague, 30 August 1921, Sturley, Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 1, pp 250-251: "Mr Rudolf: [discussing Art III, r 1 and Art IV, r 2] I can conceive a case of a vessel going to sea in an unseaworthy condition, and the operation of the sea on that vessel leads to a loss, and apparently under that section 2 that is a loss which the shipowner is exempt from. Lord Phillimore: No; the law is well settled the other way These are old and well settled exceptions. Mr Rudolf: I know they are settled, but I was wondering whether the effect of making those two paragraphs is going to alter what is the recognised law. That is what I have in mind. Lord Phillimore: No."

In Art III, r 1, the term "seaworthiness" should be given its common law meaning. Nothing in the Rules generally or in the travaux préparatoires suggests otherwise. It was a term well known at common law and, for the reasons I have given, it is probable that that was the meaning that the drafters of the Rules intended it to have. What constitutes "seaworthiness" depends on the voyage to be undertaken [134] . The ship must be seaworthy to undertake the voyage planned and to face any expected weather or storms [135] . If, as was the case here, the ship is expected to sail through an area of sea which is renowned for its severe weather, appropriate precautions must be taken to ensure that the ship is fit to undertake that voyage both in respect of the ship itself and the stowage of the cargo. The carrier must exercise due diligence at the start of the voyage to make the ship seaworthy in the light of the anticipated weather conditions [136] .

Huddart Parker Ltd v Cotter (1942) 66 CLR 624 at 663 2. McFadden v Blue Star Line [1905] 1 KB 697 at 703 3. Kopitoff v Wilson (1876) 1 QBD 377 at 379

If the goods are carried on a ship that is unseaworthy and as a result are lost or damaged, the loss may and ordinarily will also be caused by the perils of the sea. But since the carrier is under an obligation to carry the goods on a ship that is seaworthy and otherwise complies with Art III, r 1, the loss or damage, although directly caused by a peril of the sea, is caused by the anterior breach of Art III, r 1. If unseaworthiness is relied on, the cargo owner must prove that the loss or damage resulted from that unseaworthiness. Once that is proved, the burden is on the carrier to prove that it exercised due diligence to make the ship seaworthy (Art IV, r 2). On the other hand, if the cargo owner alleges a breach of Art III, r 1(b) or (c), it must prove both a lack of due diligence in respect of that matter and that the loss or damage resulted from that breach.

Article III, r 1 therefore effectively imposes an obligation on the carrier to carry the goods in a ship which is adequate in terms of its structure, manning, equipment and facilities having regard to the voyage and the nature of the cargo. If the carrier breaches that obligation and, as a result, the goods of the owner are lost, it is not to the point that a concurrent cause of the loss was a peril of the sea or one of the other matters enumerated in pars (a)-(q) of Art IV, r 2. Of course, it is possible that one of the matters referred to in those paragraphs may be the sole cause of the loss or damage even though the ship is unseaworthy. In that event, the cargo owner's claim will fail - not because the carrier comes within the immunities identified in Art IV, r 2 but because the owner has failed to prove that the loss or damage has resulted from unseaworthiness.

In this case the primary judge, after hearing the details of the packing and preparation of the ship and the opinions of expert witnesses, concluded that the ship was "fit in all respects for the voyage". That being so, no question of the perils of the sea defence arose. The owner failed to prove that the ship was unseaworthy. The owner therefore failed to prove a breach of Art III, r 1. If it had proved a breach of the obligation to make the ship seaworthy, Art IV, r 2 would have provided no defence or immunity.

Article III, r 2, however, imposes an additional obligation on the carrier in relation to the goods carried. The obligation is to "properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried". The responsibility under Art III, r 2 is expressly made subject to the exemptions in Art Iv But that does not mean that the duty of care imposed by Art III, r 2 is some way qualified by Art IV, r 2.

Notwithstanding the opening words of Art III, r 2, the terms of Art IV, r 2 do not in my opinion affect the content of the obligations imposed by Art III, r 2. The carrier remains under an obligation to "properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried". But the carrier is not liable if the "loss or damage" to the goods arises or results from one of the matters identified in pars (a)-(q) of Art IV, r 2. Where the owner alleges a breach of Art III, r 2 and the carrier relies on one of the identified matters in pars (a)-(q) as a defence, the liability of the carrier will turn on whether the loss or damage arose or resulted from the breach or from the identified matters.

In that respect, Art III, r 2 and Art IV, r 2 effectively track the common law doctrine applicable to bills of lading. The common law position was stated by Willes J in Grill v General Iron Screw Collier Co [137] :

In the case of a bill of lading it is different, because there the contract is to carry with reasonable care unless prevented by the excepted perils. If the goods are not carried with reasonable care, and are consequently lost by perils of the sea, it becomes necessary to reconcile the two parts of the instrument, and this is done by holding that if the loss through perils of the sea is caused by the previous default of the shipowner he is liable for this breach of his covenant. 1. (1866) LR 1 CP 600 at 612. This passage was cited with approval by Lord Herschell in The "Xantho" (1887) 12 App Cas 503 at 510-511.

Now, I quite agree that in the case of a marine policy the causa proxima alone is considered. If that which immediately caused the loss was a peril of the sea, it matters not how it was induced, even if it were by the negligence of those navigating the vessel. It is equally clear that in the case of a bill of lading you may sometimes look behind the immediate cause, and the shipowner is not protected by the exception of perils of the sea in every case in which he would be entitled to recover on his policy, on the ground that there has been a loss by such perils. 1. (1887) 12 App Cas 503 at 510.

Thus, the relationship between Art III, r 2 and Art IV, r 2 is similar to that at common law where there was a finding of negligence but the bill of lading contained exceptions such as perils of the sea.

The words "arising or resulting from" which appear at the very beginning of Art IV, r 2 indicate that the loss or damage must be caused by one or more of the matters enumerated in pars (a)-(q) before the carrier can escape liability. If it results or arises from any other cause such as the negligence of the carrier, the carrier is liable. The presence of r 2(a) which creates a limited but separate exemption for the carrier for damage resulting from the negligence of its master or servants in relation to the navigation or management of the ship is a further textual indication of this interpretation. The presence of this express immunity suggests that the parties to the Convention had turned their minds to negligence as a cause of loss and deliberately limited the carrier's immunity for loss caused by negligence to situations involving the negligence of the master or servants of the carrier in relation to the management and navigation of the ship. If negligence is established and has caused the loss or damage to the goods, the carrier is liable unless the negligence comes within the specific exception of par (a).

The foregoing analysis of Arts III and IV is in accord with the reasoning of Mason and Wilson JJ in Gamlen [139] where this Court considered the interaction between the obligations in Art III, r 2 and the exceptions in Art IV, r 2. Their Honours held that, on the correct construction of these clauses, the carrier is able to claim an exemption listed in Art IV, r 2 only where the effective cause of the damage or loss to the cargo is the exemption claimed. The carrier cannot rely on Art IV, r 2 where the effective cause of the loss is the negligence of the carrier. Their Honours' reasoning in Gamlen is in my respectful opinion correct. Mason and Wilson JJ, with whom Gibbs and Aickin JJ agreed, undertook a detailed textual analysis of the relevant clauses. They said that [140] :

There is a persuasive answer ready to hand to explain why Art IV, r 2 does not expressly preserve liability for negligence in all cases. It is that pars (c) to (o) inclusive, with the exception of (l), are all matters which in themselves are beyond the control of the carrier or his servants. Any reference in that context to negligence is inappropriate, because they are events which of their nature occur independently of negligence on the part of the carrier. For example, one would not expect to see the rule relieve the carrier from responsibility for damage resulting from "act of God, unless caused by the fault or neglect of the carrier, his agents or servants". The remaining paragraphs of r 2 carry their own explanation. Paragraph (a) has its origin in s 3 of the Harter Act, and has attracted a particular history [141] . Paragraph (b) relates to fire, and reflects its own particular statutory history (see the Merchant Shipping Act 1894 UK, s 502). Paragraph (l) deals with deviation to save life and property, and receives fuller treatment in Art IV, r 4. Paragraph (q) is of the greatest assistance in the task of construction, because in our opinion it expresses the fundamental scheme of the Rules. That 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). 1. (1980) 147 CLR 142. 2. Gamlen (1980) 147 CLR 142 at 164-165 3. cf Gosse Millerd [1929] AC 223 at 230, 236.

Since the owner failed to prove any breach of Art III, r 2, the applicability of the defence of the perils of the sea does not arise. Even if the bill of lading had not incorporated the immunities identified in Art IV, r 2, the owner's claim would fail. It would fail because it has not proved any breach of the obligations of the carrier set out in Art III, r 2.

No doubt the failure to deliver the coils of aluminium in the condition in which they were received is evidence of a breach of the obligations imposed by Art III. But I do not think that a contract of carriage under the Hague Rules contains any implied obligation for the carrier to deliver the goods in the state in which it received them. Article II [142] should be taken as declaring the rights and immunities and responsibilities and liabilities of the parties, subject to the right of the carrier under Art V to surrender the whole or part of its rights and immunities or to increase its responsibilities and liabilities by the terms of the bill of lading. As Professor Sturley points out [143] "the new rules were designed to create a self-contained code (at least in the areas it covered) that would not require reference to domestic law". The delivery of the goods in a damaged state is evidence of a breach of Art III, and imposes an evidentiary burden on the carrier to show that no breach of Art III has occurred. But unlike the common law, failure to deliver the goods in the state received does not cast a legal onus on the carrier to prove that the state of, or non-delivery of the goods, was not due to the carrier's fault.

"Subject to the provisions of Article VI, under every contract of carriage of goods by sea, the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth." 2. Sturley, The Legislative History of the Carriage of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules (1990), vol 1, p 9.

Once Carruthers J found that there was no breach of the carrier's obligations in this case, the immunities conferred by Art IV, r 2 became irrelevant. However, the meaning of "perils of the sea" is important, and I should deal with it.

The owner contends that, on its proper construction, "perils, dangers and accidents of the sea" means perils at sea which were not reasonably foreseeable and could not be reasonably guarded against by the carrier. This construction seeks to strain the language of the exception by grafting onto it a limiting phrase. The owner relied on United States [144] and Canadian [145] authority in support of this interpretation. In a leading United States case - The "Giulia" - the Second Circuit Court of Appeals said that the perils of the sea must be "of an extraordinary nature or arise from irresistible force or overwhelming power, and [such as] cannot be guarded against by the ordinary exertions of human skill and prudence" [146] . This is contrary to the law, as it has long been understood, in Australia. In Vacuum Oil Co Pty Ltd v Commonwealth and Dominion Line Ltd [147] , McArthur J said that he could find nothing in the cases to justify the statement:

that that which might have been foreseen and guarded against cannot be a peril of the sea. On the contrary, they make it quite clear, in my opinion, that it is not an essential element of a peril of the sea that it cannot be foreseen or guarded against. 1. The "Giulia" (1914) 218 F 744 at 746 (2nd Cir); The Demosthenes (1951) 189 F 2d 488; States Steamship Co v United States (1958) 259 F 2d 458; Gerber & Co v SS Sabine Howaldt (1971) 437 F 2d 580; Thyssen Inc v SS Eurounity (1994) 21 F 3d 533 (2nd Cir). 2. Canadian National Steamships v Bayliss [1936] SCR 261 at 263 Goodfellow Lumber Sales Ltd v Verreault [1971] SCR 522 at 528 Kruger Inc v Baltic Shipping Co [1988] 1 F 262 at 278, per Pinard J; Francosteel Corp v Fednav Ltd (1990) 37 FTR 184 at 191 Canastrand Industries Ltd v The Lara S [1993] 2 F 553 at 575 3. The "Giulia" (1914) 218 F 744 at 746 (2nd Cir). 4. [1922] VLR 693 at 698.

Under the Anglo-Australian approach, the critical question is not whether the peril can be foreseen or guarded against but whether the harm causing event was of the sea and fortuitous, accidental or unexpected. If it was, a further question arises as to whether that event was the effective cause of the loss. This approach restricts the immunity of the carrier for the loss or damage by reference to the carrier's negligence rather than by reference to the foreseeability or severity of the peril [148] .

The "Xantho" (1887) 12 App Cas 503 at 510; Hamilton, Fraser (1887) 12 App Cas 518 at 525; Gosse Millerd Ltd v Canadian Government Merchant Marine Ltd [1929] AC 223 at 230 Silver v Ocean Steamship Co [1930] 1 KB 416 at 435 Paterson Steamships [1934] AC 538 at 548.

The reasoning of the majority of this Court in Gamlen correctly indicates that the foreseeability of the peril does not preclude the carrier from relying on the perils of the sea immunity. Mason and Wilson JJ said that "sea and weather conditions which may reasonably be foreseen and guarded against may constitute a peril of the sea" [149] . This statement accords with the view of McArthur J in Vacuum Oil. The owner criticised this statement of Mason and Wilson JJ and contended that it is inconsistent with the construction placed on the phrase "perils of the sea" by some United States and Canadian courts. So it is. But the criticism is misplaced. Many perils of the sea may be reasonably foreseen. The sinking of a ship after hitting an iceberg while crossing the North Atlantic in mid winter is a clear example. And hitting an iceberg does not cease to be a peril of the sea because it could have been avoided by lessening speed or keeping a proper lookout. Subject to the effect of Art IV, r 2(a) in a case governed by the Hague Rules, the failure to lessen speed or to keep a proper lookout may prevent the carrier from relying on the defence of "perils of the sea". But that is because the negligence of the skipper and not the peril of the sea is the effective cause of the loss or damage. The Titanic was sunk by one of the perils of the sea even though the presence of icebergs in the relevant latitude was reasonably foreseeable and the collision could have been avoided by reducing the speed of the ship.

In this case, knowledge of the weather in the Great Australian Bight was a critical factor in determining whether the carrier was negligent. However, the primary judge, Carruthers J, held that the carrier was not negligent in the precautions which it took to meet the expected weather conditions and that the cause of the loss or damage was a peril of the sea. As I have pointed out, once his Honour found that no breach of Art III, had occurred, it was not necessary for him to determine whether the carrier could rely on the perils of the sea immunity. Nevertheless, once his Honour made that finding, the only identifiable cause of the damage was the extreme pounding of the waves as the result of the heavy weather encountered in the Great Australian Bight. The damage to the owner's goods, therefore, resulted from a peril of the sea.

This appeal comes from the New South Wales Court of Appeal [150] . As presented, its principal concern was the meaning to be given to the phrase "perils, dangers and accidents of the sea" ("perils of the sea") appearing in Art IV, r 2(c) of the Hague Rules [151] . Those Rules govern international contracts for the carriage of goods by sea. The idea of "perils of the sea" lies deep in the English language and literature. In the law, it long enjoyed an established provenance in cases concerned with bills of lading and marine insurance [152] . But in this case, literature and law must give way to the meaning of the phrase as it is derived from its context in the Hague Rules. The Australian Parliament has made these Rules part of the domestic law of this country [153] . Only a close consideration of the Rules, read as a whole [154] , will yield the true meaning and operation of the phrase and answer the questions raised by this appeal.

Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation, Berhad (1996) 39 NSWLR 683 2. The Brussels Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924, 51 Stat 233 TS No 931; 120 LNTS 155. 3. Early cases include Lawrence v Aberdein (1821) 5 B& Ald 107 [106 ER 1133] and Gabay v Lloyd (1825) 3 B& C 793 [107 ER 927]. 4. The Amended Hague Rules are now Sch 1 to the Carriage of Goods by Sea Act 1991 Cth. It incorporates the Hague-Visby Rules, being the Hague Rules 1924 as amended by the Protocol dated 23 February 1968 known as the "Visby Protocol". The present appeal was conducted on the footing that the Rules applicable were those incorporated into Australian law by the Sea-Carriage of Goods Act 1924 Cth, s 4(1) and Sch 1 (since repealed). There is no material difference in the expression of the applicable Rules. 5. cf Effort Shipping Co Ltd v Linden Management SA [1998] AC 605 at 613-614

On 5 October 1989, Malaysian International Shipping Corporation Berhad (MIS) (the respondent) issued a bill of lading naming as "the notify party" Great China Metal Industries Co Ltd (GCM) (the appellant). The bill of lading provided that MIS would carry a cargo of aluminium can body stock from Sydney, Australia to Keelung, Taiwan. MIS undertook the delivery of the cargo in the same good order and condition as when it was shipped. The bill of lading showed that the goods were shipped on the Bunga Seroja in apparent good order and condition. GCM was the owner and consignee of the goods. MIS was the owner and operator of the ship. The cargo in question was stowed in the hold of Bay 5. Upon inspection in Fremantle, and subsequent delivery to GCM at Keelung, the cargo was found to be in a damaged condition. These proceedings represent the attempt by GCM to recover from MIS the losses it thereby suffered.

The cargo was shipped in ten 20 ft FCL containers said to contain "40 cases of aluminium can bodystock in coils alloy". The evidence showed that the coils were not packed in cases. Four were stowed in each container. Each coil was fixed to a pallet and weighed about five tonnes. Accordingly, a fully loaded container weighed over 20 tonnes. The coils were strapped and wrapped with aluminium sheeting to prevent water damage. Once four coils had been placed in each container, timber was nailed to the base of the container to prevent lateral movement. Nevertheless, in extreme weather conditions, a coil might jump vertically due to pitching, rolling and pounding of the ship. If this happened, all coils in the container were at risk of damage.

The primary judge (Carruthers J) rejected the contention by MIS that the packing by the agent of GCM had been insufficient [155] . Nor was any fault found in the system by which the containers were loaded onto, and distributed within, the ship. Specifically, Carruthers J rejected the suggestion that the ship was "too stiff".

Within the meaning of the Hague Rules, Art IV, r 2(n).

Having received her cargo, the Bunga Seroja left Sydney for Melbourne. On 8 October 1989, she departed for Burnie in Tasmania. Before departing from Melbourne the Master of the vessel (Captain G Singh) received a weather bulletin which included a gale warning for the oceans south of the Australian continent. The passage to Burnie was extremely rough. On the evening of 8 October 1989, four containers above deck in Bay 9 were damaged. One, in the same bay, was swept overboard. The ship berthed at Burnie on 9 October 1989. She sailed for Fremantle that evening. It was the events which followed, and which, at given times, occasioned the damage to GCM's cargo, that give rise to the proceedings.

Because there is no land mass between the southern coast of Australia and Antarctica, storms in the "Roaring Forties" commonly cause a strong swell, high seas and strong and variable winds. There are some stretches of sea on the earth's surface (such as the North Atlantic Ocean off the coast of North America) which, at given times, are well known for severe oceanic conditions, reflected in many reported maritime cases [156] . The Southern Ocean in the vicinity of the Great Australian Bight is one such stretch of sea, long known to navigators [157] .

eg, The City of Khios (1936) 16 F Supp 923; Edmond Weil Inc v American West African Line (1945) 147 F 2d 363; Benedict on Admiralty, 7th ed (rev), vol 2A s153, par 15-12. 2. The mishap in Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142also arose from conditions in the Great Australian Bight; cf The "Bunga Seroja" [1994] 1 Lloyd's Rep 455 at 469, quoting the evidence of the Master, Captain G Singh: "It is known to be an area where there is always bad weather."

On 12 October 1989 a weather forecast was received at sea by radio from Adelaide. It renewed the gale warning. It predicted "very rough to high seas and heavy swell". From that time, the Master described the weather and the wind experienced as "tremendous". He regarded it as unsafe to send any seamen on deck because of the extreme danger to their lives from the chance of being swept overboard. He spent long hours at the bridge directing manual steering of the vessel. By 14 October 1989 conditions had deteriorated still further. The wind was described as Force 11 on the Beaufort Scale [158] . Once again, the Master changed course to adjust to the prevailing conditions. Later that day, the Bunga Seroja had reached the southwest point of Australia. The deck log records winds of Force 10/11. It was at this point, in the late afternoon and early evening hours of 14 October 1989, that containers in Bay 6 were seen to move their positions. The ship's speed was reduced still further. This notwithstanding, containers in Bay 6 fell forward in tandem. Three were immediately washed overboard, followed later by a further five. Damage was also observed to three containers in the hold of Bay 5, including one of the containers belonging to GCM. Independently of the loss of, and damage to, the containers just described, the heavy weather caused structural damage to the ship. Most of this was reported as having occurred as the falling containers struck the bulwark from the break of the forecastles resulting in damage to the bulwark and gunwale [159] .

As it was devised in 1805, the Beaufort Wind Force Scale was a scale from 0-12, based purely upon observation of the effect of wind force at sea, with no mention of the speed of the wind. Various attempts, particularly during this century, have been made to correlate the two. Thus it is generally agreed that Force 8 is a "gale" (62-74 kmph); Force 9 is a "strong gale" (75-88 kmph); Force 10 is a "storm" (89-102 kmph); Force 11 is a "violent storm" (103-114 kmph); and Force 12 is a "hurricane" (117 kmph and above): Tetley, Marine Cargo Claims, 3rd ed (1988), pp 1268-1269. In 1955, Beaufort force numbers 13-17 were added by the United States Weather Bureau. But even now, these are frequently ignored. See, eg, Benedict on Admiralty, 7th ed (rev), vol 2a s153, par 15-7. 2. The report of structural damage recorded that the bow rails on the forecastle deck were broken off partly; the anchor motor, winch cover and gear cover were missing; the port anchor was lost with a length of anchor cable missing; the starboard bulwark and gunwale were buckled by falling containers and bulwark stays ripped off; an air pipe was broken; catwalk rails were partly dented and welding joints parted; an aft life-raft suffered cracks in the outer cover area; and there were indentations on one of the hatch covers.

When the weather subsided on 15 October 1989, the ship and the cargo were inspected at sea. The windlass motor was found inoperable. A length of cable in the water was slowly retrieved. It was discovered that the port anchor was lost. On inspection after arrival at Fremantle it was found that two of GCM's containers had been damaged. When the ship eventually arrived at Keelung on 2 November 1989, it was discovered that the contents of two further containers had been damaged [160] .

The eventual claim was for damage and water stains to five coils. Ten other coils were said to be severely distorted or crushed and were treated as a total loss.

GCM sued MIS in Admiralty in the Supreme Court of New South Wales to recover damages for breach of the contract of carriage and negligence. MIS pleaded various defences, many of which are not now relevant. Specifically, it accepted that the bill of lading, evidencing the contract of carriage, was subject to the Sea-Carriage of Goods Act 1924 Cth and the Hague Rules scheduled to that Act. It admitted that it was bound to exercise due diligence to make the ship seaworthy and all parts of the ship in which goods were carried fit and safe for their carriage. However, MIS denied any breach of such obligations. Moreover, it specifically denied an allegation that it was a bailee for reward of the cargo and liable for breach of duty as a bailee. It was MIS's case that its sole liability was pursuant to the bill of lading subject to the Hague Rules. Pursuant to the Rules, MIS raised several defences including that it was not responsible for the loss or damage to the cargo in so far as this had arisen or resulted from perils of the sea [161] ; insufficiency of packing [162] ; an act or omission of the shipper or owner of the goods, his agent or representative [163] ; or any other cause arising without the actual fault or privity of the carrier or without the actual fault or neglect of the servants or agents of the carrier [164] .

Hague Rules, Art IV, r 2(c). 2. Hague Rules, Art IV, r 2(n). 3. Hague Rules, Art IV, r 2(i). 4. Hague Rules, Art IV, r 2(q).

At trial, MIS did not dispute the damage to GCM's cargo. Its principal case was that the "proximate cause" [165] for the damage to the cargo was a fortuitous accident arising during the voyage by reason of the excessive weather conditions. It contended that the pounding of the ship by extremely heavy seas had caused coils within the containers to jump, resulting in movement of other coils, thereby occasioning damage for which it was not, by law, liable in contract, nor by the common law of bailment or negligence. Much of MIS's case at trial depended upon whether the evidence of the Master, Captain Singh, was accepted and whether various criticisms of his seamanship, including his response to the severe weather conditions, were made out. GCM called a marine surveyor, Captain Fairburn, in an attempt to establish one or more defects in the loading of the cargo and the seamanship of those in charge of the Bunga Seroja. These criticisms included the suggestion that the loading of the ship had rendered her "relatively stiff" and so liable to roll too quickly; that the vessel had maintained too high a speed for the conditions; and that a different course should have been taken to round Cape Leeuwin (at the southwest point of Australia) at a location likely to have reduced the excessive pounding and rolling to which the ship was subjected. Captain Fairburn suggested that Captain Singh had been trying to keep to a schedule for the owner's [ie MIS's] benefit.

At a glance

Court

Decision date

Before

Source

Judgment (445 paragraphs)

Parties

Cases Cited (18)