FEDERAL COURT OF AUSTRALIA ADMIRALTY - claim for damage to cargo - FOB sale - payment under irrevocable letter of credit - whether breach of contract of carriage - non-refrigeration of consignment - whether contract and carriage required a refrigeration clean negotiable Bill of Lading - construction of Bill of Lading - effect of attachment station goods are refrigerated for shipment - whether respondent was the "carrier" - whether plaintiff had title to bring proceedings - passing of property and risk in the cargo - nexus between the breach of contract and the damage claimed - whether fault of other parties involved in transaction breaks the causal link between the plaintiff and the defendant - assessment of quantum of damages - whether Hague Rules apply in the present situation - meaning of "package". Mercantile Act 1867 (Qld) s 5(3) Carriage of Goods by Sea Act (Cth) 1991, s 11, The Amended Hague Rules, Articles 3 & 4 March v E & M Stramare Pty Ltd (1991) 171 CLR 506, applied Chellaram & Co v China Ocean Shipping Co [1989] 1 Lloyd's Rep 443, distinguished Hunter Grain Pty Limited v Hyundai Merchant Marine Co Ltd (1993) 119 ALR 507, followed Evans v James Webster & BrotherLtd (1928) 32 Ll LR 218, followed PACIFIC COMPOSITES PTY LTD & LEMARNE CORPORATION LIMITED - v - TRANSPAC CONTAINER SYSTEM LIMITED (carrying on business as BLUE ANCHOR LINE), ANL LIMITED & UNITED ARAB SHIPPING COMPANY (SAG) NG 377 OF 1996 TAMBERLIN J SYDNEY 11 MAY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 377 of 1996 in admiralty BETWEEN: PACIFIC COMPOSITES PTY LTD (ACN 005 952 698) First PLAINTIFF LEMARNE CORPORATION LIMITED Second PLAINTIFF AND: TRANSPAC CONTAINER SYSTEM LIMITED carrying on business as BLUE ANCHOR LINE First DEFENDANT ANL LIMITED (ACN 008 654 206) Second DEFENDANT UNITED ARAB SHIPPING COMPANY (SAG) Third DEFENDANT JUDGE: TAMBERLIN J DATE OF ORDER: 11 MAY 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first defendant pay the plaintiff the sum of AUD38,570, together with interest from 30 September 1995 to date of judgment. 2. The first defendant pay the costs of the plaintiff in this proceeding. 3. Otherwise action dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 377 of 1996 in admiralty BETWEEN: PACIFIC COMPOSITES PTY LTD (acn 005 952 698) First plaintiff LEMARNE CORPORATION LIMITED Second plaintiff AND: TRANSPAC CONTAINER SYSTEM LIMITED carrying on business as BLUE ANCHOR LINE First defendant ANL LIMITED (ACN 008 654 206) Second defendant UNITED ARAB SHIPPING COMPANY (SAG) Third defendant JUDGE: TAMBERLIN J DATE: 11 MAY 1998 PLACE: SYDNEY REASONS FOR JUDGMENT This is a claim for damages arising as a consequence of the non-refrigeration of a consignment of goods of resin-coated carbon fibre ("the goods") during the course of shipment from Pusan to Brisbane, in the period 13 August 1995 and 7 September 1995. The plaintiff, Pacific Composites Pty Ltd ("Pacific"), is the consignee of the goods. The first defendant, Blue Anchor Line ("BAL"), is said to be the relevant carrier. Australian National Line Limited ("ANL") is said to be the charterer of the vessel "Australian Advance" on which the goods was shipped. The third defendant is the owner of the vessel. The matter was not argued by the second and third defendants and the resolution of the dispute before me turns on the defences raised by BAL, for whom Mr P King of Counsel appears. The Amended Statement of Claim alleges that BAL is in breach of the contract of carriage comprised in the Bill of Lading ("the Bill") and also that BAL negligently misrepresented, on the face of the Bill, that the goods were refrigerated for shipment when in fact they were not on refrigeration during the shipment. BAL pleads a number of matters by way of defence, in addition to denying the allegations of breach of contract and misrepresentation. First, it denies that it was a carrier. Second, it disputes the allegation that under the contract for carriage the goods were required to be on refrigeration. Third, it says that any fault was not attributable to BAL. Fourth, it says the contract requires that a dispute should be heard by the Courts of Hong Kong and according to the law of Hong Kong. Fifth, it denies the quantum and any cause or nexus between any breach and the damage. It also submits that the plaintiff has no title to bring this proceeding because it is not a party to the relevant contract. Finally, it claims that the plaintiff is limited in the quantum of its recovery to the Amended Hague Rules. Background The evidence discloses that since 1989, Pacific, which has offices in Melbourne and Brisbane, has manufactured fibre reinforced products using carbon fibre and fibreglass sheeting pre-impregnated with epoxy resin and is one of the leading manufacturers of those products in Australia. Sunkyong Industries Limited ("Sunkyong") of Seoul, Korea, manufactures carbon fibre and fibreglass sheeting pre-impregnated with epoxy resin. Pacific Composites purchase that material for use in the production of products, such as fishing rods and windsurfer masts. Mr Smith, the General Manager of Pacific, gave evidence that the goods can be transported by sea without any damage or reduction in quality so long as it is kept refrigerated. His experience has been that if kept refrigerated at around minus 20şC, the material keeps indefinitely. His experience is also that if the material is not kept refrigerated it has a shelf life of between 7 to 14 days, as the epoxy resin present in the material dries and hardens during the period, making the goods less pliable and unsuitable for use in manufacturing. This evidence is consistent with statements made in a brochure issued by Sunkyong, to the effect that the goods has a long out life of 14 days at 25şC. The evidence indicates that on at least one prior occasion before the present consignment, between May and June 1995, Pacific was a consignee of resin coated carbon fibre sheet shipped by Sunkyong on a Bill of Lading issued by BAL. These goods were shipped on the vessel "Pyrmont Maersk", which loaded the goods on board at Pusan, Korea for shipment to Brisbane. There was nothing in the earlier Bill of Lading to indicate that the goods were required to be "on refrigeration". However, the evidence of Mr Smith, for Pacific, which I accept, was that the goods had in fact been "on refrigeration". There is in evidence a Purchase Order, dated 10 July 1995, signed by Mr Smith and directed to Atherton International ("Atherton"), the Australian representatives of Sunkyong. That Purchase Order specifies the goods and under the heading "Delivery Schedule" it contains the words "REFER-SEA" in handwriting. There is then printed beneath that expression the words "Please notify immediately if you are unable to meet Del'y date". Although there was some cross-examination as to the meaning of "REFER-SEA," I accept that this expression was intended to and did, on a reasonable interpretation, convey a requirement that the goods were required to be in a refrigerated container and actually on refrigeration during shipment. I also accept that the Purchase Order does not require any specific temperature range for such refrigeration. Mr Smith says that on about 14 July 1995, he telephoned the offices of Kuehne & Nagel (Australia) Pty Limited ("Kuehne & Nagel"), who were the delivery agents nominated in the BAL Bill of Lading issued on 19 August 1995, and stated that the goods must be refrigerated for the period of sea carriage otherwise they would deteriorate and become unusable. This conversation is not admitted and there are no records of any such conversation in the files of Kuehne & Nagel. However, in cross-examination, it became clear that the files of Kuehne & Nagel were by no means complete. Having regard to surrounding documentary material, I consider that the probability is that the conversation attested to by Mr Smith took place in the terms he alleges. Although there is no mention of refrigeration in the commercial invoices issued by Sunkyong on 10 August 1995, the packing list issued on that day, apparently together with these invoices signed on behalf of Sunkyong, makes reference in the "Remarks" box on the form to the fact that "Goods are Refrigerated". In addition, the Irrevocable Documentary Credit issued by the Australia and New Zealand Banking Group Limited on 21 July 1995, calls for a "Full set of clean on board marine bills of lading made out to shipper's order and endorsed in blank marked freight collect and evidencing that goods are refrigerated (for sea shipment)". It also requires a packing list stating that sea freight goods are refrigerated. The typewritten Attachment to the Bill of Lading, issued on 19 August 1995, also uses the same language, namely, "Goods are Refrigerated (For Sea Shipment)". In addition, there is an invoice issued by Kuehne & Nagel on 7 September 1995, contained the statement "Goods are Refrigerated". This repeated and consistent series of reference to the effect that the goods are required to be, or are, refrigerated for sea shipment strongly supports the likelihood that Mr Smith, in his July conversation, specified to Kuehne & Nagel that the goods was to be refrigerated and I find this to be the case. The BAL Bill of Lading was issued as a negotiable clean on board bill whilst the goods was stated to have been shipped on board on 13 August 1995. Although there is some doubt as to the exact date of shipment because a Bill of Lading, issued by the group of which the second defendant was a member, indicates that the goods was shipped on board on 16 August 1995, nothing of significance turns on this discrepancy. I should note that no value in respect of the goods is declared in the Bill. The Bill of Lading The Bill of Lading, on which the claim is based, is issued on a printed BAL form, prominently displaying the BAL logo, for carriage of the goods from Pusan to Brisbane on the vessel, "Australian Advance". The goods are stated to have been shipped on 13 August 1995. The Shipper is described as Sunkyong and the Consignee is "To order". The party to be notified under the Bill is Pacific, at its Victorian office address. The delivery agent is stated as Kuehne & Nagel. The goods are described as: "1. CNT 20 FT N. O. R. CONTAINER Gross weight Measurement SHIPPERS LOAD COUNT + Kos cbm SEAL SAID TO CONTAIN 2378 25,000" There is a notation on the front page of the Bill: "DETAILS ARE AS PER ATTACHED SHEET." The Bill is signed by K. N Chunil Shipping ("Chunil") on behalf of BAL. The evidence is that K N Chunil acted as agents for the carrier on a general basis and that K N Chunil was authorised to issue Bills of Lading on behalf of BAL. The expression "on behalf of Blue Anchor Line" appears in three places at the foot of the front page of the Bill. Attached to the printed front and back pages and forming part of the Bill is a page entitled "Attachment". This is entirely type-written and records that: "GOODS ARE REFRIGERATED (FOR SEA SHIPMENT)" This endorsement accords with the requirements of the letter of Credit and is consistent with the documents referred to earlier. Clause 1.2 of the Bill defines "Carrier as the person by whom or for whom the Bill of Lading is signed." The back page of the Bill, which contains terms and conditions, is endorsed in blank by Sunkyong in the form of a stamped signature as required by the Irrevocable Letter of Credit. At this stage it is convenient to note that the reference to the expression "N.O.R CONTAINER" refers to a "reefer container", which is a container capable of being refrigerated but which is not operating on refrigeration. Hence the expressions "not operating on refrigeration" and "not on refrigeration", which are for practical purposes, identical in substance. There is no dispute that the goods were carried in a reefer container nor that the container was not on refrigeration. There is, on the face of it, an apparent discrepancy between the typewritten reference on the Bill to "NOR" and the typewritten Attachment, which states that the "Goods are Refrigerated (for Sea Shipment)". This discrepancy is discussed later in these reasons. An invoice issued by K N Chunil Shipping in Korea, on 29 August 1995, also refers to the consignee as Pacific Composites. The goods arrived in Brisbane on about 7 September 1995. On that day, Kuehne & Nagel issued a Notice of Arrival (Consignee) which stated: "Goods are refrigerated." The Shipper is described in the Notice of Arrival as Sunkyong and it is stated that the invoice is to be sent to Pacific Composites. Kuehne & Nagel are described in the document as the delivery agent. There was a delay in delivery and the consignment was eventually delivered to the possession of Pacific on 13 September 1995, whereupon Pacific immediately placed the goods on refrigeration. On the same date, a Notice of Intention to Claim was made out on behalf of Kuehne & Nagel, addressed to ANL at Brisbane. The claim then asserted by them was for $30,000 in respect of "resin coated fabric". The reason assigned for the claim was "Refrigerated Goods, power not turned on." This Notice of Intention to Claim was received by ANL on 15 September 1995. Mr Smith of Pacific testified that on about 7 September 1985, he spoke with Mr Willey of Kuehne & Nagel and stated that the goods in the container must be kept on refrigeration "during the period of delay" in delivery to Pacific. Mr Willey said he would check the position. On 8 September 1995, Mr Willey called Mr Smith and told him that the container had not been refrigerated during the period of the sea voyage. On 14 September 1995, Mr Smith received from Kuehne & Nagel, the Bill of Lading; the Invoices; and Packing List, a copy of the invoice for the consignment; and a copy of the Kuehne & Nagel invoice for freight in respect of the assignment. His evidence, as explained in oral testimony, was that "at some stage" the documents for shipment of the consignment were inspected and were found to be contradictory. Mr Smith's recollection is that this realisation occurred after the goods had been released from Customs but he could not be more specific. On 15 September 1995, the consignment was moved to a freezer at Pacific Brisbane premises, but Pacific was unable to immediately determine the extent of damage to the fibre sheeting until efforts were made to use the goods in the manufacturing process. On each occasion an attempt was made to use the material, it became dry and brittle and unusable. On 22 September 1995, payment was made by the Bank under the Letter of Credit in an amount of USD21,350. On 27 September 1995, the account of Pacific was debited with AUD44,733,94, which represented the exchange rate at that time of 0.7254 AUD to the USD. On about 24 October 1995, arrangements were made for a Survey of the consignment in order to assess the damage. The Survey was conducted on the following day. On 27 October, Mr Robinson, the Surveyor, made a report (varied by his subsequent report of 27 November 1995) wherein a total loss, including air freight costs, was stated to be AUD29,264.48. Against the above background I now turn to the specific issues which were raised in the course of hearing. Was there a refrigeration requirement? The documentary evidence provides strong support for the conclusion that it was a requirement of the sale contract that the goods should be refrigerated. The Purchase Order of 10 July 1995 contains the statement : "Refer sea". Notwithstanding the submissions made to the contrary, I am of the view that these words, albeit written with a spelling mistake, were likely to convey to a recipient, in the present context, a requirement that the goods were required to be refrigerated during the sea voyage. This view is supported by the consistent line of documentary references noted earlier to the goods being "refrigerated for sea shipment". I am also satisfied that Mr Smith communicated this requirement orally to Kuehne & Nagel, acting on behalf of BAL, on or about 14 July 1995. In addition, I am satisfied that when the Bill of Lading was issued on 19 August 1995 on the BAL printed form, its effect was to convey to Mr Smith and any reasonable person reading the Bill that the goods was to be refrigerated for sea shipment, meaning that it was to be refrigerated during the voyage. Notwithstanding the apparent discrepancy on the face of the document between the reference to an "NOR Container" on the one hand and to "Goods Refrigerated (For Sea Shipment") on the Attachment, I am satisfied that it was an express condition of the contract for carriage that the goods were to be refrigerated for sea shipment and that they were not so refrigerated. It was, no doubt, the reference to the goods as refrigerated (for sea shipment) which led to the Letter of Credit being paid out by the issuing bank because this wording was in strict accordance with the wording of the Letter of Credit. In construing the Bill of Lading, it is important to consider the whole of the wording used in the document in the context of the relevant factual matrix. In a case of ambiguity or discrepancy, the Court should endeavour to assign practical meaning and effect to the terms of the Bill given its great importance in international trade as (i) a receipt for goods shipped; (ii) evidence of the contract of carriage and (iii) perhaps more fundamentally, as a document of title to the goods. The cases have emphasised that it is essential that a Bill of Lading must be accurate in all significant respects: see Hunter Grain Pty Limited v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507 at 518; Evans v James Webster & Brother Ltd (1928) 32 Ll LR 218 at 223. Some assistance in construing the Bill can be obtained from basic canons of construction. One relevant principle is that special conditions prevail over general conditions. This is of some assistance in the present case because the details of the container, stated on the face of the Bill, are referred to as being set out in the attached sheet. This sheet described the goods as "refrigerated". Another relevant principle is that in case of doubt the construction of a printed document should be determined against the person drawing up the document. In this case the Bill is expressed to be a BAL Bill and it prominently bears the BAL logo in several places. In the event of ambiguity it should be read against BAL. The consignee, Pacific, of course was not privy to the Bill as issued. Furthermore, it is to be observed that a requirement that the goods should be refrigerated is not an unreasonable construction given the nature of the goods. In addition, there is the evidence of Mr Smith in cross-examination to the effect that the earlier consignment in May/June 1995 had, in fact, been refrigerated notwithstanding, in that instance, that the Bill of Lading made no specific reference to refrigeration. A suggestion was made in the course of argument that the words "Goods are Refrigerated (For Sea Shipment)" should be construed to indicate only that the goods were refrigerated at the time of or prior to shipment but that they were not required to be on refrigeration during the voyage. This approach does not, in my view, accord with commercial reality or common sense. It would be an odd situation indeed to have a requirement that goods be refrigerated up to the time of shipment but not during the shipment itself, particularly where express reference is made to refrigeration for sea shipment and also having regard to the nature of the goods in question and their sensitivity to fluctuations in temperature. The above considerations lead me to the conclusion that it was a requirement of the contract for carriage, evidenced by the Bill, that the goods were required on refrigeration during the sea voyage. Carrier BAL submits that it was not the carrier and that, in fact, the carrier was ANL or an undisclosed principal. In my view this submission cannot be accepted. The printed Bill of Lading form originates from BAL and it bears the logo and name of BAL in several places. It is the relevant ocean Bill of Lading and it is also the fact that K N Chunil Shipping Co, acting on behalf of BAL, had authority to issue Bills of Lading. The Bill, issued on 19 August 1995, specifically states that it is signed on behalf of BAL by Chunil. This corresponds with the definition of "Carrier" in cl 1.2 of the terms and conditions of the Bill, namely that BAL is the entity for whom or on whose behalf the Bill of Lading was signed. It was also submitted that the relevant carrier was an entity other than BAL because BAL as Shipper had entered into a Combined Transport Bill of Lading with "Kass Australia Searoad Service" and thereby subcontracted the carriage, as permitted by cl 10 of the BAL Bill. Kass Searoad Service was a group of three carriers comprised of ANL, Cho Yang Shipping Co Ltd, and Kawasaki Kisen Kaisha Ltd. However, there is no evidence to support any contractual relationship between Pacific and ANL or any other member of the group. In my view, the relevant Bill is that made between the Shipper Sunkyong and BAL. Under that Bill, the contracting carrier was clearly BAL and it was thereby obliged to ensure that the goods were refrigerated during the voyage in accordance with the Bill issued by it on 19 August 1995. Title to sue It is submitted for BAL that Pacific had no title to bring these proceedings because it did not bear the risk and had no property in the goods at the time of breach. The response to this is that, on the evidence, the contract of carriage was entered into by Sunkyong and BAL and that, on the face of the Bill, the consignee was "To order" and Sunkyong endorsed the Bill in blank. The Bill was negotiable. The invoice issued by K N Chunil on 29 August 1995 to Kuehne & Nagel indicated that the consignee was Pacific. On about 14 September 1998, Pacific became the holder of the Bill when it received the documents. The sale was in respect of ascertained goods "FOB Pusan" so that risk and property passed to Pacific either at or some time prior to payment, under the Letter of Credit. Section 5(3) of the Mercantile Act 1867 (Qld), which relates to Bills of Lading provides: "Rights under Bills of Lading to vest in consignee or endorsee. (3) Now therefore it be it enacted that every consignee of goods named in the bill of lading and every indorsee of a bill of lading to whom the property and the goods thereby mentioned shall pass upon or by reason of such consignment or indorsement shall have transferred to and vested in him all rights of suit and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself. " In view of this provision, together with the fact that the Bill of Lading was to order and that it had been endorsed in blank by Sunkyong and duly delivered to Pacific, I am satisfied that Pacific was entitled to bring proceedings to enforce the terms of carriage contract embodied in that Bill. I am satisfied that as from the time the goods was shipped on board, the property and the risk passed to the buyer which, of course, was Pacific. Did the loss flow from the breach? A further submission by BAL is that the loss claimed was not caused by, or did not flow from, any act or omission on its part. It is said that after receipt of the documents, Mr Smith became aware of the contradiction inherent in the Bill and that it was thereafter open to him to prevent payment from the Bank under the Irrevocable Letter of Credit. Mr Smith, whose evidence I accept on this point, clarified the statements made in his affidavit relating to his realisation of the contradiction with the explanation that it was not until after payment that the implications of any discrepancy in the document were properly appreciated by him. In these circumstances, I do not consider that it was either practicable or realistic for him to have stopped the payment being made under the documentary letter of credit on 22 September 1998 because the Bill and other shipping documents, on their face, conformed to the terms of the Letter of Credit notwithstanding the reference to an NOR container. I am satisfied that the Bank could reasonably have read the Bill as conforming to the Letter of Credit. In addition, it is said that the failure to refrigerate the goods arose from the default by Sunkyong because it did not make proper arrangements for a container on refrigeration. It is said that, on the evidence, an NOR container was ordered by Sunkyong for stuffing by it at its premises and accordingly it must have appreciated that the goods were not being shipped as refrigerated goods. In these circumstances, it is said that the loss arose from the fault of Sunkyong. Alternatively, it is said that the fault occurred on the part of ANL. For the reasons given above, I am satisfied that it was a condition of carriage made with BAL that BAL was to ensure that the goods should be on refrigeration. The fact that the goods were not refrigerated amounted to a breach of the contract for carriage on the part of BAL. The consequence of this is that while there may possibly have been fault on the part of other parties involved in the transaction, it does not follow that the loss was not caused by BAL's failure to comply with the condition. The test which must be adopted in such a case is whether, as a matter of common sense, it could be said that the loss was caused by default on the part of BAL: see March v E & M Stramare Pty Ltd (1991) 171 CLR 506 at 515. In my view, that test was satisfied in the present case. The insertion in the bill of the words "Goods are Refrigerated (For Shipment)" were in precise conformity with the documentary requirements of the Letter of Credit under which payment was made. Damages The evidence on the damages issue was somewhat contradictory but the end result is that I am satisfied that the consignment was a total loss. In its Amended Statement of Claim, the plaintiff seeks an award for the full landed value of the goods together with air freight costs of replacement goods and survey fees totalling AUD38,570.12. The evidence as to damages was principally that of Mr Robinson, a marine surveyor. He made two reports. The first was on 27 October 1995, in which he quantified the loss of the goods. In so doing, he stated that Pacific had tried to use the material from various rolls but on each occasion had found that it was hardened and could not be used. He therefore proceeded to assess the claim on the basis that the product had no other use and that it must be considered as a total loss. On 26 October 1995, Mr Smith of Pacific wrote to Kuehne & Nagel, Queensland, stating that the claim amounted to $19,090. In so doing I accept that Mr Smith was acting on the basis that it may have been possible to salvage some of the goods. On 27 November 1995, Mr Robinson prepared a further report which took into account what he understood to be the salvageable component of the consignment. He quantified the loss at AUD22,908.00 together with air freight costs of AUD6,356.48 making a total claim of AUD29,164.48. Both Mr Robinson and Mr Smith were cross examined in some detail as to the discrepancies in the figures, particularly as to how much the goods was in fact unsalvageable. Mr Smith explained that it was not really possible to tell what proportion of the consignment was unusable until attempts had been made to use various portions of it. No definitive view was reached on the useable component until late December 1995, after a number of attempts had been made to use the material. At that time Mr Smith concluded that the whole consignment was lost. I accept this evidence. Counsel for Pacific argued that, because the currency of the transaction was United States dollars, the sum presumably plus interest should be converted to Australian dollars at the date of judgment. However, shortly after payout of the Letter of Credit (on 29 September 1995) the issuing Bank debited the account of Pacific in Australian dollars and I think that this was the appropriate date for exchange rate purposes. The judgment should be in Australian dollars and not partly in United States dollars. Although there were differing views expressed as to the exact amount of the loss, I am satisfied that the final quantification, made on the basis that the whole of the consignment was lost, is the appropriate one and that loss amounts to AUD38,570.12 as claimed. Accordingly, so far as quantum is concerned, I am satisfied that the amount claimed in the Statement of Claim is the appropriate amount to be awarded. Loss limitation BAL also contends that the extent of the damage was substantially less than all the goods consigned in the container and that the weight of the lost goods was no more than 1,835.4 kilograms, which, under the applicable limitation, entitled Pacific to recover no more than $3,670.00. The BAL Bill of Lading indicates that there were 50 cartons in a single container. BAL relies in its Amended Defence on Article 4 rule 5 of the Amended Hague Rules ("the Hague Rules"), which apply by reason of Part 2 of the Carriage of Goods by Sea Act (Cth) 1991. That rule provides: "5(a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the Bill of Lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding 666.67 units of a count per package or units or 2 units of a count per kilogram of gross weight of the goods lost or damaged whichever is the higher." The unit of account mentioned in this article is a special drawing right defined by the International Monetary Fund: see r 5(d). The question which is raised for decision is whether the package referred to in Rule 5(a) is a reference to the container or to the cartons. In addition, the Bill limits the claims to USD500 per package unless a higher value was declared. No higher value was declared in the present Bill. Pacific relies on the decision in P S Chellaram & Co Ltd v China Ocean Shipping Co [1989] 1 Lloyd's Rep 413 where Carruthers J held that a reference to one container with 900 cartons of blank cassette tapes was to be construed as a disclosure in the Bill of Lading of the number of packages in the container supplied by the carrier, namely 900. At 427, his Honour said: "I think the word 'package' is more appropriate to the carton in which the blank cassette tapes were packed rather than the 20 ft steel container in which they were stuffed, for ease of carriage. The proposition that a carrier's liability should be limited to 100 pounds (or its equivalent) in respect of each container carried upon its vessel, does not in my view accord with common sense or current rational commercial agreement. I agree with the American authorities to the effect that container is functionally part of the vessel, at least so long as 'its contents and the number of packages or units are disclosed' see Mitsui & Co V American Export Lines Inc (1981) AMC 331." Those remarks are apposite to the present case. There is no merit or legal substance in this submission. As a further submission, BAL submits that it was a term of the contract that any dispute arising under the Bill of Lading should be determined by the Courts of Hong Kong and in accordance with the laws of Hong Kong: see cl 4. A complete answer to this submission is that s 11 of the Sea Carriage of Goods Act, provides: "(2) An agreement (whether made in Australia or elsewhere) has no effect in so far as it purports to ...... .... (c) preclude or limit the jurisdiction of a Court of the Commonwealth ... in respect of : (i) a Bill of Lading .... relating to the carriage of goods from any place outside Australia to any place in Australia or ...." In the present case the constraint in cl 4 of the Terms and Conditions of the Bill of Lading can have no force or effect because that contravenes s 11(2)(c). Furthermore, no attempt was made to establish that the law of Hong Kong referred to in the above clause was in any relevant sense, different for the law of Australia. Hague Rules - Article 3(1) Pacific relies on Article 3 of the Amended Hague Rules. The relevantprovisions read as follows: "ARTICLE 3 (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to - (a) .... (b) .... (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which the goods are carried, fit and safe for their reception, carriage and preservation. ... (2) Subject to provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried." BAL submits that the goods were shipped in the manner arranged by Sunkyong. It is said that there was no evidence prior to shipment that the party arranging carriage, namely Sunkyong, required the goods to be refrigerated. In my view, for reasons given earlier, the carrier BAL did not properly carry or care for the goods and it failed to provide the required refrigerating for the carriage and preservation of the goods. Accordingly, I do not accept this submission. Hague Rules - Article 4, r 2 BAL seeks to claim the benefit afforded by Article 4 Rule 2 of the Amended Hague Rules, which provide: "2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from ..... (i) Act or omission of the shipper or owner of the goods, his agent or representative. (ii) 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." Again, for reasons given earlier, in my view, the loss was suffered as a direct result of the failure on the part of BAL to comply with the requirement of the Bill of Lading. The damage to the goods arose, both as a matter of common sense and of practical experience, as a direct consequence of BAL failing to ensure that the goods were refrigerated and in issuing an incorrect Bill of Lading at a time when the goods had been shipped on a voyage without the provision of adequate or sufficient refrigeration as expressly required by the Bill. Negligent misrepresentation In view of the conclusion which I have reached on the contract claim, it is not necessary to determine this question and I will not do so. Conclusion For the above reasons I am satisfied that the plaintiff succeeds in its claim, and I order that the first defendant pay to the plaintiff the sum of AUD38,570 together with interest from 22 September 1995, to date of judgment. The first defendant is to pay the plaintiff's costs of this proceeding. I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin Associate: Dated: 11 May 1998 Counsel for the Applicant: Ms L Muston Solicitor for the Applicant: O'Reilly Sever & Co Counsel for the Respondent: Mr P E King Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 20 April 1998 Date of Judgment: 11 May 1998