A fire began on the Reefer Badger while a cargo of meat was being loaded. The shipper, Anglo Irish Beef Processors International (AIBP), sued the stevedore, the Port Authority, and the shipowner (SK Reefer SA) (SKR) in regard to the loss suffered from the fire. Initially the shipper sued the shipowner for negligence and breach of statutory duty, but it sought to amend its statement of claim to include breach of contract over a year after the date the cargo was originally due. The shipowner contended that the shipper was time-barred by virtue of art 3.6 of the Hague Rules. This particular article releases both carrier and ship from liability for loss or damage to cargo when a year has passed since the goods were delivered, or ought to have been delivered.

This case was an appeal by the shipper from a decision by Hayne J, which itself involved an appeal from the decision of a Master, refusing AIBP leave to amend its statement of claim. The original grounds of argument against SKR (involving negligence and breach of statutory duty) were brought within time and were entirely valid; only the breach of contract claim was contentious, and required some way around art 3.6 to continue.

Held: Appeal allowed.

Despite AIBP seeking to amend its statement of claim to include a paragraph about breach of contract, there was no contract for the carriage of goods existing between AIBP and SKR that was pleaded. Instead AIBP's argument was based on the idea that there was a contract for the carriage of goods between itself and SKR as evidenced by the bill of lading. At any rate, any contract of carriage relied upon by AIBP would be governed by the Hague Rules, as rendered law in Australia by inclusion in the Sea-Carriage of Goods Act 1924 (Cth). Moreover, the bill of lading between AIBP and SKR explicitly incorporated the Hague Rules, ensuring that their application was unavoidable.

AIBP argued the appeal on the basis that the Hague Rules were part of its contract with SKR, so the time limit imposed by art 3.6 of the Hague Rules was a contractual stipulation, not a statutory one. AIBP also argued that the art 3.6 time bar could be overcome by operation of either s 34 of the Limitation of Actions Act 1958, or through rr 36.01(1) and (6) of Ch.1 of the Rules of Court. It was up for consideration as to whether any of these provisions actually applied to contractual time bars, also in consideration of the fact that the art 3.6 time bar would extinguish, not merely bar, AIBP's remedy.

However, the Court opted to disregard the questions surrounding the Rules of Court and the Limitation of Actions Act 1958, as these were unnecessary to answer at the time.

Article 3.6 of the Hague Rules mentions the necessity of a 'suit being brought' within a year of goods being delivered, or from the date they should have been delivered, or else all liability is nullified. The Court in this case considered the possibility that the 'suit being brought' in this case was the allegations of breach of statutory duty and of negligence, regardless of the fact that breach of contract had not yet been added. If so, the time bar would become unimportant, and the question of whether or not to allow the breach of contract amendments could be considered in light of r 36.01(1) of the Rules of Court alone.

In order to constitute a 'suit', was it necessary that the proceedings be for breach of contract? The Hague Rules, as applicable in this case, concern the carriage of goods by sea, which itself relies on the existence of bills of lading between parties. This is evidenced by the reference in art 2 to 'every contract of carriage of goods', 'contract of carriage' being defined in art 1 to mean 'contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea'. 'Carriage of goods' refers to the period between goods being loaded onto a ship, and the time when they are unloaded. Because the fire that damaged AIBP's cargo happened during loading but before the ship departed, arts 3.1.c and 3.2 were also potentially relevant. Article 3.1.c requires carriers to make the holds of the ship fit and safe for the goods being carried, a duty to which the carrier is held before and at the beginning of the voyage. Article 3.2, meanwhile, saddles carriers with the responsibility of properly and carefully loading, keeping, and discharging the goods onboard.

Importantly, the context of art 3.6 of the Hague Rules involves entitlement to goods under the contract of carriage and the relationship between carrier and shipper. The Court was of the opinion that the existence of a contract for the carriage of goods by sea, covered by a bill of lading, was absolutely essential to the application of the Hague Rules. When the Rules do apply, one party to a contract of carriage may have an action in contract against the other party for breaching their contract. Claims in tort may also arise due to conduct that occurred in the performance of contractual obligations, and plaintiffs will usually have the option of either pursuing a claim in contract or in tort, subject to any important contractual terms or immunities. Because of this, the reference in art 3.6 to a 'suit' must encompass actions both in contract and in tort. Article 3.6 also refers to 'all liability in respect of' loss or damage, not merely contractual liability. A suit was brought in the one year period before the appellant's claim was extinguished, which was the suit to claim damages for negligence and breach of statutory duty. The appellant's claim was within time, even if AIBP was then only enforcing a claim in tort.

It would be in the respondent's interests for the Court to decide that art 3.6 and 'suit' encompassed only a claim in contract, as AIBP's claim would then be entirely out of time and the respondent would elude responsibility. SKR laid its argument upon several cases, which the Court considered, but disagreed with SKR's interpretations of these decisions, including of The Kapetan Markos NL [1986] 1 Lloyd's Rep 211. The suggestion in the Hague Rules that a suit must be brought within time in order to establish liability under those Rules was not a suggestion that the suit must be a suit in contract. To argue this was to equate liability under the Hague Rules with contractual liability. Nor did the possible discharge of the defendants in this case from contractual liability have any bearing on their outstanding liability in tort. In The Kapetan Markos NL, Parker LJ did not appear to be confining himself to considering only liability in contract, as would favour the defendants in this case. Parker LJ referred to and accepted the defendant's submission that 'suit' in art 3.6 of the Hague Rules referred to any kind of suit arising under 'the particular contract for breach of the particular obligation and the particular damage'.

On the other hand, in the Gadsden case, the New South Wales Court of Appeal found the shipowner could not rely on art 3.6 of the Hague Rules to refute a claim three years after the fact, because it was not a party to the bills of lading. That Court also found that the Hague Rules related only to contracts of carriage covered by a bill of lading, and art 3.6 extended no further than this. It did not extend to liability in tort, or even to liability in contract, unless that claim was based upon a contract of carriage.

The Court in the present case disagreed with those conclusions, finding that, while the Hague Rules are concerned with parties to relevant contracts of carriage and disputes between them, the Rules are not confined to governing liability in contract only. To say otherwise would contradict The Kapetan Markos NL. The notion that there was no difference between an action in contract and in tort for the purposes of 'suit' under art 3.6 was further bolstered by the opinions of Barwick CJ and Lord Wilberforce in Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon Pty Ltd (The New York Star) (1980) 144 CLR 300; [1981] 1 WLR 138, reversing a prior decision of the High Court in 1978. In The New York Star, a stevedoring company was found to have benefitted from the contract of carriage although it was not a signatory. Clause 17 in the contract in that case was essentially copied from art 3.6 of the Hague Rules; after considering cl 17, Lord Wilberforce concluded that the clause was directed at the carrier's obligations as bailee, and no distinction was apparent in the clause between contractual and tortious liability. If this reading could be applied to that clause, it would follow that art 3.6 should be read in the same way. Lord Wilberforce's judgment was followed and applied in Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd's Rep 310, finding that art 3.6 applied to all liability, including claims in tort as well as in contract. Notably, this case considered the Hague-Visby Rules as opposed to the Hague Rules, although there is little difference in the wording of art 3.6 in each Convention (in the Hague-Visby Rules art 3.6 reads 'all liability whatsoever in respect of the goods'). It was held in that case that the meaning of art 3.6 was abundantly clear, and that the one-year time bar in that article applied to all kinds of claims arising out of the carriage of goods by sea, under bills of lading subject to the Rules.

Returning to the present case, questions were raised as to whether the Hague Rules applied and to what extent they applied to deliberate theft by carriers, and also whether the Hague Rules, and art 3.6 especially, would extend to events happening beyond the ship's rail, particularly before goods were loaded onto a ship. The latter question is important because the Hague Rules only apply to certain parts of the contract of carriage, meaning there is a period where liability could arise but the Rules have no meaning, including the art 3.6 time bar. These concerns could, however, be set aside for the time being for the purposes of this case.

The suit in this case was firmly within time, being the suit that AIBP brought in tort. But for the Hague Rules to apply, there still needed to be a contract of carriage of goods by sea, evidenced by a bill of lading. To constitute a 'suit' within the meaning of art 3.6, it was not required for proceedings to be brought against the contracting carrier 'as such'. AIBP's pleadings referred only to SKR as the shipowner, or as the demise charterer of the vessel its cargo was loaded onto, which the Court thought was acceptable. It would be inconsistent to assert that 'suit' includes claims in tort, but also that it may only be brought against the contracting carrier in that capacity.

The Hague Rules only operate as between parties to a contract, and those other parties benefiting from the contract, such as stevedores. The Rules also only apply in respect of a particular time period, from the point when goods are loaded onto a ship to the point they are discharged and released, as the definition of 'carriage of goods' in art 1 indicates. Yet a contract between any given parties may not be limited in the same way, potentially covering the transport of cargo over land as well. Because of this, the Hague Rules only truly apply to a portion of such a contract, and to a portion of the cargo in question's journey. Claims in negligence arise because one party had another's cargo in their possession for a period of time, which may or may not cross over with the period that the Hague Rules cover.

In the present case there were no grounds for the respondent to allege that it was sued out of time. SKR was sued in a manner independent from the Hague Rules, on account of the fact that AIBP's goods were briefly in its custody, and in accordance with a contract of carriage evidenced by a bill of lading. The only part of the business that raised any questions was the fact SKR was not sued as a 'contracting carrier', but the Court in this case did not believe this to be significant because SKR was the contracting carrier anyway, and the Hague Rules still applied.

It was sufficient, in this case, that AIBP commenced proceedings against SKR within a year of the date its goods would have been delivered, that it enforced SKR's liability for damage to that cargo while it was on SKR's ship, that SKR was a 'carrier' within the meaning of the Hague Rules, and that SKR and AIBP were both parties to a contract of carriage evidenced by a bill of lading. If it did turn out that the Hague Rules were irrelevant to AIBP's case against SKR, the art 3.6 time bar would also become irrelevant, but its suit would still be within time if the Hague Rules were relevant. Some reference to a contract of carriage would need to appear in the pleading before any final conclusion could be reached. In any event, even if SKR was discharged from contractual liability, it would not be discharged from all liability.

Article 3.6 of the Hague Rules had no further relevance in this case, and AIBP's application for amendment could be considered apart from it. The application was answered easily and permitted, since no ground other than that based on art 3.6 of the Hague Rules was in debate. Leave to amend was granted under r 36.01(1) of the Rules of Court.