A cargo of lumber was shipped on the Beltimber from Nanaimo, British Columbia, to Antwerp, Belgium. Canadian Pacific Forest Products Ltd-Tahsis Pacific Region (the respondent) was the cargo owner. At the time of the carriage, the Beltimber was owned by Belships (Far East) Shipping Pte Ltd (the appellant). The cargo was carried on deck as expressly stated in the bills of lading, which included an exclusion clause (cl 8) exempting the carrier from liability for loss of or damage to deck cargo, howsoever caused. The principal issue at trial was whether cl 8 of the bills of lading provided the appellant with immunity from liability for the loss. The trial Judge held that the loss had been caused by the negligence of the master and that cl 8 did not exclude liability for negligence. The issue on appeal was whether the trial Judge erred in so concluding.

Held: Appeal dismissed.

The application of the Hague Rules to the relevant contract of carriage is excluded by virtue of art 1.c of the Rules, where the definition of 'goods' excludes any 'cargo which by the contract of carriage is stated as being carried on deck and is so carried'. The face of the bills of lading explicitly stated that the cargo was being 'carried on deck' and the cargo was, in fact, so carried. It was not disputed that the Hague Rules imposed a lesser obligation on the carrier in respect of the duty of seaworthiness than that imposed at common law. Article 3.1 of the Hague Rules required the carrier 'before and at the beginning of the voyage, to exercise due diligence to ... make the ship seaworthy'. Therefore, the contract was not subject to the Hague Rules but the appellant was subject to the obligations of a carrier by sea at common law unless those obligations were modified by the contract.

The question, thus, was whether there were liabilities at common law other than negligence imposed upon a carrier of goods by sea. Apart from statute and subject to the terms of the contract, the carrier undertook to carry the goods at its own absolute risk, with the exception of loss or damage caused by acts of God or of the Queen's enemies, or inherent defect in the goods themselves, or default of the shipper. In addition, the carrier impliedly undertook that the ship was seaworthy unless relieved of that obligation by a term of the contract. By this undertaking, the carrier ensured that the ship was fit both to encounter the perils of the voyage and to receive and carry the cargo safely. Although the word 'negligence' did not appear in cl 8 of the bills of lading, the language of cl 8 was broad enough to exclude negligence. Given the context of the contract, cl 8 did not intend to exclude liability for negligence but for other liabilities imposed on the appellant at common law, ie 'damage that is naturally concomitant with deck stowage including damage by seawater, rain or wind'. The Court therefore concluded that cl 8, correctly interpreted, did not exclude liability for negligence.