The action was for damage to a consignment of posters and prints loaded by the first appellant in one 20 foot container onto the MSC Melbourne at Port Botany, Sydney, in February 2000 bound for Antwerp. The container arrived in Antwerp on 26 March 2000. On 29 March 2000, the container was transshipped and loaded onto the vessel Aquitania bound for Piraeus. The container was unloaded in Piraeus on 7 April 2000 and transported by road to Aigion, arriving on 17 April 2000.

The bill of lading named the shipper as El Greco (Australia) Pty Ltd (the first appellant) and consignee as John Theodorakopoulos (the second appellant). The bill of lading described the goods as '200945 pieces posters and prints' with the number of packages enumerated as '1'. Clause 21 (on the reverse of the bill of lading) included the following: 'Where the goods have been packed into containers by or on behalf of the Merchant, it is expressly agreed that, each container shall constitute one package for the purpose of application of limitation of the Carrier’s liability'. Merchant was defined to include the shipper and consignee.

The primary Judge found that the goods were damaged by seawater during the voyage and held the carrier liable for the damage: see El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA [2003] FCA 588 (CMI1949). The primary Judge rejected the carrier’s argument that the package limitation in art 4.5 of the Hague-Visby Rules should be assessed reference to one container, and found cl 21 null and void by reason of art 3.8 of the Rules.

The primary Judge rejected the plaintiffs' evidence as to the value of the goods, finding them to be worth AUD 63,570 and not AUD 1,000,000 as the plaintiffs claimed. The primary Judge calculated the value by reference to the value of the goods in Australia because of the perceived inadequacy of the evidence of the value at the port of discharge. The plaintiffs appealed and the defendant cross-appealed.

Held (per Black CJ and Allsop J, Beaumont J dissenting): The appeal is dismissed and the cross-appeal is allowed.

The bill of lading did not enumerate packages or units as packed beyond the identification of the container as one package; thus art 4.5.c of the Rules applies. Article 3.8 of the Rules only applies where the bill of lading enumerates packages or units and includes a clause that says that the enumeration is not agreed to be 'part of the bill of lading'. The appellants’ recovery is therefore limited by art 4.5.a of the Rules to one package or the gross weight, whichever is the higher. The appellants' recovery is calculated to be AUD 38,250.

Allsop J further commented that, when calculating loss of, or damage to, goods, the words of art 4.5.b of the Rules should be given primacy and the amount recoverable is to be calculated by reference to value of the goods at the place and time at which the goods were discharged from the ship.