On 31 May 1989, following the discharge of part of the cargo from the Ralph Misener, the remaining cargo on board was damaged by a fire. The cargo owners (the appellants) filed a claim against the shipowners (the respondents) to recover their loss.

The appellants argued that their loss resulted from negligence and breach of contract on the part of the respondents. The respondents denied their responsibility and counterclaimed for the loss which they suffered by reason of the fire on board their ship.

The first instance Court dismissed the appellants' action for damages and allowing the respondents' counterclaim (see CMI585).

On appeal, the appellants claimed that the trial judge erred in his conclusion that the respondents successfully rebutted the prima facie presumption of the good condition of the cargo established by the clean bill of lading. The appellants also argued that the trial judge was wrong to conclude that the cause of the fire was because of the dangerous nature of the cargo.

The respondents contended that the appellants' cargo was 'dangerous materials' that spontaneously self-ignited during the unloading. The respondents argued that the appellants had a strict duty to warn them of the dangerous nature of the cargo. By failing to warn, the appellants were liable for the damage to the respondents' vessel.

Held: Appeal dismissed.

A bill of lading issued in accordance with art 3.4 of the Hague Rules is prima facie evidence of receipt by the carrier of the cargo as described on the bill of lading. Therefore, the shipper discharges the initial burden of demonstrating that the cargo is tendered for delivery in apparently good condition by adducing a clean bill of lading. Article 3.3.c of the Hague Rules requires the carrier to issue a bill of lading that shows only the apparent order and condition of the cargo. In other words, the carrier is attesting that, upon a reasonable and practical examination of the cargo, no damage is visible. Therefore, by reading these two articles together, it is clear that a clean bill of lading serves simply as rebuttable proof of the presence or absence of visible damage at the time of loading. Thus, where the apparent condition of the cargo cannot be ascertained because the damage is caused by a hidden condition, a clean bill of lading will not be enough to support the shipper's claim of the cargo's good condition.

In this case, the cargo was covered by a thick cloud of dust while it was being loaded on board at a high speed. Therefore, the trial judge was right to hold that under the circumstances, the clean bill of lading did not constitute prima facie evidence that the cargo was loaded in good order and condition. The trial judge was also right to conclude that the cause of the loss was the spontaneous combustion of the cargo.

As to the dangerous nature of the cargo, there was also no error in the trial judge's interpretation and application of the law, nor any palpable and overriding error in his findings of fact.