The issue was whether the appellants were time-barred by cl 24 of the bill of lading from claiming short delivery of the goods covered by the bill. The claim was brought within one year of the delivery of the goods, but outside the three-day period prescribed by cl 24, which stated:

No claim made under this Bill of lading will be admitted unless made and properly attested within 3 days after the goods have been landed. The carrier shall in no case be liable for more than the first costs of the goods and charges at the port of shipment including freight if prepared, provided not exceeding £stb. 100 per package. In the case of ad valorem cargo the carrier's responsibility shall not exceed the value of the goods declared before the time of shipment and inserted in the Bill of Lading.

Clause 23 of the bill stated:

This contract wherever made is to be construed and governed by English law. The Bill of Lading is subject to the Provisions of the Carriage of Goods by Sea Act 1924.

The provisions of the Hague Rules in the Carriage of Goods by Sea Act 1924 (UK) were in pari materia with the relevant Nigerian legislation.

A majority of the Court below, the Court of Appeal, held that the appellants were time-barred because they did not give notice within the time stipulated under cl 24: Metalimex Foreign Trade Corp v Augenie Maritime Ltd [1962] 1 Lloyd's Rep 378, 386. Clause 24 should not be construed with art 3.6 of the Hague Rules. The majority also made observations on the issue of waiver: that the joint report or survey contemplated in art 3.6 which constitutes a waiver would be a survey or report signed or carried out by the carrier and the owner of the goods.

In contrast, the minority pointed out the difference between a claim that will be admitted and when an action is maintainable. While the former relates to proof under procedural law, the latter is within the realm of substantive law and a creature of statute, not by agreement between the parties. The minority found that cl 23 made the bill subject to legislation applying provisions in pari materia with the Hague Rules. The minority viewed cl 24 as being entirely within the first para of art 3.6 of the Hague Rules, which merely prescribes a rule as to proof. The minority contrasted the first and third paras of art 3.6. The former identifies when it should be assumed that there is prima facie evidence of the delivery of the goods by the carrier, and does not say that unless the notice is given within three days the action is not maintainable. The latter states when the suit must be brought, failing which it will not be maintainable.

Dissatisfied, the appellants appealed. They argued that cl 24 was wrongly construed as imposing a limitation of action because: (1) limitation of action is a creature of statute, not by an act between the parties; (2) limitation of action was imposed by legislation which applies a period of one year instead of three days; and (3) legislation prohibits carriers from including in the bill any clause relieving from or lessening for a carrier liability otherwise than as provided by the one-year period set out in art 3.6: Hague Rules, art 3.8.

Held: Appeal allowed. The action is not barred. Clause 24 is subject to art 3.6 of the Hague Rules. Article 3.6 negates cl 24. The appellants bear the burden of proving loss or damage to the goods. The case is remitted to the trial Judge to assess damages.

Article 3.6 has three parts or paras. The first para of art 3.6 deals with the requisite notice in respect of claims for loss or damage to goods delivered, that is establishing a claim. It reads:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to the delivery thereof under the contract of carriage, or if the loss or damage be not apparent, within three days such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.

This para merely prescribes a rule as to proof. It does not say that unless the notice of loss or damage is given within three days the action is not maintainable. Instead, it indicates the period when it should be assumed that there is prima facie evidence of the delivery of the goods by the carrier.

It deals with the circumstances: (a) where the loss or damage to the goods is known before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage; and (b) where the loss or damage is not apparent. It is concerned entirely with the state of the goods at the time of delivery and with the establishment of such loss or damage in an action for claim for loss or damage to the goods. In the first case, a notice of loss or damage, and the general nature of the loss or damage, should be given in writing to the carrier or its agent at the port of discharge before removal of the goods. In the second case, where the loss or damage is not apparent, notice of any loss or damage should be given to the carrier or its agent within three days of the removal of the goods. Where the goods are removed without the giving of notice of loss or damage, this is prima facie evidence of delivery by the carrier as described in the bill of lading.

Concisely stated, unless notice of loss or damage to goods, if known before or at the time of delivery, is given to the carrier or its agent at the time, or where the loss or damage is not apparent, within three days of the delivery thereof, delivery of the goods shall be prima facie evidence that there was neither damage nor loss to such goods. It should be observed that absence of loss or damage is merely prima facie evidence that there was no damage. Thus, whether there was loss or damage in respect of the goods is a question of fact to be decided by the trial Judge. When notice of loss or damage has not been given, the burden of proving that the goods were damaged or lost is always on the consignee: Bonnington Castings Ltd v Wardlow [1956] AC 613 (HL).

Meanwhile, the first sentence of cl 24 covers the same field provided for by the first para of art 3.6. It purports to cover the same area as art 3.6. It speaks of admission of a claim made within three days. It also speaks of the liability for claims in respect of goods. But there are important differences between the two. Clause 24 speaks of the claim not being admitted unless a claim was made and properly attested within three days after the goods have been landed. It introduces the requirement of attestation (which is absent in art 3.6) to the giving of notice. It ignores the requirement in art 3.6 of delivery of the goods into the custody of the person entitled to delivery. It also ignores the distinction made in art 3.6 between loss or damage apparent at the time of delivery, and loss or damage not so apparent. Clause 24 applies the three days' notice and attestation in writing to the two situations. Clause 24 is concerned with the state of the goods when they were landed and does not consider the requirement in art 3.6 that the relevant time for determining the loss or damage to the goods is at the time of delivery into the custody of the person entitled to delivery. It is not when the goods were landed.

Since cl 24 is subject to art 3.6, and art 3.6 covers the situation which cl 24 aims at, art 3.6 applies instead of cl 24. Clause 24 has been 'swallowed up' or 'negatived by' art 3.6: Benge & Pratt v Guardian Assurance Co Ltd (1914) 34 NZLR 81, 86 (NZSC).

Next, the second para of art 3.6 deals with the situation where notice is not required in respect of claim for loss or damage to goods. It reads:

The notice in writing need not be given if the state of the goods has, at the time of their receipt, been the subject of joint survey or inspection.

This para is not involved in the interpretation of cl 24. It is not in issue in this case. It provides for the situation where notice in writing with respect to loss or damage to goods in a bill of lading need not be given and is accordingly statutorily waived. This is where the loss or damage to the goods is contained in a report which is the subject of joint survey inspection between the carrier or its agent, and the person entitled to delivery of the goods under the contract of carriage. The joint report or survey contemplated in art 3.6, which is an agreement between the owner of the goods and the carrier of the goods, would constitute a notice of claim under art 3.6 and dispense with the giving of notice, whether of three days or any other.

Finally, the third para of art 3.6 is concerned with the circumstances when the carrier and the ship are discharged from all liability and when right of action is lost in respect of claims for loss or damage to the goods, ie limitation of the right of action. It reads:

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

This paragraph is the most important in the interpretation of cl 24 because of its essential nature and the expression used. It begins with the expression 'In any event', which refers to all that has been provided in the earlier paras of art 3.6. While the first para has provided for the establishing a claim, the period when claim may be made, and the legal effect of failure to make any claims; and whereas the second para has provided for the circumstances when making of any formal claim is waived; the third para concludes by stating that in any event, that is whether or not a valid claim was made in respect of loss or damage to goods in the manner prescribed in the first para, and whether there was a joint survey inspection in the second para, if suit is not brought against the carrier or its agent claiming for loss or damage to goods within one year after delivery of the goods or the date when the goods should have been delivered, the carrier and the ship shall be discharged from all liability in respect of any loss or damage.

This operates as a limitation to the right of action and to bar suits brought against the carrier and the ship with respect to claims in respect of loss of or damage to goods arising from carriage of goods after one year of delivery of the goods: The Merak [1965] P 223 (CA). There is no other reasonable interpretation.

Meanwhile, cl 24 is concerned with the extent of the liability of the carrier in respect of a claim made. It does not prescribe the period when liability is extinguished. It does not exclude liability in respect of a claim made in an action instituted within the statutory period. Thus, where an action has been instituted within the statutory period, cl 24 is inapplicable. Clause 24 applies subject to art 3.6. Thus the third para of art 3.6 governs. Clause 24 merely provides for the limitation of the nature and circumstances of claims to be made. It does not deal with rights of action in respect of loss of or damage to goods delivered. Furthermore, in construing cl 24, it is necessary to construe art 3.6 as well. Clause 23 of the bill should not be ignored. Metalimex is distinguishable on its different facts. In these respects, the minority of the Court of Appeal was correct and the majority wrong.

Article 3.8 will be contravened by the provisions of cl 24 if the three days prescribed in respect of making of claims was construed as limiting the right of action with respect to loss of or damage to goods instead of the one year prescribed in art 3.6. If the provisions in cl 24 limit the right of action in respect of loss of or damage to goods, they lessen the right of action conferred on the appellants in art 3.6, and correspondingly the liability of the respondents. Those provisions are therefore 'null and void and of no effect', under art 3.8.