The plaintiff cargo owner hired an intermediary to ship four used cars inside containers on board the defendant’s vessel from the United States to Tonga. The cars were damaged in transit and the plaintiff sought recovery against the carrier for the whole value of the loss. The carrier had issued a bill of lading identifying the limitation of liability as the Hague Rules / COGSA art 4.5 value of USD 500 per package. The bill of lading further identified the cargo as the four cars and did not include any alternative package description.

The carrier moved for summary judgment, arguing its liability was limited to USD 500 per package and that it had properly given the shipper the opportunity to declare a different value for the goods. The plaintiff argued that it never received notice of the liability limitations or had the opportunity to declare a value of the cargo because the intermediary had hired the carrier on its behalf. It further argued that that the containerised cars were not Hague Rules / COGSA ‘packages’

The issues before the court were:

(1) Whether the plaintiff had the opportunity to declare a value of the cargo;

(2) Whether the containerised cars could be defined as ‘packages’ under Hague Rules / COGSA art 4.5.

Held: While it was the plaintiff’s intermediary, not the plaintiff, who was given an opportunity to declare the value of the cargo, ‘a cargo owner is bound by an intermediary’s failure to declare the value of the goods being shipped on a bill of lading'.

Since the container ‘made the vehicles more fit for handling and shipment’ the containerized cars were each one package for Hague Rules / COGSA art 4.5 purposes. The defendant’s liability was therefore limited to USD 500 per package (or USD 2000 for the four packages).