National Jaya (Pte) Ltd (the plaintiff) sent seven cases of marble slabs and three cases of glass mosaic from Singapore to Merak, Indonesia, on the vessel Hai Sing, owned by Hong Tat Marine Shipping (the defendant). The goods were worth SGD 28,768 but this was neither declared by the plaintiff prior to shipping nor inserted in the bill of lading.

The Hai Sing was a barge with no moveable rudder and no steering power of its own and was towed by another vessel belonging to the defendant. The Hai Sing’s deadweight was approximately 800 mt, but in fact was carrying 966 mt on the voyage. On approach to Merak the tug decided to anchor for the night to wait for clearance the next day and proceeded to shorten the tow line. During this operation, the tow line became entangled and had to be cut. The Hai Seng’s rear anchor was dropped but, because of strong wind and waves, the anchor snapped and the Hai Seng grounded. Seawater flooded two hatches and the plaintiff’s goods were a total loss. The plaintiff claimed against the defendant.

The plaintiff contended that, before the defendant may rely on art 4.5 of the Hague Rules to limit its liability to GBP 100 per package or unit, it must comply with the provisions of art 3.1 of the Hague Rules, relying on Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589. The plaintiff further argued that the defendant was guilty of so fundamental a breach of contract so as to make the voyage ‘not a contract of carriage goods by sea’ to which the Carriage of Goods by Sea (Cap 184, 1970 Rev Ed), incorporating the Hague Rules, applies.

The defendant conceded that it was in breach of art 3.1 of the Hague Rules and that the breach caused the loss. However, it contended that the Maxine case was distinguishable in that art 4.5 of the Hague Rules was not relied on by the carrier and was not considered by the Privy Council. Further, the decision was limited to the ‘immunities of art 4’. Article 4.5 does not confer an immunity but a right, that is, the right to limit liability for any loss or damage and contains the words ‘in any event’.

Held: The defendant’s argument succeeds. The effect of the words ‘in any event’ means that the limit of liability is available in the event of damage by unseaworthiness where there has been no exercise of due diligence. Support for this can be found in Scrutton on Charterparties and Bills of Lading (18^th ed 1974) and the Canadian case Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1969] 2 Lloyd’s Rep 277.

The bill of lading issued by the defendants and accepted by the plaintiff is evidence of the contract of carriage of goods by sea entered into by the parties. The voyage where the plaintiff’s goods were lost is a contract of carriage to which the Carriage of Goods at Sea Act applies.