Columbus Line Inc (the defendant) contracted to carry cargo from California to Auckland, New Zealand. The cargo was insured by Continental Insurance Co (the plaintiff). The cargo was damaged before being loaded on board the defendant’s ship. The defendant refused to pay the plaintiff for the damage to the cargo. One of the arguments made by the defendant was that its liability was limited to USD 500 pursuant to COGSA/the Hague Rules and the bill of lading.

The plaintiff filed a summary adjudication motion challenging the defendant’s defence. The plaintiff argued that although the bill of lading incorporated COGSA/the Hague Rules, it did not specifically contain the USD 500 per package limitation language. The Trial Court ruled in favour of the plaintiff. The defendant appealed.

Held: Appeal allowed.

The bill of lading clearly incorporated COGSA/the Hague Rules by reference and extended the limitation of liability provisions to the carrier’s entire period of responsibility. Accordingly, COGSA/the Hague Rules applied to this case.

Under the 'fair opportunity' doctrine, a shipper must have had a 'fair opportunity' to declare a higher liability value for its cargo in order for a carrier to limit its liability under COGSA/the Hague Rules. The Court held that the initial burden of proof rested with the plaintiff to demonstrate that the defendant’s defence premised upon the USD 500 per package limitation barred a greater recovery. However, the plaintiff presented no evidence as to whether a fair opportunity was extended to it in order to negotiate for a higher limitation of liability. Thus, the plaintiff failed to make a prima facie case that the defendant’s defence was without merit.