The plaintiff brought a claim against JP Baldacchino & Co Ltd (JPB) as the local agent on behalf of and in representation of the foreign company Lamines Marchands Europeens (LME), The Cargo Handling Co Ltd (CHC), and Valletta Freight Services Ltd (VFS).

The plaintiff imported iron bars from LME. The goods were transported to Malta on the Lipa, a ship which the plaintiff claimed was operated and/or owned by VFS, under a bill of lading. The goods arrived in Malta on 23 October 1998, and were unloaded and placed in the care and/or custody and/or possession of CHC. When the goods were finally delivered to the plaintiff, it turned out that the bars were corroded and useless for the plaintiff's purposes.

VFS argued that it was not the operator, shipowner, or disponent owner of the Lipa, as erroneously alleged in the plaintiff's claim, and should therefore be released. The bill of lading was issued by another company and signed 'FOR THE MASTER'. The bill of lading also contained an identity of carrier clause in cl 25, the effect of which was that the shipowner, not VFS, would be liable for all damages. The face of the bill of lading also included protective clauses which stated: 'Loose and/or unprotected cargo at shipper's risk' and 'Cargo located on deck at shipper's risk'. In any case, it must be proved that the corrosion occurred on the ship and not on the docks of Antwerp and Malta, this being so because the goods were not covered or protected in any way. According to the tally sheet there was no notice of damage, and therefore the goods were unloaded in good condition from the ship.

CHC denied liability, arguing that it had fulfilled all its legal obligations. It must be proved that the deficiencies in the goods occurred while they were in the custody and under the absolute control and supervision of CHC, and that the same goods were delivered to CHC without the same deficiencies.

JPB argued that the bill of lading was 'clean', and consequently its responsibility ended when the goods were loaded in good condition onto the ship. JPB was not named as the shipper in the bill of lading. It was not true that JPB had issued any directive that the material should be stowed on deck.

Held: CHC's objections are upheld, and the claim against it is dismissed. JPB and VFS are equally liable for the plaintiff's damage, and are required to pay EUR 131,023.78 to the plaintiff.

It is agreed that maritime law governs this case, and that the laws governing the transport of goods from one destination to another normally comprise three distinct phases: (a) the first phase before the loading of goods on board the ship; (b) the phase relating to carriage by sea; and (c) the post-ship unloading phase. These three phases are governed by the Hague Rules, codified today in Maltese law by Ch 140 of the Laws of Malta, consistent with the Carriage of Goods by Sea Act.

As regards the actual phase of transport by sea, art 3.2 of the Hague Rules applies, which provides that 'the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried'. Also, as is stated by the authorities, (PA PS 18.2.2004, Stafrace NOE v Abela NOE, among others), the search for liability in cases involving cargo claims is tied to two focal moments: the first is when the cargo is unloaded from the ship (which operation is usually reflected in the tally sheet), and the second is when the cargo is released in favour of the importer or consignee of the goods (which operation is normally reflected in the Gate Pass-Out). The documents issued at these two important times are generally considered decisive, and bind all parties to the dispute with the duty, at the relevant time, to check and specify the state of affairs of the goods in a timely manner because they are directly involved (App Comm 20.4.1995, Gatt NOE v Sciberras NOE (Coll Vol LXXIX.ii.903)).

These documents provide strong and reliable evidence of what they say, but this is juris tantum and not irrefutable evidence. They can only be overturned by other equally strong evidence. Therefore, these documents cannot be set aside on a simple conjecture, or under the pretext that they were made in a hasty and careless manner (App Civ 12.6.2001, Formosa & Camilleri Ltd NOE v SeaMalta Co Ltd), or with evidence arising after the time to which those documents refer (see Gatt).

In respect of the burden of proof, this Court has had occasion in Atlas Insurance Agency Ltd NOE v Gollcher Co Ltd NOE (CMI1895) to observe as follows:

[The carrier has the burden to establish] that the loss or damage was not due to its negligence, even, for example, by showing that the damage is the effect of force majeure or for any other reason among those listed under Art 4 of the Hague Rules for the purpose of discharging liability. Once one of those reasons has been established, the burden will revert to the receiver.

JPB argues that it is not the shipper on the bill of lading. However, it appears that JPB is the agent of the foreign company LME. As an agent of LME, and because it is sued in its capacity 'in the name and on behalf of the foreign company LME', JPB is responsible for any deficiencies that are found in the goods sold to the plaintiff. The Court therefore considers that JPB is a party to the contract of carriage of goods. If damages are attributable to LME, JPB must be held liable by the same measure.

VFS argues that it is not liable as it is not the owner or operator of the ship. However, it appears that VFS is the agent of the owner/operator of the Lipa, ie of Valfracht Ro Ro Line Ltd. It also appears that VFS received the payment of the freight for the voyage, and released a receipt under its name for the transport. Clause 25 of the bill of lading stipulates verbatim:

If the ship is not owned or chartered by demise to the company or line by whom the bill of lading is issued (as may be the case notwithstanding anything that appears to the contrary) this bill of lading shall take effect only as a contract with the owner or demise charterer as the case may be, as principal made through the agency of the said Company or Line who act as agents only and shall be under no personal liability in respect thereof, including negligence.

The bill is issued by Herfurth & Co as agents 'For the Master'. However, in view of the fact that VFS is the agent of the carrier, this clause still does not relieve VFS of liability, at least in its capacity as agent, and it must answer for liability attributable to the carrier.

There is no doubt that the cargo was damaged when it left the ship. That fact is not disputed. The Court is thus satisfied that CHC, which has, in reality, played a passive role throughout these proceedings, is not liable for damage to the goods. The other defendants agree on this because they have devoted themselves to imputing liability to each other.

This Court cannot ignore the fact that the bill is a clean bill of lading. As held by the Commercial Court in Mamo NOE v Sullivan NOE (20 June 1991) 'the issue of a clean bill of lading establishes "prima facie" proof that the goods mentioned in the bill are in good condition and impose the obligation that the same goods are unloaded in the same good condition'. However, what happened in this case was that the mate's receipt indicated the description 'rusty', and that this was subsequently corrected by the master on 14 October 1998 to 'partly rust stained'. It is understood that the master would not have corrected the mate's receipt if he had found that the goods were in an advanced state of rust or decay.

The qualification of 'partly rust stained' coincides with the entry on the Gate Pass-Out. According to the testimony of LME, this does not mean anything serious, but it is a normal condition that the value of the goods is not reduced according to the customs of the port of loading. However, this Court cannot rely on this evidence, which is not evidence to the extent required by law on the custom of a port.

However, 'partly rust stained' is not equivalent to the degree of damage ascertained by Elmo Insurance Services Ltd on delivery, and it should be reasonably concluded that the damage to the goods increased during the voyage as the goods were placed on the deck as shown by the relevant bill of lading.

Regarding the stowage of the goods in question, the representative of VFS gave completely confusing and conflicting testimony where in the same breath he said that the goods were stowed on the deck, then affirmed that they were in a closed hold. Both JPB and LME categorically refused to authorise stowage on deck. In fact, it is clear from the evidence that 'the goods had been loaded on deck on a ship's decision'. No proof was provided by the carrier, as represented by VFS, that this decision was necessary or due to any custom - a burden which rests on the carrier and not on the shipper or the importer/consignee. This Court therefore does not agree that VFS can be exonerated from liability by invoking the deck carriage clause in the bill of lading.

Referring to the 'loose and unprotected cargo at shipper's risk' clause, this does not apply because the cargo was not lost during the voyage. In addition, if it was not protected, it was due to the master's decision to stow the cargo on deck.

VFS did not invoke limitation of liability as a defence.