The appellant, the Doroty, carried two shipments of unpackaged tuna fish from a Panamanian island and discharged them at St Andrews, New Brunswick. The tuna was shipped pursuant to two bills of lading on identical forms, which contained cll 1 and 13. Clause 1 subjected the bills of lading to the Hague Rules. Clause 13 limited liability for goods shipped in packages to the minimum agreed value permitted by the 'pertinent Hague Rules Legislation' per package, and for goods not shipped in packages to the value per 'customary freight unit'. Clause 13 also deemed the value of the goods to be GBP 100 per package if 'the circumstances of the loss or damage are such that no Hague Rules Legislation is pertinent'.

Some of the tuna located in the lower holds were damaged. They were sent to the nearby canning plant of Atlantic Consolidated Food Ltd (Atlantic). Normally, tuna arriving at the plant would first be placed in cold storage and processed later. The damaged tuna could not wait, and so the plant prioritised the salvage operation to prevent further damage. Atlantic determined the extent of the damage - only 273 of the 397 short tons of the damaged tuna were fit for human consumption and canning by Atlantic; the remaining 124 short tons were suitable only as either pet food or fertiliser.

The respondents, Atlantic and Star-Kist Caribe Inc (Sun-Kist), claimed the market value of the respective portion of their cargo which could not be used for human consumption, plus salvage costs and freight, from the appellant. The trial Judge accepted the claims and gave judgment in favour of Atlantic for CAD 88,279.27 and Star-Kist for CAD 34,481 plus interest.

The appellant appealed.

Held: Appeal dismissed.

The Hague Rules were applicable to a contract of carriage, covered by a bill of lading (art 1.b), from the time the goods are loaded on the ship until they were discharged from it (art 1.e). The bills of lading extended its application to govern loss or damage 'before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in the custody of the Carrier' (cl 1). The damage to the goods occurred after loading and before discharge.

The deemed value of packaged and unpackaged goods was intended to apply where the damage occurred in circumstances to which Hague Rules Legislation did not, in its own terms, apply. The Hague Rules applied to the damage to the goods - they were made 'pertinent' by agreement, notwithstanding that the shipped goods were unpackaged.

The Hague Rules limited the appellant's liability to GBP 100 per unit (art 4.5). The cl 13 limitation did not apply, and the monetary unit was not GBP 100 per customary freight unit. The applicable liability limitation was GBP 100 per fish, not GBP 100 per short ton.

Article 9 of the Hague Rules provides that: 'The monetary units mentioned in this Convention are to be taken to be gold value.' However, it made no difference to value the limitation amount in bank notes or in gold. William Tetley, Marine Cargo Claims (Carswell 1965, p 240) stated that the jurisprudence was not settled as to whether a Court, when applying the Hague Rules, should interpret the limitation as being GBP 100 in bank notes or GBP 100 in gold. Tetley estimated the gold value of GBP 100 to be around USD 825. Scrutton on Charterparties and Bills of Lading (18th edn, Sweet & Maxwell 1974, p 441) placed the 1974 value in excess of GBP 400 in bank notes.

The respondents' claims were well within the limitation contained in the Hague Rules. The agreed value of GBP 1 was CAD 2.40. The limitation would greatly exceed the respondents' claim amounts, regardless of the basis used for the valuation of GBP 100.