A cargo of 70 coils of electrolytic tin plates aboard the Tasman Discoverer was damaged on a voyage between Busan, Korea and Tauranga, New Zealand. Of the 70 plates, 55 were affected. The three plaintiffs and cargo interests (Dairy Containers Ltd, Moriah Co Ltd and Posteel) sued the Tasman Discoverer and the carrier, Tasman Orient Line CV, for damages.

The bill of lading in cl 6(B) stated that carrier liability was set at '£100 Sterling, lawful money of the United Kingdom per package or unit'. Clause 7 of the bill of lading also provided that in the absence of applicable national law, the Hague Rules would apply by default, and cl 8(2) stipulated that any provisions of the bill of lading repugnant to the Hague Rules were invalid.

The relevant sections of the Hague Rules were arts 3.8, 4.5, and 9. Article 3.8 invalidates contracts of carriage that limit carrier liability further than the Rules provide, art 4.5 places carrier liability per package or unit at £100, and art 9 determines that all monetary units are to be taken to be gold value.

Held: Judgment for plaintiffs for the full claim of NZD 613,667.25.

A key point in this case was the interpretation of the wording in cl 6(B) of the bill and whether '£100 Sterling' meant 55 times GBP 100 (ie GBP 5,500), interpreting the Hague Rules literally despite the difference in monetary value from 1924 to the present, or whether it meant the current gold value of £100 sterling in 1924 multiplied by 55. On the former calculation, the package limitation was far lower than the plaintiffs' claim; on the latter, it exceeded the total claim.

In some cases, the terms of the Hague Rules, or Hague-Visby Rules, or other applicable Convention, are imposed by a compulsory statutory regime. This was not the case here, where the contract between Dairy Containers Ltd and Tasman Orient Line CV merely incorporated parts of the Hague Rules for their own use. As made apparent by cl 7 of the contract, Tasman Orient Line CV's liability was subject to 'the Hague Rules' in the general sense, thereby incorporating their entirety.

A complication then arose through how the Hague Rules' wording was utilised in cl 6(B) to refer to £100 sterling per package/unit of liability, but cl 8(2) of the bill invalidated anything that conflicted with the Hague Rules. Any difference in interpretation would have to operate in favour of the Hague Rules. Also, art 3.8 of the Hague Rules - the paramountcy clause - invalidates contracts that limit liability further than the Rules do, further reinforcing the primacy of the Rules in this case.

Williams J, however, found no difference between the reference to '£100 Sterling' in cl 6(B)(b)(i) of the bill of lading, and the limitation of liability to an amount '[not] exceeding 100 pounds sterling' as contained in art 4.5 of the Hague Rules. The stipulation in the bill that the amount was 'lawful money of the United Kingdom' served only to make clear precisely what currency was in question, for practical reasons. Both these findings led Williams J to the conclusion that there was no difference between cl 6(B)(b)(i) and art 4.5 of the Hague Rules.

Relying on the decisions in The 'Rosa S' [1988] 2 Lloyd's Rep 574 (CMI2232) and Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 93 ALR 171 (CMI668), Williams J stated that arts 4.5 and 9 of the Hague Rules are linked, as art 9 affects how art 4.5 is interpreted to mean the gold value of £100 in 1924. This interpretation differentiates the wording in cl 6(B) from that in the Convention, and since it was evident that the Hague Rules take precedence, the gold value interpretation must be adopted.

Williams J also acknowledged Kirby P's judgment in Brown Boveri in which his Honour stated that contracting parties were unlikely to agree that a monetary value from 1924 should be applied to current arrangements. In this case, too, accepting the risk of being able to recover only GBP 5,500 of its loss would have been unthinkable to Dairy Containers or any importer, who may not have played any part in actually drafting the contract.

Tasman Orient Line CV was impacted by the 'gold clause trap', which happens when the entirety of the Hague Rules, and not just arts 1-8, are incorporated into a bill of lading. This causes any monetary value to be converted to its gold value, as happened here, since the Rules take precedence.

[For Tasman Orient Line CV's successful appeal to the Court of Appeal, see Tasman Orient Line CV v Dairy Containers Ltd​ (CMI623). For the unsuccessful appeal from that decision to the Privy Council, see ​Dairy Containers Ltd v Tasman Orient Line CV (CMI566).]