Rambler Cycle Co Ltd (Rambler) consigned a large quantity of bicycles and bicycle parts to persons in Singapore trading under the name of Southern Trading Co (Southern). The goods were shipped from London to Singapore on the Chusan, owned by Peninsular & Oriental Steam Navigation Co Ltd (P&O). The five bills of lading named Rambler as the shipper, consigned the goods to 'order' and contained the usual clause paramount which subjected them to the provisions of the Carriage of Goods by Sea Act 1924 (UK) (COGSA 1924). The Hague Rules are contained in the Schedule to the COGSA 1924.

The Chusan arrived in Singapore. The goods were discharged and stored in the godowns of the Singapore Harbour Board. Southern did not produce the bills of lading but took delivery of the goods upon presentation of the delivery order issued to it by Islay Kerr (P&O's agent).

More than a year later, Bank of China Ltd sent a notice to P&O's agent stating that it held the bills of lading and claimed that the goods were 'hypothecated' to it. Rambler had neither been paid any portion of the price nor recovered the goods. It commenced proceedings against P&O and claimed contractual and/or tortious damages for non-delivery. P&O claimed immunity as a result of the time bar.

The first instance Court held that art 3.6 of the Hague Rules did not apply and hence both P&O and Sze Hai Tong Bank were liable. Since art 3.6 is a contractual clause of the bill of lading, P&O lost the protection of this 'exception clause' when it committed a fundamental breach of the contract of carriage.

P&O and Sze Hai Tong Bank appealed.

Held: Appeal dismissed.

The notice of loss or damage to goods must be given within three days (art 3.6). Even if notice has not been given, the carrier and ship will be 'discharged from all liability in respect of damage' if proceedings are not commenced within a year.

The carrier has the right to be discharged from all liabilities (art 2). The term 'loss or damage' in art 3.6 refers to the loss or damage 'in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods' is subject to no other limitation (art 2). Additionally, loss or damage to goods need not refer to physical loss or damage.

The shipowner's liability under a contract evidenced by a bill of lading in respect of shipments from a United Kingdom port is only subject to the provisions of the Hague Rules from the time when the goods are loaded on the ship to the time when they are discharged from the ship. The word 'discharge' instead of 'deliver' is used in arts 1.e, 2 and 3.2. The duty of the carrier under the bill of lading to deliver the goods to the shipper is different from the duty to discharge the goods and the discharge duty was completed when they were placed in storage in the godown.

Article 3.6 can only refer to claims in respect of loss or damage arising from art 3, which is applicable within the ambit of COGSA 1924. Since the loss was not one which arose 'in relation to the discharge of such goods' (art 2), it was not a 'loss' (art 3.6).

COGSA 1924 bears no relation to anything that happens to goods after they are discharged from the ship in which they have been carried. The definition of 'carriage of goods' (art 1.b) will not apply after the goods have been discharged from the ship. It would be possible for the parties by express contract to extend the operation of the statutory rules to a longer period. However, the pleaded clauses (cls 1 and 6) were restricted by reason of the statutory definition of 'carriage of goods' and so did not extend the application of the Hague Rules beyond the one-year period. The general law of contract should also not add to or detract from the provisions of a statute. The Hague Rules have statutory effect by virtue of COGSA 1924 and these statutory rules, including art 3.6, ceased to have effect when these goods were delivered to Southern.

The period of responsibility to which the Act and Rules apply ends when they are discharged from the ship (art 1.e). Since P&O's liability arose after the Chusan discharged the goods, the limitation of liability is no longer governed within the ambit of the Hague Rules, but by the general limitation period of six years.