Nova Steel Ltd (the plaintiff) purchased 240 hot rolled steel coils weighing 4,510 mt. The cargo was loaded on the Kapitonas Gudin, which was owned by the Lithuanian Shipping Co (the defendant), and carried from Latvia to Montreal. The bill of lading contained remarks 'Partly rust stained. Wet before shipment', which was acceptable as the coils were shipped unprotected. The cargo was damaged by contact with seawater. Both parties agreed that Hague-Visby Rules were the applicable law. The plaintiff claimed damages against the defendant. The defendant denied its liability by relying on arts 4.2.c, 4.2.i, 4.2.m, and 4.2.n of the Hague-Visby Rules.

Held: The plaintiff's action was allowed.

With respect to the burden of proof:

(1) Initially, the plaintiff need only establish its interest in the cargo, the fact that it was not delivered in the same apparent good order and condition as received on board, and the value of cargo lost or damaged.

(2) The defendant can then shift the burden of proof back to the plaintiff by establishing that the loss or damage was attributable to one of the excepted perils set out in art 4 of the Hague Rules.

(3) Thereafter the plaintiff must establish the defendant's negligence or both that the ship was unseaworthy and that the loss was caused by that unseaworthiness.

(4) If these points, in the context of unseaworthiness, were established, the defendant could only escape liability by establishing that due diligence was exercised to make the ship seaworthy.

Given the presented evidence and testimony, the Court found that the plaintiff failed to show prima facie that the cargo was tendered to ship in apparent good condition. However, this did not end the matter. The plaintiff had demonstrated that the vessel was the proximate cause of the damage sustained. The Court found, on the balance of probabilities, that seawater entered the vessel's holds during the voyage. The pitting damage to the coils occurred while they were in the custody of the vessel because they were exposed to seawater or sea salt during the voyage. The defendant provided no evidence to support its allegations.