P Odernamall & Co (the plaintiff) placed an order for cloth from Itoh & Co in Japan. Twenty-eight cases of the cloth were shipped under a bill of lading on board the ship President Monroe owned by American President Lines (the first defendant). The goods were received on board in good order and condition. The bill of lading was made subject to the Hague Rules.

Upon discharge onto lighters at Penang, the tally clerk, employed by Sime Derby as agent for the first defendant, noted minor damage or defects on seven of the cases. The goods were discharged into lighters belonging to the Penang Harbour Board (the second defendant) and the following day discharged into one of the second defendant’s godowns. A certain number of the cases were noted in the Godown Book as being subject to defects. The plaintiff then called for a survey and it was found that five cases contained less than the number of pieces they should have contained with a total shortfall of 121 pieces or 2,420 yards. The plaintiff claimed against the first defendant on the ground that they had delivered the cases in a defective condition and in the alternative for damages caused by the negligence of the first defendant, their servants or agents in the handling, storage, carriage, custody, care, and discharge of the goods. The plaintiff claimed in the further alternative against the second defendant upon an implied contract to take care of the goods and deliver them to the plaintiff or as bailees who failed to deliver the cases intact.

Held: Judgment for the plaintiff against the first defendant. Judgment in favour of the second defendant. The plaintiff has discharged the burden of proof to show that the goods were shipped in good order and the full quantity was in fact inside the cases at the time they were shipped. In the agreed bundle of documents there is an invoice and a detailed assortment list. These documents were not challenged by the defendants.

There was a significant contrast between the cases marked as defective in the tally sheets of the tally clerk appointed by the ship’s agent and the tally sheets made out by the tally clerk of the second defendant. The ship’s tally clerk noted damage to 23 cases whereas the second defendant’s tally clerk noted damage to 72 cases. According the ship’s tally sheets, there were four cases with burst strapping, two cases with planks slightly broken and one case said to be second-hand. By comparison when the goods were surveyed at the godown the state of affairs was:

It was suggested that the contents of these cases might have been extracted during the time between the discharge into the lighter and discharge into the godown over a period of one afternoon and one night. There is no evidence that this took place. On the evidence as a whole, the preponderance is in favour of the shortage having arisen at some period before the goods were discharged from the ship into the lighter.

The first defendants argued that there was a gap in the evidence between the discharge from the ship and delivery to the consignees and because of this gap the plaintiffs could not succeed because the shipowner’s liability ceased as soon as the goods were free of the ship’s tackle. On the evidence there is no such gap but even if there was, once it is shown that a shipowner has not delivered the goods in the same apparent good order and condition as that in which they were received, they are liable for any loss unless they can bring positive evidence to bring themselves within one of the exceptions in art 4 of the Hague Rules which would relieve them of liability.

The condition of the cases suggested that they had been tampered with. The burden is on the first defendant to prove they had carefully loaded, handled, stored, carried, kept and cared for the goods by the combined effect of the provisions of art 3.2 and art 4.2.q. The evidence provided by the first defendant went solely to the question of efficiency of supervision during the discharge and did not touch the question of careful handling during the voyage. As the evidence points to the goods not leaving the ship in apparent good or condition, the plaintiff is entitled to succeed.