The plaintiffs claimed damages against the defendant for the loss of cargo comprising 38 crates of plywood. The lost cargo was part of a consignment of plywood arranged by the first plaintiff to be shipped on board the defendant’s vessel, the MV Soon Yu, from Miri destined for the second plaintiff at Labuan. When the vessel departed Miri the weather was normal but at about 14h30 the vessel encountered rough seas. The master of the vessel steered the vessel towards shallow water where it ran aground at about 18h30 off the coast of Lumut, Bandar Seri Begawan.

The defendant relied on the defence of peril of the sea or alternatively act of God.

The issue was whether in the contract for carriage made orally between the parties there was any stipulation, express or implied, the effect of which was to limit the defendant’s liability. The carriage was neither covered by a bill of lading nor an insurance policy. Counsel for the plaintiffs contended that there was no such stipulation and the defendant could therefore only resort to the common law defence of act of God. Counsel for the defendant contended that the carriage came under the exceptions of the rule of strict liability by virtue of the Merchant Shipping (Implementation of Convention relating to Carriage of Goods by Sea and to Liability of Shipowners and Others) Regulations 1960 (the 1960 Regulations). The defendant was therefore exempted from liability by virtue of art 4 of the Rules Relating To Bills of Lading (the Rules) as set out in the Schedule to the 1960 Regulations, because the loss of the cargo was due to very rough sea and bad weather which constituted a peril or danger of the sea. Counsel for the plaintiffs submitted that the 1960 Regulations did not apply because the carriage was not subject to any bill of lading and that the outward manifest in respect of the goods was not 'a similar document of title' within the meaning of the Rules.

Held: Judgment for the plaintiffs for the 31 crates of plywood that were proven to be on board the vessel.

For the Rules to apply there must be a contract of carriage covered by a bill of lading or any similar document of title. For a document to be a similar document of title to that of a bill of lading, it must satisfy at least the following requirements, that is to say, firstly it must be issued by the carrier to the shipper, secondly the document must contain the name of the shipper and the consignee and the description of the goods to which the contract of carriage relates, and thirdly there must be acknowledgment by the carrier of the receipt of the goods specified therein. No such characteristic or attribute is present in the outward manifest relied on by the defendant. There is also no evidence adduced before the Court to show that the outward manifest was issued by the owner of the vessel to the plaintiffs as a document of title.

Therefore, the carriage of the crates of plywood was not a 'contract of carriage' within the meaning the Rules to which the 1960 Regulations apply. The defendant is therefore precluded from pleading peril of the sea as a defence.

In the absence of any express stipulations in any contract a carrier is allowed to invoke the four common law exceptions of the act of God, Queen’s enemies, inherent vice, and a general average sacrifice. The exception of the act of God can only be invoked where the damage or loss is solely attributable to natural causes independent of any human intervention. Here, the loss of the crates of plywood on board the defendant's vessel was the direct consequence of the master’s negligence in manoeuvering the vessel and the negligence of the salvors in carrying out the salvage operation after the vessel was grounded.