The plaintiffs shipped a set of nylon goods on board the Lars Maersk (the Lars cargo) and another set of cotton goods on board the Jens Maersk (the Jens cargo). The Lars cargo was damaged by sea water before it was unloaded from the ship while the Jens cargo was damaged by rain while being discharged by lighters and transported from the ship to shore in Singapore.

By reason of the damage suffered, the plaintiffs sued the shipowners (the first defendants) as well as the owners of the lighters (the second defendants). A sister ship owned by the first defendants, the Lexa Maersk, was arrested in Singapore.

It was held that the first defendants were liable for the damage to the Lars cargo as there was clear evidence which showed that the Lars cargo was damaged during the voyage because of the presence of sea water damage. It was also held that the second defendants were liable for the damage to the Jens cargo because they were sub-bailees for reward of the cargo and they also owed the plaintiffs a duty of care in tort.

However, there was a question of whether the first defendants would be liable to the plaintiffs in contract under art 3.2 of the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1924 (the Hague Rules) for their failure to take proper care of the Jens cargo because the lightering process was part of the carriage by sea and because the goods had not been properly and carefully discharged. An issue arose as to the definition of 'discharge' under the Hague Rules and whether the Jens cargo had been 'discharged' when they were placed on the lighters for transport to shore.

Held: The first defendants were liable to the plaintiffs.

The Hague Rules applied to a situation even where the goods had been released from the ship's tackles. More importantly, the lightering process was considered part of the discharging operation and the Hague Rules would apply to the goods while they were in the lighters. Under art 3.2 of the Hague Rules, the first defendants were under a duty to see that the lighters were seaworthy, properly equipped and properly handled. There was a clear duty to properly and carefully care for the goods while they were in the lighters and because the damage resulted from the lack of care on the part of the lighterman, the first defendants were liable for the damage.