Rail Equipment Leasing Pty Ltd (REL) purchased six second-hand locomotives and associated rolling stock from a vendor in Sweden. REL shipped the goods to Denmark for repair, and then arranged for the goods to be shipped from Denmark to Newcastle, New South Wales, Australia.

REL contracted with Baltship A/S (Baltship) to carry the goods from Denmark to Newcastle. Baltship contracted with CV Scheepvaartonderneming Emmagracht (the carrier) to carry the goods. The carrier owned or chartered the Emmagracht. The carrier issued a bill of lading to Baltship (the ocean bill) and Baltship issued a similar document to REL (the Baltship bill).

During the voyage, two locomotives shifted and caused damage to the side of the ship's hold and to one of the ship's fuel tanks, causing fuel oil to leak. The two locomotives were also damaged. The carrier alleged that the cradles on which the goods were placed were defective because they were made out of softwood rather than hardwood. Baltship alleged that the ship's lashing was inadequate, causing the locomotives to loosen and allowing them to shift within the hold.

The ship docked in the United States. The goods were removed from the ship and cleaned of oil contamination caused by the damage to the oil tank, and new cradles were constructed. The carrier claimed the costs of the cleaning and repair of the ship, construction of the new cradles, and additional port costs, as damages arising from the incident against Baltship and REL.

The goods arrived at Newcastle Port on 21 July 2008. On 24 July 2008 the carrier notified REL and Baltship that it was exercising a lien over the goods of REL. The carrier claimed that it had spent USD 1,098,877.67 on the repairs to the ship and associated costs.

The carrier offered to release the goods in return for an appropriate form of security. Neither Baltship nor REL took up the offer, and the goods remained on the wharf. Both REL and Baltship commenced proceedings against the carrier. The carrier, together with Spliethoff Transport BV and a third Dutch company, commenced proceedings against REL and Baltship in the Netherlands.

In these proceedings, Baltship sought:

(1) a declaration that the defendant did not have possession of the cargo;

(2) a declaration that the defendant had no lien over, and no right to assert a lien over, the cargo;

(3) an order that the defendant forthwith sign and deliver to the plaintiff a delivery order and or such other document and do all such things as may be reasonably required by the defendant, to do whatever is necessary to ensure delivery of the cargo to enable Baltship to collect the cargo for REL;

(4) a declaration that cl 4 of the ocean bill of lading had no effect insofar as it purported to preclude or limit the effect of Carriage of Goods by Sea Act 1991 (Cth);

(5) an order restraining the carrier from taking steps in the Dutch proceedings.

REL sought:

(1) a declaration that the carrier had no entitlement to exercise a lien over the goods;

(2) a declaration that the purported exercise of the lien was illegal;

(3) a declaration that the plaintiff was entitled to damages from the carrier;

(4) ancillary orders similar to those sought by Baltship.

The carrier asserted:

(1) A right to proceed in rem against the goods on the basis of a contractual lien based on the operation of cll 10(b), 11 and 17 of the ocean bill, s 17 of the Admiralty Act 1988 (Cth) (the Act) and art 4.6 of the Hague-Visby Rules;

(2) A general maritime lien based on a tort having been committed on the high seas;

(3) A right to proceed in rem pursuant to s 15 of the Act on a maritime lien.

Held: The declarations and orders sought by the plaintiffs are denied, other than in respect of cl 4 of the ocean bill of lading, which does not oust the jurisdiction of the Court.

Clause 11 of the ocean bill of lading grants to the carrier a lien for any amount due under the contract and for the cost of recovering the same. The carrier asserts that cll 10(b), 17 and art 4.6 of the Hague-Visby Rules, in the events that have occurred, make Baltship and REL liable to it for the amount of the claimed lien.The relevant part of cl 10(1)(b) of the ocean bill of lading appears to be 'all costs and expenses of ... replacing packing due to excepted causes and any extra handling of the cargo' for that reason. It was accepted that 'excepted clauses' could be the exceptions in art 4.2 of the Hague-Visby Rules. Three potentially relevant exceptions are:

• Act or omission of the shipper or owner of the goods, its agent or representative (art 4.2.i);
• Insufficiency of packing (art 4.2.n);
• Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage (art 4.2.q).

There is authority that the fact that the carrier is aware of the insufficiency in packing will not in itself preclude the carrier from relying on the exception (Gould v SE Chatham Railway [1920] 2 KB 186). It follows that the carrier arguably has a claim pursuant to cl 11 for the cost of replacing the cradles and extra handling of the goods.

Article 4.6 of the Hague-Visby Rules states:

Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages directly or indirectly arising out of or resulting from such shipment. If any goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place or destroyed or rendered innocuous by the carrier without liability on the part of the carrier expect to general average, if any.

Locomotives at rest would not normally be considered 'dangerous goods', nor are they inflammable or explosive. However, it has been held that 'dangerous' is not to be read eiusdem generis, that the central part of art 4.6 provides a right of indemnity for any damage, not just the cost of rendering the cargo innocuous, and that the rule is not restricted to goods liable to cause direct physical damage (see Effort Shipping Co Ltd v Linden Management SA, 'The Giannis' [1998] AC 605 (CMI571) in which it was held that a cargo of groundnuts contaminated with beetles which led to the ship being required to dump both the cargo and another cargo were dangerous goods.

It follows that there is a second arguable basis for the carrier asserting a lien pursuant to cl 11 fo the ocean bill of lading, and for the claim brought on it to be described as a general maritime claim.

It is arguable that if the carrier had a lien over the goods by virtue of cl 11 of the ocean bill of lading, it did not lose that lien by discharging the goods from the vessel. Clause 11 contemplates the sale of the cargo and it would not make sense to require sale whilst on the ship. It would appear that the parties have agreed the lien extends beyond discharge.

The carrier remains in control of the goods and if its claim to a lien under cl 11 is upheld at a hearing, it will be able to sell the goods without any need for intervention of the Court.

It is doubtful that any maritime lien over cargo for a tort on the high seas is known or recognised by Australian law. Section 4(3) of the Act makes an express mention of a general maritime claim for damage done 'by a ship', but there is no reference to damage done 'to a ship'. Nor is there any provision in the Arrest Convention 1952 for a maritime claim for damage done to a ship.