In August 2000 Phil Shtutman (the plaintiff) entered into an agreement of purchase and sale of used equipment, principally a Faguay generator and a Raymond electric lifter, with Bavaria International Garage Inc (Bavaria), a business in Conakry, Guinea. The sale was for USD 120,450.00. Delivery was to take place in the container yard at the Port of Conakry after Bavaria had made arrangements at its bank to guarantee payment of the goods to the plaintiff.

This was the first international transaction for the plaintiff and he relied on advice from his friend in matters of international trade and financing. The plaintiff retained the services of a freight forwarder, Quebec International Transport Inc (QIT), who contracted with Oceane Marine Shipping Inc (Oceane) based in the United States.

Oceane had purchased bulk space on vessels, owned by Dampskibsselskabet Svendbord (Svendborg), Dampskibsselskabet AF 1912, Aktieselskab (1912) (the defendants), servicing Canada/Europe/West Africa.

The plaintiff properly stuffed the container in Montreal in September 2000. The defendants took custody of the container at the Port of Montreal and transported it to the container yard in Halifax where it arrived in early December 2000.

A bill of lading for the container, freight prepaid, was issued to the plaintiff on 3 December 2000 by Oceane as the carrier. The bill of lading named the plaintiff as shipper and Bavaria as the consignee, the Dragor Maersk as the exporting carrier, Halifax as the place of loading, Algeciras, Spain as foreign port of unloading, QIT as the forwarding agent and Maersk Guinée to be notified.

On 4 December 12000, Maersk Atlanta issued a combined transport bill of lading in respect of the container, naming Oceane as the shipper/exporter, Bavaria as the consignee, Montreal as the place of receipt, Dragor Maersk as the exporting carrier, and Conakry as the port of discharge. This bill of lading specified that the carriage was CY to CY (container yard to container yard), the place of issue was Atlanta, and the container laden onboard the ship at Halifax on 4 December 2000.

The container was discharged at the Port of Conakry on 29 December 2000 with seal intact. It made the voyage from Algeciras, Spain, on the M/V Thor Lone.

Bavaria failed to pay for the goods and failed to claim them at the Port of Conakry. The plaintiff’s friend found a new buyer/sales agent in Conakry, said to be Magistrate Mohamed Lamine Diawara (Diawara). On 26 January 2001, the plaintiff issued a letter addressed ‘A qui de droit’ (To whom it concerns). The letter said that the cargo sitting in the Port of Conakry had not been paid for by Bavaria. Accordingly the plaintiff authorised Diawara to take delivery of the cargo and complete all paperwork necessary for customs to enable the delivery of the cargo. This letter was sent to Diawara, The Director of Customs, and the Director of Maersk.

Steps were taken to change the named consignee from Bavaria to Diawara on the two bills of lading. At the plaintiff's option the change in consignee was made without the issuance of new original bills of lading.

To support the contention that Maersk Guinée had misdelivered the container, the plaintiff relied on two documents issued by employees of Maersk Guinée. One is entitled 'Delivery Note No 6859' and Bavaria is identified in handwriting as the client. The document refers to Amara Soumah of KTT Transit, identifies the number of the truck picking up the container, and under the heading 'Marques' (Marks) the words 'MAEU 710716.9, [illegible], 013383, delivered compliant'.

The other document is also a Maersk Guinée document which names Bavaria as the client and under 'client signature' appear the words Amara Soumah (KTT Transit). Under the word 'Remarques' (Comments) appear the letters RAS meaning 'rien à signaler' (nothing to report). The seal number was not recorded on the printed form in the sentence 'Plomb No ... Intact à la réception' (Seal No ... intact on receipt).

The plaintiff also relies on a letter purported to have been sent by Diawara which said:

We have received your container No MAEU7107169. It was opened no seal and lock on the door and the goods that you mentioned in your letter dated Friday, 26, January 2001 through your notary were not found in the container.

Please contact your shipping agency to inform us about the lost goods that they were inside the container. For your information, we are going to send you the needed proofs by DHL from the SGS, the Police International and the Interpol to confirm our problems.

No payments will be sent to you until we receive the right goods agreed upon.

It is conceded by both parties that neither received the reports from SGS, the police, or Interpol.

Diawara was not called by the plaintiff at trial nor did he call anyone else from Conakry who had knowledge of what transpired. The plaintiff did not appoint a surveyor in Conakry. The defendants objected to the evidence on the grounds of hearsay.

Mory Keita, shipping manager for Maersk Guinée, testified at trial that Diawara received the goods in good order.

Held: The action is dismissed.

Several judgments of this Court have endorsed statements on burden of proof and order of proof contained in Professor Tetley’s publication Maritime Cargo Claims. There are three principles of proof that run as unbroken threads though Hague Rules and Hague-Visby Rules jurisprudence. The order of proof is as follows:

1. The claimant must first prove its loss.
2. The carrier must then prove: (a) the cause of the loss; (b) that due diligence to make the vessel seaworthy in respect of the loss was taken; and (c) that the carrier is not responsible by virtue of at least one of the exculpatory exceptions of the Rules.

In order to prove its loss, the claimant must prove the following facts:

1. That the claimant is the owner of the goods and/or is the person entitle to make the claim.
2. The contract or the tort.
3. That the person claimed against is the responsible person.
4. That the loss or damage took place in the carrier's hands. This is usually done by proving the condition of the goods when received by the carrier and the condition at discharge.
5. The physical extent of the damage or the loss.
6. The actual monetary value of the loss or damage.

The carrier must prove:

1. The cause of the loss.
2. Due diligence to make the vessel seaworthy at the beginning of the voyage, in respect of the loss.
3. One of the following exculpatory clauses:
   
   1. Error in navigation and management of the ship.
   2. Fire.
   3. Perils of the Sea and similar exceptions, being Acts of God; Acts of War; Acts of Public Enemies; Restraint of Princes; Quarantine; Strikes; Riots; Saving Life.
   4. Act or omission of the shipper.
   5. Inherent vice.
   6. Insufficiency of packing
   7. Latent defects.
   8. Any other cause.

The various arguments then available to the claimant:

1. Negligence at loading.
2. Negligence in stowage.
3. Lack of the cargo.
4. Negligence at discharge.

It is clear from the jurisprudence that the plaintiff bears the burden of proving that the goods were damaged while in the carrier’s possession; this is generally accomplished by proof that the goods were tendered in good condition to the carrier, and were ultimately received in a damaged condition. Once this is accomplished the carrier must show that the damage fits within an excepted clause of the Hague Rules. If on the other hand, the carrier cannot establish that the damage is due to an excepted cause, the burden remains on it to prove that the loss was not caused by its negligence (see Kruger Inc v Baltic Shipping Co (1989) CanLII 5258 (FCA) (CMI891)).

The plaintiff has not met his initial burden of proof. The plaintiff has not proven that the loss of the goods inside the container took place when the container was in the custody of Maersk Guinée either because of misdelivery or theft. Counsel for the plaintiff argued misdelivery to Bavaria on 8 March 2001. Keita testified why the name Bavaria appeared on the documents as the client. He was afraid that if the goods were not cleared from the container yard within a short period of time, the container would be seized and its contents sold. There is no basis in the evidence to find Keita not credible. His testimony was trustworthy. He was very knowledgeable about the affairs of Maersk Guinée at the Port of Conakry during the relevant period.

The plaintiff does not know what happened at the Port of Conakry after the container was discharged on 29 December 2000. He brought no independent evidence of what happened at the port on 8 March 2001. His reliance on the documents purportedly sent by Diawara are inadmissible on grounds of hearsay. The circumstances tell us very little of who Diawara is, and what kind of arrangement he made with the plaintiff. Was he simply a sales agent hired to sell the goods which Bavaria had failed to purchase? It is very strange that Diawara did not notify Maersk Guinée of any problems with the shipment. In short either Diawara or KTT Transit should have been called to testify to overcome the dangers of hearsay.

This finding is enough to dismiss the plaintiff’s action but in the event this is wrong there should be discussion about the defendants' argument for exclusion or limitation of liability.

The Hague-Visby Rules govern the carriage of the container and its goods. The defendants say that the Hague-Visby Rules have no application after the container was discharged over the rails of the Thor Lone on 29 December 2000 when it arrived at the Port of Conakry. This is because of the definition of 'carriage of goods' in art 1.e of the Hague-Visby Rules which reads: 'Carriage of goods covers the period of time when the goods are loaded on to the time they are discharged from the ship'.

Clause 5.3 of the bill of lading is entitled 'Carriage to and from Countries other than the USA' and reads:

(a) Subject to sub-paragraph (b) of this Clause where the loss or damage has occurred between the time of receipt of the goods by the carrier at the port of loading and the time of delivery by the Carrier at the port of discharge, or during any prior or subsequent period of carriage by water, the liability of the carrier shall be determined in accordance with either the Hague-Visby Rules where these are compulsory applicable at the place of receipt or the port of loading where the first sea carriage in the transportation is on board the ocean vessel, or in all other cases in accordance with the International Convention for the Unification of Certain Rules relating to Bills of Lading dated 25th August, 1924 (the Hague Rules) (with the exception that art 9 shall not apply and the limit of liability in art 4.5 shall be set out as in Clause 6 below).

(b) Where the carriage called for commences at the port of loading and/or finishes at the port of discharge, the Carrier shall have no liability whatsoever for any loss or damage to the goods while in its actual or constructive possession before loading or after discharge over ships rail, or if applicable, on the ships ramp, however caused.

The defendants' case for limitation rests on cl 6.2(c) of the bill of lading. Clause 6 is headed 'The Amount of compensation'. Clause 6.2 reads:

Where the Hague Rules apply hereunder the Carrier's maximum liability shall in no case exceed GBP 100.00 lawful money of the United Kingdom per package or unit, unless the nature or value of such Goods have been declared by the Shipper before shipment and inserted on the reverse side of this Bill of Lading and extra freight paid.

(a) Subject to clauses 5.7 and subparagraph (b), (c) and (d) of this clause when the Carrier is liable for compensation in respect of loss of or damage to Goods, such compensation shall be calculated by reference to the invoice value of the Goods plus freight charges and insurance if paid.

(b) If there is no invoice value of the Goods, such compensation shall be calculated by reference to the value of such Goods at the place and time they are delivered to the Merchant in accordance with the contract or should have been so delivered. The value of the Goods shall be fixed according to the Commodity exchange price or, if there be no such price, according to the current market price or, if there be no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality.

(c) Compensation shall not, however, exceed USD 2 per kilo of gross weight of the Goods lost or damaged.

Counsel for the plaintiff also argued the exclusion or limitation or liability clauses in the bill of lading clashed with art 3.8 of the Hague-Visby Rules and were thus null and void. Article 3.8 of the Hague-Visby Rules reads:

Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect.

A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability.

Article 7 of the Hague-Visby Rules states:

Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to, or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by water.

The weight of jurisprudence and the authors on cargo claims is to the effect that parties enjoy freedom to contract as contemplated in art 7 of the Hague-Visby Rules before and after the mandatory application of those Hague-Visby Rules which is effective in the period between loading on board and discharge from a vessel.

In the case of the Maersk bill of lading, the parties specifically chose to extend the application of the Hague-Visby Rules beyond their period of mandatory application but in doing so excluded some parts of the Hague-Visby Rules, as art 7 specifically allows.

Counsel for the plaintiff cited the case of Primex Forest Products Ltd v Harken Towing Co [1997] BCJ 1644 (CMI963). This case does not support the plaintiff’s proposition. The exclusion of liability contained in the contract of towage was held to be inapplicable, not because art 3.8 bars partial incorporation of the Hague Rules or Hague-Visby Rules, but because the clauses themselves purporting to exclude liability were found to be contradictory and vague.

In Motis Exports Ltd v 1912 and Svenborg [2000] 1 Lloyd’s Rep 211 the England and Wales Court of Appeal interpreted the terms of a clause worded identically to cl 5.3.b of the Maersk bill of lading and held that properly construed cl 5.3.b would not exclude liability in the event of misdelivery even against a forged bill of lading. However, the Court of Appeal construed the clause as covering an instance of therft by taking without a carrier’s consent. The Court of Appeal referred to art 7 of the Hague-Visby Rules and stated that art 7 permits the carrier to exempt or limit liability for loss or damage to goods in their custody prior to loading and after discharge from the ship.

The plaintiff’s case hinged on misdelivery to a wrong consignee or, alternatively, theft in the container yard at the Port of Conakry. The plaintiff has not discharged his burden of proof on either point.