The plaintiff, as the owner of goods loaded on the ship of the defendant in the port of Leixões, Portugal, for transport to the port of Limassol, Cyprus, and/or as recipient by endorsement of the relevant bill of lading, claimed against the first defendant damages of CYP 400 for damage to its goods, interest and expenses, as a result of breach of contract and/or duty and/or due to negligence on the part of the first defendant, its servants or its agents. The lawsuit against the second defendant ship was withdrawn.

On 23 January 1987, 28 cartons of sardines worth CYP 400, part of the consignment of 200 cartons for the plaintiff, were destroyed by the Health Department of the Municipality of Nicosia. This cargo for the plaintiff was loaded in Lisbon for transhipment to Liverpool on the Manchester Prince to Limassol, for which a consignment note was issued. It should be noted that the plaintiff's goods were loaded into a container along with other consignments. In Liverpool the container was opened and goods destined for Liverpool and Ashod were removed from it. The plaintiff's cargo, which at this stage was found to be in good condition, remained with the other goods in the same container, which was then sealed. The cargo was then loaded for Limassol on the Manchester Prince.

On delivery the plaintiff complained that 28 cartons x 100 tins were badly damaged, squashed and leaking, and therefore considered as a total loss. The Health Department of the Nicosia Municipality was called upon to examine them and proceeded to destroy them.

Held: Judgment for the plaintiff.

The bill of lading contains the terms of the contract for the carriage of the goods. Clause 5 of the bill of lading provides that the Hague Rules will apply in relation to the liability of the carrier. Article 3.4 of the Rules provides: 'Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraph 3(a), (b) and (c).'

In accordance with art 3.3.c of the Rules, the bill of lading states that the goods received by the first defendant were 'in apparent good order and condition'. This condition concerns the apparent or external condition of the goods and not their quality. Goods should not only be in good condition when loaded on board, but should also be in good condition to withstand the voyage. Goods that are improperly packaged are not considered to be 'in good order and condition': see Silver v Ocean SS Co [1930] 1 KB 416.

This reference in the bill of lading creates an estoppel. The first defendant therefore admitted that it had received the goods in apparent good condition and issued a clean bill of lading, and thus bore the burden of proving that the damage to the goods had not been caused while the goods were on board or in its custody, or that it is excluded from liability under the terms of the bill of lading. The first defendant did not prove this, and therefore had an obligation to deliver the goods in the condition in which it received them ie in 'like good order and condition'.

The first defendant alleges that it actually delivered the goods in the condition in which they were received, since the Port Authority check did not reveal any damage. This position was overturned by the witness, Petros Herodotou, who stated that the inspection performed was visual and not thorough. Therefore, the fact that the goods were not found by the Port Authority to be damaged does not prove that they were not already damaged. Consequently, the burden of proof remained on the shoulders of the first defendant.

The next issue that remains to be considered is whether the first defendant proved that it is exempt from liability. From its testimony the first defendant did not prove that it is exempted from liability under the terms of exemption of the bill of lading, and although the goods were loaded in the container by the seller (shipper), nevertheless it was not proven that the damage arose from the way the goods were loaded into the container.

In the circumstances mentioned, the first defendant, who had the burden of proof, failed to prove that the goods were not damaged while on board or in its custody. The first defendant also failed to prove that it was exempt from liability under the terms of the bill of lading.