The defendant (Sri Lanka Shipping Co Ltd) had chartered a ship, the Hansboye, for the carriage of goods between ports in Ceylon, India, Burma and the Maldives. The defendant's agent in Tuticorin contracted with the Mercantile Corporation of Tuticorin for the carriage of a shipment of cane jaggery consigned to Star Line Trades, Colombo, on whom the consignor drew a demand bill for the value of the jaggery. The bill was drawn in favour of the plaintiff bank (the Indian Bank Ltd of Colombo). This demand bill, the invoice for the shipment, the bill of lading and the policy of insurance were transmitted to the plaintiff bank.

Delivery of the cargo was taken by the Ceylon Port Cargo Corp and the cargo was lodged in the customs warehouse. The plaintiff bank became entitled to it by established practice, because the shipping documents were in its possession. Nevertheless, the customs authorities delivered the shipment to Star Line Trades (the original consignee) in consequence of the authorisation by the defendant's agents in Colombo to give delivery to the Star Line Trades.

In the present action, which was instituted about 18 months after the arrival of the ship at the Port of Colombo, the plaintiff bank claimed judgment for the value of the shipment. The defendant argued, amongst other things, that the plaintiff's claim was time-barred under art 3.6 of the Hague Rules. The District Court Judge held in favour of the plaintiff bank. The defendant appealed.

Held: Appeal dismissed. 

In commenting on the words 'loss or damage' in the Hague Rules, Carver states that the meaning of these words is ambiguous, and may even refer to loss or damage to a party to a contract. If the words do have this wide meaning, then the present action must fail on account of delay in its institution. However, the words 'loss or damage' occur for the first time in the first para of art 3.6, in a context which refers only to goods actually delivered to the person entitled to delivery thereof. That being so, the same words as they occur in the third para of art 3.6 prima facie have the same limited meaning.

The opinion is however expressed in Carver that they have a wider meaning, because the wider meaning was adopted in the case of Renton v Palmyra Trading Corp (CMI2113). That case, however, involved the construction, not of art 3.6 but art 3.8. There seems to be in art 3.8 a deliberate addition of words for the purpose of including not merely a loss or damage to goods, but also to loss or damage in connection with goods. Emphasis is laid, in the judgments of Lord Kilmuir and Lord Morton, on the use of these words in art 3.8. From the fact that art 3.8 has been held to apply in a case of loss or damage to a party arising from a discharge at the wrong port, it does not therefore follow that the provisions of art 3.6 would equally apply in the case of such an incorrect discharge. So to hold would be to ignore the absence in art 3.6 of reference to loss or damage 'in connection with goods'.

Even if, in view of the decision in Renton, the discharge of goods at a wrong port is a 'loss' to which the provisions of art 3.6 are applicable, it does not follow that the time bar will apply in the circumstances of the present case. There is in fact no provision in the Hague Rules or in a bill of lading which contemplates the variation in the nature of the fundamental obligation of a carrier which results from the custom of the port, namely, that the issue of authority by a ship's agent for the disposal of goods after their discharge from a ship is involved in the carrier's duty to deliver the goods 'to order'. While the Hague Rules therefore are applicable to a case of the wrongful discharge from a ship, one would not expect those Rules to contemplate, and to be applicable in a situation in which some act has to be done by the carrier in pursuance of his contractual obligation at a stage after goods have been duly discharged at the port of destination. In other words, the true position may be that the Rules do not apply in relation to any transaction performed or to be performed after the completion of a carriage by a due discharge. On these grounds also, Renton is probably distinguishable.

For these reasons, the time limitation provided in art 3.6 of the Hague Rules does not apply in a case like the present one, which involved only a misdelivery, and not actual physical loss of goods.