The defendant container undertook to ship washed Colombian green coffee beans from Buenaventura in Colombia to destinations in north Germany on LCL/FCL terms. The claimant cargo consignees, on outturn, found that most of the consignments, 18 containers of 20, had suffered damage from condensation. The bills of lading recorded receipt of the consignments in apparent good order and condition. The beans were typical and normal as to moisture content, as in all other respects. Condition 2 of the bills of lading, a standard clause paramount, made the carriage subject to the Hague Rules.

The claimants relied on the fact of the damage and also made a positive case that the lining of the containers was not, but should have been, effected using a double layer of paper. The defendant submitted that the stuffing of the containers by its stevedore agents occurred before the loading, so that the Hague Rules did not apply. Alternatively, if the Hague Rules applied, according to the expert evidence, in any event, the amount of lining paper used would have no effect on preventing the damage, so the claim had to fail at least for lack of causation.

Held: Claim allowed.

The Hague Rules did apply. Where cargo was loaded into a carrier's containers which were subsequently loaded on the vessel, that was part of a single loading process. Even if that were not so, the parties were free to agree on what, for the purposes of art 1.e of the Hague Rules, constituted loading. Under LCL/FCL terms where the obligation to stuff its own containers was assumed by the carrier, the contract of carriage would be interpreted as including that as part of the loading. It was not suggested that the stuffing, i.e. the actual loading into the containers, was itself defective or caused any loss. The defendant’s preliminary argument on Conditions 11 and 12, which were said to exclude its liability (as recognized by art 7) failed accordingly. The complaint was rather that the bags of coffee beans were carried in the immediate physical environment of a steel container carelessly or inadequately prepared to protect the cargo against damage from condensate. The breach alleged was thus of a duty at the heart of the carriage.

The issue of the defendant's liability under art 3.2, subject to art 4.2, of the Hague Rules depended on whether the precautions taken by the defendant against condensate damage were appropriate in conception and implementation. The undisputed damage on outturn raised a prima facie case of breach of art 3.2 which required rebuttal by evidence demonstrating the contrary. Article 4.2.m 'Wastage in bulk of weight or any other loss or damage arising from inherent defect, quality or vice of the goods', unlike many of the other causes listed thereunder, is a category of case but not an excepted peril, in which breach of the art 3.2 obligation is negatived. That led to the question of burden of proof. The defendant had failed to establish that no lining with paper or card could have prevented the damage. The proposition that damage could not be prevented by any form of paper or card lining confronted historical experience. If correct, one might have expected it to have engendered an industry-wide spate of claims and litigation, of which the defendant had produced no evidence. Even if the defendant had made good its contention that no lining with paper or card could have prevented the damage, it would not have availed the defendant. A carrier was obliged under art 3.2 to employ a sound system. The defendant had failed to establish that it adopted a sound system. If the system was a proper one, the question would arise as to why it failed to prevent damage in all but two of the 20 containers.