This action was brought by the plaintiff, which shipped 800 bags of rice under two bills of lading on the MV Shansi, a vessel owned by the defendant. Around 2 December 1964, the goods were discharged from the MV Shansi and landed at Port Moresby under a permit issued pursuant to the Customs Ordinance 1951-1962 (the Ordinance), and placed in a place of security approved by the Collector of Customs (the Collector).

This place of security was owned by the plaintiff and comprised, among other things, a shed into which the goods were placed, and for the use of which Steamships Trading Co Ltd (Steamships) paid a fee as licensee to the Collector. The defendant had no control over the shed unless it had control via Steamships if the latter was its agent. There were other areas in the place of security available to the defendant for storage of the goods. The goods were landed on the wharf from the defendant's vessel by Steamships, for which work the latter charged the defendant stevedoring charges. Wharfage charges were paid by Steamships as agent for the defendant to the Collector of Customs. The handling charges, which covered taking the goods from the ship's side and placing them in the place of security, and any other charges incurred in relation to the goods until they were delivered to the consignee, were paid by the plaintiff to Steamships and were retained by it on its own account. There was no pre-existing agreement between Steamships and the plaintiff in relation to these charges.

The practice at the time was that after goods had been in the place of security for more than four working days after the departure of the ship, the Collector charged a storage fee to the goods owner, except where the owner was the plaintiff. While in the place of security, 661 of the 800 bags of rice were lawfully removed and received by the plaintiff. The remaining 139 bags of rice, valued at AUD 991.76, were not received. The plaintiff asked the defendant to deliver them. The application for clearance in respect of the Shansi and guarantee to pay duty dated 1 December 1964 was signed by Steamships as agent of the defendant. The Collector's permit dated 1 December 1964 in respect of the Shansi was signed by Steamships as agent for the defendant. The relevant gate passes were issued by Steamships as agent for the defendant. Goods could not lawfully leave the place of security without the gate passes.

Held: Judgment for the defendant.

The two bills of lading referred to were, first, what appears to be a standard Department of Territories bill of lading for cargo to be carried from the port of Sydney and, second, a New Guinea Australia Line bill of lading. The former contains a clause paramount providing that the provisions of the rules contained in the Schedule to the Sea Carriage of Goods Act 1924 (Cth) (the Hague Rules) are to apply to the contract contained in the bill of lading, and for the carrier to be entitled to the benefit of all privileges, rights, and immunities contained in the Hague Rules as if the same were therein specifically set out. The Hague Rules define carriage of goods as covering the period from the time when the goods are loaded on to the time when they are discharged from the ship. Article 4.2 exempts the carrier from responsibility for loss or damage arising or resulting from, among others:

(q) any other causes 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.

By virtue of art 7, nothing in the Hague Rules prevents the carrier from making any reservation or exemption as to its responsibility and liability for loss or damage 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 sea. A number of reservations and exemptions are contained in the New Guinea Australia Line bill of lading, and the terms, conditions, and exceptions of this document are specifically incorporated into the Department of Territories bill of lading. Those which are, or may be, material to the issues in this action are as follows:

2. During the periods prior to the commencement of the loading of goods on to the ship and after the completion of the discharge of the goods from the ship, the following terms, conditions and exceptions shall apply to the exclusion of any other provisions in this Bill of Lading that may be inconsistent therewith:

(a) so long as the goods remain in the actual custody of the carrier or his servants ..., the carrier shall not be liable for loss damage or detention arising or resulting from the act neglect or default of the servants or agents of the carrier, nor from any other cause whatsoever arising without the actual fault or privity of the carrier, ...

(c) in all other cases the responsibility of the carrier, whether as carrier or custodian or bailee of the goods, shall begin only when the goods commence to be loaded on the ship and shall cease absolutely when discharge of the goods from the ship is completed. ...

15. Discharge and Delivery. The goods may be discharged from the ship as soon as she is ready to unload and as fast as she is able, continuously day and night Sundays and holidays included, on to wharf or quay or other spaces, open or covered, or into store, hulk, lazaretto or lighters, whether insulated, bonded or not, at ship's option and at the risk and expense of the cargo owners, any custom of the port to the contrary notwithstanding, and always subject to the regulations and conditions of any such wharf or quay, spaces, store, hulk, lazaretto or lighters, whether the property of the carrier or other persons, to which regulations and conditions the cargo owners hereby authorise the carrier to agree on their behalf. ...

18. Where Customs at port of transhipment or delivery require any bond or undertaking before permitting the landing or forwarding of dutiable goods, the carrier or his agents or the master are hereby authorised to give such undertaking on behalf of the cargo owners, who shall indemnify the carrier from all liabilities and expenses incurred. The carrier and/or master porter are authorised by the owners of dutiable cargo at any port, during and after discharge, at their sole discretion to incur and pay Customs charges for watching such cargo, which charges the owners thereof undertake to repay, any custom of the port to the contrary notwithstanding. ...

22. ... At any port where, in accordance with Customs regulations, the goods have to be landed into the charge of the Customs or other Authorities, no claims for shortage or damage will be considered by the carrier, beyond that noted by the Authorities at the time of receiving the goods into their charge.

The plaintiff claims damages for breach of the defendant's contract to keep safely and take care of these bags whilst it had them in its care and keeping and, alternatively, in detinue for the return of the goods or their value. To this claim the defendant replies that the loss complained of arose after completion of the discharge of the cargo of rice from its ship and that consequently it is exempted from liability under the terms of the bill of lading and, further, that if the 139 bags should be treated as not having been discharged from the ship, the loss arose without its actual fault or privity, and without the fault or neglect of its agents or servants.

It was not really contended that the custody of Steamships was the actual custody of the defendant, nor is there any room for such a conclusion. Neither was it contended that if the contract for carriage stood alone, any action for breach of that contract or in detinue would lie at the suit of the plaintiff, but it was submitted for the plaintiff that the contract did not stand alone, and that the plaintiff was entitled to succeed by virtue of the provisions of s 69 of the Ordinance. That section reads:

Goods unshipped and landed under a Collector's permit shall be placed by, and at the expense of, the master or owner of the ship or the pilot or owner of the aircraft from which they were unshipped, in a place of security approved by the Collector and shall, until lawfully removed from that place, be at the risk of the master or owner of the ship or the pilot or owner of the aircraft as if they had not been unshipped.

The plaintiff argued that s 69 creates a fresh relationship between the parties, and notionally puts the goods which have been unshipped back on the ship. In such a case, the carrier can only avoid liability for loss or damage if it can avail itself of the provisions of art 4.2.q of the Hague Rules, and the burden of proof being upon it, there is nothing in the facts of this case to show that it has discharged this burden. The defendant contended that s 69 is not designed to, nor does it have the effect of, altering or affecting the rights and liabilities of the carrier and of the consignor or consignee respectively, but is part of a scheme whereby safeguards are provided in relation to goods entering the Territory on board ship or aircraft to protect the revenue. In other words, the Ordinance was one dealing with the public rights of the Territory Administration, and its purpose is to regulate what goods shall go out, what goods shall come in, and what duties shall be paid thereon. It is not concerned with the rights of parties to a contract, and is not an ordinance dealing with private rights at all.

This is an ordinance relating to the Customs, not to contracts of carriage by sea, sale of goods, or marine insurance. The words 'goods unshipped and landed under a Collector's permit ... shall ... be at the risk of the master or owner of the ship ... as if they had not been unshipped' do not, in the Court's view, have an absolute or unqualified meaning of their own force. The nature of the risk referred to must be looked for outside the section. The difficulty lies in the use of the words 'at the risk of ... as if they had not been unshipped' in the section. What kind of risk does it seek to impose? The liability to the risk, laid alternatively on the master or the owner, is the liability to report and to pay duty elsewhere in the Ordinance. The Court is unable to see what liability the master has personally in relation to the goods whilst they are on board the ship other than the liability imposed on them by s 135 of the Ordinance if they fail to account for such goods or some possible liability in tort. The contract of carriage imposes no personal liability upon them, and none was suggested in any contract of marine insurance or contract of sale.

If one supposes goods being shipped from a country in which the Hague Rules have not been incorporated in the legislation, and being carried at shipper's risk, the owner or master is at no contractual risk if the goods are not unshipped, and if the section is directed to the contract of carriage it is difficult, if not impossible, to find any justification for its presence in an ordinance relating to Customs. This section was first enacted in Australia in 1901, long before the Hague Rules received statutory recognition in any of the maritime countries. The risk referred to is the risk, primarily at any rate, of liability to duty, and s 69 does not, and cannot, have the effect of imposing a liability on the carrier over and above, and indeed in direct contradiction to, those liabilities contained in the contract of carriage.