Mr Haverkate (the plaintiff) made arrangements with Danzas Ltd to have his household goods shipped to Canada. The plaintiff's goods were sealed in a container. The container remained sealed until its final delivery in Toronto. The container was on board the Span Terza, which was owned by Societa Partenopea di Navigatione SpA, and was under time charter to Federal Commerce & Navigation Ltd (the second defendant).

The container was discharged from the Span Terza on 14 September 1977 and was placed in the customs shed located in the terminal area maintained by Toronto Harbour Commissioners (the first defendant). On discharge of the container from the Span Terza, it was ascertained that the container was extensively damaged. It was agreed that the loss or damage to the plaintiff's goods occurred after loading on board and prior to their release to the plaintiff by the first defendant. However, neither the first defendant nor the second defendant admitted responsibility for such loss or damage.

The first issue to be determined was whether the first defendant was responsible for any part of the plaintiff's claim. The second issue to be determined was whether the limitation, which was agreed to be CAD 500 per package or unit, applied to the complete container, thereby limiting the plaintiff's total claim to a maximum of CAD 500. However, if package or unit meant each of the 417 packages inside the container, the limitation would be CAD 208,500.

Held: Judgment for the plaintiff against the second defendant.

The first defendant is not responsible for any of the plaintiff's loss.

As to the second issue, if the second defendant can limit its liability by defining a 'container' as a 'package', thereby making part of the hold of the ship one package, then it is doing indirectly what it is prohibited from doing under art 3.8 of the Hague Rules. The carrier cannot by creating an unusual meaning of the word 'package' or 'unit' avoid the minimum liability specified in art 3.8 of the Hague Rules.

A package usually includes an element of disposability. Packaging is often done away with after using. Packaging is usually owned by the same person who owns the goods, that is, the receiver receives the package to do with as it wishes, usually to dispose of or destroy. A container, however, is owned by a person who does not own the goods; it is reusable and usually made out of metal. Clearly, a total liability of CAD 500 for a container with 417 parcels will not be appropriate.