In this action the plaintiff, K Chellaram & Sons (FE) Ltd, claimed damages from the first defendant, Nissho Shipping Co Ltd, for breach of contract or duty regarding the carriage of three cases of goods by sea and/or conversion and in the alternative against the second defendant, the Port of Singapore Authority, for negligence in the care and custody of the three cases and for wrongfully detaining and/or converting them. The goods were carried from Japan to Singapore under bills of lading which were subject to the Hague Rules.

The goods were duly discharged ex ship's tackle by the first defendant into the possession of the second defendant. The plaintiff presented delivery orders issued by the first defendant in respect of the goods to the second defendant. The second defendant delivered to the plaintiff two cases but failed to deliver the remaining three cases. The second defendant was unable to account for them.

The issue was whether the first or the second defendant was liable to the plaintiff.

Held: Judgment for the defendants.

Clause 15 of the bills of lading provides as follows:

Discharge and Delivery: The goods may be discharged, without notice, as soon as the ship is ready to unload and as fast as she is able, continuously day and night in any weather, Sundays and holidays included, on to wharf or quay or into warehouse, or into lighter or craft or any other place, and be stored thereat and/or sent to store or warehouse; any custom of the port to the contrary notwithstanding, and always subject to the regulations and conditions of such wharf or quay, warehouse, hulk, lazaretto, lighter or craft or spaces, whether belonging to the Carrier or not.

The Carrier or the master shall have liberty to deliver the goods either from the ship's tackles or from hulk, lazaretto, store ship, lighter or craft or Custom-House or warehouse, dock, quay, or any other place. The consignee must take necessary steps for receiving his goods before the ship's discharge and take away package by package, without delay, when they are ready to be delivered to him, whether the goods, or any part thereof, be sound or damaged, either from the ship's tackle or from hulk, lazaretto, store ship, lighter or craft, or Custom-House or warehouse, dock, quay or any other place, any custom of the port to the contrary notwithstanding. In any case, all risks and expenses (including expenses for landing, lighterage, storage, cartage, etc.) incurred by delivery otherwise than from ship's tackles shall be borne by the owner of the goods; and the responsibility of the Carrier or the ship shall cease as soon as the goods are lifted from and leave the ship's deck and/or ship's tackles, notwithstanding any custom of the port to the contrary and/or any special arrangement as to expenses beyond the ship's side.

The Carrier or the ship does not undertake to furnish heating, refrigerating, cooling or other special facilities of any kind during loading or discharge of the goods, and shall not be liable in any respect whatsoever for lack of any such facilities. The Carrier or the ship does not undertake to discharge and/or deliver the goods at any special wharf or place at the port of discharge, destination or transhipment, at any particular time, or to meet any particular market or use. If the goods are delivered to or taken into the custody of the officials of the Customs or other Government Authorities, such action shall constitute full discharge of the Carrier's obligations hereunder and no claims for shortage or damage shall be considered except those clearly noted by such officials upon the receipt of the goods, but the Carrier's lien on the goods shall survive such action.

Section 88 of the Port of Singapore Authority Ordinance1963 (No 36 of 1963) (the Ordinance) provides as follows:

(1) The Authority and any person duly authorised by it shall, in respect of any goods other than transhipment goods deposited with or placed in the custody or control of the Authority for the purpose of shipment or delivery, be deemed to be the agent of the owner of the vessel loading or discharging such goods irrespective of whosoever pays or is liable to pay any rates in respect of such goods.

(2) Neither the Authority nor any person duly authorised by it shall, in acting as an agent under the provisions of subsection (1) of this section, be liable -

(a) either in damages or in any other respect for any loss caused to any person by reason of short delivery of any goods deposited with or placed in the custody or control of the Authority or any failure by the Authority to deliver or account for the same; or

(b) for damage to, or destruction of, such goods in a sum of more than two thousand dollars per package or unit unless the nature and value of the goods contained therein have, prior to delivery to the Authority, been declared in writing to the Authority by the person delivering or causing the same to be delivered, and the Authority shall not in any event be liable therefor where the value of any such goods has been mis-stated or where there prevails any of the circumstances set out in section 91 of this Ordinance.

Section 88 is not concerned with placing liability on anybody else. It appears in the Ordinance under Part X which is headed 'LIABILITY OF THE AUTHORITY', ie, the Port of Singapore Authority, and deals with the limitation of the Authority's liability. The notion or concept of agency was brought in so that the second defendant would be able to say it was only an agent. It was not introduced to enable liability for the second defendant's wrongdoing to be placed on an innocent carrier. The legislature having freed the wrongdoer, ie, the second defendant from the consequences of its own wrongdoing, the loss must fall where it lies. The Singapore importer, the plaintiff company, in this case must be taken to be aware of the provisions of s 88 of the Ordinance and it is open to it to make provision for this by insuring its goods, the premium being adjusted according to the risk involved.

Furthermore, the bills of lading contain a limitation or exclusion of liability in cl 15 which irrespective of and apart from s 88 of the Ordinance is conclusive against the plaintiff in so far as any loss occurs after the discharge of the goods. In the case of Chartered Bank of India, Australia, and China v British India Steam Navigation Company Ltd [1909] AC 369, the facts were that goods were shipped on board the defendants' ship to be carried to Penang and delivered there to order or assigns under bills of lading which contained the condition that 'in all cases and under all circumstances the liability of the company shall absolutely cease when the goods are free of the ship's tackle, and thereupon the goods shall be at the risk for all purposes and in every respect of the shipper or consignee'. They were delivered to landing agents appointed by the defendants, and for that purpose had been discharged from the ship's tackle into lighters sent by the agents, but by fraud, in which the agents participated, never reached the consignees. The case went to the Privy Council where it was held that, although there had been no delivery under the bills of lading, yet the provision as to cesser of the defendants' liability directly the goods were free of the ship's tackle was perfectly clear, and that it must be held to be operative and effectual to protect them.

It is true that this case was decided before the Hague Rules came into operation but they have no application after the goods have been discharged and have not altered the rights of a carrier to exclude liability after discharge. In any event, there is nothing objectionable to such a condition under the Hague Rules. Article 7 thereof says as much. Once the goods were discharged from the first defendant's ship the Hague Rules ceased to affect the matter and the position of the parties was governed by the contract of carriage and not affected by s 88 of the Ordinance. Neither the cargo owner nor the carrier is affected by the statute.

A further question which arises to be considered is as to whether the provisions as to cesser of the first defendant's liability under cl 15 of the bills of lading are capable of applying before completion of the operation of discharge and if they do whether or not on that account they are nullified by the Hague Rules. According to plaintiff's counsel, in so far as the provisions as to cesser of the first defendant's liability purport to apply before discharge is completed they come into conflict with art 3.8 of the Hague Rules and are null and void and of no effect. Any provision which attempts to relieve the carrier from liability before the goods have been discharged is nullified by the Hague Rules. If the provision as to lifting from and leaving the ship's deck by shore cranes is offensive to the Hague Rules, the discharge on to the quayside by ship's tackle is not and the question arises as to whether they are severable.

In Svenska Traktor Aktiebolaget v Maritime Agencies (Southampton) Ltd [1953] 2 QB 295, 301; [1953] 2 Lloyd's Rep 124, 129, Pilcher J considered it possible in a clause consisting of two parts to sever that part which does not offend against the Rules and merely strike out the offending part. McNair J, however, in GH Renton & Co Ltd v Palmyra Trading Corp of Panama [1956] 1 QB 462, 476; [1955] 2 Lloyd's Rep 301, 314, on the question whether it is permissible to 'blue pencil' and delete only the offending provision, said: 'The words of article III, r. 8, "any clause, covenant or agreement" are quite precise and do not, as I think, permit of any such process of revision in a case where the Act and Rules apply as a matter of law; and, where as in this case the Act and Rules apply as a matter of contract and the parties have not in the incorporation clause used language such as "if and to the extent that any terms of this bill of lading are repugnant to or inconsistent with the Act or Rules such term is to be void," I see no method of construction by means of which such process of revision can take place.' The case went to the Court of Appeal and thence to the House of Lords (see CMI2113) and while reversing the decision of McNair J on other grounds expressed no opinion on this matter.

On the true construction of cl 15 the two are severable and as the discharge on to the quayside by ship's tackle is not repugnant to or inconsistent with the Hague Rules the carrier is afforded complete protection.