This was a test case brought to determine whether stevedores, who were engaged to unload a cargo by the carrier and negligently damaged it, were entitled to rely upon a limitation of liability clause contained in the contract of carriage to which they were not a party. The consignee of the relevant cargo, Midland Silicones (the plaintiffs), brought a claim in tort against the stevedores, Scruttons (the defendants).

The cargo was transported from New York to London by United States Lines (the carrier) under a bill of lading. The provisions of the US Carriage of Goods by Sea Act 1936 (COGSA) were incorporated into the bill of lading. COGSA enacted the Hague Rules with several exceptions and alterations. One of those alterations was that s 4(5) of COGSA stipulated a different limit of carrier liability: USD 500 per package, instead of GBP 100 under art 4.5 of the Hague Rules.

In London, the carrier engaged the stevedores to unload the cargo. The cargo was unloaded successfully. However, the consignee did not obtain customs clearance in time. The cargo was stored in a shed leased by the carrier. The carrier instructed the consignee to apply to the stevedores to receive the cargo. After customs clearance, the consignee applied to the stevedores. During the unloading operation, one of the drums was negligently dropped. It caused damage in the amount of GBP 593 12s 2d.

The stevedores did not deny liability, but stated that the carriage contract limited their liability to USD 500 (or the equivalent of GBP 179 1s). The consignee argued that the limit of liability under COGSA did not apply to the stevedores, who were not a party to the carriage contract.

Held: Judgment for the plaintiffs.

Analysing the term 'carrier' in the Hague Rules, Diplock J concluded that it could not be interpreted extensively so as to include the stevedores. The stevedores could not be regarded as carriers and did not enjoy the carrier's liability limitation under the Hague Rules.

Diplock J emphasised that the plaintiffs did not invite the stevedores to perform the unloading operations. The carrier engaged the stevedores to perform the carrier’s obligations under the carriage contract. After that, the carrier informed the plaintiffs to apply to the stevedores for delivery. Therefore, no implied contract existed between the plaintiffs and the stevedores. It did not follow from the fact that the plaintiffs applied to the stevedores to receive the cargo that there was a contract between them. Another argument in favour of the absence of a contract between the plaintiffs and the stevedores was that the stevedores received possession of the drums from the carrier and not the plaintiffs. Further, the stevedores could not rely upon the contract between the plaintiffs and the carrier since they were not a party to it.

Considering the issue of application of the doctrine of 'vicarious immunity from liability for torts', which stipulates that servants and agents who act under a contract can claim the protection of it, Diplock J noted that there was no authority to apply this doctrine in England. Therefore, it could not be applied to the stevedores in this case.