The plaintiff had been engaged in coastal shipping since 1972. In 1978, it owned and operated a coastal vessel, the MV Atun. In July 1978, WD & HO Wills (PNG) Ltd (Wills) arranged a stock transfer of 590 cartons of assorted cigarettes from the factory in Madang to Kieta, North Solomons. The goods were shipped on the MV Atun. When the goods arrived in Kieta, 155 cartons were destroyed beyond salvage. Wills subsequently sued the plaintiff for the cost of the damage, and was awarded damages of PGK 17,145.95, with interest of PGK 7,636.22.

The plaintiff is now suing the defendants, Mr Moeder, Mr Hermann, and Moeher Trading Pty Ltd, on the basis that they indemnified the plaintiff for any damage to the goods shipped on the MV Atun. The plaintiff claims that when the vessel carried the goods, it had already been sold to the defendants.

Held: The plaintiff's action is dismissed.

It would be appropriate at this stage to deal with the question of whether the indemnity action by the plaintiff is barred by the Sea-Carriage of Goods Act 1951 (Cap 261) (the Act). The applicability of the terms of the Act to this transaction was not an issue. Counsel for Mr Moeder submitted that the indemnity claim by the plaintiff is subject to art 3.6 of the Schedule to the Act which says in its third para that in any event the carrier and the ship are discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. Counsel for the plaintiff submitted that that provision has no application to the facts of this case.

Counsel for Mr Moeder relied on the case of Grace Lines Inc v Central Gulf Steamship Corp 416 F 2d 977 (5th Cir 1969). An action was filed by the insurers of the damaged cargo against the charterer and the shipowner. At the same time, there was a third-party action filed by the charterer against the owners of the vessel. This latter action was based on indemnity. The indemnity action was based on the original claim by the insurer against the charterer and the shipowner. The trial Judge dismissed the action by the insurer against the two defendants because it was brought outside the time limitation imposed by art 3.6 of the US Carriage of Goods by Sea Act (COGSA). However, the trial Judge refused to dismiss the third party action brought by the charterer against the owners of the vessel on the indemnity action. The owners of the vessel appealed. The Court of Appeals for the Fifth Circuit held that the indemnity action was also time-barred.

This Court has not been referred to any other authority which deals with this particular issue. The decision of the United States Court of Appeals for the Fifth Circuit is the correct law on the issue. The relevant provisions in the US COGSA is similar to our Act. This Court adopts the statement of law and applies it in this jurisdiction when dealing with an indemnity action in similar circumstances.

In this case, the owners of the goods, Wills, brought an action against the shipowners, ie the plaintiff and Moeder Trading Pty Ltd. There is no question here that the damages related directly to the goods: see Goulandris Brothers Ltd v B Goldman & Sons Ltd [1958] 1 QB 74, 105. The cause of action was brought within time. The assumption in the judgment was that the plaintiff was the owner of the ship (either severally or jointly) with Moeder Trading Pty Ltd as alleged in the writ of summons. In this case, the plaintiff has brought an indemnity action against the first and second defendants who were not parties to the action brought by the owners of the cargo. In order for the plaintiff to be successful, it should have joined the first and second defendants in the action brought by Wills. An indemnity action by the plaintiff against Mr Moeder is now time-barred.

The plaintiff has also sued Moeher Trading Pty Ltd as third defendant. On the Court's findings, Moeher Pty Ltd was not a party to the transaction at the relevant time. The action against the third defendant is also dismissed.