El Greco (Australia) Pty Ltd v Mediterranean Shipping Company SA [2003] FCA 588

FEDERAL COURT OF AUSTRALIA

El Greco (Australia) Pty Ltd v Mediterranean Shipping Company SA [2003] FCA 588 SHIPPING – Carrier's liability – whether the carrier is responsible for loss and damage to cargo – whether the damage to the goods occurred at sea – the applicant's right to sue for the loss and damage – the method for assessing loss and damage to cargo – whether the sea-carriage document contains an enumeration of all items of the cargo as a 'unit' – whether the relevant 'package or unit' is the container itself

Statutes Carriage of Goods by Sea Act 1991(Cth) ss 6(1), 7, 8, Schedule 1, 1A Carriage of Goods by Sea Act 1992 (UK) Carriage of Goods by Sea Regulations 1998 (Cth) Sea-Carriage Documents Act 1996 (Qld) ss 3, 6(1)

Cases Borealis AB v Stargas Limited[2002] 2 AC 205 Referred to Brandt v Liverpool, Brazil & River Plate Steam Navigation Company Limited [1924] 1 KB 575 Cited Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1973] 2 Lloyds Reps 469 Cited Franke v CIC General Insurance (1994) 33 NSWLR 373 Discussed Hughes v National Trustees Executors & Agency Co of Australasia (1979) 143 CLR 134 Approved Jones v Dunkel (1959) 101 CLR 298 Cited O'Hanlon v Great Western Railway (1865) 6 B & S 484 Discussed Patricia v Russo-British Grain Export Company Limited [1927] 2 KB 535 Discussed River Gurara v Nigerian Shipping Line Ltd [1998] QB 610 Cited Studebaker Distributors, Limited v Charlton Steam Shipping Company, Limited [1938] 1 KB 459 Discussed EL GRECO (AUSTRALIA) PTY LTD and JOHN THEADORAKAPOULOS v MEDITERRANEAN SHIPPING COMPANY SA Q 71 of 2001 KIEFEL J BRISBANE 13 JUNE 2003

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q71 OF 2001

BETWEEN: EL GRECO (AUSTRALIA) PTY LTD

(ACN 075 512 855)

FIRST APPLICANT

JOHN THEADORAKAPOULOS

SECOND APPLICANT

AND: MEDITERRANEAN SHIPPING COMPANY SA

RESPONDENT

JUDGE: KIEFEL J

DATE OF ORDER: 13 JUNE 2003

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. Judgment be entered for the second applicant in a sum to be assessed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q71 OF 2001

BETWEEN: EL GRECO (AUSTRALIA) PTY LTD

FIRST APPLICANT

JOHN THEADORAKAPOULOS

SECOND APPLICANT

AND: MEDITERRANEAN SHIPPING COMPANY SA

RESPONDENT

JUDGE: KIEFEL J

DATE: 13 JUNE 2003

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 These proceedings concern the shipment of a large quantity of posters and prints from Sydney to the port of Piraeus in Greece. When the container in which they had been shipped was opened at its final destination, Aigion, most of the cargo was found to be damaged by moisture. The respondent disputes that it can be concluded that the loss or damage occurred in the period for which it was responsible for the cargo and it denies the applicants' right to sue for the loss. The value of the cargo lost, and the method by which it is to be assessed, remain in issue as does the limitation on the respondent's liability pursuant to the Carriage of Goods by Sea Act 1991 (Cth), which incorporates the Hague-Visby Rules. At issue is whether the sea-carriage document in question contains an enumeration of every poster and print making up the cargo as a 'unit' or whether the relevant 'package or unit' is the container itself. 2 Mr Petrogiannakis is a director of the first applicant ('El Greco'). In early 1999 he heard that some freehold land and a building at Moorooka, Brisbane were for sale together with a business conducted there. The business included the wholesale and retail sale of posters and prints. Mr Petrogiannakis was interested in the land, but not so much the business, of which he had no experience. The vendor, Mr Carl, had carried on the business for many years. He told Mr Petrogiannakis that he was expecting to be sent to prison and needed to sell the property and the business. 3 Mr Carl sought $400,000 for the land, building and the business. No detail was provided of the negotiations between Mr Petrogiannakis and Mr Carl, if there were any. The total price sought by Mr Carl was paid. Within a very short period two contracts were entered into, $250,000 was paid for the land and building and $150,000 for the business. This sum included a significant quantity of prints and posters, although they were not identified in the contract. Their quantity was unknown to Mr Petrogiannakis and he arranged at some point for an inventory to be taken. The purchaser's name initially inserted in the contract with respect to the business had been El Greco, but it was crossed out and the name of Mr Petrogiannakis' wife, Aphrodite Petrogiannakis 'as trustee for the Posters Business Trust', was inserted. 4 Mr Petrogiannakis had known the second applicant, Mr Theodorakopoulous since about 1988. At some time after the purchase of the posters business he was speaking to him at the office of a solicitor whom they both consulted. Mr Petrogiannakis knew that Mr Theodorakopoulous had sold his commercial properties and was returning to Greece. He told him about the poster business he had acquired. Mr Theodorakopoulous expressed some interest and later came to the warehouse and office at Moorooka. 5 Mr Petrogiannakis says that he and his wife commenced operating the business after payment of the deposit. It is not clear whether they sold any of the stock prior to negotiating for the sale to Mr Theodorakopoulous. Mr Petrogiannakis says that they sold 'quite a few' of the prints and posters in this period, but was not able to say whether they sold 10, 20 or 1,000 posters. The records had been lost. There had been two fires at the premises and some posters and prints were lost or damaged. The insurance settlement following the first, in June 1999, was some $170,000 and that following the second, in September 1999, was $122,000. How many posters were lost or damaged, what proportion of the total they represented and how their value was assessed, has not gone into in evidence. 6 The negotiations between Mr Petrogiannakis and Mr Theodorakopoulous appear to have taken place over a short period, some three days. They started with Mr Petrogiannakis seeking $18 per poster or print and concluded with Mr Theodorakopoulous agreeing to buy all of the stock for $956,545. The evidence of Mr Petrogiannakis and Mr Theodorakopoulous differed somewhat as to how that amount was made up. Mr Petrogiannakis said that the price to be paid for the majority of the posters was $7.00 and the price agreed for those which Mr Theodorakopoulous was not particularly keen to buy was $5.00. There would, however, appear to be a substantial number of posters and prints at this price. Mr Theodorakopoulous said that the prices agreed were simply $7.00 for the larger posters and $5.00 for the smaller ones. 7 Mr Petrogiannakis had no idea of the value of the stock when he purchased the business and Mr Theodorakopoulous had none when he was negotiating with Mr Petrogiannakis. Mr Petrogiannakis said that, subsequent to the purchase of the business, he obtained catalogues and found that the value of the posters far exceeded what he had paid for them and indeed, they were worth a lot more than was later sought. If this view was reached at an early point it was without the benefit of an inventory and description of the posters and prints, which ranged over a wide number of subjects. No catalogue or price list was produced in evidence. 8 Mr Theodorakopoulous said that he made some inquiries about what the posters and prints might be sold for. He says that the agreement made with Mr Petrogiannakis for their purchase was conditional upon him satisfying himself that he could sell the posters and prints at a profit. He said that he made inquiries of a business which specialised in those goods, 'Posterama'. Those inquiries, it emerged on further questioning, were made orally and of a person in a shop in Aigion. He also made some inquiries of gypsies who sold through stalls at flea markets. He told them he had posters with different subjects, but he was not specific. They indicated that he would be able to sell them. His inquiries were also said to have revealed that the total cost of the larger posters would be AUD$9.25 each, after the cost of lamination and payment of local taxes. He says that he found that the posters could sell in Greece for AUD$25 retail and he decided that he would sell them for AUD$20 each. The source of this advice and how such an opinion was reached was not gone into. He later added that he did not intend to sell them all at once, but a few at a time. In the meantime, he intended to store them in the basement of his brother's house. 9 Mr Theodorakopoulous communicated further with Mr Petrogiannakis, presumably confirming his purchase. An invoice or invoices later issued. Two invoices, dated 10 December 1999, varying slightly in their contents, were produced in evidence. Mr Petrogiannakis did not explain how this came about. The fact of the multiple invoices and the dates when they in fact issued did not ultimately assume importance to the other issues in the proceedings. Their relevance appears to be limited to the effect of Mr Petrogiannakis' answers, in explanation, upon his credit. The invoices issued by April 1999. Mr Theodorakopoulous also provided an irrevocable letter of guarantee to El Greco. Mr Petrogiannakis says that its purpose was to enable El Greco to sue for any outstanding monies in Greece. 10 Mr Schmidt, the person who undertook the inventory, for the sale to Mr Theodorakopoulous, amalgamated and packed any loose posters or prints in paper. Many, if not most of them were still packed and covered in paper as they had been when delivered to the premises. The shipping documents identify some 200,945 posters and prints, but it is conceded by the applicants that this overstates the correct figure by about 70,000. Mr Pavlidis, the respondent's marine surveyor, described the cargo which he inspected at Aigion as consisting of about 2,000 packages. 11 The container into which the cargo was placed was subjected to an external and internal examination, both before it was released to the transport company responsible for its conveyance to the railway, and prior to it being packed. In each case a 'light test' was undertaken as well as a visual examination of the container. The test involved a person standing in the container with its doors closed. They ascertained whether there were any holes by reference to any light coming through its roof or sides. It was reported that there were no openings in it. The person who packed the container appeared to have a clear recollection of how it was packed. Mr Coombs says that the container was packed closely and evenly across its length, so as to lessen movement in the cargo on the voyage. The posters as finally packed came up to a height of about four feet. 12 Bill of Lading No. MSCU-B-218048-3 was issued in Brisbane by the respondent on 16 February 2000. The container was transported to Port Botany and loaded onto the MSC Melbourne which sailed for Antwerp on 12 December 1999. There is nothing to suggest that damage of the kind later observed to the container could have occurred during its transportation to the point of loading. According to the plan of stowage on the MSC Melbourne the container would have occupied a position under the deck, inside the hold and on top of another container. It is common ground that, in that position, it would not have been exposed to waves or seaspray. 13 The container was discharged on 26 March 2000 in Antwerp and on 29 March loaded onto the Aquitania which then proceeded to Piraeus. On this leg, it was said, to be positioned in Bay 27. This bay is situated on top of a hatch cover. In this position, there would be other containers between it and the bow and there would have been containers on each side of it. The gap between the containers is likely to have been about 7 centimetres. En route to Piraeus the Aquitania encountered some rough seas. It arrived on 7 April 2000, but the container was not discharged until 12 April 2000 because of a strike at the container terminal. 14 The practice in Piraeus, according to the respondent's marine surveyor Mr Pavlidis, was that the consignee would appoint a forwarder who would in turn appoint a customs clearance broker. That broker would attend with the customs officer when the seals of the container were first broken and the container opened, to verify its contents as the declared cargo. Another seal would then be placed on the container and a document which provides for 'permission to exit' created. The document in question is dated 14 April 2000. That part of it designated for 'remarks' is blank. Mr Maronidis was the broker appointed by Mr Theodorakopoulous. He did not give evidence in these proceedings. 15 The container was opened in the presence of Mr Theodorakopoulous and a customs officer on 17 April 2000 in Aigion. Mr Pavlidis believes that the container was transported from the container terminal to Schistos on Friday 14 April 2000 where it remained until Monday 17 April 2000, when it was picked up and taken to its final destination at Aigion. The basis of this belief is information provided by the truck driver to Mr Pavlidis. The truck driver did not give evidence and it is not admissible. In any event, it would not seem to provide any information relevant to the question of how and when the damage was caused. In Aigion the seal was broken by the customs agent. The document 'Licence for Discharge of Cargo' notes that the cargo was wet, deteriorated or destroyed. A tear, or hole, in one of the corrugated panels of the roof of the container was apparent. Its dimensions were not referred to in evidence, but its size can be gauged from the photographs tendered in evidence. Mr Theodorakopoulous obtained a camera and took photographs of the cargo and the hole in the container. He described the cargo as affected by moisture but did not suggest that water was present. He wrote a letter of protest the next day and rejected the goods. 16 Mr Theodorakopoulous telephoned Mr Petrogiannakis who was then in China. The purpose of the call was to determine what to do about the goods, given the charges that would be levied if they remained in the container. Mr Theodorakopoulous knew that the goods were insured. The movement of damaged goods prior to inspection and survey by an insurer is unusual and I take it that they were both sufficiently experienced in business to appreciate this. It was said that they both tried to contact the insurer immediately, but for some reason were not successful until the following day. By the time the marine surveyor engaged for the cargo underwriters, Mr Zarafonitis, attended on 19 April 2000 the cargo had been removed from the container and placed in a warehouse close by. 17 When Mr Zarafonitis attended on 19 April he observed the cargo to be 'slightly wet' and 'very wet'. He inspected the container. He noticed the hole in the roof of the container and that the doors appeared undamaged. He considered the damage to the container to have been present for some weeks. Mr Zarafonitis also obtained copies of the weather reports for Piraeus and Aigion for the period 10 to 19 April. There is no suggestion of any rainfall of significance in this period. Although the rainfall is measured at points somewhat distant from these two locations, nothing would turn upon this if rainwater was relevant to the damage. He took photographs of the cargo and the container. 18 Mr Pavlidis and Mr Papazoglou, another marine surveyor engaged by the cargo underwriters, both attended on 4 May and Mr Pavlidis returned on 8 May. Mr Papazoglou took about ten samples of the cargo and these were sent to a laboratory. The results of the examination were certified as showing that the paper 'is damp by seawater'. No detailed chemical analysis was provided in the report. 19 Mr Pavlidis himself conducted a test using silver nitrate, which showed that chlorides were present. His initial report concluded that damage had been occasioned by seawater entering through the hole in the container. 20 Mr Pavlidis is no longer of that view. He explains the changes to his opinion as brought about, in part, by information he received shortly prior to the trial, about the position of the container whilst on the Aquitania. He now says that no substantial amount of seawater could have entered the cargo given relevant factors namely the weather, the position of the container and the course and speed of the Aquitania. Further, his investigations reveal that no comment about damage to the container was made on records at loading and discharge – the Equipment Interchange Report in Antwerp and the tallying sheet in Piraeus. Had there been such damage, he considers that those involved in loading and unloading would have been able to observe it. This was disputed by other witnesses. Mr Pavlidis went so far as to suggest that the absence of an observation in the Equipment Interchange Report is a guarantee that there was no damage. 21 The cargo was subsequently dumped. Payment of the sum of $883,390.08, under the relevant policy of insurance was made to El Greco on 26 July 2000. In its books of account it is shown as receiving moneys 'as the trustee of the Katerina Petrogiannakis Family Trust'. Katerina Petrogiannakis is Mr Petrogiannakis' daughter. On 27 July 2000 El Greco is recorded as having paid $825,201.88 to Business Posters Trust 'for posters and prints'. No further explanation of these entries or the relationship between the trusts and El Greco is provided.

liability 22 Clause 1 of the Contract of Carriage forming part of the sea-carriage document in question provides that it has effect subject to the Hague Rules, the Hague-Visby Rules and the Protocol signed at Brussels on 21 December 1979 ('The SDR Protocol 1979'). By s 8 of the Carriage of Goods by Sea Act 1991 (Cth), the 'amended Hague Rules' have the force of law in Australia. They consist of the text set out in Schedule 1, as modified in accordance with the schedule of modifications, Schedule 1A. The unmodified text of Schedule 1 is the translation of Articles 1 to 10 of the Brussels Convention, as amended by Articles 1 to 5 of the Visby Protocol and Article II of the SDR Protocol: (see s 7 of the Carriage of Goods by Sea Act 1991(Cth)). 23 Although the sea carriage document here in question is entitled a 'Bill of Lading', it is not capable of transfer. It is common ground that it qualifies as a 'sea waybill' under the Sea-Carriage Documents Act 1996 (Qld), s 3. That legislation has counterparts in other Australian States. The document was issued by the respondent and identifies the shipper as El Greco and the person to whom delivery is to be made as Mr Theodorakopoulous. It contains the contract of carriage. It acknowledges receipt of: '…the containers other packages or units bearing marks and/or numbers indicated in the 'Carrier's Receipt' above, said to contain the quantity of goods, weights and measurements indicated in the 'Particulars furnished by the Shipper . . .' in apparent external good order and condition.' 24 The Carriage of Goods by Sea Regulations 1998 (Cth) enlarges the period of responsibility as referred to in the Hague-Visby Rules. Article 1 r 3 of Schedule 1A provides: (a) a carrier begins to be in charge of goods at the time the goods are delivered to the carrier (or an agent or servant of the carrier) within the limits of a port or wharf; and (b) the carrier ceases to be in charge of the goods at the time the goods are delivered to, or placed at the disposal of, the consignee within the limits of the port or wharf that is the intended destination of the goods. The respondent submits that it was responsible up to the point where the cargo was made available to the customs agent, Mr Maronidis, on 14 April 2000 from which point they were taken from the container terminal. I do not understand the applicants to dispute this. 25 The tear in the roof of the container is most likely to have been caused through the use of a gantry crane. The first time such a crane would have been used was in Sydney, in loading the container. As earlier observed, there is nothing to indicate damage to the container prior to this point. Cranes would also have been used in Antwerp and Piraeus. 26 It would also seem likely that the damage had been present for a few weeks, by reference to the darker rust evident in some of the photographs. This was the view of Mr Zarafonitis and also of Mr Cupitt, another marine surveyor called by the applicant. Captain Aiton, who was called by the respondent, stated an initial preference for descriptions given by surveyors who observed the rust themselves, rather than relying upon photographs. The surveyors had referred to yellow rust, which would indicate to him that the damage was very recent, and perhaps only a week old. He did however express the opinion, with respect to the particular photographs taken by Mr Zarafonitis on 19 April 2000, that the darker rust visible in some of them suggested that the damage could have been present for a couple of weeks. Captain Aiton did not qualify this opinion and appeared to have confidence in it. Captain Aiton's earlier opinion might have placed the occurrence of damage at Piraeus. This would not explain the moisture in the container nor, more particularly, the fact that it was sea water. The presence of sea water points to damage during the voyage. The opinions as to the rust, which I take Captain Aiton to now accept as having some basis, would suggest that damage to the container occurred during the second leg of the voyage, from Antwerp. It is possible that the container was damaged during discharge or loading at this point. 27 Mr Pavlidis was the only witness to give evidence that, had the damage occurred at Antwerp or upon unloading in Piraeus, it would almost certainly have been observed and recorded. I put to one side the reliability of evidence as to the practice of recording such information in each port. The experience of the other witnesses, does not suggest, that the damage to the container was so extensive or in a position such that it would be readily observable. They say that it is not possible for detailed inspections to be carried out in these processes. Captain Aiton agrees with this. The reality is that holes are frequently discovered in containers without having been earlier observed. 28 That the cargo was affected by seawater is also established. The laboratory report does not list the constituents, and states simply that the dampness is seawater, but there does not seem to be any basis for doubting the result obtained. It is confirmed, to an extent, by the test undertaken by Mr Pavlidis. 29 The expert witnesses are not agreed that sea water, in quantities sufficient to cause the damage to the cargo, could have entered the container through the hole and during the voyage from Antwerp. Captain Aiton is both a marine surveyor and the holder of a certificate of competency as an Extra Master. He was able to give evidence as to the amount of water likely to have been shipped over the deck of the Aquitania, in the conditions which prevailed, and as to the amount of water which might have reached the container. Although I accept Mr Cupitt has some understanding of the factors involved, I do not consider that his experience and knowledge, gleaned from mariners, permits the detailed analysis that Captain Aiton was able to undertake. The answer to the questions posed depends upon an understanding of the movements of the ship in the weather conditions recorded, of the course and speed of the ship and the relative speed of the winds. These are matters as to which Captain Aiton has the benefit of experience. 30 Captain Aiton considers that the conditions recorded in the ship's log would have caused the decks to be covered with spray. There would have been occasional green water forward and on the starboard side. It would have shipped green water over a period of about eighteen hours. The applicants pointed to the lack of recorded information about swells. It does not however seem to me that the failure to call the Master or the Chief Engineer, or to produce other records they may have kept, permits the application of the rule in Jones v Dunkel (1959) 101 CLR 298). There is no particular inference available to the applicants which, it might be said, might more confidently be drawn in the absence of this evidence. In any event the impression given by Captain Aiton was that, whilst that information may have been useful, its absence did not prevent him forming an opinion. He added that the winds would bring sea spray and waves between the container in question and the stack opposite, but that the effective speed of the wind would be reduced because of the relative speed of the ship. He did not accept that water might be driven into every crevice on the starboard side. 31 Captain Aiton did not accept that in the conditions recorded, and having regard to the other factors referred to above, the damage later observed to the cargo would have been caused by water entering through the hole in the container. Mr Pavlidis held the same opinion once he became aware of the position of the container on the ship. The area from which water would have drained into the hole would have been about one-half a square metre and the amount of water draining through it limited. Further, it was not likely that anything more than a trickle of water would have entered through the doors of the container in the weather conditions recorded. 32 There is another difficulty in the way of accepting that the damage was caused in this manner. The photographs taken by Mr Theodorakopoulous, of the cargo in the container when it was opened, shows distinct absorption marks, or 'tide marks' as they were referred to in evidence. In the opinion of Captain Aiton and Mr Cupitt this indicates that water was absorbed from below, from the floor. They were agreed that any water coming through the hole in the roof would soak downwards in a conical fashion. Mr Cupitt, however, considered it possible for water to track down through the packages to the floor and then be soaked up. Captain Aiton tended to the view that what had occurred was flooding. His theory, which he acknowledged had no strong basis in known facts, was that the container may have been in a different position than recorded when it was in the hold of the MSC Melbourne. He could only say that, from time to time, stacking arrangements were not followed. Flooding to a height of only three or four inches would have been sufficient to produce the kind of absorption which could be seen in the photographs. Further damage would have been occasioned by condensation. The doors of containers are, he observed, weatherproof but not watertight. 33 The respondent also points to the inconsistency in the evidence concerning the packing of the cargo and what has been photographed by Mr Theodorakopoulous. Mr Coombs was quite clear in his evidence that it was packed over the length of the container and to a uniform height of about four feet. The photographs show the cargo stacked at one end of the container, that part which includes that section of the roof which was torn. It is alleged by the respondent that the cargo has been moved. This is possible if Mr Coombs' recollection is correct. There seems to be no reason to doubt his evidence, given in particular that his explanation as to why the cargo was packed in this way seems sensible. 34 The fact that the cargo has been moved may be relevant to other matters, including the credit of Mr Theodorakopoulous. It would not, however, appear to assist in determining how the damage was effected. The most that could be said is that it does not detract from the possibility of flooding, or absorption from the floor of the container, as disclosed by the horizontal marks on the cargo. Much was made of the dryness of that part of the cargo under and near the hole to the roof. This might support an inference that the cargo had been moved, but that is about all. Its effect otherwise is to add an element of confusion to the question of causation. 35 I tend to the view that the cargo was moved in the container prior to Mr Theodorakopoulous taking photographs of it. One can only infer that some advantage was thought to be gained by positioning it under the hole. Why this advantage was thought necessary is not possible to discern. 36 There are cases when the evidence does not enable a Court to understand all that has occurred. This is such a case. The question, however, in an action such as this is whether the damage to the cargo was likely to have occurred during the period for which the respondent is responsible. There is nothing to suggest damage to the container or the cargo prior to loading onto the MSC Melbourne. Damage to the cargo by sea water was found at the destination. That would seem to me to establish a prima facie case (and see W Tetley, 'Marine Cargo Claims', 3rd edn, Montreal, Canada, 1988, p 299). The burden of showing to the contrary, or establishing some defence or exception then shifts to the respondent. It does not seem to me, necessary that the applicants establish whether the sea water entered through the hole in the container or that the container was flooded for this purposes, although I tend to the latter view. In either case, it was sea water which caused the damage and, without some further explanation, it is to be inferred that the damage occurred during the sea voyage. 37 The respondent did not rely upon any exceptions or defences. It points out that the container was held for some days after 14 April, after the period of its responsibility ended. There is nothing, however, which occurred in this period which would provide an explanation for the presence of sea water. 38 There was a further aspect of the evidence upon which the respondent relied. The evidence of Mr Pavlidis, obtained by the applicant in cross-examination, was that the customs agent, Mr Maronidis, was present when the container doors were first opened on 14 April 2000. Mr Pavlidis says that he asked him what the condition of the cargo then was and Mr Maronidis replied that it was 'okay'. Mr Maronidis said that he would recall if there was anything unusual and he did not. The evidence in its terms does not suggest that Mr Maronidis had a specific recollection of the opening of the container or the condition of its contents. Mr Maronidis was approached by the applicants' agents in Greece after this evidence by Mr Pavlidis was given, but Mr Maronidis refused to give evidence or to involve himself in the proceedings. It remains hearsay evidence. As Gibbs J observed in Hughes v National Trustees Executors & Agency Co of Australasia (1979) 143 CLR 134 at 153 there are some cases where one party has allowed evidence to be taken as evidence of the facts stated and that may affect how that evidence is treated. That is not the case here. In general however, his Honour held it is the duty of a Judge to reach a decision only on evidence that is legally admissible. The onus of proof cannot shift unless it amounts to evidence of the facts stated. The hearsay evidence here given does not obtain that quality merely because the applicants adduced it. 39 In these circumstances the respondent has not established damage by a cause other than seawater and in a different period. It has not alleged fraud on the part of the applicants or that the damage was fabricated. Its contention is that, there has been sufficient doubt cast upon the issue of causation and that it should not be accepted that the damage is likely to have occurred in the relevant period. That approach does not, however, take account of the burden of proof which shifted to the respondent and which it cannot discharge by speculation. THE VALUE OF THE GOODS 40 The applicants have not produced any evidence as to the value of the posters and prints and rely only upon the sale to Mr Theodorakopoulous as evidence of their market value. The respondents submit that the circumstances surrounding the transaction, and other evidence of value, show the contract price to be unexplained and unreliable. 41 There was no explanation as to how either this purchase price or the previous price paid to Mr Carl was calculated or assessed. No catalogues or any other documentation showing prices were produced by the applicants or were discovered by them. It is not apparent to me why catalogues for this period could not have been produced to support the applicants' claims. No evidence was given to explain the basis of the insurance settlements after the fires. In view of the paucity of evidence, and also of the view I have taken of Mr Petrogiannakis as a witness, I would not accept his evidence as to the contract price having some basis in value, without other evidence to support it. I have referred to some aspects of his evidence. His lack of concern about its accuracy was most apparent when seeking to explain who owned the goods, the transactions which took place between his family companies and trusts, and when he attempted to explain the two invoices. At one point, he declined to acknowledge his own signature. He appears to have no difficulty in saying what he thought was required and adding to his evidence. His unfounded assertion that posters increase in value was one example. The evidence of his accountant, given later, does not lend support to his suggestion of some transfer for nominal consideration between the family entities, so as to explain the position of El Greco as shipper. I have commented elsewhere on further unsatisfactory aspects of his evidence. He was not forthright or responsive. He did not impress as a reliable witness. 42 The respondent submitted that the evidence about the timing and duration of the taking of the inventory was inconsistent. I take it, this is also said to underline the unreliability of Mr Petrogiannakis' evidence and perhaps also that of Mr Theodorakopoulous. According to Mr Petrogiannakis the business was closed between September and December 1999 because of the second fire and some of the premises had to be rebuilt. Mr Theodorakopoulous said that he attended at the premises in late 1999 and the business appeared to be operating and the building appeared undamaged. However, it may be that the repairs had been effected by this time. 43 As to the inventory, Mr Petrogiannakis said that he had some young employees do one when he first bought the business and that Mr Schmidt, who prepared the lists which he and Mr Theodorakopoulous utilised, undertook another. Mr Petrogiannakis said that Mr Schmidt was engaged for this task as a result of Petrogiannakis' conversation with Mr Theodorakopoulous and that most of it was done by Schmidt over a two to three day period, whilst Mr Theodorakopoulous was about. This accords with Mr Theodorakopoulous' evidence. On the other hand, Mr Schmidt said he started work prior to the fire, which occurred in September 1999, in about July or August, and stayed there six or eight weeks until the end of September of mid-October. It does seem unlikely that the task took as short a time as Mr Petrogiannakis recalls, but it is not plain to me why he and Mr Theodorakopoulous would give wrong accounts of the time at which it was undertaken. There is the possibility that Mr Schmidt's recollection was mistaken, at least about when he commenced his task. In any event, so far as concerns Mr Petrogiannakis' evidence generally, it adds little to the conclusion I have otherwise reached. 44 Mr Theodorakopoulous was a more direct and responsive witness. Nevertheless, I would not be inclined to act upon his evidence as to the enquiries he made without some other evidence to support it and none was offered. It is not that I consider his conversation with gypsies necessarily to be far-fetched, and there is an aspect of his assessment of the costing of the prints and posters which finds support in the evidence of Mr Coombs. By itself it is not, however, sufficient to give his evidence as to value much weight. Further, it is difficult to accept that a businessman would agree to pay almost AUS$1M on the basis of a few cursory enquiries. 45 Of course, it is possible that Mr Petrogiannakis paid AUS$150,000 and that he subsequently received about AUS$1.2m in total for them. And it is possible that Mr Theodorakopoulous was himself also going to sell them for about twice what he had paid. If the prices paid for the stock purchased from Mr Carl are reliable, Mr Petrogiannakis indeed got a bargain. The order of profit involved however necessitates explanation. The support of other evidence is required, given that it is not inherently credible. The only other evidence provided, by Mr Cocks, is to the contrary of it. 46 Mr Cocks was a witness having no connexion with these proceedings. He has sold posters and prints, both wholesale and retail for some years. He has dealt with both local and overseas suppliers and is familiar with their price lists. He dealt with Mr Carl, who had the licence to print and sell some of the posters in question, in the period 1994 to 1998 and is familiar with the stock that he sold. I see no basis for not accepting his evidence. 47 The posters and prints in question cover a wide range of subjects. They included: animals and landscape scenes, especially Australian native animals and landscapes; still lifes; old advertisements of well-known brands; vintage and classic motor cars including Falcons and Holdens, makes which are sold in Australia; former pop stars and movie stars; and motor bikes, especially Harley Davidsons. They also included posters of some Australian Rules football teams and there were some posters advertising Expo '88 in Brisbane. I accept that posters such as these, which might be thought to be of little interest to people outside Australia, were not great in number. 48 Mr Cocks said that he was paying about $2.00 for imported posters in 1994. That included freight cost. His wholesale resale price was $3.00. A retailer might sell a laminated poster for $10 to $15. So far as concerned Mr Carl's posters, such as those listed in the inventory, he would have paid $1.75 for a large poster and 95 cents for small posters and this was when purchasing in larger numbers. 49 Mr Cocks said that Mr Carl did not publish much stock himself after 1994 and most of his posters and prints listed are quite old. A lot of other stock is identifiable as supplied by overseas companies and some of it is up to fifteen years old. Mr Cocks was familiar with a large number of the prints and posters. He considered that in September 1999 and 2000 there would have been little demand for them. He could not have sold them and he would not have purchased them. Whilst he may have purchased some of the posters from overseas sources at an earlier time, he was not buying them in 1999. Generally speaking, he said, posters do not increase in value, as Mr Petrogiannakis asserted. Rather they go out of fashion. Some posters continue to sell, but most do not. He would be very surprised if he was able to sell twenty percent of the posters listed. Much of it would have to be disposed of. If he had to buy the stock as a whole he would pay no more than $40,000 for it. 50 The effect of Mr Cocks' evidence is that a wholesaler might be able to sell something less than twenty percent of the total of 130,945 posters and prints. Eighteen percent of that figure is 23,570. The cost to a wholesaler might be $40,000 and they might expect to make a profit of $1.00 for each poster or print, $23,570. The value to a wholesaler might be taken as $63,570. A retailer would make a greater profit, over a period of time, selling at an average of $12.00 per print after paying for lamination. It would not, however, seem to me that any of those claiming the loss could be regarded as a retailer. Even if Mr Theodorakopoulous were making a claim in his capacity as consignee, the evidence would not go this far. 51 The applicants objected to the evidence of Mr Carl as irrelevant, given the provisions of Article 4 r 5(b) which requires value to be assessed according to the market value of the goods at their intended destination. If this is so, the applicants' reliance upon the contract price of $956,545 would also appear to be misplaced. Even if it were acceptable, it is not evidence of market value in Greece. Mr Theodorakopoulous' evidence does not resolve the matter. His evidence, that he thought he might be able to sell them for AUD$20 each in Greece cannot be relied upon as evidence of value. Without more, it cannot establish their value, assuming for present purposes that there is some such market. 52 Article 4 r 5(b) does permit that the value of the goods be fixed by reference to the 'normal' value of the goods, where there is no current market price. This would appear to allow for assessment by the most appropriate method available. It has been suggested that the rule lays down only a prima facie measure and that the rule does not permit the case of others where the circumstances require (see A Diamond QC 'The Hague-Visby Rules' in (1978) LMCLQ 241 at 248). 53 The problem of there being no market at the destination is not new and has often arisen in cases concerning contracts of carriage: see O'Hanlon v Great Western Railway (1865) 6 B & S 484. It was there held that one should take into account the cost price, the expenses which the seller would incur, and allow for a reasonable profit. That is not the only method of assessment. Resale may be another: Patricia v Russo-British Grain Export Company Limited [1927] 2 KB 535. In the present case, the evidence permits only an assessment of the value of the goods in Australia. It would, in any event, appear to be the more appropriate, given that the claim is brought on behalf of the owner of the goods. 54 The applicants contend that where there has been a sale between two people in business, at a date close to the valuation date and there has been no material change, the price obtained in such a sale is the best evidence of value: Franke v CIC General Insurance (1994) 33 NSWLR 373 at 376. I respectfully agree that it may be stated as a general rule and that such an approach accords with common sense. That does not, however, require it to be applied where the contract price in question has no apparent basis in market prices or valuations. The transaction between Mr Petrogiannakis and Mr Theodorakopoulous, and the method by which they ascertained a price, could not be regarded as very business-like, or as usual in business, except perhaps a business of the most speculative kind. No confidence can be placed in the contract price as reflecting market value without evidence to support it. The purchase price paid to Mr Carl might have proved a useful guide. It would not support a subsequent sale price, within twelve months, of nearly $1M. I would not accept at face value Mr Petrogiannakis' suggestion that Mr Carl sold at an undervalue. However, the two payments made by the insurers after the fires suggest that the value of the goods was higher. To give weight to them, as supporting the later price agreed between Mr Petrogiannakis and Mr Theodorakopoulous would require further explanation as to the basis upon which those payments were calculated. This was not provided.

limitation of liability 55 Article 4, r 5 of the modified Amended Hague Rules provides as follows: '(a) Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, sea carriage document, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding 666.67 units of account per package or unit or 2 units of account per kilogramme of gross weight of the goods lost or damaged, whichever is the higher. (b) The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract or should have been so discharged. The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according to the current market price, or, if there be no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality. (c) Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the Bill of Lading sea carriage document as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit. (d) The unit of account mentioned in this Article is the Special Drawing Right as defined by the International Monetary Fund. The amounts mentioned in sub-paragraph (a) of this paragraph shall be converted into national currency on the basis of the value of that currency on a date to be determined by the law of the court seized of the case. …' The rule goes on to provide for the method of calculation of the value of the national currency, in terms of a Special Drawing Right. It is to be in accordance with the method of valuation applied by the International Monetary Fund. 56 Article 3 r 3, so far as is presently relevant, provides that the carrier is to issue to the shipper a sea carriage document showing: '… (b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper.' 57 In the sea carriage document, under the heading 'Carrier's Receipt' the container is identified and the 'No of Pkgs' is stated as '1'. Taken with the 'Description of Goods', the particulars of which are said to be supplied by the shipper, the following appears: '[1] x 20ft FCL/FCL general purpose container said to contain 200945 pieces posters and prints' The 'total number of packages' at the foot of the carrier's receipt columns is '1'. The gross weight is said to be 8500kgs. 58 That part of cl 21 of the Contract of Carriage which is relied upon by the respondent provides that: 'Where the goods have been packed into containers by or on behalf of the Merchant, it is expressly agreed, that such container shall constitute one package for the purpose of the application of limitation of the Carrier's liability.' 59 Article 3 r 8 provides, in relevant part, that any clause which lessens the liability of the carrier or the ship from liability, otherwise than as provided in the rules, shall be null and void and of no effect. That part of cl 21 relied upon by the respondent would seem to me to come within this prohibition. The respondent advanced two arguments against this. It was submitted that the provision could be used, indirectly, to support an inference that the parties intended the container to be the package. I do not see how it can be utilised in this way. It operates in its terms or it does not. It would not seem to me capable of supporting or adding to an inference drawn by reference to other factors. 60 It was also submitted that that part of the clause does not come within the prohibition in Article 3 r 8 because it does not limit liability 'otherwise than is provided in these Rules'. Article 4 r 5 permits the parties to agree as to how the cargo is to be described for the purpose of the limitation provisions and cl 21 reflects such an agreement. The parties have chosen the container as the relevant package. The reality is, however, that the respondent has put forward cl 21 as a term of its contract of carriage for the purpose of excluding the choice for which Article 4 r 5 provides. It should not be taken into account in determining the question of what is to be inferred from the description of the cargo in the container. 61 Some reference was also made by the respondent to the statement on the face of the sea carriage document which records as 'received for shipment' 'the container, other packages or units . . . said to contain the quantity of goods . . . indicated in the 'Particulars furnished by Shipper'.' This merely reiterates what the document provides for. The purpose of the notation appears from what follows. It makes plain that the carrier has not checked or verified those particulars as to the goods and is not to be bound by them. This may be relevant to discrepancies, for example as to quantities, but has no bearing upon the question of how the limitation on liability is to be fixed. 62 Article 4 r 5 may be seen, in part, to overcome a difficulty in language in equating a container with a package, which existed prior to the Visby amendments: see River Gurara v Nigerian Shipping Line Ltd [1998] QB 610 at 617-618. Indeed, it may be inferred from Article 4 r 5(c) that, as a general rule, the container is to be considered the package or unit. The rule permits the shipper to signify otherwise by enumerating the number of packages or units as packed in it. Where that is done the packages or units so identified are to be used for the purpose of the calculation in rule 5(a). 63 Where a container is 'said to contain 20 packages' or '20 crates of typewriters' there will be a sufficient enumeration of the cargo within the container – packages in the first example and units in the second – to show that the container was not to be treated as the package or unit for the purpose of the calculation. Where the container, however, is said to contain general merchandise and there is no enumeration, the container is to be taken as the package or unit. 64 Although the cargo here was in fact packaged, the applicants did not seek to rely upon that aspect of the rule. I take it to have been considered that the description of the cargo as 'pieces' and 'posters and prints' is not referrable to packages. Rather, the applicants submitted that the pieces so described should be taken to refer to units. The respondent did not suggest that the fact that they were packaged should in this case influence the determination as to whether the individual posters and prints can be units within the meaning of the rule. 65 The applicants submitted that the reference to a 'unit' in the Visby amendment was intended to refer to an individual article or piece of goods which is not a 'package', referring to the article by Mr A Diamond QC 'The Hague-Visby Rules' (1978) LMCLQ 241. The 'unit' there referred to may be taken to be a unit of goods, legally distinct from the 'customary freight unit' as utilised in legislation in the United States: see Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1973] 2 Lloyds Reps 469 at 475-476. It would not, however seem to me to follow that whatever is not a package is a unit. Cargo after all takes many forms and it would not have been intended that the rule extend to bulk cargo or parts of it: Falconbridge at 476. 66 In my view a 'unit' is apt to refer to an individual piece of cargo. That would appear to accord with a reading of Article 4 r 5 and Article 3 r 3 together. It would seem more readily capable of application to substantial individual pieces. In Falconbridge (at 476) it was held that a tractor was a piece of cargo within the meaning of the corresponding Article III r 3 in the Schedule to the Canadian Shipping Act (Chapters 5-9 of the Revised Statutes of Canada, 1970). It is clear from Ritchie J's reference in Falconbridge (at 476) to Studebaker Distributors, Limited v Charlton Steam Shipping Company, Limited [1938] 1 KB 459, which concerned an automobile, that an 'individual piece of cargo' was to be equated with a 'unit'. 67 Mr Diamond QC (in the article referred to at [65], p 241) suggests that there is an intermediate category of goods between goods shipped as articles or pieces and bulk cargo. One example he provides is of standards of timber and he expresses the opinion that each piece of timber may be a unit if a number of pieces of timber is stated in the bill of lading. 68 If the sea carriage document in the present case contained only a reference to a number of posters and prints it would, in my view, be arguable that they refer to general merchandise even if they are enumerated. At the least it would be equivocal. The insertion of the word 'pieces', however, clearly conveys a choice that the posters and prints are to be treated as individual pieces, or units, of cargo. The enumeration of those pieces means that the container is not to be regarded as the unit for the purposes of Article 4 r 5. 69 The overstatement of the number of items would not bind the respondent, but in any event the applicants concede the error. I do not understand them to suggest that the number stated in the document should be used in a calculation.

TITLE TO SUE 70 The Business Posters Trust was the purchaser from Mr Carl. El Greco was named as the shipper on the sea carriage document. It received the monies from the cargo insurer, but paid almost the same amount to the Trust on account of posters and prints. This does not show El Greco to have acquired title at some point from the Trust and is consistent with it acting as agent for the Trust in relation to the carriage of the goods. The Trust is not, however, a party to the proceedings. Only El Greco and Mr Theodorakopoulous are named as applicants in these proceedings, which are being conducted by the insurer acting under its right of subrogation. An application foreshadowed by the applicants to substitute the Trust as a party was not pressed. The named applicants rely upon s 6(1) of the Sea-Carriage Documents Act 1996 (Qld) as effecting the necessary transfer of contractual rights to Mr Theodorakopoulous and placing him in a position to bring the proceedings on behalf of the Trust. Alternatively, they contend that the respondent is estopped from denying El Greco's title to sue by reason of its acceptance of the goods from it. 71 In contract, El Greco is not able to sue as the shipper for the reason that it would appear to have acted only as agent for the Trust as owner in that connexion: see T Scrutton, Scrutton on Charterparties and Bills of Lading, 20th edn, Sweet & Maxwell, London, 1996, p 246. In some cases a consignee has been held to be a party to a contract, that fact being inferred from the undertaking of the holder of a Bill of Lading to pay the sums due with respect to the carriage of the cargo: Brandt v Liverpool, Brazil & River Plate Steam Navigation Company Limited [1924] 1 KB 575. 72 The background to the Carriage of Goods by Sea Act 1992 (UK), which contains similar provisions to the Queensland Sea-Carriage Documents Act 1996 (Qld) , is referred to in Borealis AB v Stargas Limited [2002] 2 AC 205 [2001] UKHL 17. A proprietary interest is no longer required to maintain proceedings. Section 6(1) of the Sea-Carriage Documents Act ('Transfer of rights') provides that all rights under the contract of carriage, in the case of a sea waybill, is transferred to the person, other than an original party to the contract, to whom delivery of the goods is to be made by the carrier in accordance with the contract. Those rights vest in that person as if they had been an original party to the contract: ss (2). Subsection (5) then provides: '(5) If, in relation to a sea-carriage document – (a) a person with any interest or right in relation to the goods sustains loss or damage in consequence of a breach of the contract of carriage; and (b) subsection (1) operates to transfer the rights in that contract to another person; the person to whom the rights in the contract are transferred is entitled to exercise those rights for the benefit of the person who sustained the loss or damage to the same extent that they would be able to be exercised if they were vested in that person.' The section permits Mr Theodorakopoulous to bring an action on behalf of the Trust as owner of the goods. Any monies paid pursuant to a judgment to a person suing on behalf of another would be held by them to the account of that other person. A Court could, if necessary, give directions as to payment but the need to do so does not arise here. It is not necessary for me to further consider the alternative argument raised by the applicants. 73 The respondent submitted that Mr Theodorakopoulous was in any event unable to exercise rights on behalf of the Trust because it would be compensated twice if judgment were given in the action. This rather overlooks the position of the insurer seeking to recover the sums paid by it. In any event, the fact that an insurer has made a payment under a policy is irrelevant to the question whether there is a cause of action founded upon loss and damage.

CONCLUSION AND ORDERS 74 There will be judgment for the second applicant in a sum to be assessed. I have assessed $63,570 as the value of the goods to a wholesaler and this would appear to me an appropriate measure with respect to the interests of the Trust. I will hear further submissions as to the application of Article 4 r 5 given the conclusion I have reached as to the posters and prints having been described as units for the purpose of the rule. I will also hear submissions as to costs. I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel .

Associate: Dated: 13 June 2003 Counsel for the Applicants: Mr B Rayment QC and Mr M McHugh

Solicitor for the Applicants: Murrell Stephenson

Counsel for the Respondent: Mr A Sullivan QC and Mr G Diehm

Solicitor for the Respondent: Blake Dawson Waldron

Dates of Hearing: 3-5 and 12 December 2002; 30-31 January 2003

Date of Judgment: 13 June 2003