Seyba Aluminium Limited

vs

Sea Malta Co. Ltd

Court of Appeal

Judges

Chief Justice Vincent Degaetano

Anton Depasquale

Albert J. Magri

26 May 2006

The plaintiff company (PC) ordered aluminium from Italy and engaged the defendant company (DC) to transport it to Malta in terms of a bill of lading. The plaintiff claimed that it was loaded and transported late. When picked up, plaintiff representatives noticed that it was uncovered but did not make note of any damage and accepted delivery. About two months later, PC started distributing the aluminium and it was obvious that it was corroded.

Upon contacting the Italian supplier, the plaintiff was told that this occurred due to exposure to seawater. Examination also revealed crystallised minerals in proportions that resembled such found in seawater.

Experts’ reports imputed liability to DC. PC requested DC to make good the damage, however this was in vain. PC hence requested the court to declare DC responsible for the damage and consequential damage and condemn DC to pay the damages. DC denied this responsibility, claiming that:

• it had respected its contractual obligations, taken all precautions and delivered the merchandise in the condition in which it was received;

• the plaintiff failed to give notice of the damage within the time period prescribed by the bill of lading;

• the action was not made within the time contemplated in the bill of lading i.e. three months from the date of the delivery of the goods to PC;

• the lack of notification of a cargo claim in the stipulated time prejudiced the rights of DC – the latter could not take necessary steps to protect its legitimate rights;

• it was uncertain whether the merchandise was transported by it;

• latent defects.

First Hall, Civil Court – 9 October 2003

Analysis showed that contact with seawater caused the damage. It also transpired that goods were badly stowed. The question concerned who had a duty to make sure that goods were properly stowed.

A witness produced by DC stated that it was usually the latter that, when examining the merchandise and seeing that it needed to be covered, should cover it. The lack of proper stowage was the defendant’s fault. Latent defects in the merchandise remained unproven.

Witnesses showed that the defendant could not deny transportation of the merchandise because before this incident, PC always worked with DC.

Regarding the time the case was filed, the bill of lading stated:

“Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the company or his agents at the place of delivery before or at the time of the removal of the container(s) or its contents into the custody of the merchants such removal shall be prima facie evidence of the delivery by the company of the container or the goods as described in the bill of lading. If loss or damage is not apparent the notice must be given within three days of the delivery. In any event the company shall be discharged from any liability unless suit is brought within three months after delivery of or the date the goods should have been delivered”.

Notice was not given within three days of the delivery/the day when plaintiff representatives discovered the damage. Yet this was not a fatal error; it created a presumption that the merchandise was delivered in good order. Evidence proved otherwise allowing the presumption to be rebutted.

There was no doubt that on 15 June 1999, PC upon receiving the analysis from the Italian supplier, knew that the merchandise was damaged and what had caused such damage. However, the case was filed on 4 January 2000, more than three months after.

The court however referred to the Hague-Visby Rules which stipulate that the period referred to in the bill of lading did not apply to this contract of carriage because it was less than one year and had the effect of exonerating DC otherwise than as provided in the rules.

The court rejected both the plea of prescription, condemning DC to pay PC Lm8,242.71 and the claim for loss of earnings because PC still sold the same amounts of merchandise.

Court of Appeal

DC appealed on the grounds that:

• there was no conclusive evidence submitted showing that the merchandise was brought to Malta by them. This was rejected since witnesses proved otherwise.

• The time that lapsed between the carriage and the claim for damages prejudiced its rights to rebut allegations made against it.

• There was no proof that the aluminium was not anodised and after such a long time, DC could not establish this. DC, upon being approached by PC after the discovery of damage, had refused to make any investigations as to how it occurred except checking when the ship arrived. The defendant could not shift liability when it was clear that it failed in its obligations to ensure that the product did not get wet.

• It was responsible for the carriage of the merchandise and not the stowage of the merchandise. The plaintiff should have sued the suppliers since the aluminum was not anodised. The Court rejected this particularly because a representative of defendant had witnessed that it was the obligation of DC to take care of the stowage when the merchandise was loaded. Another witness testified that the aluminium was anodised.

• The time period to make an action was time-barred. This was rejected – the Hague-Visby Rules applied. Hence, the one-year prescriptive period was applicable rather than the time stipulated in the bill of lading.

The Court of Appeal hence upheld the First Hall, Civil Court judgement.