Australia: Deteriorated Seafood Claim Leads to Issues of Due Diligence in a Latent Defect Defence:

Trade and Transport Bulletin
Last Updated: 9 July 2010
Article by Andrew Tulloch

The recent decision of Justice Ryan in the Federal Court of Australia in Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) FCA 702, confirmed and followed the approach of the High Court of Australia in Great China Metal Industries Co Limited v Malaysian International Shipping Corporation Berhad (the 'Bunga Seroja') 1998 196 CLR 161, in a case involving heating damage to a consignment of frozen seafood.


In November 2005, a refrigerated container of seafood was shipped from Yokahama, Japan to Melbourne on the vessel 'CSCL Yantai' and was delivered in Melbourne with evidence of having sustained thaw damage. Seafood Imports Pty Ltd, being the consignee, brought proceedings against ANL Singapore Pte Ltd as bill of lading carrier maintaining that there had been a breach of the carrier's obligations under the Hague Visby Rules which applied to the bill of lading.

After reviewing the available evidence, Justice Ryan was satisfied that the goods were in good order and condition when stuffed into the container and delivered to the ship at the terminal in Yokahama. He found that the damage observed at out-turn had occurred during the voyage and possibly also after the goods had been discharged at the terminal in Melbourne. He accepted evidence that the damage was sustained when incompatible software in the refrigerated container led to an extended defrost cycle.


The judge noted that the view previously expressed in Gamlen Chemical Co (A/sia) Pty Ltd v Shipping Corporation of India Limited (1978) 2 NSWLR 12 to the effect that the cargo interest only had only to prove the contract of carriage and the non delivery of goods, or the delivery in a damaged condition and the burden then shifted to the carrier to prove that the loss or damage arose from one or other of the matters specified in Article IV Rule 2 of the Hague-Visby Rules had been rejected in the High Court in the Bunga Seroja decision.

He quoted with approval the comments of Justice McHugh in that case, who said:

'The words "arising or resulting from" which appear at the very beginning of Article IV Rule 2, indicate that the loss or damage must be caused by one or more of the matters enumerated in paragraphs (a) to (q) before the carrier can escape liability. If it results or arises from any other cause such as the negligence of the carrier, the carrier is liable. The presence of Rule 2 (a) which creates a limited but separate exemption for the carrier for damage resulting from the negligence of its master or servants in relation to the navigation or management of the ship is a further textural indication of this interpretation.'

Justice Ryan also noted that in his earlier joint judgment with Justice Dowsett in CV cheepvaartonderneming Ankergracht v Stemcor A/sia Pty Ltd (2007) 160 FCR 342 at 361, he had said that:

'The proper course is to identify negligence (usually a breach of Article III Rule 2) before considering the availability of exceptions pursuant to Article IV Rule 2 and ... the mere occurrence of loss or damage may not be sufficient to prove a breach of the former rule.'

A similar approach was to be adopted in this case.


Article III Rule 1 of the Hague-Visby Rules provides:

1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to -

  1. Make the ship seaworthy;
  2. Properly man, equip and supply the ship;
  3. Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation. Justice Ryan considered it is unnecessary in this case to express a concluded view on whether the liability for loss or damage arising from unseaworthiness attached when a container was supplied which had a controller fitted with incompatible software. It was unnecessary as the facts raised the inference that there had been a breach of Article III Rule 2 which provides:Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.' Circumstantial evidence was sufficient to raise the inference of a breach of Article III Rule 2.


The carrier maintained that it was exempted from liability as the damage was caused by a latent defect in the container, being one that could not have been discoverable using due diligence.

Justice Ryan concluded on the balance of probabilities that the damage had been caused by the container having been stuck in defrost mode for an extended period of approximately three days, probably as a result of the incompatibility between the container's controller and the software with which it was fitted. But that was not the Immediate cause of the plaintiff's loss. Rather the loss was caused by the continuous running of the container in defrost mode, an event which could have been detected and rectified had the carrier's employees carried out appropriate monitoring and inspection of the container and kept proper records, including notations of apparent anomalies. Accordingly, he found that there had been a lack of due diligence such that a latent defect defence was not open to the carrier.


Justice Ryan rejected a submission from the carrier that the Hague-Visby Rules apply only in the 'tackle to tackle' period from loading to discharge from the ship. He considered instead that the obligation on the carrier to 'properly and carefully discharge' extended to ensuring that the container in which goods had been carried did not have a propensity to be stuck in defrost while at the port terminal and before the goods could reasonably be expected to be removed from the container. In all the circumstances judgment was given for the plaintiff for the full extent of the loss or damage to the goods after salvage which had been agreed at $130,192.40, together with interest and costs.


The case is a relatively straight forward example of the Hague-Visby regime at work. While it establishes no new law it does include some interesting comments regarding the extent of the carrier's obligations in relation to damage which might have occurred after discharge and a brief analysis of the burden of proof and analysis of a latent defect defence.

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.