New Zealand Shipping Co. v. A.M. Satterthwaite & Co.

[1974] 1 All E.R. 1015 (1974)

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New Zealand Shipping Co. v. A.M. Satterthwaite & Co.

Judicial Committee of the Privy Council
[1974] 1 All E.R. 1015 (1974)

Facts

Ajax Machine Tool Company Ltd., a maker of tools, consigned a drill for shipment by the carrier Federal Steam Navigation Company Ltd. (Federal Steam), which issued a bill of lading. The drill was loaded onto the vessel Eurymedion in Liverpool. The consignee was A.M. Satterthwaite & Company Ltd. (Satterthwaite) (plaintiff) of New Zealand. New Zealand Shipping Company Ltd. (NZ Shipping) (defendant) was the sole owner of Federal Steam, carried out stevedoring work for Federal Steam, and acted as Federal Steam’s agent; Federal Steam also acted as the stevedore’s agent. NZ Shipping received the bill of lading at Wellington, New Zealand, and by August 1964 had transferred it and the drill to Satterthwaite, which by then had title to the drill. The first page of the bill of lading stated that in accepting the bill of lading, the shipper agreed to be bound by all its terms. On the back of the bill, in small type, Clause 1 stated that if no other law applied, the bill incorporated the provisions of Great Britain’s Carriage of Goods by Sea Act 1924. The clause added that servants, agents, and independent contractors employed by the carrier were not to be held liable to the owner of the goods for damage or delay arising from any act or neglect. The clause made any limitation on liability that was available to the carrier also available to the carrier’s servants, agents, or independent contractors. This was known as a Himalaya clause. Clause 2 limited the carrier’s liability to £100 per unit unless the value of the goods was declared. The law provided that a suit against the carrier and ship must be brought within a year after delivery. Satterthwaite brought a negligence suit for the cost of repairing the drill in 1967. Satterthwaite argued that the limitation on liability should not extend to NZ Shipping because NZ shipping had given no consideration, making the term in the bill of lading a gratuitous promise.

Rule of Law

Issue

Holding and Reasoning (Lord Wilberforce)

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