Kuehne & Nagel (Hong Kong) Ltd v. Yuen Fung Metal Works Ltd
Read the full judgment text of CACV 5/1979 on BabelCite. This Court of Appeal judgment was delivered on 1 October 1979.
1. This is an appeal by Kuehne & Nagel (Hong Kong) Ltd. (the defendants in the action in the High Court), against a judgment of Cons, J., delivered on the 21st of December 1978, in favour of the plaintiffs (respondents) for the sum of $222,817.92.
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CACV000005/1979
Coram: Roberts, C.J. , McMullin, J.A. and Leonard, J. Date of Judgment: 1 October 1979 ----------------- JUDGMENT ----------------- Roberts, C.J. - 1. This is an appeal by Kuehne & Nagel (Hong Kong) Ltd. (the defendants in the action in the High Court), against a judgment of Cons, J., delivered on the 21st of December 1978, in favour of the plaintiffs (respondents) for the sum of $222,817.92. 2. It is only necessary to refer briefly to the facts, which are set out in sufficient detail in the judgment of Cons, J. Facts 3. The plaintiffs are manufacturers in Hong Kong of aluminium goods. They had for some time, up to 1977, supplied substantial quantities of such goods to a firm in Germany called Heinrich Berndes KG Aluminiumwerk, referred to as "Berndes" for short. 4. According to a letter from the plaintiffs to the defendants, which was exhibited at the trial, the plaintiffs had consigned a substantial number of containers through the defendants to Berndes in Germany between January 1976 and April 1977. This letter suggests that these goods had all been sent by container by the Trans-Siberian Route, which involves a combination of sea, rail and road transport. 5. In February 1977, Berndes placed an order with the plaintiffs for the supply of aluminiumware. This was despatched as usual through the defendants on the 12th of April. 6. There was no oral evidence before the trial judge as to the terms of contract of carriage entered into between the plaintiffs and the defendants for the transport of these goods from Hong Kong to West Germany. The terms of such contract, therefore, can only be inferred from such documents as were put before him. 7. These documents consisted of -
8. A container, in which were the goods concerned, was duly shipped from Hong Kong on the "Grodakovo" on the 17th April. On the 16th May, the container arrived at Helmstedt on the border between Poland and Germany. Final delivery instructions should have been given there to the Russian truck driver. It is not known what instructions were given, if any. 9. On the 17th May, however, the goods were delivered to Berndes without any surrender of the T.B.L. In any event, Berndes could not, at that stage, have tendered it, since it still remained with the Deutsche Bank and, to obtain the bill, Berndes would have had to accept the draft which had been drawn upon them. 10. Having obtained the goods without being forced to accept the draft i.e. having got them without payment, Berndes subsequently declined either to return them or to pay for them. 11. Their justification for their conduct was that they had a claim against the plaintiffs for a substantial sum, as a result of other transactions, and believed that that claim would be more easily settled by retaining the goods which had come into their possession without payment. Effect of contract 12. The shipping order/dock receipt of the 12th April contains a section headed "important", in which the following appears -
13. This document describes the plaintiffs as the shippers/exporters and the consignee as "to order". It also says that Berndes were to be notified. The port of loading is described as Hong Kong, the port of discharge as Nakhodka and the place of delivery as Neheim-Husten, which is in West Germany. 14. The second document, called "delivery instructions", was issued by the defendants on 15th April. It is apparently designed to serve both as a receipt to the consignor and also as instructions to those who are to deal with the consignment during its carriage. 15. The document again states that delivery is to be "to order". This entry has been typed and is thus not part of the standard printed conditions. The document also describes Berndes as the party to be notified at the destination. Delivery is to be effected through Kuehne & Nagel of Cologne. 16. At the foot of the document is a section headed "Delivery Instructions". In this section are several "boxes". Against one of them an "X" has been typed, to indicate that the instruction alongside the box is to apply. This instruction reads -
17. The third document is the T.B.L., dated the 15th April 1977 and issued by the defendants. Again, the container is said to be for delivery to order, Berndes are to be notified and delivery is to be effected through Kuehne & Nagel (Cologne). 18. At the foot of the T.B.L. appears the following -
19. The T.B.L. contains a number of clauses designed to exempt the carrier of goods transported in accordance with its conditions from virtually any kind of liability. Indeed, it was not disputed that, if these conditions do apply to the carriage of this particular consignment, either the defendants would be exempted totally from any liability, or at least their liability would be limited to a maximum sum of $1,600. Case for the plaintiffs 20. In view of the widespread nature of the exemption clauses in the T.B.L., it was necessary for the plaintiffs, if they were to succeed, to show that the misdelivery of the goods amounted either to a breach which fell outside the exemption or to a breach of such a fundamental nature that the exemptions would not apply to it at all. 21. In view of the terms in which the three documents to which I have referred were couched, the trial judge had no difficulty in finding that it was a term of the contract of carriage between the plaintiffs and the defendants that the goods would only be delivered against surrender of the T.B.L. and that the plaintiffs were entitled to rely upon that term being complied with, when they made their financial arrangements relating to the goods. 22. In view of his conclusion that there was a fundamental breach of contract, the trial judge did not find it necessary to decide whether the exemption clauses would have relieved the defendants of liability, had the plaintiffs failed to establish a fundamental breach. Was there a fundamental breach of the contract? 23. There was considerable argument before us as to whether the defendants could properly be described as carriers. Whatever label may be attached to them, there can be no doubt that there was between them and the plaintiffs a contract of carriage, whereby responsibility for getting the consignment of goods from Hong Kong to West Germany was placed squarely and solely on the shoulders of the defendants. The latter, in a telex to Kuehne and Nagel, Cologne, dated 24th August, accepted this as being the position -
24. The plaintiffs must have been known, by reason of the frequent dealings between the plaintiffs and the defendants and the previous use of the Trans-Siberian method of transporting goods to Europe, that the defendants did not themselves own the ships; the Russian railways, or the trucks on or in which the container would be taken to Europe. 25. So it must have been clear, beyond doubt, to both parties that the actual carriers of the goods would not be the defendants, but would be persons retained by the defendants as their agents for the carriage of these goods. 26. The trial judge refers to the Privy Council case of Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd.(1), in which the facts were very similar to those of this appeal. 27. In the Sze Hai Case (1), a bicycle manufacturer shipped bicycle parts to a customer in Singapore. By the bill of lading, the parts were to be delivered to the order of the manufacturer or his assigns, with instructions to the shipper to notify the Singapore customer of the goods' arrival. The manufacturer sent the bill of lading to his bank, with authority to release them to the customer on payment of the purchase price. The customer, however, obtained a letter of indemnity from his own bank and the shipping company released the parts to him against that indemnity, and without production of the bill of lading. 28. The Judicial Committee held that the shipping company could not, in such circumstances, rely upon a clause in the bill of lading which would otherwise have exempted them from any liability. At page 587 Lord Denning says -
The Judicial Committee added that no court could allow so fundamental a breach to pass unnoticed under the cloak of a general exemption clause. Sze Hai(1), however, does suggest that a fundamental breach will only override an exemption clause if the breach occurred in such a manner that it can be inferred that the servant or agent responsible deliberately disregarded one of the prime obligations of the contract. 29. In this case there was no evidence as to how the misdelivery occurred. All that is known is that it did. 30. Levison v. Patent Steam Carpet Cleaning Co.(2) decided that, where a fundamental breach of contract is alleged by a bailor of goods, the burden of proof is on the bailee to show that the loss did not occur in consequence of a fundamental breach of contract since he is in a better position than the bailor to know what had happened to the goods while they were in his possession. 31. The defendants, who were undoubtedly bailees, have given no evidence as to what happened to the goods inside Germany, between their arrival at the border and their delivery to Berndes. They have therefore failed to discharge the burden of proof which lies on them to show that the misdelivery was not caused by a deliberate act and are not entitled, therefore, to rely upon the exemption and limitation clauses in the T.B.L. 32. We see no merit in any of the other grounds of appeal and do not feel it necessary to discuss them. In our view the trial judge was right and this appeal should be dismissed with costs. Representation: Ronny Wong & de Souza (Baker & McKenzie) for appellant Edward Chan (Johnson, Stokes & Master) for respondent (1) (1959) A.C. 576 (2) (1977) 3 All E.R. 498 (C.A.) |
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