Pope's International (HK) Ltd v. National Insurance Co. Ltd
Read the full judgment text of HCCL 194/1997 on BabelCite. This HCCL judgment was delivered on 1 June 2000.
1. This is a dispute under a policy of marine insurance issued by the defendant in favour of the assured, the plaintiff herein, on 16 May 1997. The policy covered a consignment of 745 cartons of electronic goods shipped in two containers on board the vessel " Nedlloyd Amazonas " at Singapore for carriage to Harare, Zimbabwe, via Durban, South Africa.
Cited by 1 case
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HCCL000194/1997 HCCL194/1997 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL ACTION NO.194 OF 1997 ---------------
--------------- Coram: Hon Stone J in Court Dates of Hearing: 8 and 9 May 2000 Date of Judgment: 1 June 2000 ____________________ J U D G M E N T ____________________ INTRODUCTION 1. This is a dispute under a policy of marine insurance issued by the defendant in favour of the assured, the plaintiff herein, on 16 May 1997. The policy covered a consignment of 745 cartons of electronic goods shipped in two containers on board the vessel "Nedlloyd Amazonas" at Singapore for carriage to Harare, Zimbabwe, via Durban, South Africa. 2. The policy in question - No.HK/MAR/97-98/058193 - insured the goods against "all risks from supplier's warehouse upto consignee's final warehouse as per Institute Cargo Clauses (A) dated 1.1.82", and also incorporated the Institute Theft, Pilferage and Non-Delivery Clauses 1.12.82. The amount insured was in the sum of US$219,802.00, but the policy was "subject to 2% excess for the whole consignment". 3. In the event, the two container loads were stolen in Harare, but the defendant insurer has refused to indemnify the plaintiff against its loss, maintaining that the insurance cover had terminated prior to the theft in question. Hence this claim, the value of which now is agreed between counsel as standing at US$203,697.44. THE FACTS 4. The material facts are in relatively short compass, and for the most part attract little dissension. 5. There is no dispute that these electrical goods were in fact shipped at Singapore on board the "Nedlloyd Amazonas". A bill of lading issued at Singapore on 19 May 1997 evidenced shipment of the two containers, and as issued identified the consignee as Plus Investments (Pvt) Ltd of Harare. 6. It is also common ground that the "Nedlloyd Amazonas" completed the sea voyage to Durban on 31 May 1997, whence the two containers were loaded onto railway wagons at Durban on 4 June 1997, and then were transported by rail to Harare, where they arrived on 15 June 1997. 7. Thereafter, they were stolen in circumstances which are not completely clear, and to which I shall shortly revert, although I am satisfied on the evidence, and so find, that the physical theft of the containers took place on 17 June 1997. 8. What is clear, however - possibly for reasons subsequently found to be justified - is that the plaintiff's buyer, one Daswani Marketing Limited ("DML") of Malta, became concerned and wrote to the plaintiff seller a fax dated 3 June 1997 in the following terms :-
9. Upon receipt of this request, the plaintiff requested Nedlloyd to amend the bill of lading by deleting the named consignee and inserting "To Order", thereby precluding immediate delivery at Harare to Plus Investments, DML's sub-buyer which, I understand, was then thought to be encountering financial difficulties. 10. In any event, and notwithstanding the prior amendment to the bill of lading, on 13 June 1997 the plaintiff informed Nedlloyd Hong Kong that :-
an instruction that on the face of the papers appears to have been passed, via Interoffice Memorandum dated 16 June 1997, from Nedlloyd Hong Kong to Nedlloyd Durban, and which asked, inter alia :-
11. However, unbeknownst either to the plaintiff, or indeed to the carrier in Hong Kong, at the time of this change of instructions to hold the containers at Durban, the same containers actually were being transported by rail to Harare, and by the time of the plaintiff's further instruction (following DML's request to the plaintiff of the day before) on 19 June 1997 requesting that Nedlloyd divert the two containers "whilst still in Durban" to either Felixstowe or Southampton, the containers had been stolen. 12. By letter sent on 15 July 1997 (wrongly dated 15 June), Nedlloyd's shipping agents in Harare, SMS Limited, wrote to the plaintiff as follows :-
13. What appears to have happened is that, aided by a forged bill of lading, an SMS employee named Godwin Nyengedza (who left the SMS employ shortly after the fraud was perpetrated) created, or caused to be created, what has been referred to in this trial as a 'Delivery Release Order', bearing on its face an SMS chop dated 12 June 1997 indicating to the Customs Department "All Charges Paid And Goods May Be Released" (a like chop appears on a Container Rail Advice Note), together with a Customs Bill of Entry issued at Harare Custom House on 11 June 1997, wherein the named Importer, one Abasco Enterprises Pvt Ltd, declared a commitment "to the payment of all applicable charges". 14. The fraudster Godwin appears to have been acting in concert with this same Abasco Enterprises Pvt Ltd, and more particularly with the person behind that company, whom I understand is one Mr Mohammed Choukor. I am also told that Abasco (or Abasca) had a connection to the original consignee, Plus Investments Limited, DMS's sub-buyer. Be that as it may. A fraud obviously was perpetrated, and the question for resolution in this case is whether in these circumstances the loss falls on the plaintiff/insured or the defendant/insurer? THE ISSUES 15. In macro terms, the sole issue is whether the goods were on risk at the time of the theft, or whether by that stage the insurance cover had terminated. The parties are predictably divided on this central question, which itself breaks down into several sub-issues. I should also indicate that, on the pleadings, there is rather more between the parties than ultimately was the case at trial, counsel on each side being responsible for narrowing the areas requiring decision. I deal hereunder with the particular matters which remain outstanding. (i) Were the goods delivered to Manica Freight Station prior to the theft? 16. On the state of the evidence, I am inclined to find that such delivery indeed did so occur. Mr Smith, for the plaintiff, argued that the probabilities pointed to the goods (which had been pre-cleared by Customs during the railway transit from Durban) having been abstracted immediately after unloading; indeed, Mr Davies, the only viva voce witness, suggested that this could have occurred at the site of the unloading gantry prior to the containers being raised and cross-hauled into the freight station itself. However, although Mr Davies asserted that this occurred "frequently", he also accepted that containers such as these went into the freight station "in the ordinary course", whilst in his evidence-in-chief (put in in the form of his witness statement) he opined that he was "not prepared to confirm whether the two containers were ever received into Container Depots Private Limited's Lochinvar Terminal" (an alternative description of the Manica Freight Station in Harare). This latter statement seems to have been carefully (and elliptically) phrased, and at bottom any suggestion that these containers did not go into Manica amounts to no more than pure supposition, a supposition not reinforced by the existence of what I understand is a three-day storage-free period accorded to incoming containers. To the contrary, other evidence, admittedly in the form of hearsay statements, is more definite, as the statement of Mr Foulkes, the General Manager of SMS (Shipping Management Services), at paragraph 8 makes clear :-
whilst the statement of Det. Sgt. Bernard Mashanyare of the Harare CID Fraud Squad is to similar effect :-
17. At the end of the day, the broad evidential situation is far from satisfactory, but doing the best that I can on the evidence available, on the balance of probabilities I am driven to the finding than that the two containers were placed in Manica Freight Station, and thereafter were removed therefrom by the fraudsters, or their agents, an eventuality which appears to be contemplated by the box in the Delivery Release Order marked "Area Office Responsible for Release of Cargo/Container". 18. Which brings me to what is, perhaps, the second preliminary sub-issue. (ii) Where should the 'theft' to be regarded as having taken place? 19. Mr Smith argued that it was open to the court to find that the 'theft', as understood in a pure criminal law sense, took place prior to the arrival of the containers in Harare, at the time when the forged Bill of Lading and the consequent Delivery Release Order were passed to a third party, thereby clothing such third party with documents inconsistent with the true owner's title. The significance of this argument - as with the argument that the containers never actually got into Manica Freight Station - is that, if accepted, this would effectively sidestep any argument as to the status of that freight storage depot; in other words, if in fact the containers could be shown to have been stolen either when on the railway wagon en route from Durban to Harare, or even at the point of the unloading gantry at the terminal, there could be no question but that the insurance cover had not terminated and that at the time of the theft the insurers were then on risk. 20. I confess that the concept of the containers being stolen whilst en route to Harare failed to strike a sympathetic chord, boldly though Mr Smith advanced the argument. It seems to me that the acts in question which Mr Smith put forward as constituting 'theft' amounted in real terms to no more than acts preparatory to the theft. In any event, if and in so far as the clothing of the fraudsters with false documents may be regarded under the relevant theft statute (whichever that may be) as an act of theft (which I doubt), in any event I take the view that the proper approach towards construing this insurance cover is not that of the criminal lawyer, but that which would be understood by the normal commercial man as the act constituting the theft : see, for example, the approach of Denning LJ in Nishina Trading Co. Ltd v. Chiyoda Fire and Marine Insurance Co. Ltd [1969] 2 QB 449, at 462, where the Master of the Rolls observed :-
21. I adopt and follow that approach in the present case. The theft in this case which "an ordinary commercial man would consider to be theft" in my judgment can only be the physical abstraction of the two containers by the rogues from the Manica Freight Station against the tender of the wrongful documents. Accordingly, therefore, what in this case has been termed the "criminal law point" is rejected. 22. I turn now to the two arguments which lie at the heart of this dispute, and which involve the interpretation of Clause 8 of the Institute Cargo Clauses (A). (iii) Does Manica Freight Station fall within the rubric "other final warehouse or place of storage" within Clause 8.1.1 of the Institute Cargo Clauses (A)? 23. Clause 8.1 of the ICC(A) reads, in full :-
24. The battle lines here are clearly drawn. Mr Smith says that the Manica Freight Station cannot be classified within this sub-clause as such "other final warehouse or place of storage", whilst Mr Sussex submits equally strongly that in the prevailing circumstances it can. The consequence is clear, of course. If Mr Sussex is correct, the carriage has terminated upon entry into Manica, the insurers consequently being no longer on risk under the policy at the time of the theft. 25. It is difficult to see how in normal course Manica Freight Station complies with the requirements of this clause. As the evidence of Mr Foulkes (as echoed by Mr Black) makes clear, the Manica Freight Station (otherwise variously described as the Manica Freight Services Container Depot or Manica Container Depot) :-
26. It is tolerably clear, as indeed Mr Foulkes further points out later in the same paragraph (for present purposes I ignore the self-serving drafting) that Manica is the place where goods are stored prior to onward delivery to the relevant importer or his agents, so that it is difficult to conclude that essentially Manica is other than in the nature of what, for example, was found by Mr Justice Pearson in John Martin of London Ltd v. Russell [1960] 1 Ll LR 554 to be a "transit shed". In fact, in the latter case, Pearson J observed (at page 563) :-
27. This, however, is not Mr Sussex's point. If I have understood his argument correctly, his primary submission in this case is that although in normal course Manica could and would not be regarded as "the Consignees' or other final warehouse or place of storage at the destination named herein", nevertheless in the particular circumstances of this case Manica Freight Station has effectively become such "other final warehouse or place of storage". This, he said, is because the plaintiff plainly did not want the cargo delivered to any consignee in Harare - indeed, it wanted the cargo to be held in Durban pending arrangement to ship to England - and thus, in these circumstances, the final warehouse or place of storage of the goods at Harare (the destination named in the policy) was the Manica Freight Station. The goods were not going anywhere else in Harare, he argued. To the contrary. Absent the theft which occurred, the plaintiff intended to ship them out as soon as was possible. 28. I agree with Mr Sussex that what constitutes such "other final warehouse or place of storage" must be a question of fact in each case. It could hardly be otherwise. Equally, I accept the submission that, as a matter of general principle, the clause is to be construed in light of the planned adventure at the time of the issuance of the policy so that, as Mr Sussex accepted, in the normal course of the transit as originally envisaged, Manica could not have been so classified in the way in which the defendant now contends. 29. However, Mr Sussex submitted, the key in this case was the supervening events which had served to change the picture. As at 15 June, he argued, there was no evidence that there existed any intention to deliver to any other warehouse or consignee in Harare, so that at that stage, and prior to the theft, the cover had lapsed. 30. I find some difficulty with this submission, persuasively though it was advanced. It seems clear that Clause 8.1.1 anticipates that in "the ordinary course of transit" cover terminates when the cargo actually arrives at the consignee's warehouse or designated "other final warehouse or place of storage", and it is not easy immediately to envisage a situation whereby a warehouse or other place of storage that manifestly (and admittedly) is not so regarded in the context of the adventure as planned should assume such status consequent simply upon the plaintiff's change of instruction - in this case the variation in the bill of lading to "To Order", and the apparent desire (which clearly was not effected) that the goods in question should not even reach Harare. Indeed, on the facts of this particular case, there is perhaps a good deal in Mr Smith's contention that the Manica depot should not, as he put it, be "transmogrified" into something that it is accepted it would not have been had the adventure continued as was envisaged at the date of the issuance of the policy. 31. In my view, Clause 8.1.1 delineates the termination of cover in the normal course of events in terms of the adventure as planned wherein the cargo reaches the consignee and is placed in that consignee's warehouse, or other designated place of storage. A similar view, albeit in terms of an earlier version of the Institute Cargo Clauses, appears to have been taken by McNair J in Overseas Commodities Ltd v. Style, [1958] 1 Ll LR 546 at 561, wherein he observed :-
32. A freight storage depot such as Manica, wherein the goods are placed in bond prior to clearance and collection, in my view does not fall within the ambit of Clause 8.1.1. The fact that, purported contrary instructions notwithstanding, the containers actually reached Harare, and indeed in this case the Manica depot, does not suffice to render Manica something it palpably is not; had these containers belatedly been offloaded en route to Harare, I think it highly unlikely that an argument could have been made that such an obviously interim "warehouse or other place of storage" could have been considered "final" within the ambit of sub-clause 8.1.1. 33. Moreover, on the assumption that Mr Sussex is correct in his submission that supervening events, including supervening instructions from the assured, are of relevance in the classification of what is to be regarded as such "other final warehouse or place of storage", I fail to see why for these purposes such supervening instructions are not to be viewed in their entirety. In this case, for the purposes of his argument Mr Sussex sought to draw a clear line upon the entry of these containers into Manica on their arrival in Harare, at that time there being "no fixed intention that these goods should go elsewhere". Yet self-evidently these containers were not going to remain in a bonded warehouse in Harare, absent a consignee to pay for them, and the mere fact that the shipper's instructions to the carrier to transport these containers to England were not sent until 19 June, but two days after the theft, in my judgment does not serve to preclude the obvious conclusion (as such instructions make clear) that Manica Freight Station was no more than a staging post far removed from the "other final warehouse or place of storage" envisaged by Clause 8.1.1. 34. Accordingly, I reject the argument that the cover had lapsed on 15 June "or shortly thereafter" upon the entry of the containers into Manica. Manica depot plainly was not the final destination, either at the time of the issuance of the policy or as the result (as Mr Sussex would have it) of supervening events. Which conclusion brings me to the defendant's alternative argument based upon Clause 8. (iv) The Clause 8.1.2 approach 35. It will be recalled that Clause 8.1.2 and 8.1.2.1 provide for termination :-
36. This is the focus of Mr Sussex's alternative argument, advanced on the basis that the court does not accept that Manica is to be classified as such "other final warehouse or place of storage". As Mr Sussex pointed out, under this head there is no requirement of finality, and he submitted that the only question for decision in this context is whether in the circumstances the assured had elected to use the Manica depot for storage other than in the ordinary course of transit? 37. In this regard, he argued that the plaintiff's instruction to the carrier to hold the goods represented just such an election by the assured. Accordingly, it was plain that the carrier had to hold the goods at Manica, albeit that the place of interruption of the transit happened to be at Harare, the original destination under the policy. 38. At first blush, this argument appeared to hold promise for the defendant, notwithstanding its contradistinction from the primary submission. However, the difficulty I perceive with this alternative approach is that, in terms of the construction of Clause 8.1.2, it is difficult fairly to identify an election on the part of the Assured to use the Manica Freight Station "for storage other than in the ordinary course of transit", to use the specific words of Clause 8.1.2.1. 39. Notwithstanding the plaintiff's instruction to Nedlloyd of 13 June, namely that "in supercession of our earlier instructions" the containers in question were to be held at Durban, this instruction clearly was not acted upon by the carrier until the Inter-Office Memo of 16 June wherein Nedlloyd Hong Kong requested Nedlloyd Durban to confirm if this request was "unproblematic or arrangeable". By this time, of course, the goods had arrived in Harare, and indeed were feloniously removed from Manica but one day later, on 17 June 1997. In fact, on the evidence before the court Nedlloyd Durban only responded to the Nedlloyd Hong Kong memo on 19 June, advising the Hong Kong office that the containers "have already been railed on 4/6", that message being forwarded to the plaintiff on 20 June 1997, on which same date the plaintiff requested Nedlloyd Hong Kong to divert the cargo to Felixstowe. In turn, this prompted a request from Nedlloyd Hong Kong to the plaintiff quoting a message from Harare that "the process involves appointing a clearing agent to facilitate a removal in bond back to Durban", and asking for written confirmation that the various charges quoted were accepted, the plaintiff thereafter accepting such charges by letter dated 10 July 1997. 40. On the face of the available evidence, therefore, at the time that the goods were delivered to Manica at some point after arrival on 15 June and prior to their theft on 17 June, so far as the carrier on the ground was concerned such delivery apparently was taking place in the ordinary course of transit, and in light of the established sequence of events it is not easy to construct any form of election on the part of the plaintiff as to the alternative use of Manica Freight Station. Consistent with general principle, the 'election' contemplated by Clause 8.1.2 must, it seems to me, encompass elements of knowledge and intention, and accordingly should be construed to mean a choice on the assured's part specifically to opt for storage "in any other warehouse" other than the originally designated "final warehouse", which choice then no doubt, in circumstances such as the present, is effected through its carrier agents. On the present state of the evidence, I am unable to discover any such 'election' in this case, which represents the unusual combination of circumstances which serve to afford mutually exclusive arguments to the effect that on the one hand Manica must be regarded as the "final warehouse or place of storage" and on the other that Manica is no more than an elected "other warehouse or place of storage". 41. In my judgment, on the facts of this case and on a proper construction of Clause 8.1.2, the Manica depot cannot be made to fall within either rubric. I decline to hold, as I think is impliedly suggested, that the happenstance of delivery to Manica (which occurred in normal course in terms of the transit as originally envisaged) can serve to render Manica an elected "other warehouse" by reason merely of the fact that the delivery into Manica took place subsequent to a request from the assured, uncommunicated to and unrecognized by its carrier agents in Durban or Harare at the time of such delivery, to hold the containers at Durban. Accordingly, I reject this argument also, and find that in these particular circumstances this insurance did not terminate pursuant to the provisions of Clause 8.1.2. (v) The Clause 8.2 point 42. Clause 8.2 of the ICC(A) reads :-
43. Some reference was directed in argument towards this provision. Mr Sussex made the point that, in the circumstances of this case, given the prior lapse of the insurance upon entry into Manica, there could be no question of insurance cover pursuant to this clause, the operation of which is predicated upon such cover being in place. Or, put another way, cover pursuant to the provisions of Clause 8.2 does not revive in instances in which such cover has already lapsed. 44. However, since I have earlier found that there has been no such prior termination of the insurance pursuant either to Clause 8.1.1 or 8.1.2, I would in any event have been minded to agree with Mr Smith's contention that, absent the theft on 17 June, the provisions of Clause 8.2 arguably would have been relevant to cover the situation, given the plaintiff's instruction of 18 June requesting Nedlloyd to divert the containers to either Felixstowe or Southampton. On this basis, therefore, although I find that it does not arise on the facts of this case, the insurance cover would have remained in place until "the commencement of transit to such other destination". DECISION 45. After considering the evidence before the court, together with the submissions of counsel, I have concluded that, at the time of the theft of the goods the subject of this claim, the insurance afforded by the policy had not terminated, and that accordingly that the theft occurred during the currency of the policy by reason of a peril or perils insured against. It follows, therefore, that I hold that the plaintiff has succeeded in its claim against the defendant insurer in the agreed sum of US$203,697.44. ORDER 46. The Order of the court, therefore, is as follows :-
47. In so far as anything arises upon the terms of this Order (in particular with reference to paragraph 2, the broad ambit of which I am told is uncontentious) I will hear the parties on a date to be arranged.
Representation: Mr Clifford Smith, instructed by Messrs Stephenson Harwood & Co., for the Plaintiff Mr Charles Sussex, instructed by Messrs Dibb Lupton Alsop, for the Defendant |
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