Corsina (Far East) Ltd v. Taipen Yusen Wharf & Godown Co Ltd
Read the full judgment text of HCA 2145/1974 on BabelCite. This High Court CFI judgment.
1. This is an action in negligence wherein the plaintiff as owner of 5.6 cartons of espa powernet stored in the defendant's godown claims damages for the defendant's failure to take due and proper care of the cartons of goods, as a result of which they became damaged by rain water.
Cited by 1 case
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HCA002145/1974 IN THE SUPREME COURT OF HONG KONG HIGH COURT ACTION NO. 2145 OF 1974 -----------------
----------------- Coram: Leonard J. Date of Judgment: 14th June, 1976. ----------------- JUDGMENT ----------------- 1. This is an action in negligence wherein the plaintiff as owner of 5.6 cartons of espa powernet stored in the defendant's godown claims damages for the defendant's failure to take due and proper care of the cartons of goods, as a result of which they became damaged by rain water. 2. It is common case that the defendant operated a public godown at No. 20, Tong Yuen Street, Yau Tong Bay, Kowloon and that the 56 cartons in question of which the plaintiff was the owner were shipped from Japan on the s.s. "Hinode Maru No. 8" and landed in Hong Kong on the 14th August 1973 from a lighter and placed in the defendant's godown until the 22nd August 1973 and stored by the defendant between those dates for reward. While there the cartons were damaged by rain water in circumstances with which I will deal. The defence as amended denies negligence but contains an alternative plea to the effect that the plaintiff by his agent Kyosei Agencies (H.K.) Ltd. (to which I will refer as Kyosei Agencies) or alternatively Kyosei Agencies with the consent express or implied of the plaintiff stored the cartons in the defendant's godown pursuant to an agreement between Kyosei Agencies and the defendant that the storage was subject to the conditions set out on the back of the defendant's current standard form of godown warrant. These conditions if applicable provide that the defendant does not accept liability for loss, damage or deficiency caused or contributed to by any of the specified causes, whether such loss, damage or deficiency was also in part caused to or contributed to by any neglect, wrongful act, misfeasance, error of judgment, of the defendants, their servants or agents or other persons for whose acts the defendants might apart from such provision be liable. The causes so specified included water damage, tempest and typhoon; that the damage in question was caused or contributed to by rainfall from tropical storm "Joan" I have no doubt so that the damage to the goods was occasioned by water damage one of the specified causes. A matter for consideration is therefore whether, the water damage was due to the negligence of the defendant. 3. In their reply the plaintiff denied the existence of any agency between the plaintiff and Kyosei Agencies and denied knowledge of any agreement between the defendant and Kyosei Agencies or the terms and conditions of any such agreement and claimed that the goods were stored in the defendant's godown by Kyosei Agencies without the prior knowledge or the implied or express consent or approval of the plaintiff and denied the applicability of the conditions in question. At the suggestion of the parties and on the agreement of counsel for the defendant that, if negligence was relevant it was for the defendant to rebut its existence, I ruled that it was for the defendant to begin. Having considered the admissions in the pleadings and in answer to interrogatories administered by the plaintiff to the defendant and the evidence called by the parties I have arrived at the following conclusions of fact. 4. In July 1973 the plaintiff purchased the goods in question from a Japanese company. The invoices evidencing this purchase are in the agreed bundle and show that the goods were to be leaded at the port of Yokohama in Japan. These invoices specify the unit price for the goods in Yen and under the column "amount" appears the following entry:
An incomplete copy of the bills of lading appears in the agreed bundle but it is clear that the bills of lading contain the endorsement "freight collect". It is a condition of the bills of lading issued to the vendors in Japan that:
The bills of lading in question were issued by the Kyosei Kisen Kabushiki Kaisha (to which I will refer as the shipping company) and on the arrival of the "Hinode Maru No.8" at the port of Hong Kong the shipping company availed itself of the rights conferred by the clause in the bills of lading which I have quoted and discharged the goods into lighters provided by Kyosei Agencies who have at all material times been shipping agents in Hong Kong for the shipping company. Kyosei Agencies then, following their usual practice, discharged the goods into the defendant's godown. Delivery orders were obtained by agents of the plaintiff and endorsed by the plaintiff. The delivery orders are dated the 16th August 1973 and are described as being "valid until the 21.8.73". The goods when discharged at the godown were one of a number of consignments regarded by Kyosei Agencies as "general discharge". This was clearly a usual practice for Kyosei Agencies to follow for as early as the 20th November 1971 Kyosei Agencies had appointed the defendant "as our general discharge godown with effective (sic) as from 1st January 1972. We hereby agreed (sic) with your conditions of storage as stated on the reverse side of your godown warrant." The reverse side of that godown warrant contains the exemption which I have mentioned when summarising the pleadings. On their discharge the goods were stored on the first floor of the defendant's godown. This is a six-storey building facing Yau Tong Bay looking south-west and Tong Yuen Street looking north-east. On the first floor of this building are two loading bays and goods to be stored on the first floor may be admitted to it, having been raised on winches through one of two large openings in the front wall of the premises which serve these loading bays. These openings may be closed by large metal sliding doors. These openings look directly onto the sea. There is a corresponding loading bay overlooking Tong Yuen Street but the sliding doors to this bay do not directly overlook Tong Yuen Street but are at right angles to it. The plaintiff's goods which were packed in 56 cartons were, according to the evidence of the witnesses for the defendant, placed close to the loading bay overlooking the sea but well away from the metal sliding doors and there was a wall intervening. They were placed between the loading bay and a staircase leading to the second and upper floors of the building and eventually to the roof. The roof is flat and its drainage is adequate to carry away storm water; such water as might enter the premises under the door to the roof one would expect to be carried away after passing down a short flight of stairs, by a gulley and a drain on the top floor. There is a similar gulley near the staircase on each of the other floors. It was the case for the defendant that the rain water which damaged the goods in this particular instance came down the staircase to which I have referred passing the gulley on the top floor turned right and then right again and continued down the staircase passing in similar tortuous manner the fifth, fourth and third floors so that it was overflow from the roof the defendant urges that caused damage to the goods. This I find quite impossible to accept. If the cartons in question were stacked one on top of the other as the defendant's godown manager stated and were more than 20 feet from the stair case all could not have been soaked but it is clear from the survey of the damage incurred that every carton was wet. 5. The manager of the defendant gave evidence as to the precautions to be taken against the danger of damage to goods stored by water. He indicated that there was a set procedure, a set of standing instructions to be implemented by the godown manager when a storm was imminent. These standing instructions had not been committed to writing but had been passed by him to the manager by word of mouth. They were to the effect that on the hoisting of No. 1 typhoon danger warning it was the duty of the godown manager to see to it that all doors and windows on all six floors were secured. The manager in his evidence indicated with considerable particularity the manner in which the sliding doors should be secured as they were most susceptible to seepage by water. He said that these doors had to be sealed with a material which would apparently become impermeable if wet. On the hoisting of No. 1 signal a thorough check was to be made on the roof to see if any of the drains were choked or if there was any danger of flooding. This witness however had no personal knowledge as to what took place on the occasion in question; the instructions which he insisted had been given on this occasion were of a general nature although he said that he had given instructions "long ago" of a detailed nature. His evidence was of no assistance as to the precautions which were actually taken although of some guidance as to precautions which should have been taken in the event of a No. 1 storm signal being hoisted. It is clear however from the evidence of the manager of the defendant's godown that on the night in question virtually no precautions against damage by water were taken. He was at the godown on the 20th August 1973 but his being there had nothing to do with the storm. He first became aware of the wind and rain outside at about 3.00 a.m. on the 21st. (Although the witness referred throughout to the morning of the 20th since his evidence was that the godown was flooded on the morning of the 20th as a result of a storm which took place on the night of the 19th/20th I took his remarks to be intended to refer to the night of the 20th/21st since it was clear that it was on that night that the storm occurred.) He did nothing to the doors leading to the roof. He did not know whether the caretaker had done so and his evidence that the 56 cartons had been wet by water coming from the roof was obviously pure speculation. He said he became aware of water entering the godown at about 4.00 a.m. He went he said to the roof on two occasions, noticed water had been accumulating and put sacks on the staircase to prevent flooding. He was unable to shift cargo which was in danger of becoming wet to a dry spot in the godown because he had no machinery to do so and the goods were so heavy that they could not be shifted manually. He made no use of any substance which might have been used to make the sliding doors impervious to water. Indeed he did not seem to know of any such substance although the general manager had described it in detail. I found the evidence of the godown manager and of the caretaker highly unsatisfactory. I was driven by it to the conclusion that their memories of times and dates were faulty, that no protection had been taken against the entry of water into the godown other than the placing of sacks on the staircase inside the door to the roof, that there were no question of moving goods which might be in danger in one place to another place in which they would not be in danger and that there was no labour other than the caretaker and the manager himself to move goods. I was not satisfied that the sliding doors to the loading bays on the first door had been closed during the typhoon storm. Even had they been left open, however, I find it difficult to see how the goods could have been wet throughout if they were in fact placed where I was told they had been placed for the spot indicated is around a corner from the sliding doors. Assuming then that is for defendant to prove the absence of negligence I must hold that it has not done so. Indeed I am satisfied on the evidence of the defendant taken as a whole that the wetting of the goods was caused through the negligent omission of the godown manager and of the caretaker to do anything to safeguard the goods. The godown manager stated unequivocally that he did not know of the approach of the storm. He came to know of it when it was already raging. I find as fact that the goods were damaged by rain water as a result of the negligence of the defendant in that the defendant had failed to take obvious and reasonable steps (outlined by its manager) to prevent such damage and had failed to take steps to see that if goods were in danger they could be shifted to a safe place. The system or its application was obviously deficient. 6. Mr. Bunting for the defendant has conceded that the defendant was bailee of the goods for reward, that the burden was on the defendant to disprove negligence and that the standard of care in question is the ordinary standard of care but I am quite satisfied not only that the defendant has failed to displace the accepted onus but that it has been established that the defendant was negligent. Is it in the circumstances possible for the defendant to escape liability by reliance on the conditions on the back of a 1972 godown warrant incorporated into its agreement with the shipping agency. Since Lee Cooper Ltd. v. C.H. Jeakins & Sons Ltd.(1) it has been well accepted that the remedy of an owner whose goods are damaged or lost through the negligence of a sub-bailee who owes no contractual liability to the owner lies in tort. In that case Marshall, J. having called to mind the words of Denning L.J. in Greene v. Chelsea Borough Council(2) that:
went on to say at page 9:
Accepting this, is it logically and reasonably possible to limit the duty owed to an owner independently of contract by reference to a contract to which the owner is a stranger entered into by the defendant with another (Kyosei Agencies) formerly in possession of the goods in question? Mr. Bunting argues that it is and bases his argument on two grounds. Firstly he argues that there is in this case what he calls a chain of agency and secondly he on an implied consent by the owner to the "exempting conditions" contained in a contract between the negligent sub-bailee and the bailee from whom he took over possession. 7. In considering this question on the pleadings the first matter for decision then is whether the relationship of principal and agent existed between the Kyosei Agencies and the plaintiff and, if so, if the Kyosei Agencies acted within the scope of its authority so as to bind the plaintiff. It is apparent that the resonsibility of the shipping company (in relation to which Kyosei Agencies was clearly an agent) ceased as soon as the goods were lifted from the ships deck and that the shipping company was within its rights in entrusting them to the Kyosei Agencies. So much is clear from the terms of the bill of lading which I have quoted. It was to be anticipated by any reasonable importer of goods that the shipping agency would in due course entrust them to the care of a wharf and godown company. I cannot however see that it is to be inferred from this that the relationship of principal and agent was created or is to be implied. There was no direct contract of agency between the plaintiff and Kyosei Agencies but Mr. Bunting argues that the defendant has proved what he referred to as a "chain of agency". By purchasing the goods on the terms indicated in the invoices from which I have quoted the consignor was, he suggests, authorised to take all necessary steps to ensure that the goods reached the plaintiff as consignee in Hong Kong. By consigning the goods he took the first step in doing so and by accepting the terms of the bills of lading impliedly on behalf of the plaintiff authorised the shipping company to employ, on behalf of the plaintiff, the Kyosei Agencies so that when the Kyosei Agencies following their usual course of business placed the goods in the godown of the defendant they did so as agent of the plaintiff. This argument is not only to ignore the possible application of the maxim delegatus delegare non potest but also requires the making of quite unjustifiable assumptions. I am asked to infer not one agency but to imply consent to a sub-agency on a sub-agency. As I understand it, it is a general rule that delegation where permitted does not create privity-of-contract between principal and sub-agent. Without privity-of-contract existing I cannot follow how a sub-agent can in turn have implied authority to appoint a sub-sub-agent. I cannot regard the Kyosei Agencies as agents of the plaintiff. If they are so to be regarded there is no evidence before me to indicate that they had authority to enter into a contract on behalf of the plaintiff discharging the defendant from liability in the event of the plaintiff suffering loss through the negligence of the defendant. It is noteworthy that the contract on which the defendant seeks to rely existed long before the creation of any agency if one is to be inferred and that there has been no evidence that the plaintiff ever knew of it. I consider that I cannot hold that Kyosei Agencies was the agents of the plaintiff. If they were, they were not expressly or impliedly authorised by the plaintiff or anyone on behalf of the plaintiff to deposit the plaintiff's goods with the defendant on terms incorporated in an agreement which came into existence long before the plaintiff's goods arrived in Hong Kong - terms which were unknown to the plaintiff. To hold otherwise would be to place unjustifiable limitations on the freedom of principals to appoint and direct their agents. 8. The alternative defence is that the goods were stored in the defendant's godown as sub-bailee with the implied consent of the plaintiff who therefore impliedly consented to the terms on which they were accepted. The defendant, it is argued may owe the plaintiff all the duties of bailees for reward but these duties are to be discovered by reference to the conditions contained in the agreement made between the defendant as sub-bailee and the Kyosei Agencies as bailees. 9. The principal modern authority as to the liability of a sub-bailee to the first bailor was recognised in Gilchrist Watt Ltd. v. York Products(3) at page 1269 to be Morris v. C.W. Martin & Sons Ltd.(4) In Morris v. C.W. Martin & Sons Ltd.(4) a mink stole sent by the plaintiff to a furrier to be cleaned was with the consent of the plaintiff sent to the defendants as cleaning specialists for them to clean it under a contract between them and the furrier. This contract contained what were called "exempting conditions" or an "exemptions clause" which were held not to be so framed as to protect the defendants. The fur was stolen by the defendants' servant whose duty was to clean it. It was held that the defendants had a non-contractual liability to the plaintiff. Diplock L.J. expressly left open the question:
Salmon, L.J. was equally non-committed contenting himself with agreeing that:
Lord Denning M.R. in the dicta on which Mr. Bunting found himself obliged to place considerable reliance had this to say:
Earlier in the judgment the Master of the Rolls had this to say:
This passage is quoted with approval in the judgment of the House of Lords delivered by Lord Pearson in Gilchrist Watt Ltd. v. York Products(3) but the purpose of the quotation is to show the existence of the non-contractual liability of a sub-bailee to an owner rather than to demonstrate the possibility of a sub-bailee escaping liability by means of "exempting conditions". Again I feel that Diplock L.J. had greater reservations as to the applicability of the "exempting conditions" than is apparent from his deliberately refraining from expressing an opinion about it for the opening words of his judgment warn that "the legal route" which has led him to his conclusion:
10. In Gillespie Brothers v. Roy Bowles Ltd.(5) the plaintiffs in London ordered watches from Switzerland for resale to buyers in Jamaica. The parcel was placed in bond in London. The plaintiffs entered into a contract with forwarding agents to arrange for transhipment. This contract contained a stipulation to the effect that it was subject to certain standard conditions among which were conditions that all goods were carried subject to any conditions stipulated by carriers into whose possession or custody the goods might pass and that in no case should the liability of the forwarding agents exceed £50 per ton. The forwarding agents hired a carrier on a monthly basis and the watches were stolen through the negligence of the driver of the carrier who remained the servant of the carrier. The plaintiff sued the carrier as tort feasors and obtained judgment for £1,008 for negligence. Relying on conditions of carriage incorporated into the contract between the carrier and the forwarding agents the carrier in third party proceedings sought indemnity against the forwarding agents so that the case turned on the question whether the indemnity clause covered the carrier for the negligence of its servant. Although the carrier by its defence claimed to have been instructed to carry the package by the owners agents, the forwarding agents and averred that it was entitled under the conditions to limit its liability there was no appeal by the carrier against the judgment establishing its liability to the plaintiff. The judgment of the Court of Appeal is therefore of little assistance to me here. It seems clear from his judgment however that the Master of the Rolls had not changed his mind as to his obiter in Morris v. C.W. Martin & Sons Ltd.(4). 11. In Harris Ltd. v. Continental Express Ltd. and Burn Transit Ltd.(6) the plaintiff entrusted its goods to the first defendant for transmission and their contract with the first defendant contained stringent "exemption conditions". The first defendant in its turn entrusted the goods to the second defendant. The goods were lost in transit through the negligence of the second defendant's servant the driver of a vehicle in which the goods were carried. The conditions of agreement between the first and second defendants included the following:
Paull, J. observed at page 259:
Again in Learoyd v. Pope(7) it was held by Sachs, J. in similar circumstances that the terms of a contract between a bailee and his sub-bailee were of no concern to the owner. Having referred to the cases of Harris v. Continental Express Ltd. and Burn Transit Ltd. (supra) and Lee Cooper Ltd. v. C.H. Jeakins & Sons Ltd. (supra) he he goes on:
12. In Monkataff v. B.O.A.C.(8) Browne J. when dealing with a case in which B.O.A.C. carried the plaintiffs' money as a result of certain agreements with the Post Office for the carriage of mail by B.O.A.C. had this to say:
13. In the instant case there has been no evidence that the plaintiff knew of the terms of the agreement between the defendant and the Kyosei Agencies. Even accepting the dictum of the Master of the Rolls as correct one is left with the question whether or not the plaintiff impliedly consented to them as being in the "known and contemplated form". I am wholly unsatisfied on the evidence I have heard that the exempting conditions in this case can be said to have been in a "known and contemplated form" or to have been "terms usually current in the trade". The evidence falls far short of that. When asked about them Mr. CHENG Tien-shum that the transaction was a "perfectly ordinary transaction such as we had with" the shipping agency and that the defendant had "exactly the same relationships with others" the defendant's conditions were "more or less the same as prevails in Hong Kong". The managing director of the shipping agency said that he would "have expected" to see a condition absolving godown keepers from liability in "certain cases". He told us that there were in the case of three companies with which the shipping agency dealt oral agreements on terms which usually embodied exemption clauses. He had however never read the conditions in question himself and so clearly could not say if they were in a "known and contemplated form" or in a form "usually current in the trade". Mr. CHIU Yen-leng the assistant manager of a large shipping line of not inconsiderable experience did not know for what risks godown keepers accept liability. It is, he suggested "case by case". If this be correct there could be no question of the plaintiff having impliedly consented to terms of which he could not be fixed with knowledge. Under cross-examination the plaintiff's representative frankly admitted that he would have expected the Kyosei Agencies to have entered into a standing agreement with a godown for the taking in of cargo but he was unaware of the practice of limitation of liability by godowns. He was not in the shipping department of the plaintiff at the time of the arrival of the goods in question and what he knew of the transaction was from information obtained in his capacity of chief accountant. On these facts I am not satisfied that the plaintiff knew or ought to have known of the exemption clauses. Hence he could not be said to have impliedly consented to them. Although it is not necessary for me for these reasons to decide whether the dictum of the Master of the Rolls correctly sets out the law, I should have had difficulty in accepting it. The principal reason for this difficulty stems from the fact that the doctrine to which the Master of the Rolls himself referred in Greene v. Chelsea Borough Council (supra) as the "privity-of-contract" doctrine had received its quietus in Donoghue v. Stevenson(9). If it be accepted as I judge it to be that a sub-bailee's duty to an owner arises in tort independently of contract I find it difficult to see how that tortious liability can be limited by a contract to which the owner is not a party. I, like Paull, J. and Sachs, J. in the passages I have quoted above, find difficulty in seeing how the terms of a contract between the defendant and the Kyosei Agencies could affect the plaintiff. In conclusion I would remark that I find it unnecessary to refer at length to those cases in which questions of sub-bailment did not arise in which the courts have displayed a reluctance to saddle a party whose person or goods have been injured with notice of a condition limiting liability in negligence. Such cases as Thornton v. Shoe Lane Parking Ltd.(10) (in which Megaw, L.J. observed:
a remark which might well be applied to the exempting condition on which the defendant here seeks to rely) while of interest in showing the general tendency of courts (even in days such as these when pride in a job well done seems to have declined) to scrutinize most carefully the details of transactions in which exemption clauses are prayed in aid to avoid liability for negligence are not strictly in point. This tendency is also apparent in cases where exclusion clauses themselves fall to be construed. See for example White v. John Warwick & Co. Ltd.(11) and Fagan v. Green & Edwards(12). 14. I prefer however to base my decision on the ground that the plaintiff cannot be said impliedly to have consented to the terms used here because they have not been shown to be in a "known and contemplated form" nor to have been in "terms usually current in the trade". It has been suggested that a decision to this effect will have the effect of preventing the defendant from carrying on its business. I do not accept that. It can insure against negligence or obtain an indemnity from the actual depositor against negligence or better still be not negligent in the way it carries out its work. 15. There will be judgment for the plaintiff in the sum of $33,270.63 and costs. I am greatly obliged to counsel for their careful and well researched arguments.
Representation: Mr. Ronny Tong (Deacons) for the plaintiff. Mr. Michael Bunting (Gunston & Chow) for the defendant. (1) (1967) 2 Q.B. 1. (2) (1954) 2 Q.B. 127, 138. (3) (1970) 1 W.L.R. 1262. (4) (1966) 1 Q.B. 716. (5) (1973) 1 Q.B. 400. (6) (1961) L1. L.R. 251. (7) (1966) 2 L1. L.R. 142. (8) (1967) 1 L1. L.R. 396. (9) (1932) A.C. 562. (10) (1970) 2 Q.B. 163. (11) (1953) 1 W.L.R. 1285. (12) (1926) 1 K.B. 102. |
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