Winkenson Impex Co Ltd v. Haverton Shipping Ltd and Others
Read the full judgment text of HCAJ 18/1983 on BabelCite. This HCAJ judgment was delivered on 23 October 1984.
1. The plaintiff is claiming the price of goods which were shipped to Nigeria in September 1981. The 1st defendant was the carrier of the goods. The goods are referred to in four bills of lading. All of the goods were shipped together in a container and appear to have arrived safely on the 30th October 1981. After arrival the container holding the goods was transferred from the pier at Port Harcourt to a bonded warehouse some distance from the Port. During the course of transportation from the P
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HCAJ000018/1983 Headnote Goods in a container shipped on an HH Basis - Hague Visby Rules -Disclaimer by carrier to the effect that goods have been described by shipper in the Bill of Lading. HELD Prima facie presumption that goods are as described in Bill of Lading does not arise. Duty of carrier not to part with goods otherwise than upon production of Bill of Lading - effect of exemption clause in Bill of Lading limiting liability in such circumstances - HELD Failure to comply with this duty constitutes a fundamental breach of contract. A.J. 1983, No. 18 IN THE SUPREME COURT OF HONG KONG HIGH COURT ____ BETWEEN
____ Coram: Hon. Mayo, J. in Court __________ JUDGMENT __________ 1. The plaintiff is claiming the price of goods which were shipped to Nigeria in September 1981. The 1st defendant was the carrier of the goods. The goods are referred to in four bills of lading. All of the goods were shipped together in a container and appear to have arrived safely on the 30th October 1981. After arrival the container holding the goods was transferred from the pier at Port Harcourt to a bonded warehouse some distance from the Port. During the course of transportation from the Port to the bonded warehouse the container disappeared. It would appear from a Police report that the driver of the vehicle transporting the container stole it. 2. The plaintiff bases its claim on the four bills of lading I have referred to and claims that the 1st defendant was in breach of duty or in breach of its contract of carriage of the goods. It is common ground between the parties that the contract of carriage was subject to the Hague Visby Rules. 3. It is evident from the pleadings and from the further and better particulars requested and given that initially the main issue between the parties was whether the 1st defendants could be held to be liable for the loss which had occurred on the basis of what had transpired in Nigeria. However, at the commencement of the trial Mr. Faulkner, who was representing the 1st defendants, made an application to me for leave to amend the defence to enable him to withdraw the admission that the plaintiff had in fact shipped the goods referred to in the bills of lading. Mr. Smith, for the plaintiff, resisted this application on the ground that there must be special circumstances to justify leave being granted to withdraw an admission. The authority he cited for this proposition was the case of Wickmas Videri AG and the Bank of Taiwan Ltd. v. H.S.M.R. Kazerooni & Sons(1). I was satisfied, however, that the matter came within the exercise of the discretion vested in me by virtue of Order 20 of the Rules of the Supreme Court. Mr. Smith was, at the time of opposing the application, unable to refer me to any actual prejudice which would be suffered by the plaintiffs if leave was granted and accordingly I exercised my discretion in favour of the 1st defendants and granted leave for paragraph 1 of the defence to be amended so that the admission I have referred to could be withdrawn. The consequence of this was to shift the main area of contention between the parties to requiring the plaintiffs to prove firstly that they were the owners of the said goods and, secondly, to proving that they had in fact shipped the goods in accordance with the bills of lading. 4. Mr. Alex Tsui, the Managing Director of the plaintiffs, was their main witness. Mr. Tsui said that he had been Managing Director of the plaintiffs since 1979. He had undertaken business with parties in Nigeria on a number of occasions. He then explained the procedure which he adopted for transacting business. Parties in Nigeria were anxious to obtain goods from the Far East. He had had business relations with Nigerian businessmen even before he had joined the plaintiffs. He had a number of connections with Nigerian businessmen and he was prepared to repose a large measure of trust in them. 5. The practice which he adopted was to send to the parties in Nigeria a document he described as a pro forma invoice in blank which would then be completed by the Nigerian party. They would fill in in the invoice particulars of the goods they required and the prices they were prepared to pay. This document would then be sent to the suppliers of the goods which were two businesses registered in Macau. The sole proprietor of these two businesses was a Mr. Franco Young. However, Mr. Tsui said that the firms in Macau were represented by an employee called Mr. Pedro Lau. There would then be discussions and negotiations between the Nigerian parties and the firms in Macau and if there was agreement concerning the goods required and their price the matter could then proceed. 6. Mr. Tsui had himself visited Nigeria prior to September 1981 and had met some of the businessmen in Nigeria taking part in these transactions. It was definitely my impression that Mr. Tsui had very little knowledge concerning the situation in Nigeria and it was necessary for him to refer to documents to refresh his memory of the names of the parties. 7. Prior to concluding the business arrangements businessmen from Nigeria had come to Hong Kong and met him. They had then proceeded on to Macau so that they could enter into direct negotiations and discussions with Mr. Pedro Lau. Mr. Tsui agreed that the businesses in Macau were conducted out of the same establishment physically. This consisted of a residential apartment where one of the rooms was used as an office. It was also Mr. Tsui's evidence that Mr. Franco Young normally resided in Hong Kong. At the conclusion of his evidence and in reply to questions I put to him he gave evidence that Mr. Franco Young was a partner with him in one of his businesses in Hong Kong. In these circumstances it is by no means clear why it was necessary for the Nigerian businessmen to proceed to Macau for their discussions. 8. Mr. Tsui said that an agreement had been concluded between the Nigerian businessmen and the suppliers in Macau in respect of the goods being the subject matter of this case. This being so, the Macau firms sent particulars of the goods which it was proposed should be shipped to Nigeria to the plaintiffs. The plaintiffs would then prepare formal invoices in respect of the goods. Due to the close proximity of Macau no bills of lading were prepared in respect of the shipment of the goods from Macau to Hong Kong. When the goods arrived in Hong Kong Mr. Tsui gave instructions to transportation agents to take delivery of the goods and pack them for shipment to Nigeria. Mr. Tsui admitted that he had never himself actually seen the goods. He also said that he had very little knowledge concerning the goods and was unable to answer a number of questions which were put to him by Mr. Faulkner during the course of cross-examination in relation to the goods. He explained that it was essential for him to trust both the Nigerian parties and the Macau suppliers. 9. Mr. Tsui produced as evidence various invoices and packing lists he claimed to have received from the Macau suppliers. Some of these documents are in the name of Firma Weng Son and the remainder are in the name of Agencia Commercial Fung Cheong. Some of the documents are unsigned and have no chops while others bear a chop and some others have both a chop together with three Chinese characters. My Interpreter, Mr. Mak, was able to decipher some of the Chinese characters. It appeared that where the characters appeared one of the names indicated was "Lau". Mr. Tsui did not identify the Chinese characters as representing the signature of any party. 10. At the beginning of the trial Mr. Faulkner drew my attention to the fact that no hearsay notices had been issued in relation to these documents. He also stated that he did not accept either the authenticity of the documents or their contents. However, at the time when Mr. Tsui produced the documents he did not make any objection. Mr. Smith, during the course of his final submission to me, argued that Mr. Faulkner's failure to make any such objection at the time of the production of the documents constituted a waiver of his right to maintain that the documents were inadmissible as evidence. I have given this matter some thought. Taking all the circumstances into account I have decided to treat the documents as admissible evidence. It is then a matter for me to decide the amount of weight attaching to the evidence. In the circumstances I am satisfied that very little weight attaches to this evidence. In this connection I would observe that Mr. Franco Young and Mr. Pedro Lau did not give any evidence to the Court. I specifically asked Mr. Smith whether Mr. Franco Young would be called as a witness and he informed me that he would not. No reason or explanation was given for this. 11. Mr. Tsui was able to give the Court very little assistance concerning the goods. Each of the four bills of lading covered separate goods. One referred to a quantity of industrial machine parts, the next to educational books, the next to "nursing necessities - baby carriage" and the final one to "nursing necessities - napkin pins". The quantity and weight of these items was also included in the invoices. Mr. Tsui agreed with Mr. Faulkner that according to the number of baby carriages and the total weight of the consignment, the weight of each baby carriage would be 0.9 of a kilo. He could provide no satisfactory explanation for this. Mr. Faulkner drew his attention to an exchange of telexes between the instructing solicitors when reference had been made to the items being toys. He agreed that he had been the author of this idea but was unable to give any explanation why he had said this. In this connection it is perhaps only fair to add that later on in the plaintiffs' case a Mr. Ashby produced a baby carrier which is an article of canvas or cloth material which is used to secure a baby to the back of one of its parents. Also catalogues were produced which illustrated baby carriers, the weight of which would more nearly correspond to the weights referred to in the invoices. It is significant though to add that nowhere in the documents is the word "baby carrier" included and at all times reference is made to "baby carriages 12. Mr. Tsui also encountered difficulty in explaining the weight and price of the napkin pins described in the invoice referring to it. He could give no explanation why according to the calculations he agreed the napkin pins could weigh 1.5 pounds per dozen. Nor could he explain how it was that the price given. was $25 per dozen in 1981. The defendants were able to produce napkin pins they had purchased recently in the Colony which had cost $6.50 per dozen and weighed about an ounce. Mr. Tsui just kept repeating that his only function had been to copy down the details he had received from Macau and record them on the invoices. Before concluding with the invoices and the prices given therein it is noteworthy to observe that the total purchase price of the goods in three of the bills of lading all amount to US$18,645. The price for the final item was US$16,610. It would certainly appear to be something of a coincidence that three of the rather disparite items which were shipped should all cost exactly the same price. I realize, of course, that different quantities would have been involved. 13. According to Mr. Tsui's evidence he was required to complete and sign a form issued by the Nigerian Authorities in connection with their Exchange Control Regulations. Restrictions are imposed both on the importation of goods and also on remitting moneys from Nigeria to other parts of the world. It is necessary for parties importing goods to obtain from the supplier of the goods a certificate of the value of the goods and a certificate of the place of origin of the goods. Mr. Tsui had completed this form and given the relevant certificates. Mr. Faulkner asked him how he had been able to make the certifications he had having regard to the scanty knowledge he admitted having relating to the goods. Mr. Tsui said that when businessmen signed forms of this nature it did not matter whether the contents was true or false. I regret that it was strongly my impression that this reply accurately illustrates Mr. Tsui's attitude towards the truth. 14. After the goods were packed by the transportation agent they were delivered to the 1st defendants for shipment to Nigeria. The goods were shipped in a Container. 15. Almost immediately after the goods were shipped the plaintiffs paid the amount payable on the first invoice. The first payment was effected on the 11th September 1981, a second payment was made on the 10th December 1981 and a third payment was made on the 21st January 1982. Documentation was produced to prove these payments. It is, of course, necessary to bear in mind that in effect the payee for the goods was Mr. Franco Young, Mr. Tsui's partner. Mr. Tsui said that in the normal course of events he would expect to receive payment for the goods from the consignees in Nigeria. Due to the Nigerian exchange controls I have earlier referred to, there was normally a considerable delay before such payment could be effected. Mr. Tsui estimated that delays usually amounted to between 3 and 6 months. For this reason the plaintiffs added a charge of 10% of the price of the goods to compensate them for having to wait for their money. From the evidence deduced to the Court this payment of 10% was the only consideration received by the plaintiffs for the services they provided and the functions they performed. Having regard to the passage of time and Mr. Tsui's evidence to the effect that the plaintiffs were taking grave risks in the matter, it is perhaps surprising that their reward should be limited to this. Mr. Tsui's explanation for this was that if one traded with parties in the Middle East or South America, one only received 2 or 3% of the value of the shipment. 16. Mr. Tsui was invited to give a description of the role or function exercised by the plaintiffs in these transactions. There appeared to be some confusion in his mind in this connection. He was, however, adamant that his main role was to act as a financier. It was, perhaps, rather difficult to reconcile this evidence with other evidence he gave to the effect that it was his understanding that when the goods came from Macau to Hong Kang, property in the goods passed to the plaintiffs on their arrival in Hong Kong. 17. Perhaps not surprisingly Mr. Tsui was unable to give much evidence concerning what had transpired in Nigeria. The plaintiffs placed reliance upon the various documents which had been deduced by the defendant in this respect. 18. It may be helpful at this stage to make some comments and observations upon Mr. Tsui's evidence. I did not find him to be in any way a convincing or reliable witness. It mill be noted from the summary I have given of his evidence that there are a number of highly suspicious circumstances. Mr. Tsui was unable to give any satisfactory explanation why the plaintiffs should be prepared to repose such a large measure of trust in the Nigerian customers. He also did not give any evidence which provided a plausible or convincing explanation for the role which was assumed by the plaintiffs. I regret that unless Mr. Tsui's evidence is corroborated from some other source or supported by satisfactory documentation, I am not prepared to believe him. 19. Other than Mr. Ashby who I have already shortly referred to, no other witnesses, gave evidence for the plaintiffs. 20. The first witness to give evidence for the 1st defendants was Mr. Van Emden, who is a Director of the 2nd defendants' Gold Star Line Ltd. The 2nd defendants' charter ships from the 1st defendant. Mr. Van Emden, who was familiar with the details of this transaction, provided an explanation of the way in which goods are shipped by Container. There are four ways in which this can be done. The first is what is known as house to house arrangements at the port of embarkation and at the destination. Where goods are shipped on this basis the shipper is responsible for stuffing the Container. At the other end the consignee takes delivery of the Container as a whole and unstuffs the van. The second arrangement is, one called pier to pier. When a shipper has insufficient cargo to fill a van other shippers of small quantities of goods join together to fill the van. By the same token separate consignees take delivery of a Container where pier arrangements subsist at the point of destination. The other two types of arrangements are variations on this theme. For example, you can have house arrangements at one end and pier arrangements at the other and vice versa. 21. In the present case the goods had been shipped on a H to H or house to house basis initially. This being so, the shipper was responsible for loading or stuffing the van or Container and the carrier would not know what was contained in the van. He accepted that a representative of a Sworn Measurers would have. attended when the goods were being stuffed, but his function would be limited to weighing and measuring the goods for the purpose of ascertaining the correct amount of freight to be payable. 22. He had attended at Port Harcourt and had some knowledge of the circumstances prevailing there. He agreed that the Lagos and Niger Shipping Agencies Ltd. (Lansal) were the agents of Gold Star Line. This was in accordance with a long-standing agency agreement and the arrangements also extended to Port Harcourt. He defined the nature and scope of the functions exercisable by agents. These were fairly extensive and included the discharge of cargo. 23. He was aware that Lansal also exercised other functions for other parties and that it may be the case that they were performing duties for different parties at the same time. In October 1981, there were limited facilities available at Port Harcourt. He understood that stacking facilities were limited and only H to H containers could be stacked at Port Harcourt. 24. There were no facilities for unstuffing containers at the pier at Port Harcourt, and accordingly if a container had to be unstuffed it would have to be transferred to a bonded warehouse which was some distance from the Port. Lansal operated a bonded warehouse which, amongst other things, was used for unstuffing containers. 25. From the information available to the defendants, it appeared that the status of the container had been changed after it arrived at Port Harcourt. From a perusal of his Company's records it did not appear that the defendants had given any instructions for the change of status. The change of status he was referring to was that the house status of the container had been changed to pier status. This process was known as groupage. He assumed that in the normal course of events instructions would have been received from the consignees to the effect that delivery was required of part of the contents of the container. One possible reason for this was that the goods in the container were represented by four different bills of lading. Lansal was, amongst their other functions, a forwarding agent and it was likely that they would have received instructions from the consignee to this effect. 26. Mr. Van Emden was referred to the documents in the agreed bundle relating to the disappearance of the container. He said that this was the only information that he had concerning the disappearance of the goods. It appeared from a waybill in the bundle that Lansal had chopped a waybill which authorized the driver of a truck belonging to Gakna to transport the container from the pier to the bonded warehouse operated by Lansal. 27. The next witness to give evidence for the defendants was Mr. James Allan, who is General Manager of Sworn Measurers and Weighers Ltd. Mr. Allan outlined the scope of the duties performed by his Company. When a shipper loaded a container, one of his representatives would attend at the site and witness the loading. It was his duty to measure and weigh cargo. Normally this would consist of measuring packages or cartons. As most goods exported from Hong Kong were of a relatively light nature, the dimensions of the cargo usually determined the amount of freight which would be payable. It would not normally be the practice of a representative to inspect or have knowledge of the contents of cartons or packages. It may however be the case that a representative would unexpectedly notice a situation which might indicate that a fraud had been perpetrated. An example of this may be found if cartons were being shipped which were empty. It would normally, though only be by chance, that a representative would stumble across an irregularity. Mr. Allan said that in 1981 it had been the practice of his Company only to retain records for a period of 6 months if no claim was outstanding in respect of the shipment. This being the case, his Company had not retained the records relating to this transaction. 28. The final witness to give evidence for the defendants was Mr. Samuel Agbaza, the Deputy Managing Director of lansal. He had been with Lansal for more than 20 years and was familiar with this matter. He described the different types of services undertaken by his ompany. They included being shipping agents, forwarding agents and the operators of a bonded warehouse. There were separate offices in different locations for these different functions. He confirmed that Lanseal were agents for Gold Star Line. 29. He did not have direct knowledge of exactly what had happened in this case. However, from the information available to him, he assumed that one of his colleagues had received instructions from the consignee of the goods to change the status of the container to groupage status. The probable reason for this was that the consignee was not in a strong financial position and would need to take delivery of the cargo in parts so as to finance the delivery of the whole consignment. 30. The acceptance of the instructions from the consignee would have been conditional upon the consignee agreeing to pay additional freight charges incurred as a result of removing the container to the bonded warehouse where it could be unstuffed. He expressed the opinion that when the goods were transferred from the pier to the bonded warehouse Lansal, as forwarding agents, were acting upon the instructions of the consignee. 31. Mr. Agbaza was then asked about Lansal's relationship with Gakna transportation. He said that this was a well-known local company in Port Harcourt and that Lansal had had dealings with the Company for over a year. They had not previously encountered any problems with them of a serious nature. Before issuing a waybill Lansal would satisfy themselves that the driver of the vehicle had produced his driving licence and that he was entitled to drive the lorry. Unless their suspicions were aroused they would not revert to the Licensing Authority which had issued the driving licence to confirm its validity. The port area was a busy area and there was a limit to the amount of time which could be spent in verifying the details of drivers. 32. I found Mr. Van Emden, Mr. Allan and Mr. Agbaza all to be truthful and reliable witnesses. In all important respects I accept their testimony. 33. I will now endeavour to relate the facts I have above referred to to the legal position. I will deal first with the question whether the plaintiff has succeeded in proving first that it is the owner of the goods which were shipped and, secondly, whether they have established that the goods described in the various invoices were in fact shipped. I am satisfied that initially the burden of proving this lies upon the plaintiffs. 34. Mr. Smith mainly placed reliance upon the prima facie presumption that where a carrier issues a bill of lading and it describes goods therein, he is presumed to have received the goods. It could be seen from the bills of lading in the agreed bundle that the goods were as described in the various invoices. Mr. Smith submitted that this was a very strong prima facie presumption and referred to a passage from the speech of Lord Halsbury, L.C., on p 75 of Henry Smith & Co. v Bedouin Steam Navigation Co. Ltd.(2):
These views were also adopted by Lord Watson, Lord Shand and Lord Davey. These principles were also followed in Attorney General of Ceylon v Scindia Steam Navigation Co. Ltd.(3). It could be seen on p 74 of the Report that a disclaimer, that weight, contents and value were shipped unknown, was not a disclaimer as to the number of bags, and the appellant was not disentitled by the conditions in the bills of lading from relying on the admission that bags to the numbers stated in the bills of lading were taken on board. 35. However, before considering the extent to which assistance can be derived from this case it is necessary to have regard to the contents of the various bills of lading. The form of all of the bills of lading are similar. I refer to the bill of lading at p 24 of the agreed bundle. In the space entitled "marks and number" is an endorsement "1 HH ...", then follows the container number and "30 industrial machine parts". Mr. Van Emden explained that the "HH" signified a house to house arrangement and this records that fact. Then in the remarks column there is an endorsement "Shipper's load and count. Containerized cargo. Freight prepaid." Then in very small print at the bottom left hand corner of the bill is a disclaimer which makes it clear that the carrier absolves itself from responsibility for the description of the cargo in the bill or for the contents of the sealed container. It is necessary to consider the Scindia Steam Navigation Co. case in the context of this. A passage on p 75 of the Report makes it clear that where there has been a disclaimer by the carrier the prima facie presumption does not arise.
36. Unless this passage accurately reflects the law, carriers would be placed in a highly invidious or impossible position when they are shipping containers. On the evidence of Mr. Van Emden and Mr. Allan, both of whom I consider to be reliable witnesses, the defendants had no opportunity of ascertaining the contents of the container. It would make no sense at all to attribute to carriers knowledge of the contents of containers when they are not in a position to verify the information. Indeed, one of the reasons for transporting goods in containers is to maintain the integrity of the cargo for evidential purposes. 37. I am satisfied on the facts of the present case that the prima facie presumption does not arise and the plaintiffs cannot place reliance upon the bills of lading for this purpose. As I have indicated earlier in this judgment, I attach very little, if any, weight to the various invoices and pa king lists which the plaintiffs received from Macau. Also, on the basis of Mr. Tsui's evidence, I am not prepared to accept that the plaintiffs have discharged the burden of proving that they are the owners of the goods described in the invoices. Nor am I prepared to accept that any goods resembling the descriptions in the invoices were in fact shipped. The result of my coming to these conclusions is that the plaintiffs' claim must be dismissed. Notwithstanding this, I feel that it might be helpful for me to deal with the other main issue which arises in this case, namely, the liability for the loss of the goods in Nigeria. 38. The stance adopted by the defendants has been to place reliance upon the exemption clauses contained on the back of the bill of lading. Clause 3 reads:
Mr. Faulkner conceded that the meaning of the exemption was a matter of construction. I have no doubt that the exemption clauses are applicable. However, the exemption clauses cannot be invoked where there has been a fundamental breach of the contract. This principle is well-illustrated in Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd.(5) I refer to a passage appearing on p 586 of the Report:
This case also establishes the principle that there is a fundamental obligation on the part of a carrier to deliver the goods only to the holder of a bill of lading. There is no suggestion in the evidence placed before me that Lansal ever delivered the goods to the holder of a bill of lading. I am satisfied that they did not do so and that they were the agent for the 1st defendants while the goods were at Port Harcourt. I do not think that it is a matter of importance that Lansal may have been acting as agent also for the consignees of the goods. It is perfectly possible that they were exercising both functions at the same time. What is of importance is that they were agents for the defendants and they delivered the goods to a third party without receiving the bill of lading. 39. I will now deal with the defences raised in paragraphs 8 & 9 of the Defence. As I have already stated, the contract is covered by the Hague Visby Rules. In paragraphs 8 & 9 of the Defence reliance is placed upon Article IV Rule 2 (q) of the Rules. This provides:
40. It will be noted that the burden of claiming the benefit of the exemption lies upon the defendants. As I have already indicated, I am satisfied that Lansal were the agents of the defendants when they parted with the goods. Their act of parting with the goods without requiring the bill of lading would certainly, in my view, constitute fault. On the evidence which is available I am doubtful whether it could be argued that Lansal were simply moving the container from one part of the Port to another albeit that it was many miles away. I have borne in mind the fact that the burden of establishing that there has been no fault lies upon the defendants and I do not think that they have succeeded in shifting this burden. 41. If I had been satisfied that the plaintiffs were the owners of the goods shipped and had indeed shipped the goods referred to in the bills of lading they would have succeeded in this claim. However, as they have not so succeeded, their claim is dismissed. 1 will hear submissions on costs.
(1) (1934) HKLR 37 (2) (1896) AC 70 (3) (1962) AC p 60 (4) [1917] 2 K.B. 64 (5) [1959] A.C. 586 Representation: Mr. C.L. Smith instructed by Clyde & Co. for Plaintiff. Mr. R. Faulkner instructed by Sinclair Roche for Defendant. A.J. 1983, No. 18 IN THE SUPREME COURT OF HONG KONG HIGH COURT __________ BETWEEN
________ Coram: Hon. Mayo, J. in Court Date: 23 October 1984 42. I order that defendants will be entitled to 75% of their costs.
Representation: Mr. C. L. Smith instructed by Clyde & Co. for Plaintiff Mr. R. Faulkner instructed by Sinclair Roche for Defendant |