Kind Respect Ltd v. Apex Logistics Ltd

DCCJ 502/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 502 OF 2004

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BETWEEN:

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Coram : HH Judge Lok in Court

Date of hearing : 14, 15, 16, 18 & 21 August 2006

Date of handing down of Judgment : 16 October 2006

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JUDGMENT

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1.This is a dispute arising out of 2 bill of ladings issued by the Defendant.

2.Pai Hung Sporting Goods Co. Ltd. (“Pai Hung”) is a company in Taiwan which carries on the business of supplying skateboards and ice-skating blades with a production line in the Mainland.  The Plaintiff is an associated company of Pai Hung incorporated in Hong Kong responsible for handling the sales transactions of Pai Hung, including the issuance of invoices and collection of payment.  On the other hand, the Defendant carries on the business of a freight forwarder in Hong Kong.

3.In or about July 2003, the Plaintiff received order from one Pacific Extreme Skateboard Co. (“Pacific Extreme”) to supply two lots of skateboards produced by Pai Hung to Mexico and the United States respectively.  The parties agreed that the sales transactions would be conducted on term “f.o.b. Hong Kong”, and Pacific Extreme would be responsible for engaging a carrier to ship the goods from Hong Kong to Mexico and the United States.

4.On 16 September 2003, the Plaintiff received a call from one Mr. Roger Lin of the Defendant.  Mr. Lin told the Plaintiff that the Defendant was engaged by Pacific Extreme to transport the goods, and so the Plaintiff handed the goods to the Defendant for shipment.  After the goods were placed on board the vessels, the Defendant issued 2 respective bill of ladings (“Both Bills of Lading”) to the Plaintiff with the particulars as follows:

Bill of Lading No. 2003100012 dated 8 October 2003 (“the Mexico Bill of Lading”)
Shipper:	the Plaintiff
Consignee and Notifying Party:	Pacific Extreme S.A. De C.V. (“the Mexico Consignee”)
Freight Forwarder for the Consignee:	Sistemas De Fletes Internacionales S.A. De C.V.
Port of Loading:	Hong Kong
Port of Discharge:	Manzanillo, Mexico
Name of Vessel:	“Ikoma”
Goods transported:	152 cartons

Bill of Lading No. 2003100024 dated 14 October 2003 (“the US Bill of Lading”)
Shipper:	the Plaintiff
Consignee and Notifying Party:	Pacific Extreme U.S.A. Inc. (“the US Consignee”)
Freight Forwarder for the Consignee:	Fax Cargo Corporation
Port of Loading:	Hong Kong
Port of Discharge:	Long Beach, California, the United States
Name of Vessel:	“P & O Nedlloyd”
Goods transported:	350 cartons
Both Bills of lading were signed by the Defendant as agent for “the carrier”.

5.The Defendant was only engaged by the freight forwarder in Mexico, Sistemas De Fletes Internacionales S.A. De C.V. (“Sistemas”), to arrange for the shipment of the goods both to the United States and Mexico, and so the Defendant’s service charges would be paid by Sistemas.  The latter also gave instructions to the Plaintiff regarding the contents of Both Bills of Ladings.  Sistemas belonged to a large group of freight forwarders called the “Vitrans Group”.

6.The destinies for the two lots of goods were very different.  For the goods shipped to the United States, they were released by the freight forwarder engaged by Pacific Extreme to the US Consignee without the production of the original bill of lading.  The Plaintiff claims that the release of the goods was wrongful, and as the Plaintiff has not received the price of the goods, the Plaintiff claims for such damages against the Defendant in the sum of US$13,650.

7.For the goods shipped to Mexico, they arrived safely at the destination.  However, for some unknown reasons, the Mexico Consignee did not obtain delivery of the goods.  The goods were then left in the Custom authority in Mexico for quite some time, and finally they were auctioned by the Custom authority.  The Plaintiff alleges that the Defendant has not rendered the necessary assistance to the Plaintiff to get back the goods, and so the Plaintiff claims for damages for such loss in the sum of US$13,500.

Plaintiff’s causes of action as pleaded in the Statement of Claim and the issues in the present case

8.The Plaintiff has all along been represented by solicitors, but only a few days before the trial, the Plaintiff decided to fight the case without legal representation and appointed its director Madam Hou Jei Mei to act on its behalf.  According to the Statement of Claim drafted by its former solicitors, it is not clear as to what causes of action that the Plaintiff intends to rely on in its claim.  However, it seems from paragraph 6 of the Statement of Claim that the Plaintiff’s claim for wrongful release of the goods is one based on breach of contract.  It is arguably that the claim is also one based on conversion.  For the loss of the goods shipped to Mexico, the Plaintiff is apparently relying on the same two causes of action as pleaded in paragraph 7 of the Statement of Claim.  According to the pleading, the Plaintiff is not relying on negligence or breach of duty as bailee as the basis for its claim.

9.After the first day of the trial, I pointed out the confusion in the pleading to the Plaintiff, and as a result an adjournment was granted to allow the Plaintiff to seek legal advice.  Unfortunately, the Plaintiff decided, after the adjournment, to continue with the case without legal representation.  In the absence of proper legal advice, the Plaintiff then made an application to amend the Statement of Claim, and submitted to the court a home-made pleading with the amendments in Chinese to the otherwise English Statement of Claim.  However, I took the view that the proposed amended Statement of Claim did not serve the purpose of clarifying the causes of action relied on by the Plaintiff.  Further, taking into account the relatively small amount of the claim, it would be unfair to the Defendant to have further adjournment to deal with any possible new causes of action relied on by the Plaintiff.   I therefore refused the Plaintiff’s application, and proceed on the basis that the Plaintiff’s claim is one based on breach of contract and conversion.  However, even if negligence and breach of duty as bailee have been pleaded, I do not think that the result of the case would be different.

10.Since the Defendant was appointed by Sistemas to carry the goods to Mexico and the United States, there was no contractual relationship between the Plaintiff and the Defendant.  However, the Plaintiff claims that Both Bills of Lading issued by the Defendant were documents of title.  As there was a commercial practice that freight forwarder handling the goods would not release the goods to anyone without the production of the original bill of lading, the Plaintiff claims that the Defendant was guilty of conversion by releasing the goods to the US Consignee.  For the goods shipped to Mexico, it is the Plaintiff’s case that the Defendant had to return a document known as “master bill of lading” to the Plaintiff in order to enable it to obtain the goods from the Custom authority in Mexico.  This was a document issued by the carrier to the Defendant after the goods were shipped on board the vessel.  As the Defendant did not supply such document to the Plaintiff, the Plaintiff says that the Defendant was guilty of conversion.

11.To oppose the Plaintiff’s claim for wrongful release of the goods in the United States, it is the Defendant’s case that the US Bill of Lading was consigned to a named consignee without the addition of the words “or order or assigns”.  In such circumstances, the US Bill of Lading was a “straight bill of lading”, and it was the commercial practice that the goods covered by such kind of document could be released to the consignee without the production of the original bill of lading.  Further, the Defendant had all along been acting as an agent for the carrier or the freight forwarder engaged by Pacific Extreme, i.e. Sistemas, and so it assumed no contractual or personal liability vis-à-vis the Plaintiff for the handling of the goods.  For the loss of the goods auctioned by the Custom authority in Mexico, the Defendant claims that it was not necessary for the Plaintiff to get the master bill of lading in order to obtain delivery of the goods.  As the goods had arrived at the port of destination, the consignee of the master of lading, Sistemas, was the only party who could obtain delivery of the goods from the carrier, and the Plaintiff had to approach such consignee in order to get back the goods.  More importantly, the Defendant had never refused the Plaintiff’s request to obtain the master bill of lading.

12.Hence, the issues of the present case are as follows:

(i) what was the nature of Both Bills of Lading, in particular the US Bill of Lading, issued by the Defendant?

(ii) was it necessary for the Plaintiff to get the master bill of lading before it could obtain the goods from the Custom authority in Mexico, and whether the Defendant had in fact refused to give such document to the Plaintiff?

(iii) did the Defendant assume contractual or personal liability vis-à-vis the Plaintiff for the handling of the goods?

Nature of the bills of lading issued by the Defendant

13.For the goods shipped to the United States, it is clear from the US Bill of Lading that the consignee was “Pacific Extreme U.S.A. Inc.” without the addition of the words “or order or assigns”.  According to the authors of Benjamin’s Sale of Goods, 6 ed. at para. 18-017, as such kind of bill of lading contains no words importing transferability, such document is a “straight bill of lading” and is not negotiable.  It is akin to a sea waybill, and the shipper and the consignee cannot, by purporting to transfer it by way of indorsement, impose on the carrier a legal obligation to deliver the goods to another person apart from the named consignee.  The question then arises is, therefore, whether there is an obligation for the named consignee to produce the original bill of lading before it can obtain the goods from the carrier.  In this regard, there is a divergence of views between the local authorities and those of other Commonwealth jurisdictions.

14.The two local authorities are Melissa (HK) Ltd. v P & O Nedlloyd (HK) Ltd. (1999) 3 HKLRD 674 and “The Brij” (2001) 1 Lloyd’s Rep 43, and the best summary of these two cases can be found in para. 4-187 of Chitty on Contract, Hong Kong Specific Contracts, which reads:

“The position in Hong Kong is set out in two first instance decisions.  In Melissa (HK) Ltd. v. P & O Nedlloyd (HK) Ltd., Deputy Judge Li held that a bill of document was only a document of title if it is negotiable or transferable, which a straight bill of lading is not.  In ‘The Brij’ Waung J. held that the essence of a straight bill of lading is that it is not negotiable and that the original contractual mandate is to deliver to the named consignee without the production of the original document.  In his decision, Waung J. relied the description of straight bills of lading in Benjamin on ‘Sale of Goods’, which stated that a consignee under a non-negotiable bill of lading could not impose on the carrier a legal obligation to deliver the goods to another person and a shipper cannot oblige the carrier to deliver goods to a different consignee merely by indorsing and delivering the bill to that person.  To require otherwise would force the carrier to deliver goods in circumstances in which he has no means of knowing if the purported transfer is genuine or not, a point which would not arise in an ‘order’ bill of lading.”

15.A different approach was taken by the Singapore Court of Appeal in APL Co. Pte. Ltd. v. Voss Peer [2002] 4 SLR 481.  In that case, the court was asked to determine the specific issue as to whether, in the case of a straight bill of lading, such document need to be produced before the cargo relating to it could be delivered to the named consignee, and the court answered in the affirmative.  The Singapore Court of Appeal acknowledged that there was a lack of authoritative case law in the context of a straight bill of lading, and in such circumstances, the issue had to be resolved on the basis of contract law and the intention of the parties.  An useful summary of the observations made by the Singapore Court of Appeal can also be found in para. 4-188 of Chitty on Contract, Hong Kong Specific Contracts :

“The Singapore Court of Appeal observed that while a straight bill of lading is substantively similar in effect to a sea waybill in that both are non-transferrable, they are not necessarily the same.  Although the character of transferability is absent in a straight bill of lading, there is no automatic inference that the intention of the parties must be that delivery upon presentation should be done away with.  Clear words must be present to imply that the parties’ intended the instrument to be treated as if it were a sea waybill and hence, presentation by the named consignee was unnecessary.  If the parties had wanted to have a sea waybill they would not have issued a bill of lading with three originals.  So the Court of Appeal could infer that by issuing the documents as bills of lading the parties must have wished to retain all the features of a bill of lading other than transferability.  In practice, making the presentation of a straight bill of lading a pre-requisite to obtaining delivery of cargo has the benefit of commercial certainty.  This rule is simple to apply, prevents confusion and avoids shipowners’ having to decide whether the bill of lading is a straight bill of lading or an order bill of lading.  The Court of Appeal therefore considered that a straight of lading was useful for an unpaid seller who wished to use the bill as a security for payment.  A sea waybill on the other hand cannot be used as a security to obtain financing.  Finally, the Court of Appeal considered that a straight bill of lading avoided the undesirable consequences of the shipper’s rights of suit under the original contract of carriage surviving any transfer of the document to the consignee.  By holding that clear words are needed to imply that the parties intended the document to be treated as if it were a sea waybill and that presentation by the named consignee is unnecessary, the Singapore Court of Appeal presupposed that a straight bill of lading must be presented for delivery.  As such, the decision differs from the decision of the court of first instance in The Brij.  However, ‘The Brij’ was not followed by the Singapore of Appeal in Voss Peer as the trial judge was of the view that the case law (which he had reviewed) had not been brought to the attention of Waung J.  Nonetheless, it could be argued the case was not highlighted in ‘The Brij’ simply because they were cases of ‘order’ bills of lading and therefore irrelevant.”

16.A similar approach was adopted by the English Court of Appeal in “The Rafaela S” (2003) 2 Lloyd’s Rep. 113.  Again, the best summary of this case can be found in para. 4-189 of Chitty on Contract, Hong Kong Specific Contracts:

“The case involved a straight bill of lading to a named consignee without the words ‘to order’ appearing on the face of the bill of lading.  The question arose as to whether such a document could be considered to be a bill of lading or similar document of title to which the English Carriage of Goods by Sea Act 1971 applied.  The English Court of Appeal held that the Act was compulsorily applicable, and likened a straight bill of lading more to that of a classic negotiable bill of lading than to a sea waybill.  The English Court of Appeal further held that a named consignee must surrender a straight bill of lading in order to obtain delivery of goods.  They considered the decision of the Singapore Court of Appeal in Voss Peer.  The English Court of Appeal decided that a straight bill of lading was a bill of lading within the meaning of the Hague-Visby Rules because the rules are concerned with contracts which may affect a third party into whose hands the bill is transferred and a named consignee under a straight bill of lading is as much a third party as a named consignee under a classic bill.  A straight bill of lading is used as is in the same way as a classic bill of lading as a document against which payment is required and the transfer of which marks the intended transfer of property.  It can be transferred by delivery, just like a classic bill of lading to the named consignee.  Commercial practice appears to be that a straight bill of lading is used in an identical fashion to a classic bill of lading in that it must be produced on delivery and transferred to the consignee to enable him to obtain delivery.  The Court of Appeal decided that the straight bill of lading was a document of title, commenting that there was ‘no reason why a document which has to be produced to obtain possession of the goods should not be regarded, in an international convention, as a document of title’.  Finally, negotiability was not a necessary requirement of a bill of lading for the purposes of the Hague-Visby rules, and therefore a straight bill of lading could be a ‘similar document of title’.  The Court of Appeal considered that a straight bill of lading must be produced to obtain delivery of the cargo even in the absence of an express provision requiring its production to obtain delivery.  It is therefore clear as a matter of English law (at least until the House of Lords has considered the subject), that production is now required to deliver cargo under a straight bill of lading, save where there is appropriate wording to the effect that production is not required.”

17.Hence, we have two lines of conflicting authorities, with Melissa and “The Brij” on the one hand and Voss Peer and “The Rafaela S” on the other.  After studying these authorities in some detail, I would prefer the reasoning adopted in the latter two cases.  In fact, various authors have expressed different views on the subject, but in “The Brij”, Waung J. only relied on Benjamin’s Sale of Goods to support the proposition that production of the bill of lading is not necessary, whilst the Singapore and the English Court of Appeal reviewed all the relevant Commonwealth authorities and the textbooks on the subject in reaching a different conclusion.  Further, the rule suggested in Voss Peer and “The Rafaela S”, that is production of the original bill of lading is necessary for the named consignee to obtain delivery of the goods even in the case of a straight bill of lading, is easy to apply and has certain degree of commercial certainty, and it would remove the confusion arising out of the classification of different bills of lading.  Hence, despite the fact that Voss Peer and “The Rafaela S” are not binding on Hong Kong courts and are merely persuasive, I would prefer to follow the reasoning adopted in these authorities.

18.However, even adopting such approach, I do not think that it can benefit the Plaintiff’s case.  As decided in Voss Peer and “The Rafaela S”, whether production of the straight bill of lading is necessary for the named consignee to obtain delivery of the goods has to be determined by reference to contract law and the intention of the parties.  In England, commercial practice appears to be that a straight bill of lading is used in an identical fashion in that it must be produced on delivery and transferred to the consignee to enable him to obtain delivery of the cargo involved, and so the English Court of Appeal accepted that production of the document is necessary.  Hence, the ultimate question is to ascertain the intention of the parties associated with the issuance of the straight bill of lading.

19.In this regard, Madam Hou testified that it was her own understanding that production of the original bill of lading, whether such document contained the words “to order or assigns”, was necessary for the named consignee to obtain delivery of the goods.  Such practice would provide additional security to the Plaintiff for the payment of the goods.  On the other hand, Mr. Lin of the Defendant testified that, according to established commercial practice, production of the original bill of lading was not necessary in the case of a straight bill of lading.  Further, the Defendant was engaged by the buyer to arrange for the shipment of the goods and there was no reference to any letter of credit in the US Bill of Lading, these led the Defendant to believe that the Plaintiff had already made some other arrangement with the buyer about the payment of the goods, and the Plaintiff would not require the production of the original bill of lading as additional security.

20.As Mr. Lin has had considerable experience in the trade, it would be very difficult for this court to reject his evidence about the commercial practice, in particular such practice is supported by two local authorities directly on the issue, namely Melissa and “The Brij”.  It is common ground that there was no express discussion between the Plaintiff and the Defendant about the arrangement relating to the release of the goods, and so in the absence of express agreement, such issue has to be determined by the prevailing commercial practice.  As there is no evidence to contradict Mr. Lin’s evidence about the trade practice, I have to accept his evidence as the truth.  Hence, even accepting the reasoning in Voss Peer and “The Rafaela S” in focusing on the intention of the parties and the commercial practice, I am not prepared to depart from the proposition established in the two local authorities, i.e. production of the straight bill of lading is not necessary for the named consignee to obtain delivery of the goods.

21.In reaching such conclusion, I have also taken into account the contents of the correspondence between the Defendant and Sistemas after the goods had been released to the US Consignee.  In such correspondence, the Defendant seemed to accept there was an universal practice that production of the original straight bill of lading was necessary for the named consignee to obtain delivery of the goods, and as a result the release of the goods by Sistemas was wrongful.  As to why the Defendant made such observation in the correspondence, Mr. Lin explained that it was not the Defendant’s genuine position by that time, and he was only repeating the Plaintiff’s allegation in order to put maximum pressure on Sistemas to resolve the dispute.  According to Mr. Lin, the Defendant only received a small service charge for handling the shipment of the goods, and yet the Plaintiff repeatedly alleged that the Defendant was liable for its damages.  By that time, the Defendant only hoped that Sistemas would resolve the dispute directly with the Plaintiff as soon as possible, and so the Defendant did not have to involve in the dispute any further.  The Defendant even detained some of the goods of the Vitrans Group with a view of exerting pressure on Sistemas.  Taking into account the persistence and the aggressiveness of Madam Hou in reinstating her arguments in support of her case throughout the trial, it is not hard to imagine the pressure that was facing the Defendant by that time.  Hence, there is certain degree of truth in Mr. Lin’s explanation, and I accept the same to be the truth. 

22.The effect of my decision is that, in line with the two local authorities Melissa and “The Brij”, it is not necessary for the named consignee to produce the original straight bill of lading in order to obtain delivery of the goods.  Obviously, in the modern world of international trade, it is quite undesirable to have two sets of conflicting practices, one established by the local authorities and the opposite one established in Voss Peer and “The Rafaela S”, as it would cause confusion to members of the trade.  However, I would like to put a caveat here.  My decision is very much based on the one-sided evidence of trade practice presented in this particular case, and it would not be surprising to find that the courts in Hong Kong may in future come to a different conclusion in the light of new evidence before the courts.  Until the confusion in this area of the law is fully clarified, businessmen involved in international trade should be aware of the different classification of the bills of lading and their effects.  If they want to rely on such document as a document of title giving them additional security for the payment of the goods, they have to make sure that the bill involved is not a straight bill of lading.

23.As it was not necessary for the US Consignee to produce the US Bill of Lading to obtain delivery of the goods, the Plaintiff’s claim for wrongful release of the goods must fail.

Loss of the goods auctioned by the Custom authority in Mexico

24.Then I turn to the goods shipped to Mexico.  Whoever was responsible for the shipment of the goods had fulfilled its obligation by shipping the same to the port in Mexico.  However, for some unknown reasons, the Mexico Consignee did not obtain delivery of the goods, and as a result the goods were auctioned by the Custom authority in Mexico.

25.It has always been the Plaintiff’s case that the Defendant was obliged to ship the goods back to Hong Kong.  Further, the Plaintiff claims that the Defendant had to supply the master bill of lading to the Plaintiff to order to enable it to obtain the goods from the Custom authority in Mexico.  As the Defendant had refused the Plaintiff’s request for such document, the Plaintiff says that the Defendant should be liable for the loss of the goods.

26.For this particular claim, one must understand that whoever was responsible for the shipment of the goods had fulfilled its obligation to ship the goods to Mexico.  Hence, unless there was an agreement between the parties, the Defendant had no obligation to ship the goods back to Hong Kong.  According to Mr. Lin of the Defendant, the Defendant did not want to do so, but Madam Hou insisted that the Defendant had such an obligation.  During the negotiation, the Plaintiff insisted on the following terms: (i) the Defendant had to take some photographs about the goods prior to the shipment back to Hong Kong; and (ii) the Plaintiff would only pay for the freight charges when the goods were actually handed over to the Plaintiff in Hong Kong.  Madam Hou does not dispute that it was her stance by that time.  Eventually, the parties could not agree on the terms of the agreement, and so there was no obligation on the part of the Defendant to ship the goods back to Hong Kong.

27.The Plaintiff also complains that the Defendant has failed to supply a document known as “master bill of lading” to the Plaintiff.  According to my understanding, the quantity of the goods shipped by the Plaintiff was relatively small, and so the goods had to be packed and shipped in a container with goods belonging to others.  In such circumstances, the carrier would issue a master bill of lading to the Defendant when the goods were shipped on board the vessel.  In such document, the Defendant and Sistemas were stated as “the shipper” and “the consignee” respectively.

28.However, it is the Defendant’s evidence that such document itself was not sufficient to enable the Plaintiff to get back the goods from the Custom authority in Mexico.  As the goods had arrived at the destination, only the named consignee in the master bill of lading had the right to obtain the goods from the carrier or the Custom authority in Mexico.  Hence, even if the Plaintiff had obtained the master bill of lading, it was quite useless.  The only way for the Plaintiff to get back the goods was to approach the named consignee of the master of lading, i.e. Sistemas, for assistance.

29.In the absence of contrary evidence, there is no reason for me to doubt the evidence of the Defendant in this regard.  As I have mentioned above, if the master of lading provided that Sistemas was the named consignee without the addition of the words “or order or assigns”, then only Sistemas had the right to demand the goods from the carrier or the Custom authority in Mexico.  In such circumstances, there was no commercial reason for the Defendant to keep the master bill of lading.  In fact, according to the letter sent by the Defendant to the Plaintiff’s solicitors in January 2004 (exhibited as “AH-9” to the witness statement of Madam Hou), the Defendant agreed to supply such document to the Plaintiff.  Hence, I find that the Defendant had never refused to supply the master bill of lading to the Plaintiff.  Further, even if the Plaintiff had obtained such document, it would not have entitled it to get back the goods from the Custom authority in Mexico.  Hence, the Plaintiff’s claim for loss of the goods auctioned in Mexico must fail.

Relationship of the parties

30.Even assuming that my aforesaid analysis is wrong, there is another reason as to why the Plaintiff cannot succeed in its claim for the loss of both lots of goods.  It is not disputed in the present case that the Defendant was engaged by Sistemas to carry the goods, and Sistemas was responsible to pay for the service charges of the Defendant.  In such circumstances, the Defendant’s contract of carriage was not made with the Plaintiff, and there was no contractual duties owed by the Defendant to the Plaintiff.  As the freight forwarders and carrier were engaged by the buyer Pacific Extreme, the Plaintiff was not even a party to the contract of carriage.

31.Even if the Plaintiff has the right to sue under the contract of carriage, the staff of the Defendant had expressly told the Plaintiff that the Defendant was only acting as an agent for Sistemas, who was a freight forwarder engaged by Pacific Extreme, to arrange for the shipment of the goods from Hong Kong to the United States and Mexico.  In such circumstances, the Defendant was only acting as an agent either for the carrier or Sistemas in issuing Both Bills of Lading, and it assumed no personal or contractual liability vis-à-vis the Plaintiff for the handling of the goods.  In the trial, there is some confusion in Madam Hou’s evidence in this regard.  At one stage, she accepted Mr. Lin’s evidence that such clarification was made by the Defendant during their conversations.  However, she later changed her evidence and testified that the Defendant had not told her that it was only acting as an agent for someone else.  On the other hand, Mr. Lin’s evidence remained firm and consistent throughout the trial, and I therefore prefer to accept his evidence as the truth.

32.As I have mentioned earlier, the Plaintiff’s claim is one based on breach of contract and conversion.  As there was no contract made between the Plaintiff and the Defendant, the Defendant cannot be liable to the Plaintiff for any breach of contract.  For the claim based on conversion, I accept that the Defendant had made it clear to the Plaintiff that it was only acting as an agent for the overseas freight forwarder Sistemas.  In such case, the Defendant parted possession with the goods in accordance with the instructions given by Sistemas, and so it cannot be liable for converting the goods to its own use.  If any party was so liable, it was Sistemas and not the Defendant.  Hence, the Plaintiff’s claim cannot succeed in any event.

33.The Defendant also runs another argument in the Defence.  As the sales contracts between the Plaintiff and Pacific Extreme were made on term “f.o.b. Hong Kong”, the Defendant says that the property of the goods had passed to the buyer when the goods were shipped on board the vessels, and as a result the Plaintiff has lost the right to sue for the loss of the goods.  Based on my analysis above, it is not necessary for me to deal with this argument.  However, as it is arguable that the Plaintiff had intended to reserve the property in the goods until payment, it seems that this argument may not be able to succeed.

34.By reason of the aforesaid reasons, the Plaintiff’s claim is dismissed.  I also make an order nisi that the Defendant is entitled to the costs of this action with certificate for counsel, and such order will be made absolute 14 days after the date of the handing down of this judgment.

The Plaintiff, in person, represented by its director Madam Hou Jui Mei

Mr. Kwong Kim Ning, instructed by Messrs. Lam & Partners, for the Defendant