Minwa Electronics Co Ltd v. Mol Logistics (HK) Ltd and Others

DCCJ  512  /2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL JURISDICTION ACTION NO. 512 OF 2006

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BETWEEN

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Coram: Deputy District Judge M. Chow

Date of Hearing: 27^th October, 2006

Date of Handing Down Decision:  14^th December, 2006

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DECISION

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1.This is the Plaintiff’s application to apply for leave to discontinue its action against the 3^rd Defendant; for a determination as to payment of the 3^rd Defendant’s legal costs and for a determination of the Plaintiff’s costs occasioned by this application.

The relationship between the parties

2.D1 was a freight forwarder in Hong Kong and D2 was the associated company of D1 in the USA.

3.The Plaintiff had arranged for the shipment of the goods which were electronic products with D1 from Hong Kong and was expected to be arrived in the USA at about 19th Febuary,2005.

4.There were 2 shipments Agreements evidenced by two bills of lading between the Plaintiff and D1.

5.D3 was the shipping company arranged by D1 to ship those goods relating to the MLGHKG000362 Bill of Lading.

6.The relationship between D1 and D3 was pursuant to a bill of lading no. MLGDMLGHKG000362 dated 14^th February, 2005.  D1 was named as the shipper and D2 was named as the consignee for the carriage of 810 cartons of goods from Hong Kong to California, USA.

7.In respect of the MLGHKG000363, D3 was not the shipper and the Plaintiff simply has no cause of action against D3 for its lost of goods.

8.D4 was the customer of the Plaintiff located in the USA and the ultimate consignee under the MOL bill of lading.

The Pleadings

9.The Plaintiff took out a writ of summons on 2^nd February 2005 against 4 defendants for the misdelivery/ wrongful release of the goods to the Consignee and/or the Notify Party of 2 shipments of goods from Hong Kong to USA.

10.The Plaintiff only served the writ on D1 and D3 as D2 and D4 were out of the jurisdiction.

11.D1 has neither filed an Acknowledgement of Service nor filed a Defence.

12.D3 filed acknowledgement of Service and filed a Defence on 9th March,2006.

D3’s defence

13.D3’s defence denied that there was any agreement between the Plaintiff and D3 to ship the products to the USA under the Bill of Lading MLGHKG000362 and MLGHKG000363. D3 was not aware of the identity of the Plaintiff until the present action.

14.On 18^th February, 2005, D1 surrendered the full set of the PAC Bill of Lading to D3 and instructed D3 by a letter to release the Goods (B/16) to the Consignee D2 without the need for the presentation of any original PAC Bill of Lading and that D1 would be responsible for any liability.

15.Therefore, D3 instructed its agent by e-mail to release the Cargo to D2 without production of the original PAC Bill of Lading.

The Present Summones

16.D3 took out a summons on 5^th June, 2006 for various direction as to list of documents, inspection of documents and exchange of witness statements before a pre-trial review under Order 34 of the Rules of the District Court.

17.The next day, the Plaintiff took out a summons to discontinue this action against D3 with leave and costs of this action to be paid by D1 or alternatively with no order as to costs.  The costs of this application to be paid by D1.

18.D3’s primary position was that if leave was granted to the Plaintiff to discontinue the action against D3, the Plaintiff should pay costs to D3 for defending this case.  If this was unsuccessful, D1 should pay the costs to D3.

19.D3 is of the view that the Plaintiff’s cause of action against D3 was bound to fail.  The Plaintiff’s case as pleaded in the Amended Statement of Claim is based on contract, not bailment as argued by the Plaintiff’s Counsel.

20.It is not in dispute that there was no contract between the Plaintiff and D3.

21.The Plaintiff’s Counsel in his submission said that D3 was the sub-bailee of the consigned goods from Hong Kong to LA.  However, it was not the pleaded case of the Plaintiff.

22.The learned author in Jacob and Goldrein on Pleadings Principles and Practice at P.46 stated that: -

Every pleading must state only those facts which are material.  This rule is itself based upon the underlying principle of the Judicature Acts 1873 – 1875, namely, the function of the court is, so far as possible, to determine all matters in controversy between the parties and to avoid multiplicity of proceedings concerning such matters.  In the great majority of cases, the matters in controversy between the parties are matters of fact, and the function of the system of pleading is to ascertain what are the facts that are in controversy between them.  Even when the matters in controversy between the parties are a question of law, still the facts have to be ascertained, whether by determination, admission or agreement. 

23.If the Plaintiff wish to amend the pleading, it is already time bar.  The Plaintiff was bound by its pleading as Order 18 rule 12 is to tie the hands of the parties and set the perimeter of the parties’ case so that the parties cannot without the leave of the Court to go into any matters which are not pleaded in the pleadings.

24.In the present case, question to ask is whether the Plaintiff is not unreasonable to name D3 as one of the Defendants?

25.The Plaintiff relied on the Booking of Acknowledgement to commence action against D3.  In fact, the Booking Acknowledgment did not indicate D3 would be shipping the goods from HK to USA on board Cosco Vessel.  On the contrary, it indicated that the ocean or actual carrier of the goods was Cosco.

26.The Plaintiff did not issue any pre-action letter to D3 to clarify the role of D3 in this action.

27.The pre-action letter would certainly put the Plaintiff in a clear picture of the position of D3 in respect of this shipment.

28.D3’ case was denial of misdelivery of the goods because D1 had issue a letter of release to D3 to release the goods to D2.  It is common ground that a carrier should not be delivered the cargo to the consignee named in the bill of lading unless against the production of the original bill of lading or after receipt of the telex authorization from the shipper.  In D3’s bill of lading, the consignee was D2.  The Plaintiff was neither the shipper nor the consignee in D3’s bill of lading, was not entitled to the possession of or obtain delivery of the cargo from D3.

29.In these circumstances, once when D3 received the letter of release from D1 to release the goods to D2.  D3 had properly released the goods to D2 because D3 was not aware of the identity of the Plaintiff.

30.Further the letter of release instruction (B/16) to D3 was after D1 had surrendered the full set of D3’s original bill of lading.

31.Although the Plaintiff complained of misdelivery of the goods, there was no complaint against D3 by D1/D2 that there was misdelivery of goods.  The proper inference was that the instruction by D1 to D3 to release the goods to D2 was a proper instruction.

32.Bearing in mind that D1/ D2 took a very active role to settle the claim with the Plaintiff with full claim USD$42,000 plus legal cost $1,300 to the Plaintiff.

33.D1 agreed to settle the full amount of claim USD$42,000 to the Plaintiff two days after the writ was served on D1.  (B/36)

“We have been given permission from our insurance company to formally offer Minwa the full amount of their claim in exchange for the complete dismissal of their civil action against all parties.  We will make this offer to them straightaway.”

34.When D3’s Solicitors wrote to the Plaintiff to notify it’s position in the Bill of Lading MLGHKG0000362 on 15th February, 2006, the Plaintiff should have known the case should be settled by then, but the Plaintiff chose to continue its case against D3.  To this extend, the Plaintiff’s conduct of the proceeding was behaving unreasonably.

35.In the present proceeding, D1 did not file any defence.  What D1 did was to settle the matter as soon as the writ was served upon them.  D1 had done nothing to mislead the Plaintiff to believe that D3 should be a party to be sued or put the blame D3, rather, on the other hand, D1 advised the Plaintiff to settle the matter against all parties.

36.To bring D3 into this proceeding was the Plaintiff’s own decision.

37.With this background in mind, I do agree that D3 is an innocent party in the present proceeding.  I do conclude that the Plaintiff should bear the costs of D1 and D3 in this present application.

Order: -

38.Leave to the Plaintiff to discontinue the action against D3.

39.The Plaintiff do pay D3’s costs of the action up to discontinuance, and that the discontinuance shall not be effective until the costs have been paid by the Plaintiff.

40.Costs of this application be to D1 and D3, including costs reserved orders, with Counsel’s Certificate to D1, to be taxed if not agreed.  Order nisi, 14 days to become absolute.

Mr. Donald LEO, instructed by Messrs William K.W. Leung & Co. for the Plaintiff.

Mr. Calvin Y.C. CHEUK, instructed by Messrs Jimmie K.S. Wong & Partners for the 1^st Defendant.

Mr. Sam TSUI, of Messrs Tsui & Co. for the 3^rd Defendant.