Esgame Co Ltd v. Freight Overseas Co Ltd and Another

DCCJ 1845/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1845 OF 2006

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BETWEEN

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Date of Hearing : 16^th July 2007

Date of Handing Down Decision : 27^th July 2007

DECISION

1.The 1^st Defendant applies to have its name struck out and to cease to be a party in these proceedings; alternatively that the Plaintiff’s claim against the Defendant be struck out on the basis that such claims are time-barred under Order 15 r.16(2)(a) and o.18 r. 19(1) of the District Court Rules.  The application is opposed by the Plaintiff.

Background

2.The Plaintiff issued a writ of summons against the 1^st Defendant, Freight Overseas Company Limited, and the 2^nd Defendant Marine Power Company Limited.  The Plaintiff instructed the 2^nd Defendant on or about 5 July 2005 to arrange for the carriage of certain goods (‘the goods’) purchased by a Brazilian company, Gemini Industries e Comercio Ltd. (“the purchaser”), to be shipped from Yantian in Mainland China to Itajai in Brazil.  The goods were shipped in two shipments on 15 July 2005 and 27 July 2005.  The 2^nd Defendant issued to the Plaintiff two bills of lading (“the B/Ls”) for the two said shipments.  The two B/Ls named the 1^st Defendant as the carrier and the 2^nd Defendant as the agent for the 1^st Defendant.

3.The whereabouts of the goods are in dispute.  The Plaintiff claimed the two shipments of goods were delivered to an unknown party in Brazil not to the purchaser, while the 1^st Defendant claimed the goods were kept in a customs warehouse in Brazil pending release to the lawful holder of the B/Ls.  The Plaintiff claimed against the two Defendants for damages as bailees for their failure to deliver the goods to the purchaser in breach of contractual duty.

History

4.The 1^st Defendant Applicant now claimed that it was wrongly joined as the 1^st Defendant because when the Plaintiff issued the writ on 13 April 2006 it was addressed to the 1^st Defendant at its principal place of business at 2F-2, No. 66, Sec. 2, Chien Kuo N. Road, Taipei, Taiwan.  The writ was marked “not for service out of jurisdiction” because no application under Order 11 had been sought by the Plaintiff.

5.On 23 March 2007, the Plaintiff lodged a notice of change of solicitors and on 3 April 2007, the Plaintiff amended the writ of summons by inserting a name in Chinese of the 1^st Defendant as「聯億船務有限公司」, deleting the Taiwan address and substituting the address of ‘Flat 13, 5^th Floor, Block 1, Tak Fung Industrial Centre, 168 Texaco Road, Tsuen Wan, N.T., Hong Kong’.  The Plaintiff filed the statement of claim on the same day.

6.The amended writ of summons and statement of claim was served on the 1^st Defendant at the amended address in Hong Kong and to the 2^nd Defendant in April 2007.

The Application

7.The Applicant, Freight Overseas Company Limited 「聯億船務有限公司」(“FOCO Hong Kong”), claimed that the Plaintiff had joined the wrong party because the party intended was the original 1^st Defendant Freight Overseas Company Limited at the address in Taiwan at 2F-e, No. 66, Sec. 2, Chien Kuo N. Road, Taipei (“the address”), which is operating under the Chinese name of 「山千嵊國際有限公司」 (“Qian Sheng”).  The Applicant claimed that the Plaintiff’s action is based on the two B/Ls which named “FOCO Freight Overseas Co. Ltd” of the Taipei address on the face of the two B/Ls (pp.98 and 100 of the bundle) as the carrier and the issuer of the B/Ls for the two shipments.  The Applicant further relied on the permit of the carrier 「海攬（基）字第1124號」 as the true particulars of the carrier.

8.The Applicant exhibited with Mr. Lin Chih Yu’s affirmation documents of incorporation of the Taiwan carrier in Taiwan (pp.25 – 27 of the bundle), members’ list of the International Freight Forwarders and Logistics Association in Taiwan, the permit number and Taiwan address of the carrier (pp.28-29 of the bundle).  Mr. Lin further deposed to the fact that though he is both a director of the Applicant FOCO Hong Kong and the carrier FOCO Taiwan (Qian Sheng), the two companies are separate entities.  He further claimed FOCO Taiwan (Qian Sheng) was the carrier of the goods, but FOCO Hong Kong was not involved in the contract of carriage of the Plaintiff.

9.The Applicant further claimed that the Plaintiff being in possession of the two original B/Ls should have known the carrier named in the B/Ls was FOCO Taiwan (Qian Sheng) not FOCO Hong Kong.  Mr. Liang, counsel for the Applicant, submitted that where there is a bill of lading relating to the goods received on the ship, the bill of lading constitutes evidence of the terms of the contract of carriage for the goods.  Mr. Liang relied on the case of Leduc Co. v. Ward [1888] 20 QBD 475 at p.479 – 480.

10.Further evidence relied on by the Applicant were the 3 letters dated 21 February, 16 August and 16 October 2006 addressed to FOCO Taiwan sent to the address on the B/Ls demanding return of the goods under the B/Ls (p.58-61).

11.Mr. Lin admitted he is and was a director of both FOCO Hong Kong and FOCO Taiwan.  However, he denied FOCO Hong Kong was a subsidiary of FOCO Taiwan, he further denied FOCO Hong Kong is or was the agent of FOCO Taiwan in respect of the claimed transaction with the Plaintiff.

12.The evidence on the B/Ls showed FOCO Taiwan was named the carrier and the 2^nd Defendant its agent in Hong Kong.  Therefore, there is undisputed evidence that FOCO Hong Kong was not the agent of FOCO Taiwan so far as the suit transaction is concerned.

13.There are also unequivocal evidence showing FOCO Taiwan and FOCO Hong Kong to be two separate entities having been incorporated in separate jurisdictions, each registered as a separate legal entity rather than a branch of the other.  In none of the registers were there evidence of FOCO Hong Kong named as a branch of FOCO Taiwan (p.83 & 89), neither did the 2^nd Defendant’s website named FOCO Hong Kong as a carrier of the 2^nd Defendant.  The only common factors to the two companies are their names in English and one of their directors was Mr. Lin.  It is not an appropriate case to pierce the corporate veil.

14.On this basis, FOCO Hong Kong and FOCO Taiwan must be regarded as separate legal entities.  As Mr. Liang and his instructing solicitors represented only FOCO Hong Kong in this application on whom the writ of summons was served, FOCO Taiwan being outside the jurisdiction was never served under Order 11, therefore is not represented at the hearing and this application was made by FOCO Hong Kong only.  I shall deal with the application as such.

15.I accept Mr. Hui’s submission that the contract of carriage was between the Plaintiff and the 2^nd Defendant.  The 2^nd Defendant had acted as an agent to FOCO Taiwan.  I also accept the two B/Ls were and are evidence of the contract.  In Lord Devlin’s words in the case of Pyrene Co. v. Scindia Navigation Co. Ltd. [1954] 2QBD 402 at p.414 “It is not disputed that in this case, as in the vast majority of cases, the contract of carriage was actually created before the issue of the bill of lading which evidences its terms.

16.Lord Bingham observed in the Starsin [2004] 1AC 715 at p.738G:

“	But I have great difficulty in accepting that a shipper or transferee of a bill of lading would expect to have to resort to the detailed conditions on the reverse side of the bill (and to preservere in trying to read the conditions until reaching conditions 33 and 35) in order to discover who he was contracting with.  And I have even greater difficulty in accepting that he would expect to do so when the bill of lading contains, on its face, an apparently and unambiguous statement of who the carrier is.
	…. I am further fortified in taking this view of the market practice by noting its adoption (since 1994) in the ICC Uniform Customs and Practice for Documentary Credits.  This now provides, in article 23 (a):
	“	if a credit calls for a bill of lading covering a port to port shipment, banks will, unless otherwise stipulated in the credit, accept a document, however named, which: (1) appears on its fact to indicate the name of the carrier and to have been signed or otherwise authenticated by:- the carrier or a named agent for or on behalf of the carrier, or – the master or a named agent for or on behalf of the master … .”
	article 23(v) makes plain that banks will not examine terms and conditions on the back of the bill of lading.  The ICC position papers No. 4 re-iterates that the name of the carrier must appear as such on the front of the bill and that banks will not examine the contents of the terms and conditions of carriage …”.

17.On the basis of Lord Bingham’s dictum, as the name of FOCO Taiwan with an address in Taiwan was clearly displayed on the B/Ls, and the 2^nd Defendant was named and signed as FOCO Taiwan’s agent, it is undisputable that the carrier was FOCO Taiwan not FOCO Hong Kong.  The two should not be confused.  Neither do I accept the permit number「海攬（基）字第1124號」should be ignored altogether when it is part of the requirement to specify on the B/Ls the permit number of the carrier.

18.It is therefore both plain and obvious to me the contractual carrier named on the two B/Ls was FOCO Taiwan, not FOCO Hong Kong.  I would therefore strike out the name of FOCO Hong Kong; however, I shall allow the Plaintiff to reinstate FOCO Taiwan as the 1^st Defendant by re-amending the writ and the statement of claim.

The Time Bar issue

19.It is not an issue that need concern the Applicant because it is no longer a party to these proceedings.

20.As to the applicability of the terms and conditions on the back of the two B/Ls, it is a matter for FOCO Taiwan to raise after it is formally served the writ of summons.  I have strong reservations as to whether terms that came into being after the contract was entered into at the unilateral imposition by the carrier upon the issue of the bill of lading should be binding on the Plaintiff.  In any event, it is not a matter that should be dealt with in this application.

21.Cost nisi – there shall be costs to the Applicant to be taxed if not agreed with certificate for counsel.

Parties:

Mr. George Hui instructed by Messrs. Chan & Cheng for the Plaintiff.

Mr. Alfred Liang instructed by Messrs. W.K. To & Co. for the 1^st Defendant.