Maintek Computer (Suzhou) Co Ltd and Others v. Blue Anchor Line and Others
Read the full judgment text of HCAJ 106/2008 on BabelCite. This HCAJ judgment was delivered on 1 March 2010.
1. I previously refused ECT’s application to set aside the interlocutory judgment on liability entered against it by the Plaintiffs. I have now heard the parties on the assessment of the Plaintiffs’ damages. This is my judgment on quantum in relation to the Plaintiffs’ claim against ECT.
Cites 1 case
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HCAJ 106/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ADMIRALTY JURISDICTION ACTION NO. 106 OF 2008 ----------------------
---------------------- Before: Hon Reyes J in Court Date of Hearing: 1 March 2010 Date of Judgment: 1 March 2010 ---------------------- J U D G M E N T ---------------------- I. INTRODUCTION 1.I previously refused ECT’s application to set aside the interlocutory judgment on liability entered against it by the Plaintiffs. I have now heard the parties on the assessment of the Plaintiffs’ damages. This is my judgment on quantum in relation to the Plaintiffs’ claim against ECT. 2.The facts have been summarised in my Judgment of 25 February 2010 refusing ECT’s setting aside application. I will use the abbreviations defined in that Judgment. By way of damages, the Plaintiffs claim the invoice value (Euros 950,071.20) of the Sony Play Stations stuffed in Container X. II. DISCUSSION A. Limitation of liability under the ECB 3.There is no dispute that the type of carriage involved in this case was what the ECB calls a “combined transport”. In this respect, insofar as material, the ECB provides as follows:-
4.The principal submission of Ms. Janet Ho (appearing for ECT) is that ECT is entitled to rely on the 2nd paragraph of ECB cl.18.3. She suggests that ECT is so entitled by reason of ECB cl.1.3 which defines the expression “Carrier” to include Transpac’s “agents, servants and subcontractors”. If cl.18.3 applies, then the Plaintiffs would only be entitled to damages of US$24,392 (that is, US$2 per kg. x 12,196 kgs.). 5.I shall assume that Ms. Ho is right in reading “Carrier” as encompassing ECT. Even then, I do not think that the 2nd paragraph of cl.18.3 is sufficiently unambiguous to cover the present situation. 6.First, it is unclear whether the words “loss or damage” in the 2nd paragraph:-
7.It would be remarkable if, where a Carrier was at fault through negligence or recklessness, the Carrier could limit its compensation to a sum which has no bearing to the actual value of the goods lost or damaged. Here, for instance, the US$2 per kg limitation in the 2nd paragraph produces a compensation which is derisory in relation to the actual value of the goods lost. 8.Despite cl.18.1 which refers to compensating a party by reference to the invoice value of goods lost or damaged, could the 2nd paragraph of cl.18.3 really be clawing back on cl.18.1 by only offering a minimal sum even when the Carrier is at fault? It is possible. But, given the principle of reading a contract contra preferentem, much clearer words would need to be inserted into cl.18.3 before the Court can construe the provision as having the effect for which Ms. Ho contends. Ambiguities in the clause are to be construed against the Carrier seeking to rely on the same. 9.Therefore, just read in isolation, cl.18.3 does not seem wide enough to cover the situations where loss or damage has been caused through the negligence or recklessness of a Carrier. 10.Second, cl.18.3 cannot be read in isolation. The conclusion just reached above is confirmed (at least as far as recklessness is concerned) by ECB cl.23.2. 11.Cl.23.2 states that the Carrier:-
12.In my previous Judgment, I indicated that I thought that ECT through its employee Jimmy was not just negligent, but reckless in ignoring its own internal procedure. That remains my view. 13.Jimmy ought to have checked that Container X had been transferred from ECT’s barge system to its trucking system. Because of the volume of containers having to be processed at the time, Jimmy did not so check. He took a short-cut and simply re-routed Container X to the trucking system. 14.ECT must have envisaged that there would be a probable risk of misdelivery in such situations. Otherwise, why did its internal procedures require a check? ECT did not adduce evidence suggesting that Jimmy was unaware of the risk of misdelivery involved in doing what he did or that ECT was oblivious to the real possibility of misdelivery if the internal procedure of a check was not followed. In those circumstances, the Court can be bold and presume that ECT must have been fully aware of a probable (and I believe self-evident) risk of misdelivery to an unauthorised person if no check with its barging system staff was undertaken. 15.It appears that short-cuts similar to that which Jimmy took were routinely taken by ECT staff without mishap in the past. But that slack practice was only postponing the inevitable day when the obvious risk of misdelivery to an unauthorised person would materialise. That ECT got away with slackness in the past does not make what it did less reckless. The evidence is that, not surprisingly, since the events of the present case ECT has modified its procedures. 16.Third, I do not read the expression of an exception to cl.18.3 in cl.23.2 as implying that negligence by the Carrier is covered by the limitation in cl.18.3. The more plausible reading of cl.23.2 is that it merely emphasises that cl.18.3 does not cover the extremely serious situation where the Carrier has been reckless. In other words, I do not think that this is a situation of expressio unius exclusio alterius. 17.If cl.18.3 was truly meant to cover fault situations (such as negligence), one would at least expect comprehensive expressions such as “loss or damage whatsoever” or “loss or damage howsoever arising” to appear in the provision. 18.Ms. Ho refers me to cl.17(B)(2)(k) which excludes liability for “loss or damage” due to some unavoidable cause or event “the consequences whereof [the Carrier] could not prevent by the exercise of reasonable diligence”. She suggests that since, by cl.17(B)(2)(k) the Carrier is absolved of liability altogether where it is not at fault, cl.18.3 must at least have been intended to operate in the different situation where the Carrier is at fault by reason of negligence. 19.I am unable to accept this argument. In particular, I do not think that cl.17(B)(2)(k) absolves liability in all no-fault situations. Clause 17(B)(2)(k) seems to me only to concern situations of frustration or force majeure. 20.Where there is “loss or damage” due to such unavoidable circumstances, the Carrier is not to be liable. The expression “the consequences whereof [the Carrier] could not prevent by the exercise of reasonable diligence” merely stresses that the relevant force majeure event must be truly unavoidable or unforeseeable. I do not think that cl.17(B)(2)(k) goes so far as to absolve a Carrier in all situations where there has been a lack of fault on the Carrier’s part, even in the absence of frustration or force majeure. 21.Thus, for example, conversion is a tort of strict liability. One might commit conversion innocently, despite having taken all reasonable care, by (say) surrendering cargo to a fraudster who has presented a skilfully forged bill of lading. I do not think that on its wording cl.17(B)(2)(k) excludes the Carrier’s liability in such case wherethere is no question of force majeure. 22.It follows that cl.18.3 may possibly simply apply to no-fault situations (such as the one just posited) which are not covered by cl.17(B)(2)(k). 23.In summary, ECT having been not just negligent but also reckless, cl.18.3 does not apply to limit its liability to the Plaintiffs. Even if I were wrong about ECT having been reckless, I would still decline to treat cl.18.3 as limiting liability where (as here) ECT has at the very least been negligent. B. Limitation under the Hapag Lloyd Sea Waybill 24.Transpac shipped the Plaintiffs’ containers (including Container X) from Shanghai to Rotterdam through Transpac’s agents Kuehne Nagel. Kuehne Nagel engaged Hapag Lloyd for the voyage and received a Sea Waybill as evidence of the contract of carriage. 25.Sea Waybill cl.5(1) provides:-
26.In the alternative, Ms. Ho submits that ECT is entitled to rely on cl.5(1)(b) of the Sea Waybill. She says that this is possible by reason of a Himalaya clause found in cl.4 of the Sea Waybill. On that basis, the misdelivery of Container X having taken place after its discharge from the vessel in Rotterdam, Ms. Ho contends that ECT is not liable for anything at all. 27.Sea Waybill cl.4 confers on the Carrier’s agents or bailees the benefit of exemptions and limitations accorded to the Carrier by the Sea Waybill. I shall assume for the purposes of argument that cl.4 allows ECT to rely on provisions in the Sea Waybill. Despite that, I do not think that cl.5(1)(b) applies to give ECT the wholly surprising result of total immunity from liability. Whatever it might mean, cl.5(1)(b) cannot be conferring total immunity for any loss howsoever caused following discharge. 28.Cl.5(1)(b) needs to be read in the context of the Sea Waybill as a whole. 29.Sea Waybill cl.3(2) provides:-
30.Logically, delivery to a consignee must follow discharge from a vessel. Since cl.3(2)(b) provides that the Carrier is liable for misdelivery where it has not “exercised reasonable care to ascertain that the party claiming delivery is in fact entitled,” cl.5(1)(b) (whatever it might mean) cannot be granting immunity in such situation. Notwithstanding its apparently wide wording, cl.5(1)(b) must have a significantly more restricted ambit. On pain of contradiction and incoherence, the Carrier cannot rely on cl.5(1)(b) to cut down on the plain meaning of cl.3(2). 31.It is unclear just what the restricted ambit of cl.5(1)(b) was intended to be. But for the purposes of these proceedings, it is not necessary to determine the term’s scope. That is because here (as already discussed) ECT did not take all reasonable care to ascertain that Nico was entitled to receive Container X on the Plaintiffs’ behalf. On the contrary, ECT acted recklessly in releasing Container X without first checking with its barge system personnel. 32.Mr. Edward Alder (appearing for the Plaintiffs) observes that, insofar as cl.5(1)(b) purports to absolve ECT of liability altogether, it should have been (but was not) raised in the course of ECT’s application to set aside the interlocutory judgment on liability. It is now (Mr. Alder urges) too late to rely on cl.5(1)(b). While I agree with Mr. Alder’s submission, I have nonetheless dealt with the merits of ECT’s cl.5(1)(b) argument for the sake of completeness. 33.Cl.5(1)(b) is not applicable to the present circumstances. III. CONCLUSION 34.ECT’s submissions for a reduced assessment of quantum fail. There will be judgment in the Plaintiff’s favour for the invoice value of the goods in Container X (Euros 950,071.20). As insurer, Mitsui Sumitomo (the 5th Plaintiff) paid the invoice value of the goods plus a 10% uplift by way of compensation for the lost Sony Play Stations. The rationale behind the 10% uplift is unclear on the evidence. I therefore am not able to award more than the invoice value of the goods. 35.I will now hear the parties on interest, costs and consequential orders.
Mr Edward Alder, instructed by Messrs Richards Butler, for the Plaintiffs Messrs Stephenson Harwood, for the 1st, 2nd, 4th, 6th & 7th Defendants – absent Ms Janet Ho, instructed by Messrs Holman Fenwick Willan, for the 8th Defendant 11th Defendant in person – absent |
Cases cited in this judgment
Further hearings and rulings under HCAJ 106/2008