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DMC/SandT/40/02
The Owners of Cargo on board the ship "Brij" v. The Owners of the
ship "Brij"
Hong Kong Admiralty Court: Waung J.: 14 July 2000
Mr Clifford Smith, instructed by Sinclair Roche & Temperley for the cargo
owners
Mr Joseph Fok SC, instructed by Johnson Stokes & Master for the shipowners
CARRIAGE OF GOODS: NVOC BILLS OF LADING: OCEAN CARRIER
BILLS OF LADING: NEGOTIABLE Bs/L AND STRAIGHT Bs/L: SHIPPER HOLDS NVOC Bs/L BUT
NOT OCEAN CARRIER B/L: DELIVERY BY CUSTOMS AT DISCHARGE PORT TO NAMED CONSIGNEE
IN OCEAN CARRIER B/L WITHOUT PRODUCTION OF EITHER B/L: CONSIGNEE DEFAULTS:
WHETHER OCEAN CARRIER B/L SHOULD HAVE BEEN PRODUCED BEFORE DELIVERY
Summary
Where an ocean carrier had issued to a freight
forwarder a straight bill of lading – namely, one which was non-negotiable and
required the carrier to deliver the goods to a named consignee, it was not
necessary for the carrier to require that the bill be produced to obtain
delivery of the goods.
DMC Category Rating: Confirmed
This case note is based upon a note prepared by the website’s
former International Contributors from Hong Kong, Koo and Partners/Paul Hastings
Facts
This was a consolidated action by the plaintiff
cargo owners against the defendant shipowners for alleged misdelivery of goods
which were the subject of two separate sets of bills of lading: one set issued
by the freight forwarder, the other set issued by the shipowner ocean carrier.
The Plaintiff, Glory Products Co. Ltd., a seller and exporter of garments in
Hong Kong, contracted to sell garments to South American buyers. The garments
were sourced from China and carried from Chinese ports to Hong Kong. There they
were transshipped onto vessels operated by CAVN for carriage from Hong Kong to
Venezuela. The plaintiff effected the shipment of the goods through a freight
forwarder, Wing Tung Wei (China) Ltd (‘WTW’). WTW operated its shipping
business under the name of Talent Express Line (Talent). WTW issued bills of
lading (Talent bills) to the plaintiff, with the plaintiff named as the shipper
and the consignee to order, and with the buyer's agent (Amaya) as notify party.
The Talent bills were used by the plaintiff as documents of title to obtain
payment from the buyer under letters of credit. Unknown to the plaintiff, WTW
made a separate agreement with the Hong Kong agent of CAVN. CAVN, a
container liner operator, were operating the Brij, but were not its owners. CAVN
issued bills of lading to WTW (CAVN bills), showing WTW as shipper and Amaya as
consignee. When the goods arrived in Venezuela, they were released by the
Venezuelan Customs to the customs agent of the buyer. The buyer failed to pay
for the goods and the Talent bills were never given to the buyer or Amaya. The
Plaintiff commenced action in contract and in tort against the CAVN for
misdelivery of five shipments of goods.
The main issues before the court were:
- Whether the CAVN bills were direct consignment bills ("Straight
bills"), under which the carrier would deliver the cargo directly to
the consignee without the need for production of the original bills of
lading; or were they ordinary negotiable bills of lading which could be
transferred by indorsement, in which case the cargo was to be delivered only
against production of the original bills;
- Whether the Defendant was liable in tort for breach of duty.
Judgment
The action against the shipowners was dismissed, with costs.
- The freight forwarder, WTW, when entering into the contract with CAVN, was
acing as principal and not as agent of the plaintiff. The financial
arrangement between the plaintiff and WTW showed that it was principal to
principal since the payment made by the plaintiff to WTW covered not only
services provided by WTW, but also included profits of WTW. Moreover, the
arrangements between WTW and CAVN were also concluded on the basis of
principal to principal. WTW could not be an agent of the plaintiff, since
the plaintiff had no knowledge of the CAVN bills of lading and there was no
reference to the plaintiff in all relevant CAVN bills/documents. Therefore
the position between the plaintiff and WTW was that they regarded Talent as
the carrier under the Talent bills and the Talent bills were negotiable
documents of title. In contrast, the CAVN bills were a separate agreement
between WTW and CAVN, to which the plaintiff was not a party. It followed
that the plaintiff could not claim in contract on the basis of the CAVN
bills.
- The CAVN bills were not intended to be the documents of title, given the
existence of the Talent bills, which were the documents of title for the
same goods. The CAVN bills were also not intended to be negotiable bills and
were not used as such. Therefore, the CAVN bills were only straight bills
and non-negotiable.
- Given the CAVN bills were straight bills and non-negotiable, the carrier
was entitled and bound to deliver the goods to the original named consignee
(i.e. Amaya), without requiring production of the bill, as opposed to the
position under an order bill, where the goods would have been deliverable
only on production of the bill. CAVN were in this case obliged to deliver to
Amaya and to no one else. Therefore the defendant shipowners were not in
breach of their duty of care under the CAVN bills and the plaintiff’s
action in tort also failed.
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