China Airlines v. Phillips HK

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DMC/SandT/03/23
China Airlines Ltd v Phillips Hong Kong Ltd
Singapore Court of Appeal: Chao JA, Yong JA, Tan JA: 25 June 2002
Rodyk & Davidson for China Airlines Ltd
Allen & Gledhill for Phillips Hong Kong Ltd
CARRIAGE BY AIR: LOSS OF FOUR CARTONS/SUB-PACKAGES CONTAINED WITHIN A PALLET: COMPUTATION OF CARRIER’S LIMIT OF LIABILITY UNDER WARSAW CONVENTION AS AMENDED BY HAGUE PROTOCOL
Summary
China Airlines was the carrier by air of nine cartons of cellular transceivers, packed as a single pallet, shipped by Phillips Hong Kong, from Singapore to Hong Kong. A single air waybill was issued stating the number of pieces received as "1". Upon arrival in Hong Kong, four cartons containing 440 transceivers were discovered missing. Article 22(2)(b) of the Warsaw Convention, as amended by the Hague Protocol, limited the carrier’s liability to S$49.58 per kg of "the total weight of the package or packages concerned". The court decided that the limitation should be calculated on the weight of the entire pallet, rather than the weight of the four missing cartons.

This case note has been contributed by Ang & Partners, International Contributors to the website for Singapore

Facts
Phillips Hong Kong Ltd shipped nine cartons of cellular digital spark transceivers from Singapore to Hong Kong in one pallet carried by China Airlines Ltd. A single air waybill was issued stating the number of pieces received as "1". The gross weight was stated to be 154 kg. No mention was made that the transceivers were packed into nine cartons. Upon arrival in Hong Kong, four cartons of transceivers weighing 60 kg were found missing. The total value of the missing transceivers was USD 74,360.

The carriage was subject to the Warsaw Convention Concerning International Carriage by Air (the "original Convention"), as amended by the Hague Protocol (the "amended Protocol"), which is given the force of law in Singapore by the Carriage by Air Act (Cap. 32A). Article 22(2)(a) provides that the liability of the carrier for registered baggage and cargo is limited to 250 francs (decreed under Singapore law to be equivalent to S$49.58) per kg. Article 22(2)(b) provides that the weight to be taken into consideration in determining the amount of the limit shall be only the total weight of the package or packages concerned.

China Airlines argued that the limit of liability should be computed based on the weight of the four missing cartons, which would give a figure of S$2,974.80. Phillips contended that the correct basis was the weight of the pallet and not the sub-package (i.e. the cartons).

Judgment
The Court of Appeal held as follows:

1. It is not necessary to rely on the construction given by the courts to the Hague and/or Hague-Visby Rules to construe the provision in the Warsaw Convention, original or amended. In the former, the limitation is expressed as a particular amount per package while under the latter it is expressed as a specified amount per kg per package. Under the former, the larger the package, the lower the limitation. Under the latter, the smaller the size of the package, the lower is the limit of liability for the air carrier. Furthermore, in the Hague-Visby Rules, there is a specific provision deeming the number of packages or units enumerated in the bill of lading for consolidated goods as the number for the purpose of limitation of liability.

2. The literal meaning of "package" includes a wrapper, case, bag, envelope and anything that holds things together. It can be large or small. It could include a "container" or a "pallet". There is really no technical meaning to it. Clearly, the word "package" must be construed in the light of the provisions of the amended Convention as a whole. The construction which a court gives to the word "package" must be reasonable and fair, and it must also promote certainty.

3. The statement as to the number of packages on an air waybill is only prima facie evidence of the same. If there is a clear error as to the number of packages that is written on the air waybill, the carrier must be allowed to adduce evidence to show what was the true number of packages which were consigned to the carrier. However, there was no error in the description of the package in this case just because the goods in that package were packed in nine smaller packages.

4. The approach of China Airlines would give rise to uncertainty and/or unnecessary controversies. To allow opening up of a package to see what is the packaging inside is certainly more likely to encourage disputes. Upon receipt of a "package", the carrier knew the extent of its maximum liability in respect of that package. The purpose of the Convention, in establishing liability limits, is to enable the carrier to calculate his risk.

5. Article 22(2)(b) refers to a package or packages and not to sub-package. The Court should not be concerned with sub-packaging which does not appear to the eye and never formed the basis for the contract of carriage.

6. Under article 7, the carrier has the right to require the consignor to make out separate air waybills when there is more than one package. Furthermore, a carrier has the right to set the weight limit for each package if it were concerned about the question of limit of liability. It is a matter which lies within its discretion. In this way the carrier could set the maximum extent of its liability for loss or damage of a package.

7. Whether it is the literal interpretation or the purposive interpretation that should be applied to article 22(2)(b), the answer, on the facts of this case, remains the same: the computation of the limit of liability should be based on the package as a whole.

Accordingly, the court found in favour of Phillips.

Comment
The Court of Appeal pointed out that the outcome could have been different if the consignor had indicated that in the one big package, there were, say, nine packages. However, as the question did not arise in this case, the Court expressed no definite opinion on this scenario.

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