Kithan v. A&G Int'l.

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DMC/S&T/36/01
Kithan Ltd V A&G International Cargo Ltd
Hong Kong District Court: Carlson J.: [2001] HKEC 977: July 2001
Mr. Cheung Ping-fai, of Susan Liang & Co., for Kithan
Ms Ann Mary Chang, of Messrs. Leung Kin & Co., for A & G International
CARRIAGE BY AIR: DELIVERY BY ROAD: SHORTAGE DISCOVERED ON DELIVERY: WHETHER DEFENDANTS UNDERTOOK TO DELIVER CONSIGNMENT AND ITS CONTENTS: NEGLIGENCE: CONSIGNMENT IN APPARENT GOOD CONDITION: CLEAN RECEIPT TO TERMINAL OPERATOR: OBLIGATION OF HAULIER: EXTENSION OF AIR WAYBILL TO LAND HAULAGE: APPLICATION OF STANDARD TRADING CONDITIONS: COURSE OF DEALING: DIFFERENCE BETWEEN EXPORT AND IMPORT CONSIGNMENTS

Summary
Kithan’s claim against A&G International for shortage in a consignment of 15 cartons of mobile phones, which A & G International had delivered to their premises on Hong Kong Island from Hong Kong’s international airport, failed, because they could not establish that A& G International had been negligent in carrying out their responsibility as hauliers. Although A&G International had given the airport terminal operators a clean receipt for the consignment, it was not apparent from the condition of the cartons that part of their contents had been stolen, nor could A&G International have reasonably been expected to notice the loss in weight, since it was only about 10%.

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Facts
Kithan were importers and distributors of mobile telephones. A&G International were international freight forwarders. Kithan had bought a consignment of 300 Nokia mobile telephones and accessories from a company in Dubai. These were shipped to Hong Kong by air from Dubai, as packed by the manufacturer in their individual boxes, which in turn had been packed into cardboard cartons. The cartons had been sealed with adhesive tape and then further secured by nylon straps. There were 15 cartons in all, weighing 190 kg. A&G International were named as the consignees in the Master Airway Bill.     Ê

The consignment arrived at Hong Kong on 3 July and was taken to the cargo terminal at Hong Kong International Airport. Kithan then engaged A&G International to arrange for collection of the consignment and to deliver it to their premises on Hong Kong Island. This was done on 4 July by the transport company usually instructed by A&G International for delivery work. The price charged was HK$480, in accordance with the scale of charges of the Hong Kong Association of Freight Forwarders. Ê

When the consignment was examined on arrival at Kithan’s premises, some of the cartons were found to have their seals broken and the total consignment was found to be 16.5 kg underweight. Further inspection revealed that, of the 15 cartons, 10 had been broken into; 200 mobile telephones and a quantity of batteries out of the original total of 300 of each had been stolen. The plastic adhesive tape at the bottom of the cartons from which items had been removed had been cut along its entire length so as to give access to the contents. The nylon retaining straps had been eased off, and then slipped back on, the cartons after the contents had been removed. Ê

Kithan sued A&G International for the losses, valued at US$24,276. êê

Arguments
Kithan claimed that A&G International, being a forwarding agent for reward and/or as a bailee, was under a duty to ensure that the consignment was delivered to the claimants in the same good order as shown in the clean receipt (Release Form) that A&G International had given to the airport terminal operators. Alternatively, Kithan claimed in negligence. Ê

A&G International argued that they had been engaged only to transport 15 cartons from the airport to Kithan’s premises for the modest scale fee. This they had done. They had no knowledge of the details of the matter and any losses that Kithan had suffered were not caused by any negligence on their part. A&G International further argued that if they were found to be negligent, then they were entitled to limit their liability either under the terms of the Air Waybill or in accordance with their ‘Shipper’s Instruction Form’, the terms of which Kithan knew from previous dealings between them. êê

Judgment
The judge rejected Kithan’s submission that A&G International had contracted to deliver the 15 cartons together with their precise contents. The judge described the transaction as "a simple, rather unglamorous assignment, two men and a van, whereby the defendants agreed to get 15 cartons identified in the House Airway Bill from [the airport] to the defendant's premises, all for a very modest scale fee. The defendants did not undertake the strict burden, almost of an insurer, to bring the cartons with their exact contents". Ê

From that finding it followed that Kithan could only succeed if they could prove negligence on the part of A&G International. This they had not done. The judge said: "these cartons have a clearly defined top and bottom. The arrows show which is the right way up. The cartons had been slit at the bottom. The top seals were intact. The nylon straps were in place and intact. They were underweight, but only as to 10 per cent overall, insufficient to immediately put a man carrying them onto a van or lorry on notice that something was amiss…. In the absence of anything which would have put a reasonable person on notice that something was wrong with the consignment, and there was nothing on this occasion, the job of transporting the cartons to Hong Kong was properly done." Ê

Although it was not necessary for his decision, the judge went on to say that, in his view, the contract between the parties was an oral one. The contract of carriage under the Air Waybill had come to an end at the airport terminal. The land transport was separate, an ‘extra’ that Kithan paid for. He distinguished the Hong Kong Court of Appeal decision in Manohar t/a Vinamito Trading House v Hill & Delmain (Hong Kong) Limited [1993] 2 HKC 342. Ê

Further, the judge found that these arrangements had not been made on the basis of A&G International’s standard trading conditions. Kithan had not signed a ‘Shipper’s Instruction Form’ for this transaction and they were not bound by their previous course of dealing. The previous dealings had related only to export transactions. There was, in the judge’s view, a distinct difference between an export transaction "which is more complex" and this import transaction, which he described as "no more complex than a taxi service". He could not imagine that "that these parties thought they were contracting on a complex basis…. for a mere pickup service." Ê

Judgment was accordingly given in favour of A&G International.

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