MISC v. VI SA Australia
In this case, the claimants, MISC, were unsuccessful in their claim for container demurrage against the consignee under its standard form bill of lading. The court of appeal held, applying the law of the state of Victoria, that the consignee could not be held responsible for such charges where, as here, the container had been unpacked, not at its premises, but at the premises of its customer.
DMC Category Rating: Developed
Case note contributed by Drew James, a partner in Ebsworth & EbsworthLawyers, Sydney. Ebsworth & Ebsworth are the InternationalContributors to the website for Australia.
"If Containers supplied by or on behalf of the Carrier are unpacked at the Merchant’s premises, the Merchant is responsible for returning the empty Containers, with interiors brushed and clean, to the point or place designated by the Carrier, his servant or agents, within the time prescribed. Should a Container not be returned within the prescribed time, the Merchants shall be liable for any demurrage, loss or expenses which may arise from such non-return".
Clause 1 of the bills defined "merchant" quite widely as follows:
"Merchant’ includes the Shipper, Holder Consignee, Receiver of the Goods, any person owning or entitled to the possession of the Goods or of this Bill of Lading and anyone acting on behalf of any such person".
VI SA raised a number of matters in defence to MISC’s claim. One of those matters was described as a short point of construction of clause 13(4) of the MISC bill of lading arising from the uncontradicted fact that none of the relevant containers was unpacked at VI SA’s premises. The judgment was limited to the determination of this point.
In short, VI SA contended that as a matter of the proper construction of clause 13(4), it was only the merchant at whose premises the container was unpacked that could be liable for container demurrage. Whilst VI SA was someone who fell within the definition of "merchant" in the bill of lading, it was not the merchant at whose premises the container(s) was unpacked.
Judgment at First Instance
Judgment of Court of Appeal
At first instance, MISC had sought to distinguish between the word "merchant" in the first sentence in sub-clause 13(4) and the word "merchants" in the second sentence, so as to contend that the obligation to pay demurrage extended beyond the merchant who unpacked the container. Justice Byrne had rejected that contention. On appeal, MISC put the argument differently and contended that the opening words of the sub-clause, "If Containers supplied by or on behalf of the Carriage are unpacked at the Merchant’s premises", together with the definition of "merchants", were sufficiently wide to encompass unpacking containers at the premises of VI SA’s customers such that the remainder of the sub-clause was concerned with the consignee being the party bound by the contract of carriage.
To put it another way, MISC argued that the word "merchant" where it first appeared in the sub-clause included any person answering one or other of the descriptions in the definition of "merchant" and that the word "merchant" and "merchants" when next appearing meant the merchant who was bound by the contract of carriage, that is to say the consignee.
Justice Buchanan rejected this argument holding that it was a condition upon which the operation of clause 13(4) depended that the unpacking of the containers took place at the premises of the merchant who was bound by the contract of carriage or was otherwise subject to its obligations by the operation of the Sea-Carriage Documents Act 1988 (Vic). He held that this condition had not been fulfilled and accordingly dismissed MISC’s appeal.
Essentially, by the operation of such acts, the shipper’s rights and liabilities under the contract of carriage are transferred to:
in the case of a bill of lading – each successive lawful holder of the
A "lawful holder" of a bill of lading essentially means a person who has come into possession of the bill, in good faith, as the consignee of the goods as stated in the bill, or has come into possession of the bill by endorsement or transfer of the bill.
Upon the "rights" being transferred, the transferor’s (usually the shipper) rights are then extinguished. But when it comes to "liabilities", their transfer does not prejudice the liability of the original party to the contract. Relevantly, the shipper remains liable for container demurrage and could be sued along with a lawful holder of the bill of lading.
In the MISC case, VI SA’s customer, it would seem, whilst coming within the definition of "merchant", was not the lawful holder of the bill of lading (or named consignee in the sea waybill) and as such did not have transferred to it, the rights and liabilities arising under the MISC bill. So it, VI SA’s customer, could have no contractual liability to MISC. In essence it did not become a party to the contract of carriage with MISC.
VI SA would have been the lawful holder of the MISC bill of lading and as such had transferred to it all the rights and liabilities arising under the bill including any obligation to pay container demurrage. The reason why it had no such obligation was because the wording of clause 13(4) limited the obligation (to pay demurrage) to the merchant at whose premises the container was unpacked, which was not VI SA.
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