Rapiscan v. Global

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DMC/SandT/20/02
Rapiscan Asia Pte Ltd v Global Container Freight Pte Ltd
Singapore High Court: S. Rajendran J: April 2002
Straits Law Practice LLC, for Rapiscan
Ang & Partners, for Global Container 
ORAL CONTRACT OF CARRIAGE– WHETHER OBLIGATION TO MONITOR SHIPMENT AND REPORT ON ITS PROGRESS - INCORPORATION OF SINGAPORE FREIGHT FORWARDING ASSOCIATION CONDITIONS – INCORPORATION OF TERMS OF BILL OF LADING WHICH WAS ONLY ISSUED AFTER THE CONTRACT OF CARRIAGE WAS ENTERED INTO – WHETHER EXEMPTION AND LIMITATION CLAUSES IN THE SINGAPORE FREIGHT FORWARDING ASSOCIATION CONDITIONS AND THE BILL OF LADING EXCLUDED OR LIMITED LIABILITY ARISING FROM NEGLIGENCE 
Summary 
Rapiscan had a contract to rent X-ray machines to a customer in Macau, for use on 19 December 2000. An oral contract of carriage was negotiated between Global Container and Rapiscan’ subsidiary, to carry the machines from Brunei to Macau via Singapore. After the contract, Rapiscan represented that the machines were on board "KOTA PERKASA" and were expected to arrive in Macau on 17 December 2000. The machines were in fact on board a different vessel which was not scheduled to arrive in Macau until 19 December 2000. On learning this, Rapiscan attempted to air-lift replacement machines, but could not do so in time, and the customer cancelled the rental contract on 18 December 2000. The bill of lading was not issued until after the rental contract was cancelled. Rapiscan sued Global Container for breach of the oral contract of carriage.

Facts
Rapiscan entered into a contract to rent 13 X-ray machines to "Fei Fu"in Macau to be used on 19 December 2000 for the First Anniversary celebrations of the hand over of Macau to China. The X-ray machines were agreed to be operationally ready in Macau before 18 December 2000. Rapiscan’s sister company, OSM, negotiated an oral contract with Global Container, to ship the machines from Brunei to Macau via Singapore. On 14 December 2000, Global Container faxed the draft bill of lading to Rapiscan. The draft bill of lading named "Kota Perkasa" as the carrying vessel on the Singapore/Macau leg and Rapiscan as the shipper. On the same day, Global Container also faxed a shipping confirmation note to OSM, giving the vessel’s ETA (expected to arrive date) in Macau as 17 December.

On 16 December 2000, Rapiscan learnt that the machines were not on "Kota Perkasa" but were on a different vessel which was not scheduled to arrive in Macau until 19 December 2000. Rapiscan, with Fei Fu’s consent, immediately arranged to air-lift similar machines in Rapiscan’s warehouse in Singapore to Macau. The only air-cargo space available was from Kuala Lumpur to Hong Kong. The machines were trucked from the warehouse in Singapore to Malaysia, with some delay, but while they were en route to the Malaysian airport on 18 December 2000, Fei Fu cancelled the rental contract.

Rapiscan sued Global Container for breach of the oral contract of carriage, in particular for breach of an obligation to monitor the shipment. Apart from denying that it had such an obligation, Global Container argued that its liability was excluded or limited by the limitation and exclusion of liability clauses in the Singapore Freight Forwarders Association Trading Conditions ("SFFA Conditions") and in the bill of lading.

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Judgment
1. There was an express and implied term in the oral contract that Global Container would monitor the shipment and keep Rapiscan informed of its progress. The judge found that Global Container had, in breach of its obligation, negligently misrepresented that the machines were due to arrive in Macau on 17 December 2000 on board "Kota Perkasa.

2. Global Container’s quotations contained the printed qualification that all transactions would be subject to the SFFA Conditions. The contract of carriage was entered into subject to those Conditions.

3. The terms of the bill of lading formed part of the contract of carriage notwithstanding that the bill of lading had not been issued at the time the oral contract was entered into. Rapiscan who had used Global Container’s services in the past would be aware that there were standard conditions attached to Global Container’s bill of lading. The principle in Pyrene Co Ltd v Scindia Steam Navigation Co Ltd [1954] 1 LLR 321, at 329, was applied: "When parties enter into a contract of carriage in the expectation that a bill of lading will be issued to cover it, they enter into it upon those terms which they know or expect the bill of lading to contain."

4. Clause 26(b) of the SFFA Conditions provided that Global Container shall not, "in any circumstances", be liable for loss or damage caused to property other than the goods themselves, indirect or consequential loss, loss of profits, and the consequences of any delay or deviation. Clause 6(4)(A) of the bill of lading had a comparable provision in shorter form. These exemption clauses were subject to the "Morton test", laid down in Canada Steamship Lines Ltd v The King [1952] HL 192. The exemption clauses were held not to encompass liability for negligence as they were applicable to heads of claim other than claims based on negligence. Therefore, they would not exempt Global Container from liability for the breach of contract arising from its negligent misrepresentation as to the whereabouts of the machines.

5. Clause 27(b) of the SFFA Conditions limited Global Container’s liability, "howsoever arising and notwithstanding that such liability shall have arisen from the neglect or default" of Global Container, "in respect of claims for delay". Clause 6(4)(A) of the bill of lading also contained a provision limiting the carrier’s liability for delay. Although the limitation clauses were not subject to the same strict approach as the exemption clauses, the judge held that, on their wording, these clauses limited liability only in respect of claims for delay. Therefore, they could not limit Global Container’s liability arising from its negligence in failing to properly monitor the shipment.

6. Rapiscan was entitled to damages for loss of rental income as well as the costs of its attempt to mitigate the loss by embarking on the exercise of air-freighting other machines to Macau.

Comment from the Editor
Although the Court held that the third Morton test was not satisfied because cl 26(b) was applicable to heads of claim other than claims based on negligence, it is not clear for what other heads of claim, unrelated to negligence, Global Container could be liable. Plaintiffs’ counsel referred to Global’s obligations as a bailee and as a carrier. But in the circumstances of this case, Global Container was not a bailee, nor was it a common carrier. In the latter context, the judge had relied on a passage from Stone JA’s judgment in Belships (Far East) Shipping (Pte) Ltd et al v Canadian Pacific Forest Products Ltd et al (1999) 175 DLR (4^th) 449, but case was concerned with the strict liability of a common carrier. Here, Global were a contractual carrier and their liability as a carrier was governed by the bill of lading.

The Court’s decision is pending appeal to the Court of Appeal.

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