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DMC/S&T/32/01
TICC Limited v. COSCO (UK) Ltd.
English Court of
Appeal: Ward, Kay and Rix LJJ: 5 December 2001
Christopher Smith instructed by James Chan & Co for Cosco UK
Samuel Jarman instructed by Sanders Witherspoon for TICC
BILLS OF
LADING: CONSIGNEES: SHIPPING LINES: FREIGHT NEGOTIATIONS BETWEEN LINES’ UK
AGENTS AND CONSIGNEES IN UK: FREIGHT COLLECT BsL: ASSURANCES FROM UK AGENTS:
FREIGHT SURCHARGE ANNOUNCED BY CIRCULAR IN HONG KONG TO SHIPPERS: WHETHER
INCORPORATED IN BsL: SHIPPERS NOT CONSIGNEES’ AGENTS: NOTICE NOT EFFECTIVE TO
BIND CONSIGNEES
Case Note based on an Article
in the December 2001 Edition of the ‘Bulletin’, published by the Marine and
Insurance teams at the international firm of lawyers, DLA
Summary
In this case, a shipping line tried to recover from its UK customer
certain freight surcharges, notice of which had been given by its Hong Kong
office to ‘all shippers’. The notice had been received by the shippers under
the relevant bills but not by the UK customer itself. Further, there was a
course of dealing whereby the UK customer negotiated the freights (which were on
a freight collect basis) directly with the Line’s UK agents, who had assured
the customer that, if a surcharge were introduced, they would give the customer
notice of it. This did not happen. The court found that the UK customer was not
bound by the notice issued in Hong Kong. It had not received specific notice of
the surcharge and the shippers (who had) were not its agents.
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Facts
The defendant, COSCO (UK) Limited, was
UK agent for the carrier COSCO Container Lines. The claimant, TICC, was the
English consignee of goods shipped on various COSCO vessels in September and
October 1998 under bills of lading which named either Cycle Container Lines
Limited or IFB International Freightbridge Limited as shippers. In every case
TICC was named as consignee.
The bills of lading were marked "freight collect" and the practice
was for COSCO (UK) to negotiate the applicable freight rates directly with (and
in due course collect the freight from) TICC. The bills all stated that
"the terms of the Carrier’s applicable Tariff and other requirements
regarding charges are incorporated into this Bill of Lading..."
In the summer of 1998, as rates began to harden, the subject of a possible
surcharge was discussed in a telephone conversation, during which the
representative of COSCO (UK) told TICC that, at that date, the line was not
charging a surcharge but, if one was introduced, COSCO (UK) would be told and
would pass the information to TICC.
On 28 August 1998, COSCO Container Lines’ Hong Kong agent sent a fax
addressed to "all customers" stating that their principal had decided
to implement a peak season surcharge effective from 11 September. This
was sent to Cycle and IFB, the freight forwarders, but they did not pass it on
to TICC. COSCO (UK) said they were also not informed about it. The issue was
whether the fax had been sufficient notice to inform TICC of the surcharge.
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The Arguments
COSCO (UK) argued that the fax had
effectively incorporated the surcharge into the shipping contract evidenced by
the bills of lading and TICC, on becoming holder of those bills or the person to
whom delivery was made, became liable under section 3 of the Carriage of Goods
by Sea Act 1992 to pay the surcharge as if it had been an original party to the
contract. Alternatively, COSCO (UK) maintained that TICC was the true shipper
and Cycle and IFB acted as its agents, so TICC was bound by their agents’
knowledge.
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The Judgment
The judge and the Court of Appeal
disagreed. Normally, a person who procures a shipment for the ultimate benefit
of a consignee does not thereby contract with the carrier as agent for the
consignee. A CIF seller is not an agent for his buyer in procuring the contract
of carriage. There was also nothing to suggest Cycle and IFB had contracted only
as agents and, in any event, TICC was named as consignee and not as shipper.
Since the surcharge was not an express part of the bill of lading, it could
only be incorporated by notice. For this to happen, COSCO (UK) had to show that
COSCO Container Lines had done what was reasonably necessary to bring the
information to TICC’s attention.
Both the High Court and the Court of Appeal decided that the fax of 28 August
failed this test. The evidence showed that all freight and other charges had
been negotiated in England directly between TICC and COSCO (UK) and TICC had
been reassured that COSCO (UK) would tell them if a surcharge was introduced.
Against this course of dealing, a general notice sent by the line’s Hong Kong
agent to its Hong Kong customers was not enough to give TICC notice of the
surcharge. COSCO’s claim for the freight surcharges therefore failed.
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Comment
The case illustrates the familiar principle
that a contracting party who wishes to rely on certain terms must ensure that
they are brought to the notice of the other party at the time the contract is
made and that they are accepted, either expressly or by implication. The Court
of Appeal appeared to accept in principle that the terms of the bills of lading
allowed for variations in freight rates to be incorporated by notice but decided
that in this case, TICC were not given sufficient (or, indeed, any) notice,
particularly in the light of their previous course of dealings. The moral of the
story is, in any situation where notice has to be given, don’t take any short
cuts!
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