DMC Rating Category: Confirmed

This case note has been contributed by Chris Potts, a partner in the firm Crump & Co., Hong Kong. Crumps are the international contributors to the website for Hong Kong

Background
This was a case of misdelivered goods. The Plaintiff, Vastfame Camera, contracted with the buyer, H.P.I France ("HPI") for the sale of 55,000 cameras and invoiced HPI for the sum of US$143,815. The payment terms under the contracts were "LC at sight" but these were later varied to cash against documents. The Plaintiff then arranged with the Defendant freight forwarder, Birkart, to carry the cameras from Hong Kong to Le Havre, France. The Defendant issued to the Plaintiff a ‘To Order’ bill of lading, the Plaintiff was named as "Shipper" and HPI as "Notify Party". On arrival, the consignment of cameras was released to the buyer without the production of the bill by a third party French Company, namely Moiroud S.A. ("Moiroud") who was a co-operation partner of the Defendant in France.

It was admitted by Moiroud that it did release the goods to HPI without the production of the bill of lading and the Defendant joined it in Third Party Proceedings.

The court entered a judgment in favour of the Plaintiff in the main action and a judgment in favour of the Defendant in the 3^rd Party Action for US$143,815.00 together with interest and costs.

Issues
1. Nature of Contractual relationship
It was alleged by the Defendant that it did not undertake to carry the goods as contractual carrier. The Defendant relied on Clause 10 of the reverse side of the bill, and in particular the following:

Conditions 3(i) and 3(ii) stated that:

The Defendant submitted that the only obligation undertake by them was limited to arranging for the carriage of goods, the "bill of lading" issued by the Defendant represented "an entirely neutral consideration." They also relied on Scrutton (20^th ed.), page 376 which suggests such a "house bill of lading" is "at most a receipt for the goods coupled with an authority to enter into a contract of carriage on behalf of the shipper" and is not a document of title. 

The Defendant further relied on Tetley on Marie Cargo Claims (3^rd ed.) at 693, which notes, amongst other things, that "merely because a forwarder issues a document entitled ‘bill of lading’ does not necessarily mean that the forwarder is the carrier". As neither the Plaintiff nor the Defendant intended that the Defendant would assume the obligations of a contractual carrier, coupled with the facts that no freight charged was received by the Defendant apart from a sum of US$150 payable in terms of profit share by its co-operation partner, Moiroud, the relationship between the Plaintiff and the Defendant should be classified as an agency relationship only.

Judgment
The first argument was rejected by the court as it was clear that the Defendant was indeed the contractual carrier under the bill of lading issued by the Defendant to the Plaintiff. The evidence given by the Defendant’s staff showed that the Defendant did issue the Bill of Lading as principal and Moiroud was the Defendant’s agent in releasing the goods. The use of the term "forwarder" or "forwarding agent" does not mean that a party is not signing as principal.

Furthermore, the court upheld and adopted the principle in The "Starsin" [2003] 2 WLR 711 (HL) which says that when a bill of lading contains on its face an apparently clear and unambiguous statement of who is the carrier, it is difficult to accept that the shipper would expect to have to resort to the detained conditions on the reverse of the bill in an attempt to discover with whom he was contracting.

2. Exclusion and limitation provisions
The Defendant submitted that they should be entitled to rely upon the exclusion clause contained in Condition 4(i) (a) of the Bill of lading and also the limitation clause contained in Condition 24(iii) (b).

Clause 24(i)(a) read:
"The Agent shall not be liable to the customer or the consignee or the Owner: 
(a) for loss or damage (physical or otherwise), including but not limited to loss or damage resulting from non- delivery of the goods or mis-delivery of the goods to a wrong party, caused by any failure to carry out or negligence in carrying out the Customer’s or the Consignee’s or the owner’s instructions, or by any failure to perform or negligence in performing the Agent’s obligations (whether such obligations arise by contract or otherwise), unless such loss or damage is due to the willful misconduct of the Agent or its own servants and to circumstances within its control…"

Judgment
As regards the arguments under clause 24(i)(a), the court noted that the term "Agent" (the beneficiary of the exclusions and limitations under the clause) was not defined in the bill of lading, whereas Birkart was defined as "the Company". This led naturally to the conclusion that the Agent and the Company were two difference entities, or that, if the word "Agent" did refer to Birkart, it accorded them protection only where Birkart was contracting as agent and not as principal, as here. Furthermore, the Court agreed with the Plaintiff that the words "misdelivery to a wrong party" were "insufficient to make it clear to the users of the carrier’s services that the carrier is specifically seeking to exclude liability for releasing goods, absent the production of a bill of lading". Whilst it might be possible to draft a clause to that effect, very clear wording was needed [The "Ines" [1995] 2 Lloyd’s Rep.144] and that had not been achieved here. The "contra proferentem" principle applied, by which any ambiguity in an exemption clause was to be resolved against the party seeking to rely on it.

The court accepted the invoice value as evidence of the sound arrived value, it went on to say that instead of clause 24(iii) (b) as relied on by the Defendant, Clause 24(iii) (a) should apply and the invoice value of the relevant goods calculated on an FOB (Free on Board) basis represented the normal measure of loss in claims for delivery of goods without production of a bill of lading. The words "whichever be the lesser" in (b) referred to the two alternatives in (b) itself and not to the lesser of the results of (a) and (b).

Third Party Action
As regards the Third Party action, the Court held that, as there was a clear contractual relationship between the Defendant and Moiroud, the Defendant was entitled to be indemnified by Moiroud, to the full extent of its liability to Vastfame, since Moiroud’s had clear and sole responsibility for the loss.

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