COSCO CONTAINER SHIPPING CO LTD v. WORLDTREND SHIPPING LTD

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REASONS FOR JUDGMENT

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1. At the conclusion of this application by the Plaintiff for summary judgment against the Defendant, I granted summary judgment in respect of all the claimed Invoices except three for which conditional leave to defend was given and I indicated that I would give my reasons for the Judgment later. I now hand down my Reasons for the Judgment.

2. The Plaintiff is the container shipping arm of the internationally well known Cosco Group. In April 1994, the Plaintiff ("Cosco") and the Defendant ("Worldtrend") entered into 5 agreements ("Agreements"). Each agreement contained the terms and the tariffs of the container shipping services to be provided by Cosco to Worldtrend in relation to a particular area of the world. Agreement 1 is in relation to Persian Gulf, Agreement 2 in relation to Australia, Agreement 3 in relation to South America, Agreement 4 in relation to South Africa and Agreement 5 in relation to West Africa. Worldtrend is a company which carried on the business of arranging for the shipping of cargo from Chinese ports to countries overseas. The commercial reality of the arrangement underlying these 5 Agreements is that Chinese exporters/cargo owners consigned their cargo to the Defendant Worldtrend which in turn entrusted the cargo to Cosco for carriage to the various overseas ports. The Chinese exporters paid freight to Worldtrend and Worldtrend in turn paid a lower freight to Cosco. Worldtrend of course made its profit from the difference between the freight it received and the lower freight it had to pay to Cosco. This whole Action is about the substantial total sum of freight arising from a large number of shipments made for Worldtrend by Cosco which Worldtrend had not paid.

3. The course of dealings which emerged from the documents and the evidence is that in relation to any cargo required to be shipped by any of the Worldtrend's various offices in China, a shipping order would be made out showing the shipper, the consignee, the notify party abroad, the port of loading and port of discharge and the details of the cargo. On the shipping order, there would normally appear a notation "COSCO/WTS No. 5" or some similar notation which referred to the Agreement No. governing the carriage of that particular cargo. Very often on these shipping orders, there would also appear notations indicating that Freight is prepared to Cosco by Worldtrend at Hong Kong. Furthermore the shipping orders would very often also bear on the top right hand corner, a round chop in Chinese which means Worldtrend ("Round Worldtrend Chop"). The freight earned by Cosco from Worldtrend is generated by the carriage of the particular cargo as evidenced by the Cosco Bill of Lading which contained generally speaking almost all or very similar details as earlier described in the shipping order. Therefore the words "COSCO/WTS No. 5" also commonly appeared in the Cosco Bill of Lading. The Cosco Bill of Lading would of course invariably show the name of the carrying vessel. The Round Worldtrend Chop was generally however not put on the Cosco Bill of Lading.

4. These are the primary documents generated by the above arrangement of Cosco carrying to various parts of the world pursuant to the 5 Agreements, the various cargo entrusted to Cosco by Worldtrend which in turn were entrusted the cargo by the shippers or exporters of such cargo. The shipper in the Cosco Bills of lading would generally therefore be some company or enterprise in China but quite often, Worldtrend was also recorded as the shipper in the Cosco Bills of Lading. In such cases, then Worldtrend usually issued its own bill of lading on its own Worldtrend form.

5. The evidence shows that a few days after the date of the Cosco Bill of Lading, Cosco issued and sent to Worldtrend the Cosco Invoice and attached to the Cosco Invoice was the Cosco Bill of Lading. The Cosco Invoice shows the destination, the particular sailing on a particular ship, the Cosco Bill of Lading No. and the Container No. by which that cargo was shipped and finally the freight to be paid by Defendant Worldtrend to Cosco in respect of that particular carriage. At the hearing it is not disputed that all or practically all these Cosco Invoices the subject of the present claim by Cosco were sent to Worldtrend on the dates indicated in the Cosco Invoices. The dates of the 63 Cosco Invoices ran from May 1995 to February 1996 in respect of various carriages of cargo (covering more or less the same period).

6. There were in fact far more than the 63 subject Cosco Invoices now claimed in this Action. The Defendant Worldtrend was slow in paying the Cosco Invoices. Eventually some 63 Cosco Invoices were not paid and that was after repeated promises by the Defendant Worldtrend that they would be paid and acknowledging they were due to Cosco. The correspondence relating to the Plaintiff chasing for payment and the Defendant repeatedly promising to pay all 63 Invoices covered a period from November 1995 to September 1996. These 63 Cosco Invoices were not paid and on the 4th of October 1996, the present Action was commenced by Cosco and Cosco applied for summary judgment on the sum owing under each of these 63 Cosco Invoices.

7. At the hearing before me, many of the defence issues raised in the Affirmations of Chan Man Keung were abandoned or not pursued. At the end, the real defence to the summary judgment argued by Mr. Chan for the Defendant at the hearing can be summarised as being a desire to verify the full details of each Invoice and it is really on this basis that the Defendant contends that it should be allowed to go to trial on all 63 Invoices. The issue finally narrowed down to whether in respect of each Cosco Invoice claimed to be unpaid by the Plaintiff, the Court can come to a decision that a bona fide defence has been sufficiently raised to give rise to an unconditional leave to defend.

8. The curious stand taken by the Defendant in resisting the liability on these 63 Invoices is not to swear on Affidavit, in relation to each particular Invoice and say what are the particular facts which show that the Defendant Worldtrend as being not liable for that Invoice. To illustrate the way the Defendant sought to persuade the Court that there is a bona fide defence, it is convenient for me to take one of the Invoices and describe in relation to that invoice how the Defendant contended that it was not liable for payment under that Invoice.

9. Cosco Invoice No. 0140/95 dated 25th August 1995 shows the carriage of one 20 footer container No. TRIU3742048 shipped under Bill of Lading No. HQKWSYD2540 on Voyage No. 112 from Fuzhou to Sydney with a freight charge of US$1,470. As the voyage was to Australia, this Invoice therefore charged freight in accordance with the tariff rate provided in the Agreement 2 in relation to Australia. This is an Invoice which was part of the 63 Cosco Invoices claimed by the Plaintiff in this Action as being unpaid by the Defendant.

10. The Cosco Bill of Lading No. HQKWSYD2540 which was sent together with the Cosco Invoice shows the following: -

It is reasonably clear to me that the Cosco Invoice and the Cosco Bill of Lading are in respect of the same carriage of a particular cargo from Fuzhou to Sydney. It is true that no Shipping Order has been exhibited by the Plaintiff in relation to this particular Invoice. Does that however create a genuine defence for the Defendant. For the purpose of the Order 14, the 4 central questions which ought to be answered in respect of each Invoice are:-

I have no doubt that the answers to all these 4 questions in relation to Cosco Invoice No. 140/95 are yes. There was no evidence from the Defendant that the cargo was not shipped to Sydney as per the Cosco Invoice and Cosco Bill of Lading. The Cosco Bill of Lading bears two references to Worldtrend which shows that the cargo was shipped for Worldtrend by Cosco. There is no evidence that the Cosco Invoice charged too much for that cargo shipment and it is not seriously even in dispute that payment had not been made by the Defendant to the Plaintiff for this shipment.

11. At the hearing, the Defendant did not put forward any particular evidence in relation to this particular shipment or why the Defendant should not be held liable for the particular amount shown in that Invoice No. 0140/95. There is therefore no Affidavit defence evidence filed by the Defendant in relation to this particular Invoice.

12. In support of this desire of the Defendant to verify full details of each Invoice, it was suggested on behalf of the Defendant that ex-employees of the Defendant might have carried out business in the name of the Defendant and that therefore some carriages might not be done for Worldtrend and ought to be the responsibility of the Defendant. But no evidence had been filed by the Defendant as in which of the many Chinese loading cities the subject of the 63 Cosco Invoices (e.g. Shanghai, Shekou, Xingeng, Huangpu, Fuzhou, Quindao, Yantai etc.) there had been carriages done by such ex-employees or which particular carriages were so suspect as to require even investigation or verification. This lack of condescension as to particulars is characteristic of the whole approach of the Defendant in this resistance to summary judgment and without full particularisation of its defence in relation to each Cosco Invoice, the plea for unconditional leave of the Defendant is nothing but "putting forward a case that is all surmise and Micawberism" in the words of Megarry, V.C. in Lady Anne Tennant v Associated Newspapers Group Ltd. and provides no basis for court granting leave to defend.

13. Ultimately Mr. Chan was forced to put forward in relation to each Cosco Invoice an alleged individual defence. Two tables were put before the Court by Mr. Chan:-

I hope Mr. Chan will for give me if I interpret his two documents as being the Invoices in the Schedule showing possible defence and the Invoices in the Highlights of Discrepancies showing strong defence.

14. The basic theme running through the so called defence of the Schedule Invoices is that there was no reference in the documents to Worldtrend and that therefore each of the Schedule Invoices could not be attributable to the Defendant. It is a hopeless defence, totally devoid of merit and I will illustrate the point by picking out just one group relied on by Mr. Chan in his Schedule. Cosco Invoices 100/95, 130/95 and 144/95 are all said to be not the responsibility of the Defendant because the supporting documents of the Plaintiff had no reference to Worldtrend apart from the Round Worldtrend Chop. These Invoices are to be found at page 256, 274 and 328 and in each case was supported by the relevant Cosco Bills of Lading and Shipping Orders. In each of the Cosco Bill of Lading and Shipping Order there appeared either the relevant governing Agreement No. such as "COSCO/WTS NO. 5" or reference to freight prepaid to CCSC at Hong Kong or both. There is no doubt that these Invoices all point to these shipments being made for Worldtrend with freight to be paid by Worldtrend pursuant to the Agreements. Based on documents, there is clear and sufficient evidence to show that the shipments under these Invoices were linked to Worldtrend and made for Worldtrend. But, to raise a bona fide defence the Defendant needs to do a great deal more as it is incumbent on the Defendant to say on Affidavit that a particular shipment was not made for Worldtrend and why it was not made for Worldtrend. Having regard to the fact that the Cosco Invoices were sent immediately after the shipments were made and that the Defendant had raised no query as to these Invoices and in fact had over a long period of time repeatedly acknowledged its responsibility for the Invoices and seeking more time to pay, no court will grant leave to defend unless convincing evidence is put before the Court in relation to a particular Invoice showing that such shipment was not made for Worldtrend and that the document had wrongly recorded the position.

15. The Defendant's complaints of the Schedule Invoices are in one way or another all of the same nature as those described earlier and in my judgment, no bona fide defence had been raised in relation to the Schedule Invoices.

16. More potently, Mr. Chan also relied on the Highlight of Discrepancies as showing that the 12 Invoices referred thereto in his document show a stronger defence. I do not agree. The technique employed with this document is to contrast the Bill of Lading with the Shipping Order and point to the discrepancies between the two documents. In my view, there is really nothing in most of these points as the difference between number of cartons or gross weight or cubic measurements could be perfectly consistent with the goods actually shipped under the Bill of Lading were those done for Worldtrend even though the goods in question might turn out on shipment to be less than originally envisaged in the Shipping Order. All these are common place and if Worldtrend was being charged only on the basis of the shipped goods and not on the basis of the details of the goods described in the Shipping Order, there is no basis for the Defendant to contend that it should not pay for such shipment, specially if it had been happy to acknowledge its responsibility for such Invoices time and again.

17. Three of the Invoices were however pointed out as showing discrepancies between the Bill of Lading and Shipping Order which might indicate that the goods shipped under the Cosco Bills of Lading might not be the goods entrusted to the Cosco by Worldtrend under the Shipping Orders and these Invoices are 130/95 ($2,850), 149/5 ($1,470) and 177/95 ($2,850). With Invoice 130/95, the description of the goods, the number of cartons and name of shipper were all different and in the Bill of Lading there was no Agreement No. notation. With Invoice 149/95, there were non-matching of shipper, vessel, cartons, description of goods, weight and measurements. With Invoice 177/95 there were discrepancies of vessel, goods and cartons. Bearing in mind these were matters not raised by way of Affidavit in which positive evidence could be given on the discrepancies thereby giving an opportunity to the Plaintiff to explain the documents, I have reached the conclusion that conditional leave should be granted in respect of these 3 Invoices. I am not satisfied that genuine defences had been raised in relation to these 3 Invoices, but having regard to the shadowy manner of the defences raised by the Defendant, it seems to me that the fair order in relation to these three Invoices is to give conditional leave to defend. In reaching this conclusion, I have regard to all the circumstances including the Affidavit material put before me and in particular the correspondence.

18. My conclusion on this Order 14 application is that in relation to Invoice Nos. 130/95, 149/5 and 177/95, conditional leave to defend is granted in relation to these 3 Invoices if within 14 days, the total amount of these 3 Invoices in the sum of US$7,170 was paid into Court. Summary Judgment is entered in the balance sum of US$285,015.00 together with interest thereon at 2% above prime from the date of the Writ until Judgment. The Plaintiff is to have 95% of the costs of the Action and 100% of the costs of this Summary Judgment Application.