VASTFAME CAMERA LTD v. BIRKART GLOBISTICS LTD AND OTHERS

HCCL 63/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 63 OF 2002

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J U D G M E N T

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1. I have before me three summonses for specific discovery issued by the Plaintiff against the 1st Defendant in these proceedings. The first of these summonses was issued on 11 September 2003, the second was issued on 30 September 2003 and the third was issued on 4 March 2004, shortly before the hearing. The dispute between the parties is a relatively straightforward one, concerning a shipment of goods of which the Plaintiff was the shipper, which was misdelivered on arrival at the destination in France.

2. The shipment consisted of some 688 cartons of single use flash cameras which the Plaintiff had sold to one of its French customers, the 4th Defendant in these proceedings. The Plaintiff arranged with the 1st Defendant for the shipment of the goods to be effected. The remaining Defendants to these proceedings are the 2nd Defendant which is a French company involved in the handling of the goods in France and the 3rd Defendant, which is the owner of the vessel on which the goods were carried.

3. In brief what is said to have happened, and this is not seriously disputed, is that, on arrival, the goods were released to the buyer without production of the original shipping documents in relation to them. It is against this background that the Plaintiff has brought these proceedings against the various Defendants. For present purposes, however, I am concerned only with the position of the 1st Defendant.

4. The 1st Defendant's main line of defence is a simple one - that it was not itself, the carrier of the goods. The 1st Defendant's position is that it did not enter into any contract of carriage for the goods but only acted as the agent of the Plaintiff for the purpose or arranging shipment of the goods to France. It says that this is clear from the terms and conditions on the house bill of lading that it supplied to the Plaintiff which indicate that the role of the 1st Defendant was that of an agent rather than a principal responsible for the carriage of the goods.

5. This seems to be the key issue that separates the parties in these proceedings, and the basis on which discovery of the various documents sought is applied for is that it is said that these documents are likely to throw light on the issue of whether or not the 1st Defendant was truly only an agent in this transaction, or whether it had itself undertaken to effect the carriage of the goods so as to make itself liable as a carrier.

6. With this background, I must deal first with the submission made by Mr Stock, appearing for the 1st Defendant, to the effect that insofar as documents were sought which might relate to the question of whether the 1st Defendant regarded itself in its dealings with other persons involved in the transportation of the goods, or whether such other persons regarded it, as a principal in such transactions, or only as an agent for the Plaintiff, these documents are irrelevant as between the Plaintiff and the 1st Defendant since their relationship is governed exclusively by the terms of the contract between them. With respect, I am unable to accept that the terms of the house bill of lading issued by the 1st Defendant are necessarily conclusive of this issue.

7. It seems to me that it is at least arguable that notwithstanding the terms of that document, the true situation may be that the Plaintiff had engaged the 1st Defendant and the 1st Defendant had undertaken the responsibilities of carriage of the goods as a principal. This is a matter that can and, I think, should be resolved at the trial of this action.

8. It seems to me that to deny the Plaintiff discovery of documents which may have a bearing on this point would be unjust since it would mean the Plaintiff would be severely hampered in advancing this part of its case against the 1st Defendant. On the other hand, if the 1st Defendant's case as to its status is well-founded, the question of the relevance and the probative value of the documents in question is a matter that can more appropriately, in my view, be dealt with at the trial of this action.

9. With that preliminary observation, I turn to deal with the various categories of documents of which discovery is sought. Dealing first with the summons of 11 September 2003, this sought discovery of six classes of documentation, of which three are no longer in issue.

10. The first item sought was the master or ocean bill of lading issued by the actual carrier in respect of the shipment of these goods. Mr Stock informed me that it had recently been agreed in correspondence that the terms and conditions of this bill of lading, the front of which was disclosed in the 1st Defendant's list of documents, would be disclosed shortly. This item, therefore, is no longer in issue.

11. The fifth class of documents sought was described as "correspondence between the 1st Defendant and the actual carrier". Mr Maurellet accepted that this class, so phrased, was much too wide. He was content not to pursue it, and to rely instead on one of the items in the second summons which covered the documents which the Plaintiff was seeking.

12. Item six in this summons is also no longer in issue, having been effectively withdrawn some time before the hearing of this application.

13. That leaves the second to fourth items, which relate to invoices for freight charges issued by the actual carrier to the 1st Defendant or its agent, receipts issued by the actual carrier, addressed to the 1st Defendant or its agent, and documentary evidence of payment by the 1st Defendant to the actual carrier of such freight charges.

14. Mr Maurellet suggested that these documents were relevant, as they would cast some light on the question of whether the 1st Defendant acted as a principal in this transaction, itself undertaking the carriage of these goods, or was throughout acting only as an agent for the Plaintiff.

15. It seems to me that a prima facie case of relevance is made out, at least in relation to the first two of these items. Quite apart from the fact that the way in which the 1st Defendant described itself, or was described, in these documents may cast some light on its true role, questions such as whether or not the 1st Defendant made a profit from the difference between the freight that it charged to the Plaintiff's customer and the freight that it was charged by the ocean carrier may go some way to assisting in the resolution of this issue, on the footing that Mr Stock's submission as to the exhaustive nature of the terms and conditions in the house bill of lading issued by the 1st Defendant to the Plaintiff does not succeed.

16. With this in mind, it seems to me at least in relation to the invoices for freight charges and the receipts that they are prima facie relevant and that there is also a prima facie case that they exist, since they are documents that one would expect to be generated in the course of a transaction such at this.

17. So far, however, as the fourth item is concerned, it seems to me that documents which evidence the making of payment of the charges for ocean freight, or which evidence the mechanism by which such payment was effected, are not likely to be of any real relevance in these proceedings since they would simply show the movement of funds, rather than throw light on the relationship between the Plaintiff and the 1st Defendant. In any event, Mr Maurellet accepted that this item was of, at best, limited relevance.

18. As this item is unlikely to throw any light on the question of whether or not the 1st Defendant contracted as a carrier or simply as an agent for the Plaintiff, I do not propose to make any order in relation to this item. However, I consider that the 1st Defendant should give specific discovery in relation to items 2 and 3 of the summons of 11 September 2003.

19. The second summons, issued on 30 September 2003, initially related to three categories of documentation. Of these, only one is now pursued. This is item 7, which is described as "all correspondence between the 1st Defendant and the ocean carrier" (which I take to be the same as the actual carrier) "relating to the subject shipment in this action".

20. It seems to me that, for the same reasons as were given by Mr Maurellet in relation to the invoice and receipt for the ocean freight, documentation of this class, if it exists, is likely, at least on a prima facie basis, to be relevant to the issue in these proceedings as to whether the 1st Defendant was simply an agent or was a carrier.

21. Mr Stock submitted that there was no very good reason for thinking that such documentation exists. However, having seen the discovery that has been provided by the 1st Defendant, it appears that the only documentation of this nature that has been disclosed consists of, first, a booking confirmation in respect of the shipment passing between the ocean carrier, Mitsui, and the 1st Defendant and, second, the ocean bill of lading itself.

22. It seems to me that in the ordinary way of things, it is at least prima facie likely that there may have been other documents, such as a shipping instruction, that were created before these documents came into existence. If such documents exist (and I do not at this stage express any concluded view as to whether or not they do), they are clearly documents which ought to be disclosed. It seems to me that there has been a prima facie case made out for the existence of such documents and it is therefore appropriate that the 1st Defendant should make an affirmation or affidavit to explain whether or not such documents in fact exist or whether they have previously existed, and if the latter, what has become of them.

23. I do not accept Mr Stock's further submission that this class of document is described too widely. It is clear that what is sought is all correspondence relating to the shipment which is the subject matter of this action, passing between two parties - the 1st Defendant and the ocean carrier. It does not seem to me that this is a class that can cause any difficulty for the 1st Defendant when it comes to dealing with the question of whether or not such documents exist. In this respect, it seems to me that the description of the class is significantly more focused than that which appears in the authority to which Mr Stock referred me (the decision of Chu J in Re The Estate of Ng Chan Wah, deceased (unreported, CFI, Chu J, 5 March 2003)) where what was sought were documents of an unspecified nature which might contain information relating to matters in issue in those proceedings. It seems to me that such a formulation is clearly substantially more open textured than the formulation of item 7 in the schedule to the summons dated 30 September 2003.

24. Turning to the third of the summonses, that issued on 4 March 2004, this sought discovery of six classes of documents. Of these, the first (item 10) is no longer in issue as it has been disposed of in correspondence between the parties prior to this hearing.

25. Item 11, however, is in issue. It relates to a cooperation agreement dated 23 May which was entered into between the 1st and 2nd Defendants and which has been disclosed in the list of documents that has been filed by the 1st Defendant. That document indicates that there was a profit sharing arrangement between the 1st and 2nd Defendants in relation to the shipments effected by them respectively in cooperation with each other.

26. What is sought are documents or correspondence between the 1st and 2nd Defendants concerning the sharing of loss or profit in relation to the shipment in question, and the monthly statement of accounts in respect of the month in which profit-sharing figures in relation to the shipment in question would have appeared. Mr Maurellet says that this may also cast some light on the role of the 1st Defendant in these proceedings. I am prepared to accept for present purposes that this is the case, and that there are, at least prima facie, documents in existence in this category. It may be, as Mr Maurellet accepted, that the only document that exists is the monthly statement. If that is the case, than that document should be produced and should be disclosed at this stage.

27. Item 12 relates to freight invoices for the shipment that were issued by either the 1st or 2nd Defendant. Although item 12 does not identify the person to whom these invoices might have been issued, it seems clear from the affirmation in support of this application that what is sought are the invoices in relation to the shipment which should have been issued to the 4th Defendant, since the shipment was on a freight collect basis.

28. It seems to me that, as with other freight invoices, it is possible that these would throw some light on the role of the 1st Defendant. I would therefore be prepared to order their disclosure insofar as they exist. It seems to me also likely, in the ordinary way of things, that documents of this nature are likely to have existed. I therefore think that discovery of these documents should be ordered. If it turns out that no such documents exist or existed, this can be stated in the affirmation to be made in compliance with the order for discovery.

29. Item 13 seeks documents that are referred to in an e-mail message dated 29 August 2001, from the 2nd Defendant to the 1st Defendant. This message makes it clear that certain documents were sent by the 1st Defendant to the 2nd Defendant by courier in August 2001. This request was based on that reference, and it was suggested that it was unclear what those documents might be. However, it is apparent from the series of e-mail correspondence of which the e-mail referred to in this item forms a part that the documents which were sent consisted of the ocean bill of lading and a copy of the house bill of lading.

30. It seems to me that in these circumstances, unless there is some evidence that there may have been other, additional, documents included, there is no real basis made out for disclosure under this item. Mr Maurellet, I think, accepted that there was no such evidence, and I therefore do not propose to make any order in relation to item 13.

31. Item 14 consists of documents or correspondence, including any binding terms and or conditions between the 1st and 2nd Defendants, evidencing the engagement of the 2nd Defendant by the 1st Defendant. As to this item, Mr Maurellet accepted that it was likely to be of less relevance than items 11 or 12. In my view, that is correct. I also have some difficulty in seeing that there is any basis on which to suggest that there might be such documents in relation to this particular shipment over and above the cooperation agreement that has already been disclosed. In the circumstances, I am not satisfied that there exist any further documents in this category and I decline to make an order in relation to it.

32. The final item is item 15 which seeks discovery of e-mails exchanged between the 1st Defendant and 2nd Defendant, apart from those already disclosed by the 1st Defendant in its list of documents. Reference was made in this regard to various e-mail messages which the Plaintiff had listed in its amended list of documents which was recently filed on 16 February 2004. However, it appears that only two of those e-mail messages had not been disclosed by the 1st Defendant in its own list of documents. Of those two, neither was an e-mail message passing between the 1st Defendant and the 2nd Defendant, which is what this request is directed at. One of the messages is clearly a message from the Plaintiff itself to the 1st Defendant, and the other seems to be a message from the Plaintiff to the 2nd Defendant which does not, on the face of it, appear to have been copied to 1st Defendant.

33. In these circumstances, it does not seem to me that there is shown a prima facie case that there exist any further e-mail exchanges between the 1st and 2nd Defendants as sought by this item, and I decline to make any order in respect of it.

34. I shall therefore order that the 1st Defendant make further discovery in relation only to items 2 and 3 of the summons dated 11 September 2003, item 7 of the summons dated 30 September 2003 and items 12 and13 of the summons dated 4 April 2004.

35. I will now hear the parties as to the costs of these applications.