NANTONG ANGANG GARMENTS CO. LTD. v. HELLMANN INTERNATIONAL FORWRADERS LTD.

HCCL 117/1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.117 OF 1994

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REASONS FOR JUDGMENT

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Introduction

1. This case is a misdelivery claim. The action was brought by the plaintiff, a silk garment manufacturer in the mainland, against the defendant, an international freight forwarder, for damages resulting from the misdelivery of 903 cartons of ladies silk woven garments.

2. The goods were manufactured by the plaintiff and were delivered to the defendant's Shanghai office for onward carriage by air from Shanghai to Columbus, USA.

3. This designated state of affairs did not occur. Notwithstanding the specified position under the contract of carriage, the goods were re-routed to Hong Kong without reference to the plaintiff and were released by the defendant to the 1st third party herein, Silking Development Ltd, which appears to have been acting in conjunction with the 2nd third party, Lerner Stores Inc, an American corporation and, I understand, the intended buyer of these silk garments.

4. Neither third party was present at the trial of this action, the firm of solicitors hitherto representing both, Messrs Simmons and Simmons, having successfully applied, by Order dated 29 October 2002, to come off the record on the basis that despite repeated attempts no instructions could be obtained from the defendants for the forthcoming trial.

Compromise of the Head Action

5. The defendant forwarder, Hellmann International, submitted to judgment in the afternoon of the first day of the trial, at a stage prior to the completion of the evidence of the plaintiff's first witness, Mr Daniel Ng Ho Ngor.

6. The substance of this judgment was that there was to be judgment for the plaintiff in the sum of US$370,000.00, such sum to be inclusive of interest and costs. Provision was further made for the payment by of this sum by instalments (the final instalment of US$120,000 to be payable on 27 January 2003), in addition to payment out of sums earlier deposited in court pursuant to orders requiring payment of security for costs.

Third Party Action

7. Settlement of the head action left Mr Kat, appearing on behalf of the defendant, to prove his case against the absent 1st and 2nd third parties in the third party action.

8. In my view he succeeded in so doing. One witness was called on behalf of the defendant, Mr William Chiu Hon Kin, who gave evidence in terms of his witness statement, in addition to identifying and verifying the documentary evidence supporting the plea that the defendant had received direct instructions from each of the 1st and 2nd third parties respectively as to the variation in carriage of the goods, specific instructions with which the defendant forwarder had complied.

9. Mr Chiu referred in particular, also, to the fact that consequent upon the instructions received, the 1st 3rd party, an Hong Kong company, had given the defendant a letter of indemnity dated 4 March 1994 confirming to the defendant, inter alia, that "we will undertake and agree to bear full responsibilities/liabilities whatsoever directly or indirectly arising from or relating to the said route change".

10. I accept without reservation the uncontradicted evidence of Mr Chiu.

11. Mr Kat submitted, in my view with some justification in the circumstances, that the express indemnity as received by the defendant was couched in sufficiently wide terms to encompass an obligation binding upon both third parties, so that the indemnity as given by Silking may be construed as being tendered both on its own behalf and on behalf of Lerner.

12. If there be any residual doubt on the point, in any event I further accept Mr Kat's submissions concerning the general principles relating to the implication of an indemnity in favour of a party acting at the request of another when such act turns out to be injurious to third party rights: see, for example, The "Nogar Marin" [1988] 1 Lloyd's Rep 412 (CA) and Stanley Yeung Kai Yeung v. Hong Kong and Shanghai Banking Corporation [1981] AC 787 (PC). So that in this instance, as he pointed out, such indemnity necessarily arises by reason of the specific and direct instructions given to the defendant forwarder by the 1st and 2nd third parties, Silking and Lerner.

13. Whilst the non-appearance of the third parties and the absence of adversarial argument remains a less than satisfactory feature of this case, nevertheless I was satisfied on the evidence that the defendant had established its case as pleaded in the Amended Statement of Claim (leave to amend having been granted to the defendant) against each of the 1st and 2nd third parties, and accordingly that the defendant was entitled to the indemnity sought, together with consequential orders for the defendant's costs of the third party proceedings and for the costs incurred in the defence of the plaintiff's action. I so ordered.

14. As to the element of post-judgment interest, given that judgment in the head action against which an indemnity now has been ordered is payable by instalments, such interest is to run, until payment, at the judgment rate from time to time prevailing and is to be calculated upon each of the three instalments as from their respective payment dates. The Order to be engrossed will be amended accordingly.