CHARMAX TRADING LTD v. WT SEA AIR ASIA LTD AND ANOTHER

HCCL 8/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 8 OF 2009

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BETWEEN

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J U D G M E N T

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1.  This is a claim for misdelivery of cargo with a twist.

2.  Charmax as owner and shipper of goods seeks summary judgment against the 1^st Defendant (WT) for misdelivery of those goods.

3.  Charmax sold the goods to Marchpole and Homebody in the UK. Marchpole and Homebody are related companies.

4.  Charmax delivered the goods to WT in Hong Kong for carriage by sea (in respect of some of the goods) and air (in respect of the rest) to England. Charmax received 4 Bills of Lading and 4 Air Waybills from WT for the goods. The Bills of Lading were all consigned to HSBC or its order. The Air Waybills were all consigned to HSBC. The Bills of Lading and Air Waybills named Marchpole or Homebody as Notify Parties.

5.  Marchpole and Homebody still owe Charmax a balance of US$130,892.57 for the goods.

6.  In a typical misdelivery claim, a consignor complains that a forwarder or carrier has released goods without presentation of a bill of lading. The twist in this case is that WT delivered the goods against presentation by Marchpole or Homebody of original copies of the 4 Bills of Lading. But a difficulty arises here because none of the 4 Bills of Lading presented had been endorsed to Marchpole, Homebody or anyone else by HSBC. WT released the goods to parties who were not identified as consignees or endorsees on the faces of the 4 Bills of Lading.

7.  A bill of lading is usually issued as a set of 3 original copies. That was the case here. WT issued 4 Bills of Ladings (each comprising a set of 3 original copies) when Charmax consigned the goods for carriage. Charmax sent an original copy of each of the 4 Bills of Lading to Marchpole or Homebody. According to Charmax, this was done “in exchange for the Inspection Certificates for the goods”. However, upon receipt of those copies, Marchpole and Homebody used them to claim the underlying goods from WT’s UK agent (the 2^nd Defendant), even though neither Marchpole nor Homebody had fully paid for the goods.

8.  WT says that it has a valid defence to Charmax’ claim. It argues that there was no misdelivery of the goods. WT says that it was entitled to release the goods upon presentation by Marchpole and Homebody of original copies of the 4 Bills of Lading.

9.  I am unable to agree with WT.

10.  In Carewins Development (China) Ltd. v. Bright FortuneShipping Ltd. [2009] 3 HKLRD 409, the Court of Final Appeal (CFA) (at para. 21) echoed Lord Denning’s famous dictum in Sze Hai Tong BankLtd. v. Rambler Cycle Co. Ltd. [1959] AC 576 (at 586). The CFA stressed that, under a bill of lading, “[t]he contract is to deliver, on production of the bill of lading, to the person entitled under the bill of lading”. The presentation of a bill of lading may not by itself justify release of goods to a stranger. Delivery can only be made to such party if he or she is the person entitled to receive the goods in accordance with the terms of the bill of lading.

11.  Here the 4 Bills of Lading required the goods to be released to HSBC or its order. The 4 Bills of Lading not having been generally or specially endorsed by HSBC, neither Marchpole nor Homebody was entitled to the delivery of the goods. WT accordingly had no authority to release the goods to Marchpole or Homebody.

12.  As for the goods covered by the Air Waybills, WT has raised no defence. WT released those goods to Marchpole or Homebody without presentation of any document. WT admits the claim in relation to these goods.

13.  It follows that there shall be judgment in Charmax’ favour against WT for the outstanding purchase price of the goods (US$130,892.57). Interest will run on that amount at 1% over US$ prime from 20 April 2009 (the date of Writ) to today. Thereafter, interest will accrue at the judgment rate until payment.