LONG FORD GARMENT LTD v. JAS FORWARDING (Hong Kong) LTD

DCCJ 4503/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4503 OF 2002

(Action transferred from High Court Action No. HCA1184/1997)

--------------------

--------------------

________________

J U D G M E N T

________________

1. By this action, the Plaintiff claims against the Defendant damages in the sum of USD69,017.35 for breach of the Defendant's duty under a bill of lading No.015044180 dated 4th September 1995 and/or as carriers for reward, the Defendant and/or its agent having failed to deliver the goods described therein to the person holding the bill of lading but without authority to do so released the said goods to a person not entitled to receive the said goods. Alternatively, the Plaintiff claimed against the Defendant for damages in breach of their duty as carriers for reward and/or its agent have failed properly and carefully to carry and keep, care for or deliver the said goods but were negligent in and about the custody, delivery and release of the said goods.

2. The issues of the trial were:-

1. Whether the Defendant is the proper defendant of the Plaintiff's contractual or tortuous claim;

2. Whether clauses 4(a), (b) and 5(a) of the B/L limit the liability of the Defendant.

3. In the course of the closing submissions, the Defendant's Counsel conceded that the issue of whether the Plaintiff has the locus to sue under the contract or in the tort of conversion was no longer an issue. Also in the course of the closing submissions, the Defendant's Counsel conceded that Hong Kong Law applied to the contract in the Bill of Lading and therefore the issue of whether the Venezuelan Court Order relieved the Defendant of responsibility over the said goods was no longer a live issue.

The 1st Issue

The Facts

4. Mr. Foo Chik Hop, the director of the Plaintiff gave evidence. He stated that the Plaintiff carried on the business of garment manufacturing for export to Europe and America. In about early June 1995, Mr. George Bohbot of Silvereed International Ltd. ("Silvereed") approached the Plaintiff to order some garment products for export to a buyer in Venezuela, South America called Koshito. As the Plaintiff had not done any business with any buyer in Venezuela, Silvereed nominated the Defendant as the forwarder. Silvereed gave a name card of one Dr. Pierre-Etienne Delalonde (hereinafter referred to as "Dr. Delalonde") of the Defendant to the Plaintiff for contact in respect of shipping arrangements. The name card was given to him so that he could contact the staff of Jas Forwarding (H.K.) Limited (hereinafter referred to as "Jas Forwarding"), the Defendant. He gave the name card to his staff to contact the Defendant. At para 15 of his witness statement at page 54 of the Bundle of Documents ("BD-D"), Mr. Foo stated that the Plaintiff delivered the goods to the Defendant which accepted the goods through its agent Jas Ocean which operated at the same address as the Defendant's own. He further stated that it was the intention of the Plaintiff at all times to deal with the Defendant and the Defendant only as the carrier of the goods as nominated by Silvereed. The Plaintiff had no intention to deal with anyone else so that should anything go wrong, Mr. Bohbot of Silvereed, who was close to a senior personnel member of the Defendant, namely Dr. Delalonde, would easily assist and readily ask for Dr. Delalonde to intervene in any necessary negotiation to be made, so that the Plaintiff's goods were specifically delivered to the Defendant. Mr. Foo further stated in para 16 of his same witness statement that all subsequent communication between the Plaintiff, the intermediate agent "Silvereed" with the Defendant was with a person named "Pierre" who in fact was none other than the said Dr. Delalonde of the Defendant.

5. Mr. Foo stated that no one in the Defendant's company informed him that any other company would be involved in the delivery of the goods. He was not told by anyone in the Defendant's company that the Defendant was just an agent for another company. No one in the Defendant's company mentioned to him the name of Jas Ocean (H.K.) Ltd (hereinafter referred to as "Jas Ocean"). The first time he knew of the existence of Jas Ocean was when he obtained the Bill of Lading which is at pages 4 and 5 of BD-D. He stated that the Bill of Lading was chopped at its back, seen at page 5 of BD-D, with the chop of the Plaintiff and the signature thereon is that of his staff Ms. Windy Yam. He confirmed the date of the Bill of Lading was 4 Sept. 1995. This could be seen at the bottom of its front page. In Bundle C ("BD-C") is an invoice for the Bill of Lading issued by Jas Ocean. This is dated 4th September 1995. Mr. Foo stated that he received this after the Bill of Lading was received. The Plaintiff issued a cheque dated 20 Sept. 1995 to Jas Ocean in payment therefore. The Plaintiff knew that they paid for the services of Jas Ocean after the Bill of Lading was issued. Mr. Foo stated that all along he had only seen Dr. Delalonde but had not seen anyone from Jas Ocean.

6. Mr. Foo stated that when the Plaintiff encountered problems with the delivery under this bill of lading, they contacted Dr. Delalonde. He stated that Jas Forwarding all along have responded to his questions in relation to the problems in this shipment. He had never contacted anyone from Jas Ocean. He did not know that both Jas Forwarding and Jas Ocean shared the same office. He did not know if anyone of his staff who dealt with this Bill of Lading knew that they were dealing with Jas Ocean.

7. Mr. Foo stated that Silvereed was the agent of the Plaintiff in its dealing with Koshito. He stated that Mr. George Bohbot, the boss of Silvereed had a close relationship with the senior personnel of Jas Forwarding. After some problems arose with the shipment of goods to Venezuela, he contacted Silvereed to request that Jas Forwarding ship back the goods to Hong Kong. Silvereed chased Jas Forwarding after the goods. When he chased Silvereed related to the goods, Silvereed showed him the letter from Jas Forwarding to Silvereed at page 17 of BD-D. This letter which is headed "Re: Silvereed / Koshito / BL no. 015044170/80. It therefore refers to two bills of lading including the one of the Plaintiff namely no. 01504410. It states, "Please be informed that Jas Caracas has released the container to Koshito on Dec. 14th of 1995, due to the presence of a lawyer and a court representative as they mention it on their fax."

8. Mr. Sung Hew Fung, a Director of the Defendant gave evidence for the Defendant. He stated that in 1995, JAS had three independent companies. One called Jas Forwarding (H.K.) Limited. This is the company specialized in handling client's airfreight business. Another company was JAS Ocean (H.K.) Ltd. It does ocean freight business. The third one is called JAS Forwarding China Ltd. The three companies share the same office premises. General staff, such as receptionist, and secretaries do not have clearly defined roles as regards which company they work for. But for operation and sales staff of each of these Companies would operate in the name of that Company because their job nature would be different. One such staff is Dr. Pierre-Etienne Delalonde. In 1995, he should be a manager responsible for the French line in the Defendant. His name card shows that he is the France Route Manager. Since he was the France Route Manager, obviously, he would deal with clients of the France route and the overseas office. He would also be involved in operational matters concerning sales personnel and staff.

9. When asked in evidence-in-chief, what Dr. Delalonde would do if a customer came to him. He stated that he would introduce the customer to the company. He stated that if there was a shipment by sea, the Defendant would not enter into a contract in its name. That is because three companies had been set up to do different roles. He had been involved in the conception of the three companies being set up with different nature of business. However, in 1999, he stated that Jas Ocean no longer existed through restructuring.

10. Through speculative questioning, as regards what Dr. Delalonde would do if someone wanted to do shipment by sea, Mr. Sung stated that he believed that Dr. Delalonde would of course introduce the client to the three companies to make a decision. When asked by his Counsel that the Bill of Lading had JAS Ocean's name in the front. Mr. Sung stated, "Maybe, JAS Ocean takes the role of a carrier and JAS Forwarder takes the forwarder role. When prodded by his Counsel, at the end of the day, the person who deal with this bill of lading who is the person dealing with? Mr. Sung stated, "Clear, it is JAS Ocean". When asked by his Counsel,

Q.	Would there be any specific statement as to whom the staff represent when a client telephones in?
A.	Because there were 2 or 3 teams of staff working in the same office. So if the shipment were handled by the operational staff of JAS Ocean, the staff would tell the other side they were from JAS Ocean.

11. He stated that in the course of the process there would be more than one contact between staff of the client and staff of the company. If the matter were to be handled by JAS Ocean, the staff of JAS Ocean would handle it.

12. In relation to Silvereed, he stated that he knew that Silvereed is a buying office. Silvereed would look for goods for overseas companies under different buying terms. So sometimes he has a say in nominating which forwarding company to ship the goods. That is why he is Silvereed their client. He stated under cross-examination that according to his experience, as he did not personally get involved in this case, Silvereed was a client of Dr. Delalonde. Either Silvereed contacted Dr. Delalonde or the Plaintiff contacted Dr. Delalonde. He stated that it was not one person who dealt with this case. Dr. Delalonde obtained the information related to the contract. He would pass the information to the operation department to deal with. The operation department would be that of Jas Ocean. Dr. Delalonde left Hong Kong in 1996. He agreed that there is no way of finding out what transpired between Dr. Delalonde and the Plaintiff. There is no way of finding out the communication between the Plaintiff and the JAS group in relation to the Bill of Lading in question. He stated the person responsible for handling these bill of ladings in JAS Ocean is a person called Mr. Gilbert Wong who was the general manager of JAS Ocean. He has left JAS Ocean. Owing to the length of time between the happening in the case and the date of trial the Defendant's key witnesses were no longer working for the Defendant or for Jas Ocean.

13. He stated that wording in the back of the form of bill of lading wherein in para 1 thereof, it is stated that "The expression "the Company" shall mean herein JAS FORWARDING (H.K.) LTD" was in the original backsheet of the bill of lading of Jas Forwarding (H.K.) Ltd. which had not been amended or corrected when the bill of lading of Jas Ocean was printed. He stated that it was the fault of the secretary of the Company who did not take appropriate action to change the name JAS FORWARDING (H.K.) LTD when she took the papers to be printed. He maintained that Jas Ocean is a carrier and Jas Forwarder is a forwarder.

14. When he was shown the letters written by Dr. Delalonde to Silvereed in the name of the Defendant at page 17 of BD-D and that from Dr. Delalonde to Jas Caracas, when it was pointed out to him that it was Jas Forwarding that wrote those letters, he stated that as Jas Forwarding was set up before the other companies in the group, those writing is in the habit of using in the heading of the document the name of Jas Forwarding when writing to their clients. He stated that Dr. Delalonde used the name of this company out of habit. When asked;

Q.	The problem is how would the client know?
A.	I cannot give you an answer and I don't know what is said between him and the client.

15. When asked that unless Dr. Delalonde put on notice he is acting for Jas Ocean, how would the client know that he is dealing with Jas Ocean, Mr. Sung stated that after setting up two more companies other than Jas Forwarding, they have told the staff the object of setting up the two other companies.

16. When he was asked whether Dr. Delalonde had at any particular point of time represented to his client that he represented Jas Ocean, he agreed that he would not know.

17. When it was put to him that Dr. Delalonde of Jas Forwarding was the person responsible for this case, he stated in reply, "You could say that". At another point, Mr. Sung stated it depended on what was meant by the word "responsible".

Finding

The Law

18. Bowstead & Reynolds on Agency (17th Ed. at para9-016j states:-

"Where the agent gives the third party to understand that he acts for another, as by reference to 'our principals', 'our clients', etc., there may indeed be cases where the third party can be regarded as being willing to deal with the principal, whoever he is. Indeed it has been said that in an ordinary commercial transaction such willingness may be assumed by the agent in the absence or other indications. But this may sometimes be an improbable construction to put on the situation; at the other end of the scale, therefore, such facts may give rise, or assist in giving rise, to the inference that the third party deals only with the agent (the problem of the agent's position vis-à-vis his principal being relevant to the third party). But there is a middle course. The Restatement suggests a rule that when the agent acts for a principal whose existence is known but who is not identified at the time of contracting, the agent is unless otherwise agreed a party to the contract, and the inference is that he is liable in addition to and not in substitution for the principal. . ."

19. The Plaintiff's Counsel referred to the judgment of Judge Diamond Q.C. in Cory Bros v. Baldan [1997] 2 Lloyd's Rep. 58 faced the same question. At 65-66:-

"I turn therefore to consider the question whether, in the absence of the trade usage which I have found to exist, Cory Brothers have proved facts from which an inference must be drawn on a balance of probabilities that Baldan are personally liable notwithstanding that Cory Brothers knew that Balden were contracting as agents. I referred earlier, when dealing with the booking of the relevant space, to the fact that on Apr. 4, 1995 Cory Brothers sent Baldan a freight quotation in which the customer was named Baldan. Subsequently on Apr. 19 Mr. Fleet on the basis of this quotation asked Cory Brothers to book space for the cargo. This is a factor from which in my view an inference can properly be drawn that Baldan are personally liable. Where a party booking space on a vessel is known to be acting for a shipper, it may be an uncertain question whether the agent is personally liable. The identification of 'the customer' resolves that ambiguity. It was not until after the contract had been concluded on May 9, 1995 Balden sent bill of lading instructions to Cory Brothers stating that they acted as agents only. It is true that Cory Brothers did not challenge this statement but by this time the contract had already been concluded and Cory Brothers had incurred liability to the ship owners for the booking. The bill of lading was subsequently issued naming 341 as shippers and immediately thereafter Cory Brothers involced Baldan for the freight..."

The Facts

20. The issue is whether there is evidence to suggest that the Plaintiff knew before the conclusion of the contract, namely the issue of the bill of lading, that the Defendant was acting as agent for Jas Ocean, or that the Defendant was acting as agent.

21. In this case, the primary players in this contract, staff of both the Plaintiff and Jas Ocean who actually handled the shipping arrangements did not give evidence. Mr. Foo gave evidence as to the initial introduction of the Plaintiff to Dr. Delalonde of the Defendant. However, he could give no evidence of what actually transpired in the handling of the shipping arrangements. The shipping documents were not adduced into evidence by the parties. Over 8 years have transpired since the date of the bill of lading and memory could not be so fresh as to what transpired and witnesses who dealt with the shipping arrangements could not be located as could be seen in the Court papers which show that the Defendant could not locate the staff of Jas Ocean who would have dealt with this case.

22. The evidence is clear that Mr. Foo of the Plaintiff was introduced by Mr. George Bohbot of Silvereed to Dr. Delalonde of the Defendant in relation to the shipping arrangements of the goods to be sold to Koshito in Venezuela. Mr. Foo was only aware that Dr. Delalonde was a staff of the Defendant. Mr. Foo stated that he was not aware that Dr. Delalonde was acting for Jas Ocean or was an agent of Jas Ocean in relation to the bill of lading. Mr. Foo further stated that he did not know of the existence of Jas Ocean until he saw the bill of lading in question. Dr. Delalonde did not inform him that he was an agent of Jas Ocean. As far as Mr. Foo was concerned, Jas Forwarding was the company that was handling the shipping arrangements related to the said goods. He told his staff to contact the Defendant related to the shipping arrangements. However, as could be seen in the name card of Dr. Delalonde, he was the France Route Manager of the Defendant. It could be seen that he was not the General Manager of the Defendant. It could hardly be expected that he would be dealing with the Venezuela route.

23. Mr. Sung stated that after the restructuring of Jas Forwarding into three companies, Jas Forwarding would only handle air freight and shipping was handled by Jas Ocean whilst China related matters was dealt with by Jas China. The operations of the three companies were different. He stated that although the three companies shared the same office premises, in relation to operation, Jas Ocean had separate staff dealing with shipping. There is affidavit evidence related to this and also documentary evidence related to an employment contract of Ms. Tse Yuk Chun who was employed as a shipping clerk of Jas Ocean (H.K.) Ltd. on the 18th July 1994 at pages 23-4 of the Bundle of Exhibits (BD - C). This evidence supports Mr. Sung's evidence that Jas Ocean had separate staff employed by them to handle shipping matters. Mr. Sung's evidence that the staff of Jas Ocean would be the staff to be contacted in relation to the handling of the shipping arrangements must be true.

24. When the Plaintiff by Mr. Foo states that he had no knowledge of the existence of Jas Ocean, he could not speak for the Plaintiff, for the Plaintiff staff such as Windy Yam, who signed the Bill of Lading on behalf of the Plaintiff, was staff of the Plaintiff who handled the operations related to the shipping of the said goods. On the basis of Mr. Sung's evidence, which I accept as true, staff of the Plaintiff dealing with shipping of the said goods, must have dealt with staff of Jas Ocean in the shipping arrangements. Without the evidence of the staff of the Plaintiff who dealt with the shipping arrangements, such as Windy Yam, there is a gap in the evidence of the Plaintiff and the Plaintiff is not able to establish that the Plaintiff had no notice of the existence of Jas Ocean or that the Plaintiff did not know they were dealing with Jas Ocean in the shipping arrangements.. According to Mr. Sung, there were documentations that would have been passed between the parties. If the operations related to shipping were dealt with by Jas Ocean, which I find in all probability would have been the case, such documentation would have shown the situation as regards which company was the carrier. When Mr. Foo stated that he had no knowledge of the existence of Jas Ocean, this does not mean that the Plaintiff did not have knowledge of the existence of Jas Ocean or that the Plaintiff had no notice that it was dealing with Jas Ocean. I therefore find that the Plaintiff has not established that it had no notice that Jas Ocean was the carrier before the issue of the Bill of Lading or that the Plaintiff was dealing with Jas Ocean in the shipping arrangements. In all probability the staff of the Plaintiff dealing with the shipment had notice that Jas Ocean was the carrier with whom they were dealing before the issue of the Bill of Lading.

25. From the evidence of Mr. Foo and from documentary evidence, it would seem that Dr. Delalonde was a close friend of Mr. George Bohbot and was the point person with whom Silvereed dealt. However, it would seem that the actual operations of shipping would not have been dealt with by Dr. Delalonde who was a France Route Manager. He would have passed it on to the operations staff of Jas Ocean as stated by Mr. Sung. On the Plaintiff's side such shipping arrangements would not have been handled by Mr. Foo either. He handed this over to his staff. From the fact that the Plaintiff did not have any direct correspondence with the Defendant in relation to this matter, it seems to me that the conclusion could be drawn that Mr. Foo himself did not have too much dealing with Dr. Delalonde, but immediately after introduction to Dr. Delalonde, asked his staff to contact him. I accept Mr. Sung's evidence based on the then operations of Jas Forwarding and Jas Ocean that Dr. Delalonde would have referred the operations of shipping to the staff of Jas Ocean, even were any staff of the Plaintiff to contact him.

26. When Mr. Foo stated that when he encountered difficulties he contacted Dr. Delalonde, it would seem to me from the lack of evidence of direct communication between the Plaintiff and the Defendant that in all probability Mr. Foo did not himself contact Dr. Delalonde but Mr. Foo contacted Silvereed who contacted at times Dr. Delalonde and at times Jas Ocean.

27. When asked by his Counsel that the Bill of Lading had JAS Ocean's name in the front, Mr. Sung explained, "Maybe, JAS Ocean takes the role of a carrier and JAS Forwarder takes the forwarder role".

28. In the section 31.5 at page 730 of the textbook Commercial Law by Robert Bradgate, it states,

"Often a freight forwarder may be employed to make shipping arrangements. The freight forwarder will have specialist knowledge of shipping and carriage as well as customs requirements. It often may not be clear whether the freight forwarder acts as principal supplying services to his client. . . or merely makes carriage and other arrangements as agent on the clients behalf. The distinction may be important, for example if the goods are damaged or lost: if the forwarder acted as agent he will only be liable if he failed to show the standard of care expected of an agent; whereas if he acted as principal he may be liable as carrier to his client and have a contract with the actual carrier in his own right."

29. Was Jas Forwarding acting as principal or as agent of Jas Ocean? The invoice for the freight charges dated 4 September 1995, at page 39 of BD - C, was issued in the name of Jas Ocean. Payment by the Plaintiff was made to Jas Ocean. The receipt for the payment by the plaintiff was issued by Jas Ocean dated 20 September 1995, at page 40 of BD - C. The Bill of Lading had the name of Jas Ocean and signed on behalf of Jas Ocean as the carrier. It is clear that the carrier was Jas Ocean. The Bill of Lading was issued by the carrier Jas Ocean. The goods were received and accepted by the Carrier. This is stated to be so in the Bill of Lading itself. Further I found on a balance of probability that the shipping arrangements was directly dealt with by Jas Ocean and the Plaintiff's staff had direct contact with the staff of Jas Ocean. This would lead to the conclusion that Jas Forwarder was the agent and Jas Ocean was the known principal. However the Bill of Lading was stated to be subject to the conditions printed on the back of it.

30. In the back of the Bill of Ladings para 1 of the conditions stated the definition of "The Company". It states that the "Company" shall mean herein "JAS FORWARDING (H.K.) LTD.

31. There is an obvious inconsistency between the name of the issuer of the Bill of Lading being Jas Ocean and the carrier being clearly stated as Jas Ocean and the definition the "Company" at the back of the Bill of Lading. Such inconsistency being on the face and the back of the contract, cries for an explanation. The explanation of Mr. Sung that the back sheet of the Bill of Lading was a mistake of the secretary who took the form to be printed has to be considered. In view of the obvious inconsistency the parol evidence of Mr. Sung could be considered. Was this a mistake?

32. I consider other extrinsic evidence such as the invoice issued by Jas Ocean for the Bill of Lading and the Receipt. I bear in mind the evidence of Mr. Sung of the restructuring of the three companies and the division of the work between the three companies accepted by me. I had found that the staff of the Plaintiff dealt directly with Jas Ocean in the shipping arrangements. Having considered such evidence, I accept Mr. Sung's evidence that the definition of "Company" in para. 1 of the conditions at the back of the Bill of Lading was a mistake.

33. I further find that the Plaintiff through Mr. Foo's evidence cannot establish that notice had not been given to them that Jas Forwarding was acting as agent for Jas Ocean in the contract of carriage. I find that the Plaintiff's staff had dealt directly with Jas Ocean in the shipping arrangements. In view of the aforesaid I come to the finding on a balance of probability that the Plaintiff through their staff knew that Jas Ocean was the principal with whom they dealt and the Defendant was the forwarding agent acting as agent for Jas Ocean. In effect, in this transaction the Defendant acted as an agent for a principal known to the Plaintiff. In view of my above finding, I find the first issue in favour of the Defendant. Such being the case, I find that the Plaintiff has not been able to establish the claim against the Defendant. I therefore give judgment as follows:-

Claim dismissed with an order nisi for costs of the action to the Defendant to be taxed if not agreed with Certificate for Counsel.