XCHRX Alfred Dunhill Ltd. and Another v. Kuehne & Nagel S.P.A. and others

Commercial List No. 93 of 1992

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is a somewhat peculiar application under O.14 because as things have turned out, it may be better for the 2nd plaintiff if the 1st defendant is given leave to defend.

2. The 2nd plaintiff wished to transship to Hong Kong from Italy by air 36 cartons of wearing apparel including leather belts.

3. The 1st defendant agreed to arrange the air shipment to Hong Kong and issued an Air Waybill dated 16th August 1990.

4. The goods were duly airshipped to Hong Kong but 4 cartons containing leather belts have gone missing. It appears to be common ground that they went missing within the precincts of Kai Tak Airport.

5. The O.14 application against the 1st defendant took a strange course. A defence was filed on behalf of the 1st defendant which maintained that the 1st defendant had discharged its obligations by air shipping the goods to Hong Kong and cannot be held liable for anything that occurred after the goods were unloaded at Kai Tak Airport.

6. In response to this defence, Mr. Bartlett of Clyde & Co., solicitors for the 2nd plaintiff, swore an affidavit demonstrating that there was no defence to this claim. He relied upon Article 18(2) of the Amended Warsaw Convention which imposes liability for the loss of the cargo if it was lost during the "carriage by air". This term has been defined in the Convention as covering the period during which the cargo is in the charge of the carrier and not just when airborne.

7. By a letter dated 15th September 1990, the 3rd defendant (against whom judgment has been entered but who is seeking to set aside that judgment) stated that the cartons were found missing " at Kuehne and Nagel's Airport premises".

8. Mr. Bartlett went on to submit that as the 1st defendant was not seeking to rely upon the Convention, the 2nd plaintiff was entitled to judgment for the sum claimed, namely HK$227,539.06.

9. At about 1 p.m. on the day of the hearing before me, Mr. Burney of Robert Wang & Co., solicitors for the 1st defendant, filed an affidavit in opposition to the O.14 summons. Mr. Bartlett was clearly ambushed by this late affidavit caused by late instructions to Mr. Burney but, nevertheless, Mr. Bartlett courageously decided to continue without seeking an adjournment.

10. Mr, Burney, on behalf of the 1st Defendant, sought to rely upon Article 20 of the Convention which provides that:

"The carrier is not liable if he proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures."

11. Mr. Bartlett submitted that it was the 1st defendant's case that its Hong Kong agent, the 3rd defendant, was an extremely reputable freight forwarder and that it took all necessary and possible measures to avoid the loss of the 2nd plaintiff's goods. He also relied upon what he had said in an earlier affidavit filed on behalf of the 3rd defendant.

12. In that affidavit, he had said that it was the 3rd defendant's case that it had in place an adequate security system to safeguard the 2nd plaintiff's cargo in its custody. The 3rd defendant apparently positioned a security office at the only entrance to its warehouse, which enabled it to closely observe all visitors to the warehouse. The security office was staffed at all times during business hours when the entrance was open. At all other time, the entrance was padlocked with a roller security gate.

13. It appears to me that there are two onuses upon the 1st defendant. Firstly, they have to discharge the ordinary onus on defendants to O.14 applications to show that there is a triable issue. Further, in this case to do so, the 1st defendant has to be able to argue that it is in a position to rely on Article 20. The 1st defendant has to prove that they and their servants or agents had taken all necessary measures to avoid the damage.

14. On the evidence before me, it does not appear that the 1st defendant can get anywhere near to showing that it has discharged either onus. It is not enough, in my judgment, to say that the 3rd defendant is a responsible freight forwarder and that it took all reasonable steps without condescending to any more particulars than I have outlined.

15. In my judgment, it seems most unlikely that the 1st defendant can escape liability under the Convention.

16. Mr. Burney submits that if that is my view, then the 1st defendant is entitled to rely upon the limit of liability contained in the Convention. This, I was told, amounts to HK$135 per kilogram. Mr. Burney submitted that there was no evidence as to the weight of the 4 cartons which had been lost. Mr. Bartlett had simply taken 4/36 x 1095.80 and multiplied the result by $135 coming to approximately $16,500. Mr. Burney submitted that this was unsatisfactory.

17. To these submissions, Mr. Bartlett replied by relying upon Article 25 of the Convention which provides as follows;

"The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that it was acting within the scope of his employment."

18. He submitted that the facts of this case, as we know them, must come within Article 25 and thus the 1st defendant cannot rely upon the limit of liability.

19. Just as I was not satisfied that on the evidence the 1st defendant could establish the 3rd ground as set out in Article 20, nor am I satisfied that on the evidence as it stands, the 2nd plaintiff can bring itself within Article 25.

20. If the 2nd plaintiff wishes to argue that it can rely on Article 25, then there will have to be a trial which will raise issues relating to both Articles 20 and 25.

21. Having given this matter some thought and bearing in mind my view as to the 1st defendant's chance of success on the Article 20 argument, I feel I should give the 1st defendant leave to defend this action conditional upon bringing $16,500 into court to abide the event. This will enable the 2nd plaintiff to argue that the limit should be disapplied and this will not shut out the 1st defendant from arguing that it is not liable at all. This seems to me a fair and just result in the circumstances before me.

22. I have chosen the figure of $16,500 as being an approximation of the figure which will be proved as being the limit of liability. It may be a bit more or a bit less, but it cannot be too far off.

23. I should add that Mr. Bartlett attempted to argue that he could maintain this action based upon detinue which is outwith the scope of the Convention. Having considered this argument, I conclude that it cannot succeed. The 1st defendant has always said that the goods were lost and it stretches belief too far to imagine that the 1st defendant is still holding these goods and refusing to return them to the 2nd plaintiff.

24. Finally, I should dispose of Mr. Burney's technical point. He complains that Mr. Bartlett's affidavit in support of the O.14 summons is defective because it does not verify the amount claimed in the Statement of Claim. The Statement of Claim seeks $227,539 whereas Mr. Bartlett's affidavit refers to $277,539. I am quite satisfied that this is no more than a typographical error and I do not propose to dismiss the summons because of this error.

25. In the event, therefore, there will be leave to the 1st defendant to defend this action conditional upon paying HK$16,500 into court within 7 days.

26. I propose to make a costs order nisi to the effect that costs will be in cause.