PROFIT WHEEL INVESTMENT LTD v. GREAT STREAM SHIPPING S.A. AND OTHERS

1990, No. CL160

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

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J U D G M E N T

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1. The Plaintiffs make claims against 4 Defendants. They are not at the present time pursuing their claims against the 1st and 2nd Defendants.

So far as the 3rd Defendant is concerned there has been a settlement. It is the claim against the 4th Defendant which was contested before me.

2. The Plaintiffs were the Consignees of electronic goods which were shipped from Kobe Japan in March 1990. The 4th Defendant was engaged by the 3rd Defendant to store the cargo and deliver it to the Plaintiffs.

3. The Plaintiff's goods were supposed to be packed in 96 cartons. At the same time the Consignor of the cargo also consigned 34 cartons to another Consignee in Hong Kong, The Hong Kong C.D. Centre.

4. It is the Plaintiff's case that the 4th Defendant by mistake delivered 12 of the cartons of goods consigned to them to The Hong Kong C.D. Centre. When the Plaintiffs attended at the 4th Defendant's godown to take delivery of the goods consigned to them they discovered that 12 of the cartons had been delivered to Hong Kong C.D. Centre and thus there was short delivery of said cartons.

5. The Plaintiffs who produced evidence that they had paid for the goods they had bought sue the 4th Defendant in conversion, negligence and as Bailees on terms.

6. The Plaintiffs called as a witness Mr. Fok Ka Fai who was in March 1990 and is at the present time employed by them as a Transportation Clerk. He gave evidence that he went with a colleague, Mr. Ng to the 4th Defendant's warehouse on the 20 March 1990 with instructions from his superiors to collect a consignment of electronic goods. They took with them the Delivery Order relating to the goods a copy of which was in the agreed bundle at p.215 and an Invoice describing the goods which was at p.156 of the bundle.

7. After the goods were loaded on to the lorry which they brought they realised that there were discrepancies between the markings on the cartons and the contents of the documents they had with them. They returned to the Tally Clerk who had been attending to them and drew his attention to the discrepancies which related to 12 of the cartons. He then went back into the warehouse and attempted to locate further cartons with the correct markings on them.

8. His efforts were unavailing. Mr. Fok telephoned his Superior and sought instructions what to do. He was told not to take delivery of any of the cartons and return to the office.

9. They got back the Delivery Note with the receipt which had been endorsed on it and cancelled the signature which had been appended to the chop.

10. On the 23rd March he had gone again to the 4th Defendant's warehouse with Mr. Ng. This time they were also accompanied by Mr. Lam, a Surveyor. Again the same cartons were produced to them. Mr. Lam then asked the Tally Clerk whether he could open the 12 cartons incorrectly marked so as to ascertain the contents. The Tally Clerk agreed to this and this was done and Mr. Lam made a note of his findings.

11. They decided to leave with all of the cartons but made it clear to the Tally Clerk that they were taking the delivery under protest.

12. I found Mr. Fok to be generally a reasonably satisfactory witness. There were some aspects of his evidence which were not wholly convincing. In particular he seemed to have been a bit confused so far as the documentation was concerned. It was only towards the conclusion of his evidence that it became apparent that he and Mr. Ng had in addition to referring to the Delivery Order also had placed reliance upon the Invoice relating to the goods.

13. However, I am satisfied that the overall evidence he gave concerning the visits on the 20th and 23rd March 1990 can be relied upon as being truthful. I accept that the Plaintiff declined to take delivery of any goods on the 20th and that when they took delivery on the 23rd it had been under protest. Mr. Fok's evidence also corroborates Mr. Lam's evidence.

14. Mr. Ng did not give evidence. I was informed that he has now left the Plaintiff's employment.

15. Mr. Lam's evidence was adduced by way of a Hearsay Notice. This is because he is now living in Scotland. His evidence was in conformity with Mr. Fok's. Also attached to the Notice was the Survey Report he prepared. In this Report he was able to state that he was satisfied that the contents of 12 of the cartons did not answer to the descriptions given in the Invoice and contained different goods to those described. Also he confirmed that 12 of the cartons contained markings which were inconsistent with the particulars given in the Delivery Order.

16. Mr. Ng for the 4th Defendant was critical of Mr. Lam's evidence. The main ground of his criticism was that it was not clear from the Survey Report that 12 of the cartons had been missing. This had been established in the statement he had made many months later. Also the main thrust of the Survey had been directed towards the Invoice particulars rather than towards the markings on the cartons which was of course the matter which was the primary concern of the 4th Defendant.

17. I do not see much merit in these criticisms. It is clear to me that the Survey did indeed refer to short delivery of the 12 cartons and I can see no plausible reason not to accept Mr. Lam's evidence and the Survey Report at their face value.

18. Also produced by way of a Hearsay Notice was the statement of Mr. Chugani of Ramsons Corporation, the Consignor of the goods.

19. Mr. Ng for the 4th Defendant objected to the admission of much of his evidence on the grounds of it not being derived from his own personal knowledge. Having heard submissions from him and Mr. Wong for the Plaintiff I admitted the parts of the statement which were not thus inadmissible. What was left was a description of the system which was adopted by Ramsons when packing goods from which it appeared to be unlikely that the electronic goods would be packed in incorrect cartons.

20. Also Mr. Chugani made reference to the Surveyors Report which had been prepared which contained particulars of the weights of the different cartons which had been packed in the container and which were referred to in the Bill of Lading. I was satisfied from this evidence that it was unlikely that the goods had been incorrectly packed in Japan.

21. I accepted all of the relevant evidence of the Plaintiffs as being truthful and reliable. I attached particular weight to the evidence contained in Mr. Lam's statement and Survey Report.

22. The 4th Defendant called 3 witnesses.

23. The first was Mr. Leung Kam Kuen, the Head Tally Clerk at the warehouse in question.

24. I formed the impression that Mr. Leung was essentially an honest witness. However, he gave evidence that he was unable to himself recollect what had transpired on either the 20th or the 23rd March. He agreed that the statement he had made had been predicated upon the premise that having regard to the system of work in operation he, as Chief Tally Clerk, would be informed if complaints were made by parties taking delivery of goods from the warehouse. As a consequence of this there was nothing in his evidence which persuaded me that any of either Mr. Fok or Mr. Lam's evidence should be impugned.

25. The next witness to give evidence was Mr. Li Chi Wah, the Supervisor of The Cargo Freight Department of the 4th defendant. He had prepared the Devanning Report from the tally record prepared by the Tally Clerk.

26. He also laboured under the handicap of not perhaps surprisingly having no personal recollection of what had transpired. He based his testimony upon what he was able to extract from the warehouse records. In my view this did not provide any convincing evidence that the wrong cartons were not delivered to Hong Kong C.D. Centre or call in question Mr. Fok or Mr. Lam's evidence.

27. Indeed I was of the opinion that Mr. Li's evidence was if anything of greater assistance to the Plaintiffs than it was to the 4th Defendant.

28. I say this because the Devanning and Tally reports placed all of the cartons in the warehouse. It also strongly indicated that the markings on the cartons had been correct and tended to undermine any suggestion that the cartons which apparently had been delivered to Hong Kong C.D. Centre on either the 15th or 16th March had been improperly marked.

29. The final witness to give evidence for the 4th Defendant was Mr. Chung Wing Lun, a Director of Hong Kong C.D. Centre.

30. I regret that I did not find him to be a satisfactory witness. He obviously did not undertake any meaningful measures to check whether his Company had in fact taken delivery of the wrong cartons notwithstanding the fact that inquiries were put to him on this subject on two occasions. He seemed to be prepared to place reliance upon the fact that if no complaints or queries were directed to him on the subject it was reasonable for him to assume that the correct goods had been delivered to his Company. I do not think that his evidence was of any assistance to the 4th Defendant.

31. I have now briefly summarised all of the most important evidence which was before me.

32. There does not seem to me to be any doubt that Ramsons shipped 130 cartons of electronic goods and that these were received in 4th Defendant's warehouse. It also appears to be clear that 96 of these cartons were delivered to the Plaintiffs and 34 to Hong Kong C.D. Centre.

33. Having regard to Mr. Lam's evidence I have no difficulty in finding on the balance of probabilities that the 12 cartons referred to in the Points o f Claim were misdelivered by the 4th Defendant to Hong Kong C.D. Centre.

34. Mr. Ng informed me that he did not dispute the Plaintiff's title to sue in bailment. It follows from what I have said earlier that the 4th Defendant was a Bailee of the relevant cartons and the Plaintiff was the Bailor.

35. I am satisfied that Mr. Wong is right in his submission that the 4th Defendant had a duty of care not to convert the cartons. In addition to this the 4th Defendant has failed in its duty to deliver up all of the goods to the Plaintiff as required by the terms of the Delivery Order issued by the 3rd Defendant.

36. A burden attaches to a Bailee of goods to furnish a satisfactory explanation for any failure to deliver up goods to a Bailor when called upon to do so. No such explanation has been forthcoming from the 4th Defendant.

37. In these circumstances I do not think that it is incumbent upon me to deal in any detail with the Plaintiff's claims in Negligence and Conversion. Suffice it to say that I consider that claims under such heads would succeed in the circumstances of this case. I am satisfied that the Plaintiffs are entitled to judgment and I order that judgment be entered for them.

38. This leaves the question of quantum. I can see no convincing reason not to assess damages on the basis of the invoice prices.

39. If credit is given for the invoice price of the 12 cartons of electronic goods consigned to Hong Kong C.D. Centre the amount due to the Plaintiffs is Japanese Yen 937,500. The Plaintiff is also entitled to be recompensed for the cost of Mr. Lam's Survey. This amounted to HK$500.

40. Judgment will be entered in these amounts and subject to any submission from Counsel I order that the Plaintiffs will be entitled to their costs.