PREMIER BEARING AND EQUIPMENT LTD v. IFB INTERNATIONAL FREIGHTBRIDGE (CHINA) LTD

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JUDGMENT

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1. On 22^nd July, 1997, the Defendant issued a summons pursuant to the provisions of Order 14A, Rules of the Supreme Court requesting determination of the twin issues specified on the face of that summons. Directions for hearing were sought and given on 29^th July after, if I may say so, some hesitation by the Court on the face of the papers before it. However, those applying for the directions indicated, correctly, that the Court had no discretion in the matter, and the case was duly set down for hearing. This argument, which took place with the assistance of Counsel, spanned two days in mid November 1997. This, then, is the judgment consequent upon that argument.

THE FACTS

2. The Plaintiff's claim herein arises from a misdelivery of goods which had been shipped from China via Hong Kong to Brazil. Mr Kerr, who appeared on behalf of the Defendant in this application, opened the case by presenting the factual position, and in this regard he will, I hope, permit quotation directly from his skeleton argument:

          "The Defendant issued a bill of lading for shipment of goods from Zhangjiang to Santos on 8^th October 1995. The goods were shipped via Hong Kong to Santos and the Defendant subcontracted the voyage to another forwarder who in turn subcontracted the voyage to Mitsui Line. The cargo was carried aboard the "Nedlloyd Van Nassau" and arrived in Santos, Brazil on 22^nd November 1995. On 23^rd November 1995, the goods were transported by lorry to Colombia Bonded Warehouse (a customs warehouse) approximately eight kilometres away from the place of discharge. The vessel on which the cargo was carried left Santos on 25^th November 1995. The goods were de-stuffed in Colombia Bonded Warehouse on 28th November 1995. The goods were transferred on 19^th December to another customs warehouse on 19th December 1995. This warehouse is 160 kilometres from Santos. On 20^th December 1995, the goods were released to a company called Impax Commercial Ltd without production of the Defendant's original bill. Unsurprisingly the Plaintiff's claim is for misdelivery of the goods and the claim amounts to US$70,000."

THE ISSUES FOR DETERMINATION

3. Against this background, the Plaintiff asks for determination of the following issues:

4. First, whether the Defendant can rely upon the nine month contractual limitation period contained in Clause 6(4)(G) of the Defendant's Bill of Lading and whether the Plaintiff's claim is time-barred? In this connection, I note that the precise wording of the contractual time-bar reads as follows:

"The Carrier shall be discharged of all liability unless suit is brought in the proper forum and written notice thereof received by the Carrier within nine months after delivery of the Goods or the date when the Goods should have been delivered. In the event that such time period shall be found contrary to any convention or law compulsorily applicable, the period prescribed by such convention or law shall then apply but in that circumstance only."

5. The second issue is whether the Hague Rules or the Hague-Visby Rules applied to the carriage of the goods and, if so, whether the Rules continue to apply whilst the goods were in storage notwithstanding Article I(e) of the said Rules?

6. It followed, said Mr Kerr, that if his clients were able to obtain what he perceived to be the correct answers to these questions, so that the Defendant could indeed rely upon the nine month time bar provision within the Bill of Lading, the further substantial relief to be granted was that the Plaintiff's claim should be dismissed with costs to the Defendant.

7. In this manner, therefore, summary relief was sought by the Defendant who, as contracting party, had carried the goods across the world, pursuant to the contract of carriage, only to misdeliver them (or to permit such misdelivery), thereby causing the Plaintiff the loss and damage the subject matter of this claim.

THE COURSE OF THE HEARING

8. Somewhat unusually I pause at this stage, before going on to an outline of the arguments, to refer to the course of the hearing, and to a ruling made by the Court which, it transpires, is of more than usual significance in the context of this case.

9. Towards the end of the first day's argument, Mr Kerr, on behalf of the Defendant, rose during Mr Coleman's submission to make application for an adjournment. He did so because, he said, he had been proceeding in this application on the basis that no evidential points would be taken by Mr Coleman. Underpinning this belief was, I understand, the content of telephone calls made between Counsel in advance of the hearing.

10. For his part, Mr Coleman opposed the application. Whilst there had indeed been such telephone calls, Mr Coleman asserted that the Defendant and its advisers could never have been under any assumption that the facts were agreed, and it could not be the case, in eschewing objection to the somewhat odd form of the evidence, that Mr Coleman was in somewise to be precluded from commenting upon its substance.

11. I do not intend here to condescend to greater detail about this particular argument because a detailed decision upon this adjournment application was delivered by the Court late in the afternoon of the first day, which decision I have now caused to be transcribed and which, for convenience of reference, I annex to this judgment. The content of the decision speaks for itself and, rightly or wrongly, Mr Kerr's application for an adjournment was ultimately refused.

12. At the start of play on the second day, Mr Kerr did not (in my view rightly) attempt to reopen the adjournment debate, but nevertheless he did submit that it was not open to Mr Coleman, in the circumstances, to take evidential points in opposition to the Order 14A application. I took this to be an application that Mr Coleman should be ordered to confine himself to purely legal argument, and I refused so to order. Thereafter Mr Kerr adopted the stance that, in any event, his evidence was in fact sufficient for his purpose, and argument on the application was concluded on this basis.

THE ARGUMENT

13. Mr Kerr submitted that it was the Defendant's case that once the goods underwent a road carriage and were placed into storage, the Hague or the Hague-Visby Rules ceased to operate and the Defendant could therefore rely upon the nine month time-bar provision in their Bill of Lading. This was distinct from the one year time-bar within the Hague-Visby Rules, which, if operative, it was accepted by both sides would not serve to constitute such time-bar in this particular claim.

14. Ergo, the real issue of law in this case, said Mr Kerr, was when did the Rules cease to apply, or, alternatively, did they apply right up to the time of delivery? If the latter position prevailed, of course, the Plaintiff would be able to rely upon the provision in the Rules which served to render void (by reason of inconsistency with the Rules) the nine month time limit within the Bill of Lading. Whether the Rules continued after discharge, submitted Mr Kerr, depended upon the interpretation of articles within the Rules, in particular, Article I(e), Article II and Article VII; and it was the Defendant's primary position in relation to the interpretation of these Articles that the Rules clearly applied up to the point of discharge, but that thereafter, as for example, being placed into storage, the Rules ceased to apply. This was because, once in storage, the contract of carriage of goods by sea had been completed and discharge, in all senses, completed. Most surprisingly, said Mr Kerr, whilst there were a significant number of authorities in this general area, there was no authority where (as here) a land carriage had actually taken place after discharge.

15. In this connection, I have had the significant advantage, from both sides of the Bar table, of an informed and critical survey of the leading cases in this area, with reference to established authority, both in England and Hong Kong. I do not intend, at this stage, to go into extensive detail in terms of the case law to which reference was made. Suffice to say that the gravamen of Mr Kerr's submission was that the correct approach clearly pointed to a cessation of the application of the Rules upon discharge, and that on the facts of this case there could be no real argument that discharge had not been completed. In this regard, Mr Kerr drew my attention to conflicting obiter dicta in two Hong Kong decisions; first, that of Liu J.A. in Wily Products Company Limited v. Hecny Shipping Limited [1995] 3 HKC 47 wherein the learned Justice of Appeal stated the position as follows (at 52G-H):

"... In other words, despite art I(e), the period of 'carriage of goods' by sea envisaged in art II should not be strictly construed, limiting it to 'events arising from loading to discharge'. Article II would therefore extend the period beyond discharge. In the situation the parties faced, art II is quite capable of standing on its own. The sea carriage did not therefore terminate after discharge and the Hague-Visby Rules still applied at the time of loss before the goods were handed over to the land carrier..."

16. And second, the view of Ching J.A. in Computronics International (a firm) v. Piff Shipping Limited Civil Appeal No. 109 of 1996, wherein the learned Judge stated (at p. 13F-R):-

"Our attention was drawn to the decision of another division of this Court in Wily Products Co. Ltd. v. Hecny Shipping Ltd. (1995) 3 HKC 47 per Liu J.A. The other two members of the Court proceeded on the basis that there was no relevant limitation period which could assist the Defendant. Liu, J.A., however, held that 'carriage of goods' as defined in paragraph 1(e) of Article I of the Rules should not be strictly construed. That article defines 'carriage of goods' as covering

'the period from the time when the goods are loaded on to the time when they are discharged from the ship.'

17. Article II then provides that

18. On general principles, submitted Mr Kerr, and in light of the language and purport of the Rules, the view expressed by Ching J.A. was to be preferred. And that the case of Wily Products, op.cit., was of no assistance to the Plaintiff as clearly the learned Judge was there dealing with a situation where a land carriage had not taken place.

19. As might be expected, Mr Coleman for the Plaintiff, the unpaid seller of the misdelivered cargo of bearings, took a strong opposite tack. I think it fair to observe that, to an extent at least, his argument developed during the application itself, possibly (and as sometimes happens) by reason of the forensic focus bought to bear on the problem during the hearing. Be that as it may. Looked at in the round, his propositions, I think, boiled down to the following:-

20. First, the Defendant's position that the Rules applied up to discharge, but not once the goods are placed into storage, ignored a significant part of the essence of the contract of carriage, and the suggestion that if a bill of lading holder was not ready at the ship's side to present the bill as the goods were swung over the ship's rail, with the necessary implication that there was thereby an acceptance of all risks accruing from necessary storage, this was also contrary to the essence of the contract.

21. It followed that second, it was not too wide a meaning to be attributed to the words "custody and care" for the Rules to apply to the whole period the goods were under the control of the contracted carrier. The Rules themselves are not expressed in temporal or indeed geographical terms, but apply to the whole of the contract between shipper and carrier. And as the carrier's contractual obligations included those of bailee, up to and including the time of delivery, the Rules have a corresponding reach. The correct approach, therefore, was that the Rules did not come to an end upon discharge, there being obligations under the contract going beyond such discharge from the vessel.

22. In this connection, Mr Coleman submitted that the views of Liu J.A. in Wily, op.cit., were more in tune with the scope and purpose of the Rules, relying, as the learned Judge there did, upon the judgment of a powerful Court in the decision of the New South Wales Court of Appeal in The "Zhi Jiang Kou" [1991] 1 Lloyds Rep 493. Indeed, the reductio of the Defendant's argument, said Mr Coleman, even taking the present facts at face value, was that the carrier would be absolved of responsibility under the Rules if the cargo had been discharged from the vessel straight into a truck which happened to carry them across land, notwithstanding that no bill of lading had ever been presented.

23. There was, moreover, no suggestion that the Plaintiff in this case had intended or anticipated that the goods might be discharged, stored, de-stuffed and taken to places at any distance from the discharge port, and, said Mr Coleman, it was difficult to see why the Defendant in this case should be exonerated from blame simply because it chose to subcontract the voyage to someone who chose to subcontract it further.

24. Third (and it is here, I think, that Mr Coleman's argument began to develop in the manner that stimulated Mr Kerr's adjournment application), such an important and far-reaching matter of legal principle should not be determined against a factual matrix which was, in substance, less than specific in certain key areas, and therefore far from satisfactory. Whilst Mr Coleman made it clear that his client was in no position to put up a contradictory factual case, he maintained (correctly in my view) his right to comment upon the evidence underpinning the present application, a right which he was certain had not at any stage been abandoned. In this connection, he asked the following rhetorical question:

25. To some extent, he said, these issues were interlinked. On Mr Kerr's version of events, it was indeed amazing how far in purely physical terms the goods had got without production of the Bill of Lading. Perhaps the answer was that they had been effectively lost when they went over the rail (so that, for example, the crucial mistake occurred relatively early in the piece) or that the discharge operation continued for some time all the way to the warehouse, so that, perhaps, misdelivery had taken place at the time when, and at a place where, one might have expected due delivery to have been taken, although in this latter connection he made the further point that we do not currently know when, on any argument, the goods should have been delivered.

26. In summary, there was nothing in the evidence about to whom or by what instrument delivery was given off the vessel, nor was there any evidence with regard to what was the document against which the goods were discharged, and put out of the hands of the carrier. This latter information, he said, would not be known until the relevant evidence was produced. Moreover, in terms of container traffic, the issue of the discharge of goods is highly moot - does it, for example, take place on a truck by the quay, or later; and if so, when? In this connection, in his submissions Mr Kerr was seeking to draw a line on a temporal and geographical basis which was incorrect in itself, quite apart from the wider issue of the summary determination of the point.

27. At the end of the day, therefore, the issue under debate was demonstrably "fact sensitive". In addition to the foregoing objections, submitted Mr Coleman (and he asserted his right to take this point if compelled so to do, although he did not take the point about the unconventional form in which the evidence was presented), the evidence before the Court clearly fell foul of the provisions of Order 41 rule 5(2) in that the material contained matters clearly not within the deponent's own knowledge, and was patently heavily dependent on hearsay and documentary inference. The point is made good, in this connection, at White Book MN 14A/1-2/8 which reads as follows:-

"The summons should be supported by affidavit evidence deposing to all the material facts relating to the questions of law or construction to be determined by the Court For the purposes of O.41, r.5(2), proceedings under Order 14A are not interlocutory proceedings, since by its nature, the application will decide the rights of the parties and will terminate the action or otherwise finally dispose of it ... and therefore, the affidavits for use in proceedings under O.14A may depose only to such facts as the deponent is able of his own knowledge to prove (O.41, r.5(1))."

28. I am bound to say that on this latter issue I am in agreement with Mr Coleman. As I observed in my decision refusing the application for the adjournment, it seems to me to be axiomatic, if an Order 14A application is going to be mounted, that the evidence therein be beyond dispute and criticism. In suitable situations, undoubtedly, the Court should not shrink from deciding difficult questions upon an Order 14A application : see, for example, the comments of Leggatt L.J. In the English Court of Appeal decision of Korso Finance Establishment Anstalt v. John Wedge and others (1994) unrep. in which case the Court of Appeal did not hesitate to construe a letter of agreement.

29. Korso is cited with approval by the learned editors of the White Book at 14A/1-2/4; I note further from the commentary, at 14A/1-2/5 in particular, the observation of Sir Thomas Bingham relating to fact sensitivity, and also the necessity as to the avoidance of any decision which would have the result of rendering a decision in hypothetical terms, the learned editors specifically stating in this context:

"Where the issues of fact are interwoven with the legal issues raised, it will be undesirable for the Court to split the legal and factual determination, for to do so would in effect be to give legal rulings in vacuo or on a hypothetical ruling, which the Court will not do (see per Taylor L.J. in State Bank of India v. Murjani Marketing, March 1, 1991, C.A. transcript 91/0304)."

30. In this case, the latter observation is particularly salient. However tempting it may be for the Court, in the face of absorbing legal argument, to pontificate upon the precise ambit of the Hague-Visby Rules, in the present circumstances I decline such invitation. I regret that I am not satisfied that there is sufficient evidence before me to do so properly or appropriately, notwithstanding Mr Kerr's persuasive efforts to the contrary. Mr Coleman is correct, I think, in his exposure of relevant lacunae in the evidence, and for that reason, and also by reason of non-compliance with Order 41 rule 5(2), in my judgment this application must fail.

31. I would add at this stage that, as a result of the erudite legal argument upon the ambit of the Rules, I have indeed formed some preliminary views, but I am disinclined to go further at this point. Indeed, I think it would be inappropriate to do so, nor even to provide a general indication as to the broad nature of those views, because it occurs to me that even slight changes to the factual matrix may alter one's perception of the true position. In this case, for example, I am told that the port of Santos has a very large container port within it called Columbia; and against this broad factual background, it is not easy to define the precise meaning of the terms "discharge and delivery" in Santos itself.

32. I would also note, as a postscript, that although the case was conducted by Mr Kerr on the basis that, in terms of discharge, one can draw a line in the sand at the latest when the goods happened to be put in a truck for land transportation --- and that the posited facts therefore constituted an a fortiori situation --- I remain far from certain whether, in any event, this case is susceptible to being boiled down quite as neatly within the present Order 14A argument as Mr Kerr sought to do. To the contrary. I am by no means sure that the relevant time-bar provision in the Bill of Lading necessarily is applicable in instances of misdelivery, as against delivery, as to which distinction see the observations of Gleeson C.J. on the meaning of "delivery" in The "Zhi Jiang Kou" op.cit. at 499; and also, possibly on a more general plane, the observations of Clark J. in "The Ines" [1995] 2 Lloyd's Rep 144 at 152. But I say no more. Doubtless further argument will be mounted on this interesting aspect of the case if and when this matter gets to trial.

33. It follows from the foregoing, therefore, that after fully reviewing the arguments of Counsel and all the material placed before the Court, I have concluded that the application must be dismissed. If such is thought to be necessary, I will hear Counsel more fully on the question of costs. For the moment, however, I will make an order nisi to the effect that the costs of and occasioned by this application are to be to the Plaintiff in any event, such costs to be taxed, if not agreed. The case is certified as fit for Counsel.

34. Lastly, it remains only to thank Counsel on both sides for their considerable assistance.