EVERGREEN MARINE CORP (TAIWAN) LTD v. LUK CHI YICK t/a FIRST GRAND ENTERPRISE CO

HCCL 1/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO. 1 OF 2002

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D E C I S I O N

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1. This is an application by the Plaintiff for summary judgment against the Defendants. The Plaintiff was the carrier in respect of six containers of mixed metal scrap for carriage from Rotterdam, Holland to Huangpu, People's Republic of China. The 1st Defendant was named as the consignee in the original set of Bills of Lading. However, there was dispute between the 1st Defendant and the shipper of the goods and the Bills of Lading were not passed to the 1st Defendant. Before the goods arrived, the shipper instructed the Plaintiff to issue a new set of bills of lading to replace the original set. The shipper instructed the Plaintiff to name King Modern Metal Co Ltd as the new consignee.

2. When the goods arrived at Hong Kong, they were delivered to the Plaintiff's nominated feeder company Kaitone Shipping Co Ltd ["Kaitone"] to arrange for onward shipment to Huangpu. At Huangpu, the goods were released by Kaitone to an agent nominated by the 1st Defendant, one Guangzhou Yue Heng Economic Trading Development Company ["Yue Heng"].

3. The release was made without the production of the Bills of Lading. The Plaintiff was subsequently sued by the shipper in the District Court of Rotterdam. On 15 November 2001, the Plaintiff settled the claim by a Settlement Agreement.

4. In this action, the Plaintiff sought relief against the Defendants in respect of the incident. Two causes of action were pleaded in the Points of Claim,

(a) indemnity based on three "letters of guarantee" given by the 1st Defendant in favour of Kaitone;

(b) conversion.

The 2nd Defendant was sued on the basis that the goods were in the possession of the 2nd Defendant after it had taken over the business of the 1st Defendant with the admission of Luk Wang as a partner.

5. At the hearing on 19 March 2004, the Plaintiff abandoned the claim based on conversion in view of the fact that the goods were, according to the Plaintiff's own case, released with the consent of the Plaintiff. Therefore the Plaintiff is not proceeding against the 2nd Defendant.

6. The letters of guarantee were in Chinese and they said as follows,

"電放保函

致：啟通船務有限公司

頭程船名/航次:LT UNICORN/007-003E	頭程提單號:EISU520100006333
二程船名/航次:長有/026A	二程提單號:HK100679

貨名：廢金屬

集裝箱號:	GATU1000350/20, GATU0991974/20
	GATU0572670/20, (3x20)

發貨人及頭程船公司已安排上述貨物由上述船舶承運，並已安排電放。

我司 永順企業公司（First Grand Enterprise Co.）（全稱）現證明已提取上述貨物，並確認以後因該貨所產生的糾紛與貴司無關。

 

	簽章
	2001年3月4日"

Similar letters were issued by the 1st Defendant in respect of the other containers.

7. The letters were addressed to Kaitone. By a letter dated 15 August 2001, Kaitone purported to assign its rights under the letters of guarantee to Evergreen Star Hong Kong Limited and Evergreen Marine Corporation. Evergreen Star Hong Kong Limited is not a party to this action. For present purposes, I shall assume (but without deciding) that Evergreen Marine Corporation is the Plaintiff.

8. In my judgment, the claims based on the letters of guarantee must go to trial. Even assuming that the wordings in the letters of guarantee were sufficient to constitute a promise by the 1st Defendant to indemnify Kaitone, and even assuming the assignment was valid, the promise remained a promise to indemnify Kaitone for losses and damages suffered by Kaitone. It was not a promise to indemnify the Plaintiff. Kaitone and the Plaintiff could not unilaterally change the obligation undertaken by the 1st Defendant by the assignment to convert the promise into one of indemnifying losses suffered by the Plaintiff instead of those suffered by Kaitone.

9. The position might be different if the assignment was with notice and consent of the 1st Defendant. One might be able to infer a novation in those circumstances. But this is not the case pleaded nor is there any evidence to such effect. Counsel for the Plaintiff informed this court that no notice had been given to the 1st Defendant in respect of the assignment.

10. Neither was it argued before this court that the letters of guarantee were issued by the 1st Defendant to Kaitone as agent for the Plaintiff. There are factual disputes between the parties as to the circumstances leading to the execution of these letters of guarantees by the 1st Defendant. On the defence's version, the 1st Defendant only issued the letters in June 2001 to assist Kaitone. This court cannot resolve such dispute of facts in the context of an Order 14 application.

11. Given the factual disputes as to the circumstances leading to the issue of the letters of guarantee, it is also not possible for this court to give judgment in favour of the Plaintiff at this stage on the basis of the doctrine of implied contract (see Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575; The Captain Gregos (No 2) [1990] 2 Ll Rep 395, The Gudermes [1993] 1 Ll Rep 311 and The Aramis [1989] 1 Ll Rep 213). According to the defence case, the goods had already been released for some time before the letters of guarantee were signed. In any event, the Points of Claim have not pleaded such a cause of action.

12. Coming back to the wordings in the letters of guarantee, the last sentence in the letters did not contain an explicit promise to indemnify the promisee in respect of the consequences arising from releasing the goods without production of the bills of lading. It might be possible to argue that such a promise was implied even on the defence case as set out in Paragraph 7 of the Affirmation of Mr Luk Chi Yick of 30 April 2003. However, this should be left to the trial judge since, for reasons given, the case must go to trial.

13. I therefore grant unconditional leave to defend to the Defendants. I also make an order nisi that the costs of the application be costs in the cause. As parties have not addressed me on directions as to future conduct of the action, I shall leave it to them to issue a summons for directions.

14. I further direct that if the 1st Defendant so wishes, he could make an appointment with the court interpreter after the handing down of this judgment for the purpose of translating the same to him orally.