THE CHINA & SOUTH SEA BANK, LTD v. JUNTEX LTD t/a JUNTEX INTERNATIONAL SHIPPING AGENCY AND OTHERS

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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DECISION

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1. This is an application by the Plaintiff against the 1^st Defendant for summary judgment.

2. The 1^st Defendant has not appeared. It was initially legally represented but since 16 August, it has acted in person. It was served with notice of today's hearing on 12 May 1997 at its registered office. On the eve of today's hearing, it transpired that the 1^st Defendant had changed its registered address as of 1 June 1997. Ex abundanti cautela, further copies of the hearing bundle and skeleton argument were served on the 1^st Defendant on 19 July. I am satisfied that the 1^st, Defendant was given notice of today's hearing and has chosen not to appear.

3. The facts giving rise to the Plaintiff's claim may shortly be summarized as follows.

4. On 15 January 1996, the Plaintiff negotiated a set of documents under a Letter of Credit including a Bill of Lading dated 12 January 1996. The Bill of Lading was signed for and on behalf of the carrier by the 1^st Defendant. The carrier named in the Bill of Lading is CNC Line. The Bill of Lading was made to the order of the Korea Exchange Bank. The Bill was endorsed in blank by Korea Exchange Bank, the consignee and delivered to the Plaintiff. The Bill of Lading stated that 300 bales of 100% viscose rayon spun yarn woven fabric were shipped on board the vessel, the Hanjin Jakarta on 15 January 1996.

5. In February 1996, the Plaintiff who had paid full value under the Letter of Credit as holder and endorsee of the Bill of Lading requested the 1^st Defendant to deliver the goods. On 29 February 1996, the 1^st Defendant wrote to the Plaintiff stating that the shipper had not delivered the goods to the 1^st Defendant in accordance with the Bill of Lading and the vessel did not in fact contain any of the goods specified in the Bill of Lading. Enquiries were made of Cheng Lei Navigation (Hong Kong) Company Limited which operated CNC Line, the carrier named in the Bill of Lading. It transpired from their reply dated 21 March 1996 that the 1^st Defendant had never been appointed by CNC as their agent and that they had never authorized the 1^st Defendant to issue any Bill of Lading on their behalf.

6. The 1^st Defendant has also not filed any evidence to dispute the Plaintiff's evidence.

7. Mr Khaw who appears for the Plaintiff submitted that by signing the Bill of Lading, the 1^st Defendant warranted that it had authority to do so. The Plaintiff relied on this warranty. It became the holder and endorsee of the Bill of Lading by virtue of s.22 of the Bills of Lading and Analogous Shipping Documents Ordinance, Cap.440. He cited the case of V/O Rasnoimport v. Guthrie & Co. Ltd. [1966] 1 L1.L.R. 1 to show that where the warranty is broken because the defendant never had authority to sign for or on behalf of the carrier and that representation was relied upon by the owners of the bill of lading, the owners are entitled to recover the appropriate damages for breach of implied warranty of authority.

8. This is a clear case: the 1^st Defendant did indeed warrant that it had authority to sign on behalf of the carrier (when it did not). For breach of that warranty, it is liable in damages. Rasnoimport applies. There is no defence to this claim and none has been raised.

9. Accordingly, the Plaintiff is entitled to judgment against the 1^st Defendant in the sum of US$116,640, with simple interest on that sum from 15 January 1996 until payment at the rate of 11.5%. The Plaintiff is also entitled to the costs of this application.