ASTEC INDUSTRIES, INC AND ANOTHER v. BLUE ANCHOR LINE AND ANOTHER

HCAJ 181/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION ACTION NO. 181 OF 2008

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BETWEEN

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J U D G M E N T

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I.  INTRODUCTION

1.  This is the hearing of preliminary questions of law.  The amount at stake in this case being relatively small, it is hoped that the answers to these questions will lead to the speedy resolution of the parties’ dispute. 

2.  The Defendants received the Plaintiffs’ road-working machinery for carriage from Baltimore (USA) to Valencia (Spain).  The machinery was damaged when it was being hauled from one dock to another in the course of trans-shipment in Antwerp.  For the purposes of this hearing, there is no dispute that the United States Carriage of Goods by Sea Act (COGSA) applies. 

3.  The machinery was shipped “as is”.  It was free-standing, neither having been enclosed in some larger case nor placed on top of some form of pallet.  The main question is whether the Plaintiffs’ machinery itself constituted a “package” within the meaning of the “per package” limitation in COGSA s.13 and cl.28 of the relevant Bill of Lading. 

4.  In the event that the machinery was not “packaged,” COGSA s.13 stipulates a limit “as per customary freight unit”.  The subsidiary question is whether, freight having been charged per cubic meter of the machinery, the “customary freight unit” in this case is the cubic meter (as suggested by the Plaintiffs).  The alternative (as suggested by the Defendants) is that the “customary freight unit” is the single unit of the machinery.

5.  The Plaintiffs claim damages of about US$53,000.  If the machinery was not packaged and if the “customary freight unit” is the cubic meter, the limit imposed by COGSA s.13 would be well above their claim.  On the other hand, if the machinery constituted a single package or freight unit, the COGSA limit would be US$500.

II.  DISCUSSION

A.  Main question: Package?

6.  The Defendants accept that the machinery was not externally packed or crated in any way.  They argue that the machinery is a package, because in the course of shipment it was “folded up for transport”. They observe that ironically the machinery appears to have been damaged because it was partly unfolded when being moved from dock to dock in Antwerp and the unfolded rigging hit the ceiling of a tunnel as a result.

7.  In support of their case, the Defendants rely on Fireman’s Fund Ins Co. & Tall Pony Productions Inc v. Tropical Shipping and Constr Co (2001) 254 F 3d 987 (11th Circuit).  There the Court held that a mobile stage which was folded up when transported constituted a package within the terms of COGSA.  In that case, the stage could be cleverly folded down into a shape which apparently enclosed its machinery.  That enclosed space could then be hauled by a trailer.

8.  In my view, Fireman’s Fund is clearly distinguishable from the present circumstances. 

9.  At the time of the accident, the engine of the machinery here was turned on.  That was necessary in order to release its front hydraulically operated stability legs.  Unfortunately, the same hydraulic system operated the machinery’s grizzly assembly.  The release of the stability legs also caused the grizzly grid of the machinery to extend upwards.  This situation went unnoticed, so that the grizzly hit the tunnel ceiling in the course of moving from dock to dock.

10.  In the ordinary course of event, the grizzly ought to have been transported in a retracted (as opposed to extended) position.  But that hardly implies that the entire machinery then becomes some sort of self-enclosed package like the mobile stage in Fireman’s Fund. All the retraction of the grizzly means is that the grizzly is down and the machinery can be safely moved about with minimum risk of hitting some low-lying structure on the road.

11.  It seems to me that, as submitted by the Plaintiffs, the more apposite case is Tamini v. Salen Dry Cargo (1989) 866 F 2d 741 (5^th Circuit).  In that case, a portable rotary drilling rig was somewhat covered by external sheathing.  Nonetheless, the Court (both below and on review) did not think that the rig was a package.  This was despite the rig having been described as a “package” in the Bill of Lading.  See Tamini at 743. 

12.  I note that the Bill of Lading here also describes the machinery as constituting “1 package” or “1 piece”.  But this cannot be conclusive.  The meaning of “package” in COGSA is a matter of law. The Bill of Lading may or may not have used the word “package” in the same sense that the word was intended to be used in COGSA.  I am consequently unable to draw any conclusion from the description of the machinery as a “package” on the face of the Bill of Lading.

13.  I would answer the main question: “No, the machinery here was not packaged and did not constitute a “package” within COGSA s.13.”

B. Subsidiary question: Customary freight unit?

14.  On this, it is hard to see how the machinery, a unique piece of equipment, can constitute a “customary” freight unit. 

15.  In my view, freight having been charged “per cubic meter,” the applicable customary freight unit must be the cubic meter and at the time of contracting the parties must have regarded it as such.  I would answer the subsidiary question accordingly.

III. CONCLUSION

16.  The Plaintiffs’ claim is well within the limit stipulated by COGSA.