FLYING TRANSPORTATION (MACAU) LTD. v. PACIFIC AIR FREIGHT (HK) LTD.

HCA 6187/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6187 OF 2000

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J U D G M E N T

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1. This is an action by the plaintiff, a Macau based company, against the defendant, a Hong Kong based company, for a sum totalling $661,933.20 for freight charges incurred. The dispute arose in the following way.

2. The defendant had Taiwanese clients who wished to ship goods from China to Taiwan through Macau. The defendant itself did not have facilities in Macau, and so it instructed the plaintiff, a Macau based freight forwarder, to arrange the freight from Macau to Taiwan.

3. I have not the slightest doubt, irrespective of any of the evidence, that all of the parties would have known and appreciated that the defendant company was acting as an agent for the Taiwanese purchasers of the goods.

4. The business began in about July 1999. In the first month, some $200,000.00 worth of goods were trans-shipped from Macau by the plaintiff to the defendant's principals in Taiwan. On 28 August 1999, the plaintiff sent a statement to the defendant and the defendant paid it by cheque. Trans-shipment of goods from Macau to Taiwan began again in October 1999.

5. The way the transaction worked was this: a Mrs Kei or a Mr Kwai in the defendant's company in Hong Kong was contacted by the Taiwanese principals. Having received the details for the instructions, Mrs Kei or Mr Kwai would contact the plaintiff in Macau and issue instructions for the transaction. Mr Yau, the assistant manager of the Macau plaintiff company, would then prepare the necessary documents based on the information given to him by the defendant's Hong Kong representatives.

6. The documents prepared were, first, an airline air waybill. That set out the shipper as Flying Transportation (Macau) Limited, the plaintiff company. The consignee's name was one of the Taiwanese companies. By way of example, I refer to a transaction commencing at page 13 of the bundle, in which the consignee was shown as Link Way Air Cargo Company Limited. Also prepared was a house air waybill on the plaintiff's own documentation. For reasons which were not explained but are not in any way important, on that document the consignee's name is different, but it appears that the consignee is an associated company of the consignee on the main air waybill. The house air waybill contains the defendant company's name as the shipper.

7. The goods would be shipped directly from Macau to Taiwan, and the plaintiff would then send a debit note to the defendant company for the cost of the freight. The defendant company added 10 per cent to the cost and charged the Taiwanese company accordingly. The house air waybill was faxed by the plaintiff to the defendant at the time of the transaction. The house air waybill contains the following provision:

" It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF."

8. The following provisions are contained on the reverse of the house air waybill. The plaintiff is plainly "the company" as that expression is used in the standard trading conditions which are endorsed on the back. An expression is used, "customer", which means:

" Any person at whose request or on whose behalf the company undertakes any business or provides advice, information or services."

9. Clause 2 of the contract contains the following provision:

" Contractual status of the customer. The customer entering into any transaction with the company hereby expressly warrants that it is either the owner or the authorised agent of the owner of the goods (including any container or equipment) to which the business relates and further warrants that it is authorised to accept and is accepting these conditions not only for itself but also as agent for the owner of the goods. Where the customer accepts these conditions as agent for the owner of the goods, it also accepts personal liability, but such acceptance shall not prejudice the rights of the company against the owner of the goods. The customer shall indemnify the company against all expenses, losses and other liabilities whatsoever suffered by the company arising from or due to a breach or breaches of the above warranties whether or not arising out of the negligence of the customer."

Clause 19(a) of the contract provides:

" Quotation and Charges:

(a) the customer shall pay to the company in cash or as agreed all sums immediately when due without deduction or deferment on account of any claim, counterclaim or set-off. Payment to the company is due as soon as an invoice has been rendered."

10. It is unfortunate that the advisers for the plaintiff had not bothered to read this document. If they had, they would have, as they should have, pleaded the terms that I have quoted.

11. It is equally unfortunate that those advising the defendant, when inspecting the discovered documents, did not bother to read the clauses that I have quoted, for if they had, it would have focused their minds on the only real issue in this case.

12. Had an original copy of the house air waybill been delivered to the defendant, there would have been no doubt whatsoever as to the defendant's liability. That is because the contract documents state what I am completely confident is the universal situation in the freight forwarding industry: namely, that when a freight forwarder contracts with another freight forwarder for goods, he does so not only as an agent for his principal, but, as between freight forwarders, as a principal.

13. However, the evidence does not establish that the conditions on the reverse of the house air waybill were also drawn specifically to the attention of the defendant. By that I mean there is no evidence that the reverse itself was faxed to the defendant. The plaintiff was obliged to rely on the notice contained on the front of the house air waybill drawing the attention of a party to the conditions on the reverse.

14. The law is well known and is set out adequately in Chitty on Contracts (28th Edition) at 12-008 and following.

15. I am satisfied freight forwarding contracts and air waybills are documents of a class which a party receiving them would expect there were contractual conditions. I am equally satisfied that everybody dealing with such documents would expect to find the conditions printed on the reverse of the document. But even if they did not know that, their attention is specifically drawn to the conditions by the statement that "The goods described are subject to the conditions of contract on the reverse hereof," those words being in capital letters.

16. Mr Fong says that he does not read English and he fills out and reads these documents using the little English that he has, which tells him what is in the items that have been filled in. It is no answer for him to say that he did not read either the notice drawing his attention to the conditions or the conditions themselves. If a businessman chooses to conduct himself without knowing the terms of his contract, that is his problem. It is up to him to find out what they are.

17. I am satisfied that the notice on the front of the contract is in sufficiently clear and bold print to have drawn attention to a user of the document that it was something that ought to be looked at.

18. The defendant had been dealing with the plaintiff since August 1999, had been receiving these air waybill documents, and has had more than adequate notice that there were conditions which it could have looked at if it had chosen to do so.

19. It is not suggested, and it could not be suggested, that the terms on which the plaintiff relies are onerous or unusual. Indeed, they are what I would expect to be normal conditions in this trade.

20. I am satisfied that the conditions have been properly drawn to the notice of the defendant. Had he bothered to read them, he would have known that he was contracting as a principal and was liable to pay the plaintiff whether or not he was paid by his Taiwanese clients.

21. The only other matter that I need to comment on is the issue raised by the defence that by pursuing the Taiwanese company and getting paid for some of the outstanding freight charges, the plaintiff has made an election which bars him from recovering against the defendant. In Clarkson Booker Limited v Andjel [1964] 2 QB 775, the Court of Appeal held that:

" The institution of proceedings against either agent or principal did not, as a matter of law, amount to a binding election so as to bar proceedings against the other. Whether there has been an election in any particular case is simply a question of fact to be decided in the light of all of the circumstances."

22. In this case, the plaintiff went to the Taiwanese supplier only after the defendant had stopped making payment.

23. In the circumstances of this case, I am not persuaded that his conduct in so doing was anything other than a commercial course of action, and not an election at law to abandon a claim against the defendant.

24. There will, accordingly, be judgment for the plaintiff against the defendant in the sum of $661,933.20. That sum will bear interest at judgment rate from the date of the issue of the writ until payment.

25. The plaintiff will have its costs, together with any costs reserved, costs on a party and party basis, to be taxed if not agreed.