FOSHAN SUNDY TRADE CO LTD v. AIR SEA TRANSPORT (HK) LTD

DCCJ 2417/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2417 OF 2006

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JUDGMENT

The Plaintiff’s O.14 Application

1.  This is a hearing of the Plaintiff’s application for summary judgment against the Defendant under Order 14 of the Rules of the District Court.

2.  In this action, the Plaintiff claims against the Defendant under an original bill of lading no. AHK50602006A for the sum of US$114,706.80 or alternatively, damages; plus interest and costs.

Background

3.  This is a claim for misdelivery.  The primary facts are undisputed.

4.  In May 2005, the Plaintiff as seller received an order from Bliss Success Limited (“BSL”) for the purchase of 30,186 pieces of ladies jeans (“the Goods”).   BSL is the Third Party in this action.

5.  Both the Plaintiff and BSL agreed the selling price of the Goods at US$114,706.80.  This sale is evidenced by an invoice dated 30 May 2005.

6.  On about 29 May 2005, the Goods were delivered into the custody of the Defendant, as the carrier, who packed the Goods inside 9 containers for shipment to the United States.

7.  On about 1 June 2005, Miss Liang of the Plaintiff came to the Defendant’s office and paid the Defendant the relevant freight and charges for the shipment of the Goods.

8.  The Defendant handed over to Miss Liang the original Bill of Lading No. AHK50602006A (“the Bill of Lading”).  There was no adverse clausing in the Bill of Lading.

9.  The Bill of Lading named the Plaintiff as the Shipper, “to order of HBZ Finance Ltd.” as the Consignee, and BSL as the Notify Party.

10.  By operation of the Carriage of Goods by Sea Ordinance, the Hague-Visby Rules were incorporated into the contract of carriage.

11.  The Goods under the Bill of Lading were shipped from Hong Kong to the United States in mid June 2005.

12.  BSL then informed the Defendant that they had lost the Bill of Lading and asked the Defendant to release the Goods to them.

13.  In late June 2005, without taking instruction from the Plaintiff, the Defendant released the Goods to BSL upon securing a letter of “Indemnity and Guarantee” issued by Israel Discount Bank of New York dated 15 June 2005, holding the Defendant harmless from the release of the Goods.

14.  Subsequently, BSL provided 3 advertisements dated 22, 23 and 24 of July 2005 in newspaper saying that the original Bill of Lading was lost by BSL.

15.  In March 2006, the Plaintiff sent letters to the Defendant asking for return of the Goods on the ground that the Plaintiff was the holder of the original Bill of Lading.  The Defendant failed to do so as the Goods had been released.

16.  The Plaintiff took out this action on 18 May 2006.  On 19 June 2006, the Defendant filed a defence and Third Party Notice joining BSL as the Third Party.  On 15 July 2006, the Plaintiff took out the summons for a summary judgment.

The Plaintiff’s case

17.  Mr. Yau, solicitor for the Plaintiff, says the Goods were released without production of the original Bill of Lading.  The Defendant, as a carrier for reward and/or as a bailee of the Goods, was in breach of its duty to take reasonable care of the Goods and to deliver the Goods according to the terms of the Bill of Lading.  The claim was therefore based upon the Defendant’s fault or negligence in unauthorized release of the Goods without collecting the original Bill of Lading and/or seeking instructions from the Plaintiff.

The Defendant’s case

18.  The Defendant only disputes its liability, not the quantum. 

19.  The Defendant’s case is that the Defendant had not done any business with the Plaintiff before.  The Defendant only knew about BSL at the material times.  In early June 2005, the Defendant received a shipping order from one Ms. Annie Kwong of BSL concerning shipment of the Goods.  BSL informed the Defendant that it would send someone called Ms. Liang to collect the Bill of Lading and pay the relevant charges.  The Defendant did not know who Ms. Liang was.

20.  All along the Defendant took instructions from BSL, which they regard as the “shipper”.

21.  The Goods were duly shipped and arrived at Long Beach, USA, the Port of Discharge in about mid-June 2005 in good order and condition.

22.  Upon arrival of the Goods, the Defendant received instructions from BSL requesting the Defendant to release the Goods with the representation that the Bill of Lading was already lost.  BSL also produced a letter of “Indemnity and Guarantee Delivery without the Bill of Lading” issued by Israel Discount Bank of New York dated 15 June 2005.

23.  In reliance of the representation and the said letter of Indemnity and Guarantee, the Defendant released the Goods to BSL in late June 2005.

24.  Mr. Leung, counsel for the Defendant, accepting that the Hague-Visby Rules are applicable in the present case, abandons at the hearing his time-bar defence raised in the Defence and his written submissions.  He does not dispute the main facts suggested by the Plaintiff, except whether Miss Liang, when she came to the Defendant’s office paying the freight and relevant charges, identified herself as representative of the Plaintiff.

25.  Mr. Leung argues that the “Shipper” of the Goods was BSL, not the Plaintiff.  He submits that the Defendant only followed the instruction of the shipper to release the Goods without production of the original Bill of Lading and was therefore not negligent or in breach of its duty.

26.  Mr. Leung says the case is “peculiar and mysterious”.  He even goes so far as to suggest that there is a conspiracy between the Plaintiff and BSL to defraud the Defendant.  In support of this contention, Mr. Leung produces a letter dated 27 March 2006 issued by Messrs. Tam, Pun and Yipp, solicitors for BSL, to Messrs. Y.S. Lau & Partners, solicitors for the Plaintiff.  The letter suggests that there was a trading dispute between the Plaintiff and BSL over the Goods delivered by the Defendant.

27.  Mr. Leung suggests that the Defendant is kept in the dark and does not know what is going on between the Plaintiff and BSL.  The whole picture is not clear and can only be resolved at trial by making inquiry with the Plaintiff, the Defendant, and BSL.

The Principles for Order 14

28.  The following are well-known principles applicable to O.14 applications:

(a)	The defendant shoulders the burden to satisfy the Court that he has a real or bona fide defence (i.e., that there are trible issues), or that there ought for some other reason to be a trial of the plaintiff’s claim.
(b)	O.14 is for clear cases, i.e. cases in which there is no serious material factual dispute and, if a legal issue, then no more than a crisp legal question as well decided summarily as otherwise.  The procedure is inappropriate where the plaintiff’s entitlement to recover any sum is made subject of any serious dispute, whether of law or fact.
(c)	Although the mere assertion in an affidavit does not, ipso facto, provide leave to defend, the Court will not embark upon a mini-trial of the action on paper and leave to defend will be granted unless the defence raised so incredible or so contradicted by contemporaneous documents or circumstances that it becomes clear that the defence is a sham.
(d)	The test is not whether the defendant’s assertions are to be believed, rather it is whether those assertions are believable, i.e. capable of being believed.  If so, the defendant must have leave to defend.
	See:	Hong Kong Civil Procedure 2006 Vol 1 para 14/4/9
		Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155
		Man Earn Ltd. v. Wing Ting Fong [1996] 1 HKC 225

Carrier’s duty

29.  It is trite law, and undisputed by the Defendant, that when a bill of lading has been issued, the carrier is under the obligation to deliver the goods at the port of destination to the holder of the bill upon presentation of the original bill.

The defences

Who is the Shipper?

30.  The main defence, as suggested by the Defendant, is the dispute as to whether the Plaintiff was the shipper.  The Defendant says, all along, they took instructions from BSL, which they regard as the shipper.  They released the Goods, though without presentation of the Bill of Lading, under the instructions of the “shipper”.  The Defendant was therefore not in breach of its obligation in the contract of carriage.

31.  In my judgment, the identity of the shipper cannot be disputed in this case.  It is not disputed that the Bill of Lading was prepared and issued by the Defendant as the Carrier.  The Plaintiff was named as the shipper in the bill.  The dispute whether Ms. Liang, who came to pay the freight and relevant charges, has disclosed her identity as representative of the Plaintiff is immaterial.

32.  The Defendant has exhibited the instructions by fax dated 6 June 2005 that they received from BSL.  This document also stated clearly that the shipper was “Foshan” (the Plaintiff).

33.  On the documentary evidence, it is ludicrous to suggest that the Plaintiff is not the shipper or that the Defendant did not know the Plaintiff’s status as the shipper.

34.  In any event, the Defendant was bound under the contract of carriage and/or had a duty as a bailee and/or as a carrier for reward to deliver the goods only upon production of the bill.

35.  Mr. Leung has suggested that there may be a conspiracy between the Plaintiff and BSL to defraud the Defendant.  In my view, this serious allegation has been made without any basis, and against the affidavit of Foo Sai Kit of the Defendant, who says that he is given to understand that there are trading dispute between the Plaintiff and BSL.

Omission of the Plaintiff?

36.  At the hearing, Mr. Leung concedes that the Hague-Visby Rules are applicable in this case and abandons the time-bar defence.  However he raises a new defence, namely, the exemption clause under Article IV 2(i) of the Hague-Visby Rules.

“	Article IV (Hague-Visby Rules)
	1.	………
	2.	Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from –
	.
	.
	.
	.
	.
	.
		(i)	Act or omission of the shipper or owner of the goods, his agent or representative.
	.
	.
	..…..”

37.  Mr. Leung says it was an omission of the Plaintiff for not keeping the Defendant informed that the Plaintiff was in possession of the original Bill of Lading.  This proposition is raised without authorities in support.

38.  In my view, no such duty arises from the contract of carriage.  Given the historical and commercial background of the use of a bill of lading, there cannot be such a duty on the shipper who would not expect the carrier to release goods without his instruction in the absence of the original bill of lading.

39.  Mr. Leung complains that the Defendant is kept in the dark and does not know what is going on between the plaintiff and BSL.  He says the whole picture can only be resolved at trial.

40.  In my judgment, any trading dispute between the Plaintiff and BSL, as the Defendant alleged, is no defence to the head action between the Plaintiff and the Defendant.

41.  In my view, the defences raised by the Defendant are bound to fail.  There cannot be any argument that the Defendant, as carrier of the Goods releasing the Goods without production of the original Bill of Lading, is negligent and/or in breach of its duty as carrier and bailee. 

Decision

42.  I am satisfied that the present case is one of the few cases suitable for summary judgment.

43.  The quantum is not in dispute and is supported by the Goods’ value in the invoice.

44.  There is therefore judgment for the Plaintiff against the Defendant in the principal sum of US$114,706.80.  I will also order interest on the principal sum from date of writ at judgment rate until payment.

45.  I also make costs order nisi that the costs of this action, including costs of and occasioned by this application, be paid by the Defendant to the Plaintiff, to be taxed if not agreed.  This costs order nisi will become absolute after 14 days from date of handing down of this judgment.