SUPER ALLOY (HOLDING) CO LTD AND OTHERS v. FURUKAWA LINE AND OTHERS

DCCJ290/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 290 OF 2002

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BETWEEN

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JUDGMENT

1.  This case has had a long history and the original action was commenced in the High Court under action number HCCL No. 206 of 1997. Originally there were only six defendants. Subsequently, the seventh to the ninth defendants were added. The claim as endorsed claimed on behalf of the Plaintiffs being owners and persons entitled to sue in respect of a cargo of 57 cartons of “ADESSO” quatz watches lately laden on board the ship or vessel “ASIAN POLLUX” and/or as holders and/or endorses of bills of lading No. COSA 96-00009 and/or HK 961001152 both dated 31^st October 1996 under which the said cargo was shipped, and the Plaintiffs claim damages from all defendants in respect of their breach of contract and/or duty as bailee and/or negligence in and about the loading, stowage, handling, custody, care, discharge and delivery of the Plaintiff’s cargo and the carriage thereof on board the ship or vessel “ASIAN POLLUX” on a voyage from Hong Kong to Osaka, Japan in or about October to November 1996 and/or conversion, short delivery, or non-delivery of the Plaintiffs’ cargo resulting in the Plaintiffs suffering loss and/or damage.

2.  In short, it is claimed that the Plaintiffs’ goods, being the 57 cartons of quatz watches were lost en route between Hong Kong and Osaka and when the Statement of Claim particularised, the loss and damages in respect of those quatz watches were in the total sum of US$43,792.00. The Plaintiffs looked for damages from the chain of defendants who were responsible in their respective roles for the transportation, carriage and/or delivery of the said goods.

3.  The matter was eventually transferred to the District Court for trial and for various reasons need not go into, there remained only the 4^th and 6^th Defendants for trial before me.

4.  In the Re-Amended Statement of Claim, it was said that the Plaintiffs delivered the said cargo in good order and condition to the 2^nd Defendant who then subcontracted the stuffing and consolidation of the said cargo in the container to the 4^th Defendant who then subsequently sub-sub-contracted the stuffing and consolidation of the cargo in the container to the 6^th Defendant. The 2^nd Defendant was the agent for the 1^st and 3^rd Defendants who were carriers and/or owners of the vessel “ASIAN POLLUX”.

5.  The cargo was said to have been stuffed and loaded by the 6^th Defendant into container no. GSTU 7108435 together with 65 cartons of other goods and the container doors were then sealed under Seal No. 172523. After loading of the container, purportedly containing the said cargo, the vessel “ASIAN POLLUX” set sail on or about 31^st October 1996 for Osaka Japan. When the vessel arrived on 11^th November 1996, as evidenced by the Shin Nihon Kentei Kyokai Container Devanning Report dated 11^th November 1996, the cargo of 57 cartons was found to be missing.

6.  The Plaintiffs say that the 4^th and 6^th Defendants were under a duty as bailees and/or sub-bailees and/or as carriers for reward to ensure delivery of the said cargo and in breach, they failed in their duties to make delivery.

7.  In the Amended Defence of the 4^th Defendant, it was said that the 2^nd Defendant had engaged it to carry the cargo from Hong Kong to Osaka Japan on board the ship or vessel “ASIAN POLLUX”. The 4^th Defendant in turn engaged the 5^th Defendant to carry the said cargo on board the abovementioned ship.

8.  On or about 29^th October 1996, the 5^th Defendant confirmed by the shipping order numbered HKOSCO92 that the said cargo could be collected at the 6^th Defendant’s warehouse on 30^th October 1996. The 5^th Defendant informed the 4^th Defendant that its haulier freight container transportation company, namely the 7^th Defendant would carry the container assigned under the said shipping order and would arrive at the 6^th Defendant’s warehouse at about 4pm on 30^th October 1996 to collect the said cargo.

9.  By a fax message dated 29^th October 1996, the 4^th Defendant informed the 6^th Defendant the details of shipping order, haulage, date and time of loading. Prior to the date of collection, the said cargo was deposited at the 6^th Defendant’s warehouse and the latter had acknowledged to the 2^nd Defendant and/or the 1^st Plaintiff its receipt thereat.

10.  The 7^th Defendant was instructed by the 5^th Defendant to perform the drayage and to carry the said container to the 6^th Defendant’s warehouse first and then to the warehouses of the 8^th and 9^th Defendants for the loading of other goods into the said container.

11.  The 6^th Defendant and/or the 7^th Defendant carried out the actual stuffing and/or loading work and by virtue of the container load list dated 30^th October 1996, the 6^th Defendant confirmed the loading of the said cargo into the container numbered “GSTU7108435”.

12.  Likewise, the 5^th Defendant had also acknowledged the receipt of the said cargo loaded into the abovementioned container by the issue of its Bill of Lading No. HK961001152.

13.  It was said that the 4^th Defendant at no point of time had any sight or any physical contact or possession with the said cargo. Needless to say, the 4^th Defendant also denied any liability or any responsibility in relation to the loss of the said cargo. Furthermore, the 4^th Defendant say that the loss or damage was not due to its neglect or default and it had engaged competent and reputable companies in the transportation of this load.

14.  The 6^th Defendant admitted in its Amended Defence that it was the 4^th Defendant who instructed them to load the said cargo into the container and in turn the 6^th Defendant acknowledged receipt of the cargo by virtue of a Container Load List dated 30^th October 1996.

15.  Further, it was alleged by the 6^th Defendant that the 4^th Defendant had arranged the said cargo to be sent to the 6^th Defendant’s warehouse for loading into a container with the ultimate destination of Osaka, Japan. The 6^th Defendant had acknowledged receipt of the cargo by signing on a shipping order set.

16.  On or about 30^th October 1996, the 4^th Defendant informed the 6^th Defendant that the cargo were to be loaded into the container of Freight Container Transportation Co, the 7^th Defendant. On that same day, a trailer with a container from the 7^th Defendant arrived at the 6^th Defendant’s warehouse. The driver of the container produced to the 6^th Defendant a copy of Drayage Receipt dated 30^th October 1996 indicating that he collected the said cargo and then after loading the goods at the 6^th Defendant, went on to load further goods at the warehouses of Sinowealth Warehouse Transportation Limited and Fortune Pioneering Development Limited, the 8^th and 9^th Defendants respectively.

17.  The 6^th Defendant alleged that the said cargo were loaded safely into the container and the container was sealed with a temporary seal to be cut by the next party. There was no report of loss or theft when the said container left the warehouse of the 6^th Defendant and therefore the 6^th Defendant had duly performed its duties by safely storing and loading the said cargo onto the container. Thus, the 6^th Defendant was not responsible for any loss or damage of the said cargo.

Mr. Lloyd

18.  The Plaintiff called Mr. Q Lloyd who was originally the expert witness for the 3^rd Defendant. There was an expert report filed by Mr. Lloyd. Mr. Lloyd said in evidence that since the seal to the container was unbroken and the cartons were found to be missing in Japan, he opined that the timing of the missing goods should be prior to the second loading at the 8^th Defendant’s warehouse. His reasoning was that since the cargo in question was at 6^th Defendant’s for the first loading and then the 8^th Defendant’s warehouse for the second loading and then the third loading at the 9^th Defendant’s warehouse, something must have happened prior to the second loading at the 8^th Defendant’s warehouse since by all likelihood the cargoes were loaded at the 6^th Defendant’s warehouse. That reasoning presumed the second load blocking the load at the 6^th Defendant’s.

19.  Of course, that would have been the usual course of events but as neither the 8^th nor the 9^th Defendant gave evidence in this trial, I do not know what had actually happened at either the 8^th or 9^th Defendant’s warehouses. For instance, whether anybody there had taken out the first loading and/or the second loading in order to ensure the proper stuffing of the third loading. I simply have no evidence on that and it is very difficult to speculate as to what happened during the stuffing of the said container after it left the warehouse of the 6^th Defendant. Further, it is equally difficult to find out when the said cargo became missing.

20.  During the cross-examination by Mr. Lee for the 4^th Defendant, Mr. Lloyd was asked that it would be for the foreman of the 6^th Defendant to check all the goods were loaded onto the container and then an interim seal or padlock would be put in to secure the goods in between locations, to which Mr. Lloyd did agree though it might not be necessary to do that as putting an interim seal had no value and in the majority of cases there would be no seal at all. However, Mr. Lloyd did agree with Mr. Lee that it would be reasonable and prudent to have one.

21.  Mr. Lloyd was further questioned by Mr. Lee about a report at p. 245 of the Trial Bundle named as SHIN NIHON KENTEI KYOKAI Container Devanning Report. From the remark column, it was written that there was a shortage of 57 cartons from the container aboard “ASIA POLLUX” from Hong Kong to Osaka. The container number as well as the bill of lading number corresponded with the shipping documents. The goods were said to be quartz watches and the reporter had attended the devanning and found the said goods were missing on 8^th November 1996.

22.  Mr. Lee questioned that this document was not really a surveyor report but Mr. Lloyd responded that it was prepared by a licenced Japanese surveyor and in essence it was a surveyor’s report. But Mr. Lee further queried the fact that there was no documentation on the date of the devanning showing what had happened on the date of the breaking of the seal, it is thus uncertain as to what happened in Osaka, to which Mr. Lloyd agreed.

23.  Mr. Lee said that there were a dearth of details, for example as to who the surveyor was if anyone, and nothing about the breaking of the seal. Mr. Lloyd answered that it gave the fact that the goods were missing and the name of the surveyor would not be of any significance and in any event, if the seal had been broken prior to the opening of the container, then a surveyor would have been called in and stayed there to watch the complete devanning. Thus, it signified the fact that the surveyor was called after the event of breaking of the seal. That meant the missing goods were discovered first after the opening of the container and the surveyor who compiled the said report was called to verify that fact.

24.  Mr. Lau for the 6^th Defendant in cross-examination said that Mr. Lloyd was originally instructed by the shipowner and shipline company to decide whether the cargo was lost when being carried by “ASIA POLLUX” and Mr. Lloyd’s conclusion was to exonerate his clients and that the goods were not lost at sea. Then, Mr. Lloyd concluded that the goods had disappeared before the second loading. Of course, Mr. Lloyd said that there would have been theft by staff of any one of warehouses and it was possible that staff of the second and/or third warehouses stole the goods. Further, Mr. Lloyd admitted that there was no information as to when the ship actually arrived at the port of Osaka as it was not shown on the devanning report. It only had the date, namely 8^th November when the surveyor attended. There was no information as to how long the container remained before it was inspected by the surveyor and nothing about the interval in between.

25.  Mr. Lau then estimated from the documents that it was possible that “ASIAN POLLUX” arrived at Osaka on 5^th November, to which Mr. Lloyd agreed. Then the staff would start unloading the contents when different individual company would turn up to take delivery of goods. Mr. Lau said that it was not unheard of when people stole goods at this stage, to which Mr. Lloyd answered that it was not impossible as security could only be at random.

26.  Finally, Mr. Lau suggested to Mr. Lloyd that it was possible that the cargoes were lost in Japan, to which the latter replied that whilst it was possible, the statement of the devanning report would have to be a dishonest document. Then I asked Mr. Lloyd why that had to be the case. Of course, Mr. Lloyd was talking about the surveyor being present and knew that the goods were taken by the staff and also if there had been any problems, there would have been more details of any suspicion. However, the question here is whether it is possible that the cargoes went missing in the warehouse in Osaka as there was no suggestion that the surveyor was present when the container was opened, to which Mr. Lloyd agreed that the goods could have gone missing then.

27.  In re-examination, Mr. Lloyd said that it was not impossible for the cargoes to be missing in the warehouses of the 8^th and 9^th Defendants or in Japan. However, Mr. Lloyd still maintained his conclusion that the cargoes went missing prior to the second loading at the warehouse of the 8^th Defendant.

Madam Chiu Wong

28.  Then Madam Chiu gave evidence on behalf of the 4^th Defendant. She was and is a director and major shareholder of the 4^th Defendant and was instructed by the 2^nd Defendant to carry 57 cartons of quartz watches from Hong Kong to Osaka. The 4^th Defendant in turn sub-contracted the carriage of the said cargoes to the 5^th Defendant who hired the 6^th Defendant to provide warehouse services as well as loading the said cargoes into a container for shipment. The 5^th Defendant also hired and instructed the 7^th Defendant to carry the said cargoes by road from the 6^th Defendant’s warehouse, then the 8^th and 9^th Defendants for further stuffing and then the Kwai Chung Container Terminal Freight Container for the container to be shipped to Osaka.

29.  On or about 29^th October 1996, the 5^th Defendant informed the 4^th Defendant that they had engaged the 7^th Defendant to do haulage of the said cargoes from the warehouse of the 6^th Defendant at or about 16:00 hours.

30.  As a result, on or about 30^th October 1996, the 2^nd Defendant asked the 1^st Plaintiff to deliver the said cargoes to the warehouse of the 6^th Defendant by 15:00 hours directly so as to be ready for stuffing. The said delivery was performed and was duly acknowledged by the 6^th Defendant who signed and stamping its business chop on the Shipping Order Set of the 2^nd Defendant as evidence of receipt. The 4^th Defendant was not in any contractual relationship with any of the Plaintiffs; but only with the 2^nd Defendant.

31.  There is also the Container Load List issued by the 6^th Defendant which confirmed the stuffing was performed at 16:00 hours and finished on or about 16:30 hours on 30^th October 1996.

32.  There was also another document issued by the 7^th Defendant known as Drayage Receipt evidencing the fact that the Container No. GTU7108435 with Seal No. 172523 and its contents were taken by the 7^th Defendant from the warehouse of the 6^th Defendant to Kwai Chung Container Terminal. The said container carrying the said cargoes was eventually loaded on board the vessel “ASIAN POLLUX” between 30^th and 31^st October 1996 to Osaka.

33.  Of course, the 4^th Defendant had never physically handled the said cargoes nor had any knowledge of the loss nor knowing the circumstances of such loss. In essence, the 4^th Defendant never had possession of the said cargoes. The 4^th Defendant confined itself to the paper work and liaison between the various parties and insofar as possible engaged reputable companies to perform their various different roles. For example, the 6^th Defendant had a good reputation in the trade and Madam Chiu said that she had every confidence in its performance as the 6^th Defendant was engaged by many other well-known freight forwarding companies.

34.  Further, the 5^th Defendant was also known to Madam Chiu to be very experienced and successful in freight forwarding business and she had engaged previously and still continues to engage the 5^th Defendant who performed its duties satisfactorily.

35.  Madam Chiu Wong also said that in her experience the seal of the container would not be sealed after the loading at the 6^th Defendant’s warehouse. It would only be permanently sealed after the final load was loaded at the 9^th Defendant’s warehouse. Under the normal circumstances, there would be a temporary seal between the first, second and third load.

36.  In cross-examination by Mr. Lau for the 6^th Defendant, Madam Chiu said that she never had any dealings with the warehouses of the 8^th and 9^th Defendants. Further, after this litigation commenced, both the 8^th and 9^th Defendants ceased business sometime between 1997 and 1998, as far as she understood.

37.  Madam Chiu agreed in cross-examination by the Plaintiffs that there existed no contract between the 1^st Plaintiff and the 4^th Defendant. But she disagreed with Mr. Chan for the Plaintiffs in cross-examination that the 2^nd Defendant essentially dropped out of the picture as it took part in the carriage and knew the whole process. In cross-examination on behalf of the Plaintiffs, Mr. Chan said that by the time of 1996 the 4^th Defendant was only in business for a few years, to which Madam Chiu agreed. Further, although there was no direct involvement in the handling of the said cargoes, the 4^th Defendant, in which Madam Chiu agreed, was to ensure the goods arrived on time safely and completely according to the Shipping Order Set.

38.  Madam Chiu Wong was also being challenged as to her knowledge of the system of working of the 7^th Defendant. Madam Chiu said that she knew how they carried out their work but would not know about their internal operation system. When she was further questioned as to the fact that the driver of the container did not care whether the goods were actually stuffed or not, i.e. he was not the one who was to supervise how the stuffing happened. Mr. Chan for the Plaintiffs said that there could not have been a safe system of keeping the cargoes safe, to which Madam Chiu said she could not comment on what other people said.

39.  However, Madam Chiu further commented on the fact that the 7^th Defendant at that time had a good reputation and was also a big company and there was no rumour or bad news about them in the market.

40.  Madam Chiu accepted that since the seal arrived in Osaka intact, it would be logical the cargoes did not go missing during the voyage. However, Madam Chiu disagreed that the cargoes went missing before instructions were given to deliver the goods to Osaka warehouse. She believed that there were instructions already given to collect the cargoes. In any event, any person with the original bill of lading with endorsement and consent could collect the goods from the 5^th Defendant’s warehouse in Osaka. But she did not have any personal knowledge as to whether that was in fact the case. Nonetheless, Madam Chiu had reasons to believe that the Plaintiffs had given the instructions to collect the goods but they could not get the goods.

41.  Madam Chiu believed that the client’s ultimate consignee went to collect the goods in the warehouse but found them missing. She understood that Keihin Harbour Transport Co. Ltd. was only an agent who dealt with documents and they would not collect the goods or deliver them physically and the goods should be with the 5^th Defendant’s warehouse or the agent in Osaka. There would be an ultimate consignee to collect the goods. However, Mr. Chan for the Plaintiffs suggested to Madam Chiu that it was all her speculation and there was no document stating that was in fact the case. To this Madam Chiu agreed.

Chu Wai Kwong

42.  The 6^th Defendant called its first witness Mr. Chu Wai Kwong. He was the driver of the 7^th Defendant and was employed between April 1995 and April 1998. Mr. Chu came to know about this case probably in or about 2002 and 2003 when his boss came to find him. Thus, the 7^th Defendant prepared a witness statement for him in the case. Later on, the 6^th Defendant requested him to be a witness on its behalf.

43.  Mr. Chu was shown the “Drayage Receipt” dated 30^th October 1996 and it was a quadruplicate document. There were three addresses on the document. He was instructed by the 7^th Defendant to collect the cargo and he complied with the instructions as to the sequences that he would collect the said cargoes. The sequence was first to the 6^th Defendant’s warehouse and thereafter to the 8^th and then the 9^th Defendants’ warehouses to collect their goods to be stuffed into the same container. Mr. Chu could not remember how long the process took at the 6^th Defendant’s warehouse. He also said that he was probably present throughout the whole process. He closed the door of the container and then put on an interim seal which was provided by the 6^th Defendant. He then immediately went to the warehouse of the 8^th Defendant.

44.  Mr. Chu could not recall how many staff there were involved in the loading at the 6^th Defendant’s warehouse. When he was at the 8^th and 9^th Defendants’ warehouses, he witnessed most of the loading process there. However, he did not see what they were doing as either his view was blocked or he went to the toilet.

45.  Then Mr. Chu said that he was not sure whether he saw anyone removing cargoes from the container. If someone did, that would have been quite normal.

46.  I then asked why he said that it was normal. Mr. Chu said that there were three places to load up the container. If after the first load, he reached the second load and the workers at the second load found the first load not stuffed in properly or that there was not enough room to move or not enough room to put in the remaining goods, the workers there would remove the goods and re-stuff them in order to put it all in and fill up the container. Nonetheless, Mr. Chu could not remember what had happened in this particular incident.

47.  Mr. Chu further explained in chief that in his many years of experience, what the loaders were most concerned with was for all the goods to be loaded into the container. That was the only factor to consider as to whether the goods already inside to be reloaded into the container.

48.  In cross-examination by Mr. Lee on behalf of the 4^th Defendant, Mr. Chu said that the location of the 6^th and 8^th Defendants’ warehouses was one on the 3^rd floor and the other on the 4^th floor of the same block of building. Thereafter, he went from the 4^th floor back to the 1^st floor to go to the 9^th Defendant’s warehouse which was located inside the same building. Mr. Chu said that apart from the Drayage Receipt, he was shown nothing else in the preparation of his witness statement. He was not even shown the 6^th Defendant’s Container Load List. Insofar as this particular incident was concerned, he could not remember whether he went to the toilet or not. But if he did, it would not have taken him more than three minutes. He said that he would normally keep an eye on the loading process and normally he would have a look but he could not remember the details clearly now.

49.  In this case, there was temporary or interim seal after each loading and then at the next warehouse, the interim seal which was intact, was cut. After the next loading, it was temporarily sealed again. The driver got the documentation and went straight to the next occasion thereafter. After the third load, he applied the permanent seal and then took the container to the Container Terminal.

50.  In cross-examination by Mr. Chan on behalf of the Plaintiffs, Mr. Chu was challenged as to his recollection of the timing of the arrival at the 6^th Defendant’s warehouse which was said to be completely wrong. It turns out that Mr. Chu relied upon his Drayage Receipt to infer the time. His Drayage Receipt put the arrival time at the 6^th Defendant’s warehouse at 1pm. Thus he said he probably arrived there at 12:30 pm and then got to the 8^th Defendant’s at around 3pm. Mr. Chu admitted that he had no independent recollection of what happened on an otherwise unremarkable day. He calculated all his other time from the Drayage Receipt. Mr. Chu also admitted that he did not see what happened at the 6^th Defendant’s warehouse. Likewise he did not see what happened at the premises of the 8^th and 9^th Defendants. It was an unremarkable day. However, Mr. Chu added if he saw anybody removing goods out of the container and did not put them back, then it would be most unusual, meaning he would have noticed it.

51.  According to Mr. Chu, he did not have any responsibility to ensure that the goods were loaded onto the container. He was only to take the goods from one warehouse to another and to the ultimate destination. According to him, in this case it was the responsibility of the second load to ensure that the goods were not misplaced. There would be a temporary seal put on by the 6^th Defendant and at the second location the workers would cut the seal and then would do their work and put the seal back on.

52.  Mr. Chan for the Plaintiff put to Mr. Chu that he did not know what was happening because he was not paying attention or was not watching. Mr. Chu however replied that he had no idea what cargoes or goods were being put in even if he watched the whole loading process. He had no idea what goods were being loaded nor what quantity of goods were being loaded. Nor did he have any intention to check as he did not know the quantity. He would not have known if the goods were taken out by anyone at any stage. He would only know anything if he had seen something extraordinary happening.

53.  In short, Mr. Chu only knew some goods were loaded into his container at three different warehouses. It was not his duty to check what was being loaded or not, let alone the quantity of each load.

54.  Mr. Lee for the 4^th Defendant asked Mr. Chu whether he had any criminal record and Mr. Chu replied that he has none whatsoever.

55.  Mr. Chu told this court that he had transported over 1,000 loads and the cargoes seldom got lost. It only occasionally happened and when it did happen it was due to misloading by the workers. These misloaded goods would eventually be found in some cases.

Ng Chun Choy

56.  The 6^th Defendant also called Mr. Ng Chun Choy who was the loader responsible for the 6^th Defendant on this occasion. When he first learnt about the Plaintiffs’ claim, he was asked to make a witness statement. Mr. Ng mentioned that the driver was one Mr. Leung Yu Yuk. The reason why Mr. Ng said that was because he was told by Mr. Leung Yu Yuk that he was the driver when he himself made phone calls to enquire as to what happened. Mr. Ng himself did not personally know who the driver was nor could he remember. He relied upon what other people told him.

57.  Further, from the Container Vanning Plan, we can see a Chinese character Choy “財” which is one of the Chinese names of Mr. Ng and thus he could tell this was his load and he was the forklift driver on this occasion. We also see from this Plan that all the goods were duly loaded into the container. As to the sequence of loading, he would load what was conveniently placed and ready to be loaded. But the important point for the purpose of this case is Mr. Ng’s evidence that from this document there is no doubt in his mind that the goods were loaded by him into the container at the 6^th Defendant’s warehouse.

58.  Mr. Ng further explained in chief that sometimes he would get into contact with the head load (i.e. the first load of goods) when it was not placed properly and if that happened the head load would be removed and placed again properly. It matters not what load Mr. Ng would be performing. The process remained the same and if he noticed anything peculiar, he would notify the office, for instance, if the previous loading was not placed properly or goods were damaged. In those circumstances, the office personnel would make enquiries with the previous loader. If for instance the goods were not loaded properly, then Mr. Ng would inform the office and in turn inform the previous loader whether they agreed charges for re-handling when he had to restore the whole container. Mr. Ng said if his warehouse were the tail-load (i.e. the last load), then he would quite often have to restore the whole container.

59.  Finally, Mr. Ng said he could not guess as to the reasons for the loss of cargoes and he had no idea of how often it happened. Mr. Ng had the impression that the 6^th Defendant was the mid-load.

60.  Mr. Lee on behalf of the 4^th Defendant asked Mr. Ng about Drayage Receipt. But Mr. Ng said he had not seen this document at all, though from this document it was possible that the 6^th Defendant was the head-load. This document was with the driver and was not dealt with by Mr. Ng. Mr. Ng had been a forklift driver for over 15 years and in his experience, he would not know what types of goods were inside the cartons by simply looking at the carton boxes.

61.  Mr. Chan for the Plaintiffs found out that Mr. Ng dealt with on average about 10 odd containers per day. That day was an unremarkable day. Mr. Ng did not have any particular memory of what happened that day but he would have worked according to his usual procedural practice. Nonetheless, Mr. Ng insisted that he would put on the temporary seal, even when the container was only going to the next floor. Mr. Ng said that when the container arrived at the 8^th Defendant’s warehouse later, the workers there would check the details. Of course, Mr. Ng would not be present at the loading process when the workers were loading the cartons into the container as he would go to another pallet to transport other goods.

62.  Insofar as the driver Mr. Leung Yu Yuk was concerned, Mr. Ng asked this Mr. Leung who told him he was the driver handling this container. Normally there would be several drivers coming to the 6^th Defendant’s warehouse and Mr. Ng also asked them and they answered the driver was this Mr. Leung. Thus, Mr. Ng was relying on other people’s information for his identification of this Mr. Leung as the driver for this load.

63.  In re-examination, Mr. Ng further elaborated his working procedure. He would not just put his goods on top of what has been placed before as they might damage the head load and his company would be subject to claims. Thus, he would put the goods in neatly in order to avoid any re-handling fees by the next loader. Also he would try his best to avoid any wastage of space so that no re-handling charges would be claimed. Mr. Ng also told us that back in 1996, the 6^th Defendant would handle between four to five containers at any given time and thus it was quite a big company.

64.  On further questions by Mr. Chan on matters arising from my query, Mr. Ng said that even if five containers were being loaded, he would still be loading containers one after another. Further, after loading was complete, the workers would pass all the labels to Mr. Ng after checking the numbers. If the numbers were accurate, the documentation would be passed to the driver who then passed it onto the office. Concerning the Container Vanning Plan, in re-examination, Mr. Ng said that a colleague of his would circle the numbers as correct after checking that they were properly loaded into the container. Mr. Ng also said that he saw his colleague checking the goods as loaded into the container.

65.  I have endeavoured to summarise some of the salient points of the evidence in this trial and in particular some of the points that are pertinent in this case. Whilst I cannot repeat each and every single piece of evidence of the trial, suffice to say I have considered all of the evidence proffered in this trial and evaluated them accordingly. The lack of mentioning of any points does not mean insufficiency of their evaluation in coming to my decision.

Discussion

66.  In assessing the evidence in this case, I bear in mind that the events took place some 12 years ago when the witnesses were giving their evidence in court. Human beings being what they are, I simply cannot expect these witnesses to remember independently what had occurred without reliance on some documentations. Further, most workers would adopt a pattern in their work procedure and if nothing caught their attention, (in the words of Mr. Chan for the Plaintiffs “nothing remarkable happened on that day”) it would be a forlorn effort to suggest that the witnesses were not noticing anything. If there was an apparent theft, then no doubt the witness would have paid attention unless he was part of the gang of thieves; since nothing untoward had happened, nobody took any notice. That is in accordance to ordinary human behavior that I know of.

67.  Having said all that, I find Mr. Ng Chun Choy credible and I can rely upon his evidence. He impresses me as a straightforward and honest witness. Even when he was cross-examined to the details about what he saw and what he did not see, he is forthright and consistent. For instance, he repeatedly denies having seen the Drayage Receipt, and I can see that he was being honest about what involved him and what did not. Further, his mistake about the identity of the driver is totally understandable. Having found out that the goods were missing from the container that he had stuffed, he sought to discover what happened and who the driver was on the day in question. It turns out that he was misled by others and Mr. Ng cannot be faulted because of this.

68.  I therefore find that Mr. Ng, who was the forklift driver stuffing the cargoes into the container, had performed his duties. I believe him without any hesitation when he gave evidence to the effect that he had stuffed the goods in question into the container and those goods were safely loaded before the container left the warehouse of the 6^th Defendant. For that matter, there was the Container Vanning Plan to substantiate what Mr. Ng had said and I do not have any reason to doubt the authenticity or the accuracy of what was stated therein. Thus, I can further rely on this document to come to the conclusion that the cargoes were properly stuffed into the container. Thereafter the container was driven to the 8^th Defendant’s warehouse.

69.  If Mr. Ng had an impression that the 6^th Defendant was the mid-load, he might have made an honest mistake, as the Drayage Receipt, which I accept as accurate document, clearly stated the 6^th Defendant’s was the head load.

70.  I now turn to the driver Mr. Chu Wai Kwong who also gave evidence for the 6^th Defendant. At the time, he was in the employment of the 7^th Defendant. Once again, Mr. Chu did not seem to have any independent memory which, as I said earlier, is understandable. But he could identify the Drayage Receipt as the one he used. There was his initial on the document as the driver in question. He followed the order as listed in the Drayage Receipt in going from one warehouse to another in order to collect the goods. Thus, from his list, the 6^th Defendant’s warehouse would be the head-load and the 9^th Defendant’s the last-load. The timing on the Receipt was 13:00 hours, which he estimated his arrival there around that time. Once again he had to rely on his document.

71.  Mr. Chu told this court that it was not his duties to oversee or supervise the loading or stuffing of the goods into the container. He was only there to drive the container once it was stuffed. In fact, even if he were to pay attention to the loading and unloading (when the container was to be reloaded), he would not have known what should or should not be loaded onto the container. I can imagine that a large number of goods would have been removed and placed around the container to be reloaded back inside, together with other new load. In other words, Mr. Chu was saying he did not have the necessary documentations to verify the goods. By simply watching the process, it would be difficult to keep count. Of course, if he noticed any theft going on, he said he would have acted accordingly. But on this assignment, nothing of the kind caught his attention.

72.  I also believe Mr. Chu’s evidence. There is nothing before me to suggest that there was any theft going on in the 6^th Defendant’s warehouse or involving this driver. Of course, I bear in mind that there is no evidence from the 8^th or 9^th Defendant. I simply do not know what had happened when the container was loaded at those two warehouses. As far as I can determine, the goods were safely stuffed into the container at the 6^th Defendant’s warehouse. Thereafter, Mr. Chu said he took the container to the 8^th and 9^th Defendants’ warehouse. But Mr. Chu did not find anything unusual happening in either the 8^th or 9^th Defendants’ warehouses either. I consider that there is a possibility that the goods might have been mislaid at either of these warehouse. It could equally be theft at these two warehouses, which was the reason why the goods were eventually missing.

73.  Madam Chiu also gave truthful and honest evidence. I can rely on her evidence where she had personal knowledge of the events. Of course, the 4^th Defendant took no possession of the cargoes. The nature of these transportation would inevitably involve different parties in the arrangement. I accept Madam Chiu had chosen reputable and competent subcontractors in performing the transportation. I also find that she had checked these subcontractors and was satisfied that they were competent in performing their duties. I also accept her evidence that she knew the working system of the 7^th Defendant but not their internal operation system. I do not find it necessary for her to know the internal working system at all. I also note that the 4^th Defendant did not engage the 8^th and 9^th Defendants. What happened, and I accept Madam Chiu’s evidence, was that she engaged the 5^th Defendant who in turn hired the 6^th Defendant to provide warehouse services and to stuff the said cargoes into a container for shipment. The 5^th Defendant then hired the 7^th Defendant to carry the cargoes on road from the 6^th Defendant’s warehouse to the 8^th and 9^th Defendants’ warehouses for more loading. Thus, the 4^th Defendant had nothing to do with the loading at the 8^th or 9^th Defendants’ or for that matter hiring the 8^th or 9^th Defendants for any of their services.

74.  Furthermore, I do not find any of the working procedure of the 6^th Defendant’s warehouse or the container driver in anyway deficient or of neglect or in default. I find the procedure of the 6^th Defendant warehouse competent and effective. Mr. Ng had a Container Vanning Plan, that Plan was then checked by other workers as accurate and complete before being sent to the office with the necessary labels. The container was temporarily padlocked to prevent loss of the contents inside. For all intent and purposes, such procedure should work adequately, effectively and efficiently.

75.  Insofar as the driver was concerned, much criticism was leveled against him that he was not watching the loading process adequately. Essentially, that was the neglect or default complained of by the Plaintiffs. As a result, there was no adequate system to prevent loss. I am of the view that the driver’s role was to drive the container safely and competently and arrive at the pre-arranged destination. His role, as Mr. Chu said in evidence which was the practice of the trade, was not to supervise or oversee the cargoes to be loaded. He could not tell what should or should not be loaded inside the container. He did not have the necessary documents in question to ensure what should or should not be loaded. That must be in accordance with common sense. It was for the warehouses to stuff the goods and for the drivers to drive the containers and arrive at the destinations safely. Otherwise, there would be much overlapping of responsibilities especially when the drivers might not be in possession of the necessary documents to check the contents.

76.  However, in this instance, Mr. Chu was present during the whole process save and except when he had to go to the toilet. He said, if anything out of the ordinary had happened, he would have noticed it. I accept his evidence. He was attentive enough, even though it was not the practice of the trade to supervise the loading process. He might have gone to the toilet but one should give allowance for that. There is another criticism on Mr. Chu in that the timing of Drayage Receipt (at 1 pm) was wrong. Even though the timing might have been wrong, I find the sequence of the loading stated on the Drayage Receipt as accurate and I can rely on that.

77.  Insofar as the missing cargoes are concerned, it is very difficult to ascertain what happened. Mr. Lloyd’s conclusion that the goods were missing prior to the second load was based on much uncertain permeables, which I am not prepared to accept without evidence from the 8^th or 9^th Defendant, or for that matter without any results of an independent police enquiry. However, it is possible that the cargoes went missing sometime after the container arrived at the 8^th Defendant warehouse. It could have gone missing at either the 8^th or 9^th Defendant; or even there was theft at these premises.

78.  Further, it is suggested by the 4^th and 6^th Defendants that theft could have taken place in Osaka warehouse, prior to the surveyor’s arrival to examine the devanning. There was a gap of some three days before the arrival of the surveyor and the opening of the container.

79.  Once again, this is also another possibility. Theft happens in any part of the world. Perhaps, it is less likely than the possibility of the goods went missing at the 8^th or 9^th Defendants’ warehouses. The reason here is that the seal did not arrive broken at Osaka and there were documents reporting on the missing goods a few days after its arrival in Japan. It would have been a concerted effort of fraud involving a number of people to say that the goods went missing when in fact they were stolen in the first place. Of course, I cannot discount that as a distinct possibility, but I find it less likely than the goods went missing at the 8^th or 9^th Defendant’s warehouses, for the simple reason that the seal remained unbroken at Osaka.

80.  Once I find the goods most likely went missing at the 8^th or 9^th Defendants’ warehouses, then should either 4^th or 6^th Defendant be held responsible?

81.  The law is quite clear. The obligation imposed by law on the defendant was to take such care of those goods as if they were its own goods. If the goods were lost or damaged, the owner would recover damages without the necessity to prove neglect or default on the defendant’s part. To escape liability, the defendant on the other hand must show that the loss or damage was not due to its own neglect or default. See Bewise Motors v Hoi Kong Container Services Limited [1988] 4 HKC 377.

82.  Of course, the heavy burden of bailment only arose when it was demonstrated that the goods had been delivered to the bailee and that the latter had taken possession of the said goods voluntarily.

83.  In this case, it is not disputed that the missing goods were placed with the 6^th Defendant’s warehouse. The 6^th Defendant accepted them and thus took physical possession of the goods and awaited the 7^th Defendant to transport the goods for shipment. Thus, the 6^th Defendants had the burden of showing the loss or damage was not due to its own neglect or default.

84.  I have already said that the missing goods were properly loaded into the container with a temporary seal put on at the 6^th Defendant’s warehouse. Thus, the 6^th Defendant has shown that the loss was not due to its fault or default. Accordingly, the case against the 6^th Defendant fails.

85.  Insofar as the 4^th Defendant is concerned, I find that it was the 2^nd Defendant who had the primary responsibility for the goods. The 4^th Defendant was essentially a forwarder. The 4^th Defendant never took possession of the goods.

86.  I have already said that the driver was not in default or neglect. Mr. Chu had performed his duties diligently and efficiently. I could not think of any other actions that he could have performed to prevent the goods from being mislaid or stolen. I have also found that Madam Chiu had chosen competent subcontractors. She knew the working system of the 7^th Defendant. She was satisfied that their working system was competent and effective in preventing losses. I accept that was the case. Thus, I find that the 4^th Defendant had discharged its burden insofar as the 7^th Defendant was concerned and since I find the missing goods were not the fault of the 7^th Defendant, the 4^th Defendant had no reason to be blamed here.

87.  Likewise, I do not find that the 4^th Defendant was in any neglect or default in engaging the 5^th Defendant which was a reputable firm.

88.  There remains the 8^th and 9^th Defendant. The peculiar facts of this case is that the 4^th Defendant did not engage the 8^th or 9^th Defendant’s services; it was the 5^th Defendant who did. Another peculiar feature here is that no evidence from the 8^th or 9^th Defendant was proffered at trial and I can see that there can be a number of possibilities for the goods to be missing. I find the more likely one of those possibilities to be that the goods were mislaid at the 8^th and 9^th Defendants’. But of course, that is as much a speculation as Mr. Lloyd’s, as I have no evidence to satisfy myself that such was in fact the case.

89.  Since I have found the 4^th Defendant did not hire the services of the 8^th or 9^th Defendant. Should it be held responsible for something it did not do? Furthermore, since I have also found the 4^th Defendant had engaged a competent and reputable subcontractor in the 5^th Defendant, should it be held responsible for 5^th Defendant, if the fault laid at the door of the 8^th or 9^th Defendant’s? Finally, since I have noted the 4^th Defendant had taken no possession or held no possessory entitlement to the goods, should it be liable in the circumstances?

90.  It is noted in Palmer (2^nd Edition) p.1367 that :-

“first, that if there is a chain of forwarders and sub-forwarders none of whom acquires an intervening possessory entitlement to the goods, the principal bailor’s rights of action are confined to the primary contracting forwarder and to anyone who takes possession, whereas the non-possessory forwarders’ own rights of action are confined to their immediate contractual neighbours.”

91.  The 4^th Defendant was in the position of a non-possessory forwarders and never acquired possession. Thus, the Plaintiffs’ right of action was confined to that of the 2^nd Defendant. As I have already stated the 4^th Defendant was not in default or neglect or in any way responsible for the missing goods. I find the Plaintiffs also failed to prove their cases against the 4^th Defendant.

92.  Accordingly, for the above reasons the Plaintiffs’ case against both the 4^th and 6^th Defendants is dismissed with costs.

93.  The Plaintiffs say that the 6^th Defendant should not be allowed its costs due to the fact that the witnesses were not in agreement and there was mistaken identify in the driver. However, these were not cogent reasons for depriving the 6^th Defendant their costs, as I have already stated such matters were understandable and fell far short of false case or false evidence which enables me to deprive the 6^th Defendant of their costs. Thus I shall allow costs for the 6^th Defendant in the usual way.

94.  Needless to say, I thank all parties for their assistance in this case through their cogent and well researched submissions.

Representation: