Summary of facts
P was a manufacturer and seller of computer accessories, while D1 provided logistics services. P placed shipping orders with D1 in respect of computer accessories in seven containers (Cargo). D1 issued seven combined bills of lading (Bs/L) to P as shipper. D1 did not own any vessel and therefore contacted Yang Ming Transport Corp (Yang Ming) to arrange for the carriage of the Cargo. Yang Ming then issued two ocean bills of lading naming D1 as shipper.
D1 and Yang Ming released the Cargo without presentation of any of the original Bs/L (Release). P only learnt of the Release after it had enquired with D1 regarding the Cargo more than one year after the Release. The Cargo was, however, eventually delivered to P’s end buyer, Koodoo Technologies (Buyer), and the Buyer made at least part payment to P.
P commenced legal action against D1 for damages representing the difference between the invoice value of the Cargo and the part payment it had received from the Buyer. The trial was heard by Deputy High Court Judge Whitehead SC (Judge).
D1 admitted that the Cargo had been released without presentation of any of the Bs/L. This case centred on the various defences advanced by D1 and the last question of whether P had proven its loss. The key arguments and the Judge’s ruling are set out below.
Whether D1’s standard trading conditions were incorporated into the carriage agreement between P and D1 as evidenced by the Bs/L
D1 argued that its trading conditions (Trading Conditions) were incorporated into the carriage agreement through the following statement contained in documents sent to P: “All business undertaken will be subject to [D1’s] trading conditions. For details, please study our website.” The Judge found that the terms of the Bs/L excluded any application of the Trading Conditions. Further, D1 had failed to sufficiently bring the Trading Conditions to P’s attention. The Judge therefore held that the Trading Conditions were not incorporated.
Whether D1 was Yang Ming’s agent at the relevant times
The Judge held that D1 did not issue the Bs/L as agent for Yang Ming because, among other reasons, Yang Ming was not named as principal on the Bs/L and there was no formal agency agreement between D1 and Yang Ming. The words “AS AGENT” printed on the Bs/L did not assist D1, as it was not clear whose agent D1 was.
Whether P authorised the Release
D1 argued that P had consented to the Release through telex release instructions. However, the Judge found on the facts that there was no actual telex request for the Release, and that P would not have retained the original of the Bs/L had it authorised the Release.
Whether P’s action was time-barred under article III, rule 6 of the Hague-Visby Rules and/or clause 8.2.1 of the Bs/L
First, the Judge held that obligations under the Hague-Visby Rules applied during ocean carriage and discharge operations, but not during handling after discharge, and that D1 had failed to establish that the delivery of the Cargo was part of the discharge operations.As to clause 8.2.1 of the Bs/L which provided for an 11-month limitation period in the case of “total loss” of goods, the Judge noted that the terms were D1’s own standard terms and that clear wording was needed to exclude D1’s liability. The Judge held that the expression “total loss” was ambiguous and should be construed narrowly and, where appropriate, in favour of the shipper. The Judge concluded that clause 8.2.1 was not precise enough to cover misdelivery of goods without production of the original Bs/L, and it was unclear as to whether or not the shipper must be aware of the loss. The Judge therefore rejected the time-bar defence.
Whether P proved that it had suffered loss and damage
P argued that it had proven its loss by “proving loss of dominion of the Cargo by reason of [D1’s] acts or omissions”, and claimed the invoice value of the Cargo (less the part payment). However, the Judge noted that the Cargo was eventually delivered to the Buyer who had made at least part payment to P. The Judge held that P had the onus to prove its loss as a result of the misdelivery but had called no evidence to do so. There was a “paucity of the documentary evidence” and no credible explanation for the absence of several key witnesses for P. The Judge decided to draw adverse inferences from such absence and silence. In contrast, D1 produced a detailed payment record sent from P’s associated company to the Buyer, which according to the court “unequivocally disclosed that full payment had been made for the 7 containers in question”.
The Judge therefore held that, although D1’s liability was established, P had failed to establish its loss. The Judge therefore only awarded P nominal damages in the sum of HK$1,000.
In this case, the plaintiff failed at the final hurdle of proving loss and damage and therefore only recovered nominal damages of HK$1,000. The case brings to the fore the importance of ascertaining the party bearing the burden of proof and producing sufficient evidence to discharge that burden. This case also serves as a reminder to parties that the court may readily draw adverse inferences against parties who fail to produce witness or documentary evidence without any good reason or explanation.
Client Alert 2021-234