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George Kallis (Manufacturers) Ltd v Success Insurance Ltd And Another

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date10 July 1980
Year1980
Judgement NumberHCCL230/1978
Subject MatterCommercial Action
CourtHigh Court (Hong Kong)
HCCL000230/1978 GEORGE KALLIS (MANUFACTURERS) LTD v. SUCCESS INSURANCE LTD AND ANOTHER

HCCL000230/1978

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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COMMERCIAL LIST

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ACTION NO. 230 OF 1978

BETWEEN
George Kallis (Manufacturers) Ltd. Plaintiff
and
Success Insurance Ltd. 1st Defendant
San International Insurance Co. (Hong Kong) Ltd. 2nd Defendant

Coram: Mr Commissioner Mills-Owens, Q.C.

Date of Judgment: 10th July, 1980.

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JUDGMENT

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1. The Plaintiff's claim in this action against the 1st Defendant is for the sum of US$91,364.00 being the value of goods lost and covered by three policies of marine insurance numbered M/116768, M/116972 and M/116973 respectively. There is a similar claim against the 2nd Defendant under a policy of marine insurance number M/32456. The facts are relatively straight forward and in summary are as follows. The Plaintiffs are manufacturers of jeans and carry on business in Cyprus. In early 1976 they entered into contracts with an entity known as "Wantex Traders" for the supply of denim on CIF terms, Wantex being responsible for arranging for the carriage of the goods from Hong Kong to Limassol and for the insurance cover. The precise legal status of Wantex was not established in evidence but it appears to have been an unincorporated firm which was then but is no longer carrying on business in Hong Kong as denim manufacturers. Pursuant to the contracts of sale the plaintiff opened two letters of credit in favour of Wantex. The first L/C was confirmed irrevocable credit number 76/20546 dated 25th May 1976 and called for shipment of APPROX 50,000 YARDS 100% COTTON INDIGO BROKEN TWILL DENIM CIF Limassol in three equal shipments in June, July and August 1976. Amongst the documents required were "FULL SET ..... of Ocean Clean "SHIPPED on BOARD" Bill (s) of LADING ... showing freight prepaid" as well as "INSUPANCE Company's Policy or Certificate of Insurance .... covering the goods from warehouse to buyer's warehouse in Nicosia against Marine and War Risks, all risks as per Institute Cargo clauses including SR & CC clauses". The second was L/C 76/20661 dated 29th June 1976 and covered approx 80,000 yards quality 30001 INDIGO BROKEN TWILL comprising 25,000 yards indigo, 25,000 yards sky blue, 15,000 yards green and 15,000 yards brown all as per sample. The goods were required to be shipped on or before 31st July 1976 from Hong Kong to Limassol or Larnaca and as with L/C 76/20546 the documents required included "SHIPPED on BOARD" Bills of Lading and Insurance Policy or Certificate with the same cover. L/C 76/20661 was amended on 27th of June 1976 to permit the 25,000 yards Indigo to be shipped by way of second shipment on or before 31st August 1976.

2. Apparently the first two shipments under L/C 76/20546 were effected without any problems arising and these proceedings do not concern them in any way. The outstanding shipment under L/C 76/20546 was a quantity of 16,667 yards of Indigo Broken Twill denim. This formed the subject matter of policy M/116973 issued by the 1st Defendant. The 80,000 yards of 30001 Indigo Broken Twill covered by L/C 76/20661 formed the subject matter of the other three policies of marine insurance. The goods were duly manufacturered by Wantex and then delivered to a company by the name of Winsome Company with premises at Kwun Tong, Kowloon in order to be made up into bales for delivery to the godown of the shipping company. The deliveries to Winsome Company were evidenced by four packing lists (Exhibit P5) dated respectively 6th, 23rd, 27th July and 3rd August 1976. A Mr Cheung Yiu Leung who was then employed by Wantex and who apparently arranged for the shipment and insurance of the particular goods in question gave evidence as to the system adopted for preparation of the shipping documents. He said that Wantex typed out Shipping Orders addressed to the shipping company containing a description of the goods to be shipped together with their marks and destination. When the goods had been received by the shipping company the bottom copies would be endorsed as a form of Mate's Receipt, acknowledging receipt of the goods for shipment and this Mate's Receipt would be returned to the shippers. In due course the Mate's Receipts would be exchanged for Bills of Lading.

3. The original intention was to effect the July shipments on board a vessel named "Oceania Maru" operated by N.K.K. Lines. However Mr Cheung stated that they were informed that this vessel was not accepting any further goods for shipment and accordingly they looked for another carrier. There were apparently very few vessels sailing for the required destination namely Limassol, but on a date which is not entirely clear but must have been somewhere around 25th July 1976 contact was made with a Mr Yip of Seawise Shipping Company, which on its notepaper described itself as being fully owned and operated by Seawise Agency Limited. Seawise then carried on business in Hong Kong as ship's agents and in particular they were the agents for a vessel by the name of "TA SHUN". Advertisements placed in the South China Morning Post in July 1976 described Seawise Shipping Company as the general agent for "Seawise Line" and "Blue Line". They stated that Blue Line offered a Mediterranean sea service for Tripoli-Benghazi-Piareus (sic) including "(accept transhipment cargo to Limassol Alexandria)" and the vessel TA SHUN was advertised as arriving and sailing on various dates towards the end of July and in early August. The impression given from reading the advertisements is that the vessel's arrival in Hong Kong was delayed for some unspecified reason but in the event Mr Cheung has told us that they did not in fact check the newspapers to find out if the vessel TA SHUN was in port.

4. Four Shipping Orders were made out by Wantex and two of these are dated 27th July and the other two are dated 28th July 1976. The office copies of the Shipping Orders dated 27th July 1976 are respectively endorsed with acknowledgments of receipt on 27th July 1976 of 58 and 66 bales respectively. The office copies of the remaining two Shipping Orders acknowledged receipt of further deliveries of 41 and 58 bales respectively on 30th July and 4th August 1976. In this case the signature was under the chop of "Seawise Godown" and was the same as that on the two previous Mate's Receipts. These Mate's Receipts were then exchanged for four Bills of Lading numbered HK/LIM-16,17,21 and 23 respectively and the first two of these were dated 28th July 1976 and the latter two 3rd August 1976. Each of the Bills of Lading was a "Blue Sky Shipping Co. Ltd. "Bill of Lading and was signed by Seawise Shipping Company as agents for and on behalf of the master. Each Bill of Lading incorporated the following material particulars. The vessel was named as "TA SHUN"; The shipper was Wantex Trader; The port of loading was Hong Kong and the port of discharge Limassol. In each case the Bill of Lading was a "freight prepaid" Bill of Lading and each bore a superimposed chop stating "SHIPPED ONBOARD" followed by a date. This last statement was clearly untrue because as will be seen the TA SHUN never called at Hong Kong during the material period. I shall return to the terms and conditions of the Bills of Lading in due course. Meanwhile the four marine insurance policies which are the subject matter of these proceedings had been issued by the defendants. It is agreed that there is no material distinction for present purposes between the terms of the policies issued by the 1st defendant and that issued by the 2nd defendant. In each case the Insured was Wantex Trader held to the order of the Cyprus Popular Bank Limited, Nicosia; the vessel named was the "ss TA SHUN" sailing from Hong Kong to Limassol and each of the policies was a valued policy. Under the words "Conditions of Insurance" the Policies stated that they were "including from warehouse to buyer's warehouse in Nicosia" and that they were subject inter alia to the Institute Cargo Clauses (All Risks) 1/1/63. Again I shall refer to the ICC Clauses in more detail later. In the first two policies the carrying vessel had originally been entered as "OCEANIA MARU" but had been amended to "TA SHUN".

5. Having paid the freight and obtained Shipped on-Board Bills of Lading, Wantex presented the documents called for under the two L/Cs to the Hong Kong & Shanghai Bank and obtaining payment thereunder in about the 2nd week of August 1976. Thereafter in the normal course of events Wantex would have dropped out of the picture.

6. However as I have said, the vessel TA SHUN, despite the statements on the face of the Bills of Lading was not in Hong Kong and never came to Hong Kong at the material time. What in fact happened was that Seawise arranged for the goods in question to be carried on the vessel "TA HUNG" from Hong Kong to Keelung where they were discharged into customs warehouses. It is agreed between the parties that the vessel TA HUNG was in the same ultimate beneficial ownership as TA SHUN and a Mr Tse Joy Tim the business manager of Oneness Shipping Company Limited stated that his company were the agents for the TA HUNG. Mr Tse identified Oneness Bill of Lading No. KAO-3 as the Bill of Lading signed by him under which the goods were carried from Hong Kong to Keelung. That Bill of Lading names Seawise Agency Limited as the shipper and Blue Sky Shipping Limited as the consignee. It will be recalled that Blue Sky were the carriers under the four Bills of Lading for carriage Hong Kong/Limassol aboard the vessel TA SHUN. The Oneness Bill of Lading described the port of loading as Hong Kong and port of discharge as Keelung but incorporated three important endorsements on its face...

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