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Miruvor Ltd. v National Insurance Co. Ltd.

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date24 October 2001
Year2001
Judgement NumberHCCL160/1996
Subject MatterCommercial Action
CourtHigh Court (Hong Kong)
HCCL000160/1996 MIRUVOR LTD. v. NATIONAL INSURANCE CO. LTD.

HCCL000160/1996

HCCL160/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.160 OF 1996

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BETWEEN
MIRUVOR LIMITED Plaintiff
AND
NATIONAL INSURANCE CO. LTD Defendant

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Coram: Hon. Stone J. in Court

Dates of Hearing: 5, 6 and 7 September 2001

Date of Judgment: 24 October 2001

_________________

J U D G M E N T

_________________

THE PROCEEDINGS

1. This is an insurance claim. The plaintiff, Miruvor Limited, is an Hong Kong exporter. It insured with the defendant eight shipments of electrical goods which had been sold by the plaintiff to its Paraguayan buyer, one Dansun S.R.L. of the city of Ciudad del Este. The goods were stolen, and the defendant insurer declined payment of the plaintiff's claim under the eight policies of marine insurance issued in 1995 upon "all risk" terms and incorporating the Institute Cargo Clauses (A). Quantum is not in issue, and this trial has focused entirely upon the question of whether the defendant was right to refuse payment under its policies.

2. This case has attracted a considerable amount of detail, particularly in terms of the dates of issue of these eight policies, the chronology of the shipments made, and the dates of arrival of these shipments together with the dates of their release. In this regard Mr Sussex SC has prepared several schedules which provide a useful overview of the broad sequence of events.

THE BACKGROUND

3. Two individuals loom large in this case. They are Mr Dhanesh Teckchand, the owner of the plaintiff, and his Paraguayan purchaser, Mr Adnan Medlej, the proprietor in Paraguay of two companies, Dansun S.R.L. and Puerto Negro S.R.L. This court has had the opportunity to see and hear Mr Teckchand, who was the sole witness called on behalf of the plaintiff. Unsurprisingly, given his role in the scheme of things, there has been no sight of Mr Medlej.

4. Until the events the subject of the present case, Mr Teckchand had an ongoing commercial relationship with Mr Medlej dating from 1990. Indeed, Mr Medlej's company Dansun S.R.L. apparently had taken its name from Mr Teckchand's own brand name for his goods, 'Dansun' being an amalgamation of the names of his wife and himself.

5. Mr Teckchand's evidence was that in 1990-1991 he had done a small amount of export business with Mr Medlej. This had been on D/P terms. Thereafter there had been a lapse in that relationship, largely due to the poor business environment in Paraguay, until mid-1994 when Mr Medlej again approached Mr Teckchand and suggested that business between them should resume. After such resumption, Mr Teckchand insured with the defendant a total of 21 shipments to Paraguay, of which the only last eight form the subject of this action.

6. The precise details of the various shipments do not greatly matter. What is important, however, in light of the arguments put up in this case, are tow particular factors : first, that the sales of these eight shipments to Mr Medlej were effected, as were the other sales, upon a D/P basis; and second, that Paraguay is landlocked, thus necessitating the import of goods via one of its South American neighbours, Brazil, Uruguay or Argentina.

7. In the present circumstances, the goods the subject of this action were shipped on board various vessels destined for one of two ports in Brazil, namely either Santos or Paranagua, and were shipments dispatched in the period between 13 March 1995 and 7 June 1995. Upon arrival at these ports, discharge took place under special customs arrangements which involved the goods being kept in bond, in a special duty free warehouse, until they were taken into, and had arrived at, their destination in Paraguay.

8. What actually happened in this case is that the goods the subject of this action were all stolen by Dansun at either Santos or Paranagua. It appears that forged bills of lading were produced to the carrier's agents by Mr Medlej or his staff, so that Dansun was able to obtain each of these particular eight shipments absent payment therefor.

9. By this device Mr Medlej was able to sidestep the anticipated obligation to attend upon his bank in Paraguay and to obtain the original bill of lading for each of the shipments upon making payment for the goods so sold. Since each sale was a D/P transaction, in the eight instances presently in question the original bills of lading, together with other relevant documents (including the bills of exchange drawn in each case upon Dansun) has been presented by the plaintiff to its bank in Hong Kong, and it was these documents which, after the bills of exchange had been discounted by the bank in favour of the plaintiff, were remitted by the plaintiff's bank to the defendant's bank. It is against these documents that payment by Dansun then should have been made. In the event these documents remained within the banking system, eventually being returned to the plaintiff when it became clear that they would not be taken up.

10. It is worth noting that, with the exception of the eight shipments with which this court presently is concerned, the plaintiff had always been paid by Dansun for the sales of its goods, and in fact during the period when some of the present eight shipments were being made the plaintiff continued to be paid by Dansun for earlier (and non-contentious) shipments.

11. After the plaintiff discovered the theft of the goods by Dansun, it sought to preserve underwriters' rights by commencing actions against the carriers and other parties who might be liable, the duty so to do arising by virtue of Clause 16.2 of the ICC(A). Accordingly, in addition to the sums claimed to be recouped under each of the eight policies (as to which, as I have said, there is no quantum dispute, and as to which tow claimed sums now have been adjusted downwards in the revised Schedule to the Statement of Claim), the plaintiff also seeks relief in terms of indemnification by the defendant for the costs and expenses of this exercise, the so-called "sue and labour" expenses.

12. There is no dispute that the insurance policies in question were in force, nor is it any longer alleged that the plaintiff had no insurable interest in the goods. If proof be necessary, Mr Teckchand, whose evidence I accept, confirmed not only the truth of his witness statement (which stood as his evidence-in-chief), but also formally confirmed the plaintiff's purchase of the goods the subject of the eight insured shipments, and also confirmed his interest in the goods as at the date these eight policies were effected. I turn now, therefore, to consider the three specific defences which have survived the widely pleaded defence and which ultimately were relied upon by Mr Sussex SC on behalf of the defendant insurer.

(ii) The Clause 8.1.2. defence

13. The broad proposition here is that, in the particular circumstances of this case, cover had ceased because, at the plaintiff's election, the goods the subject of each disputed shipment had been stored at the Santos/Paranagua warehouses other than in the ordinary course of transit.

14. At this juncture it may assist to set out in full the provisions of Clause 8 of the ICC(A), the 'Transit Clause'. It reads as follows :

"DURATION

8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either

8.1.1 on delivery to the Consignees' or other final warehouse or place of storage at the destination named herein,

8.1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either

8.1.2.1 for storage other than in the ordinary course of transit or

8.1.2.2 for allocation or distribution,

or

8.1.3 on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge,

whichever shall first occur.

8.2 If, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the goods are to be forwarded to a destination other than that to which they are insured hereunder, this insurance, whilst remaining subject to termination as provided for above, shall not extend beyond the commencement of transit to such other destination.

8.3 This insurance shall remain in force (subject to termination as provided for above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of affreightment." (emphasis added)

15. This point, if correct, would constitute a complete defence to the plaintiff's claim, given the contention that cover had terminated at the time of the losses complained of by the plaintiff.

16. Mr Sussex SC argued thus. He submitted that whilst the customs warehouse at Santos or Paranagua did not fulfil the requirement of Clause 8.1.1 - it is not a 'final warehouse or place of storage' - nevertheless it is potentially capable of falling within the phrase "any other warehouse" within the terms of Clause 8.1.2. Moreover, he said, given that the destination named in the eight policies was either Santos or Paranagua, the customs warehouse at those places also potentially qualified as a termination point of cover, because they are situate "at the destination named herein".

17. It followed that the...

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