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Regalite International Ltd v Aircargo Consolidationservice (Hk) Ltd

Judgment Cited authorities 7 Cited in Precedent Map Related
Vincent
Judgment Date29 March 1996
Year1996
Judgement NumberHCA4345/1994
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA004345/1994 REGALITE INTERNATIONAL LTD v. AIRCARGO CONSOLIDATIONSERVICE (HK) LTD

HCA004345/1994

1994 No. A4345

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN
Regalite International Limited Plaintiff
and
Aircargo Consolidation Service (H.K.) Limited Defendant

Coram: Mr. Recorder E. Chan Q.C. in Court

Dates of hearing: 20th & 21st March, 1996

Date of delivery of Judgment: 29th March, 1996

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Judgment

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The facts

1. In this action the Plaintiff claimed against the Defendant for the value of 12 consignments of watches. It is common ground that the Plaintiff was a supplier of watches in Hong Kong. It had a customer by the name of M & M Jewelers & Co. (hereinafter called M & M) which was a corporation carrying on business in Los Angeles. U.S.A. M & M purchased watches from the Plaintiff on C & 1 terms. The business between the Plaintiff and M & M commenced sometime in April 1993. According to Mr. Chong of the Plaintiff. The first shipment was a test shipment and it was made by the Plaintiff using its own air forwarders. After the goods were received by M & M, the parties decided to do business on a regular basis. There were subsequently about 29 shipments of watches by the Plaintiff to M & M. and all these 29 shipments were effected through the Defendant and the 12 shipments, the subject matter of this action, were the last 12 of the 29 shipments.

2. Mr. Chong of the Plaintiff told me and I accept his evidence that all the sales made by the Plaintiff to M & M were on D/P terms. There was the possible exception of one shipment which was orignally shipped on D/P terms. However the shipment was returned owing to some problems with the United States customs. The goods were re-shipped to another person acting as the Plaintiff's agent in New York who transmitted the same to M & M in Los Angeles on open account basis. This shipment had been paid and did not form the subject matter of this action. For the purpose of deciding the issues in this action, I am of the view that this shipment could be ignored.

3. Before the first of the 29 shipments was effected, M & M had given the Plaintiff shipping instructions that the M & M's banker was the Bank of America of Transamerica Centre, 1155 S. Hill Street, Los Angeles and that the forwarder for the cargo should be the Defendant in Hong Kong and one Air Cargo Systems Inc. (hereinafter called "ACS") in Los Angeles. The shipping arrangement for the first of the 29 shipments was arranged by M & M in that M & M either themselves or through ACS informed the Defendant to collect the goods from the Plaintiff. An Air Waybill No. ACS-185389 was duly issued by the Defendant naming the Plaintiff as the Consignor, The Bank of America as the Consignee and the freight was to be "freight collect".

4. It is common ground that since the first consignment, a practice had gradually been established that the Defendant was no longer informed by M & M or ACS to approach the Plaintiff to collect goods for shipment. Instead the practice had developed that whenever there were goods to be shipped by the Plaintiff to M & M, the Plaintiff would contact the Defendant and asked the Defendant to come to collect the goods. It is not entirely clear as to when this practice had finally become established and in particular, there is no specific evidence as to whether any of the 12 consignments now sued upon by the Plaintiff was effected as a result of the initiative on the part of M & M or the Plaintiff. What is clear from the documents put before me is that since the 4th shipment made on 25th May, 1993, in respect of each subsequent shipments (including all the 12 shipments now sued upon), the Plaintiff had signed a shipper's instruction form addressed to the Defendant to ask the Defendant to receive the goods for shipment. I will have to revert to these shipper's instructions later. It is common ground that for each of the shipments, the Defendant issued an air waybill and gave the shipper's copy thereof to the Plaintiff. Each of the air waybills named the Plaintiff as the consignor, the Bank of America as the consignee and M & Mas the notified party. Each of the air waybills contained inter alia the following clause:

"(9) Except as otherwise specifically provided in this contract, delivery of the goods will be made only to the consignee named on the face hereof, unless such consignee is one of the Carriers participating in the carriage, in which event, delivery shall be made to the person indicated on the face hereof as the person to be notified. Notice of arrival of the goods will, in the absence of other instructions, be sent to the Consignee, or the person to be notified, by ordinary methods. Carrier is not liable for non-receipt or delay in receipt of such notice."

5. As the sales by the Plaintiff to M & M were on D/P basis, in each instance, the Plaintiff made out a commercial invoice, a custom invoice, a packing list and a bill of exchange drawn on M & M at sight for the amount of the invoice. The Plaintiff presented these documents together with the shipper's copy of the air waybill and an insurance certificate to its bank, the Daiwa Bank, for onward transmission to Bank of America, the banker of M & M. In the ordinary course of events, the Bank of America would not release the air waybill or the goods to M & M without M & M's acceptance and payment of the bill of exchange.

6. All the shipments arrived at Los Angeles safely. The person handling the release of the goods at Los Angeles was ACS. When the goods arrived, the goods would be put into the custody of the U.S. Customs at the air port. The documents which accompanied the shipment such as the consignee's copy of the air waybill would be delivered to ACS. ACS would inform both the Bank of America and M & M of the arrival of the goods. The persons who wanted to take delivery of the goods would have to approach ACS who would be responsible for releasing the documents required for taking delivery. It is not in dispute that in all shipments, including the 12 shipments now under dispute, the release documents were given by ACS to M & M's customs brokers who were the agents for M & M to obtain release of the goods from the U.S. customs. It is also common ground that in fact all the goods were delivered to M & M. It is clear from the evidence of Mr. Kenny Nakagawa, the President of ACS, that the goods were so released to M & M without any consent or authorisation from the Bank of America, the consignee named on the air waybills.

7. For all except the last 12 shipments, M & M paid the Plaintiff although in nearly all instances, payments were only made after more than 30 days from the date of the arrival of the goods. A summary of the dates of the payments are set out in exhibit D-1 produced by the Defendant. It would appear that at least for one shipment under air waybill No. ACS 186307 dated 3rd August, 1993, the Plaintiff was aware that the goods had been received by M & M sometime by 10th August, 1993 and yet no payment was made until 10th December, 1993. The explanation for allowing M & M to delay in making payments was that there were some communication gaps between the various departments within the Plaintiff so that those making decisions for the supply of the goods were not kept up to date on the payments outstanding and that often the Plaintiff agreed to ship further goods on the strength of the verbal assurances from M & M that they had already paid or they would pay the outstanding bills shortly. The Plaintiff had however never enquired of M & M as to how they could have obtained the goods without paying Bank of America. The Defendant contended that the only explanation for this was that the Plaintiff had agreed to extend credit to M & M and that the Plaintiff had agreed to allow M & M to take delivery of the goods without payment. The Plaintiff denied ever agreeing to grant credit to M & M and insisted that all dealings with M & M were on D/P basis although the Plaintiff agreed that for business reasons, the Plaintiff often tolerated late payments. Having heard the evidence from Mr. Chong of the Plaintiff and on all the circumstances of this case, I do not consider that the Plaintiff had agreed to extend credit to M & M. If the Plaintiff had done so, it would be very surprising that the Plaintiff would continue to cause the Bank of America to be named as the consignee on the air waybills. Further if any credit was granted, the most natural thing to do was that the terms of dealing would be changed from D/P to D/A so that M & M could legitimately obtain the documents for the delivery of the goods by accepting a bill of exchange payable on the date of the expiration of the credit period. Yet in the present case, M & M had not accepted any bill of exchange drawn on it by the Plaintiff whether in respect of the shipments sued upon or otherwise. I find that although the Plaintiff knew that the goods in one of the shipments made in August 1993 had been received by M & M without payment, the Plaintiff had not appreciated that Defendant and ACS had adopted a practice of just releasing goods to ACS without any authorisation from the Bank of America.

8. The 12 consignments, the subject matter of this proceeding, were shipped between 13th November, 1993 and 1st February, 1994. There is no dispute that the Plaintiff had not been paid by M & M or any one in respect of these goods. There was no evidence that the Plaintiff was aware that these goods were released to M & M until well after 21st February, 1994 when the Plaintiff wrote formally to M & M to demand payment of outstanding bills threatening to ask the Defendant to return the goods if the bills should remain unpaid.

The Plaintiff's causes of...

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