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Tokio Marine & Fire Insurance Co. Ltd. v Ace Protrans Forwarding Ltd.

Judgment Cited authorities 39 Cited in Precedent Map Related
Vincent
Judgment Date25 February 1994
Year1994
Judgement NumberHCCL131/1989
Subject MatterCommercial Action
CourtHigh Court (Hong Kong)
HCCL000131/1989 TOKIO MARINE & FIRE INSURANCE CO. LTD. v. ACE PROTRANS FORWARDING LTD.

HCCL000131/1989

1989, No. CL-131

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

________________

BETWEEN
TOKIO MARINE & FIRE INSURANCE
CO. LTD.		 Plaintiff
AND
ACE PROTRANS FORWARDING LTD Defendant

________________

Coram: The Hon. Mr. Justice Mayo in Court

Dates of hearing: 1, 2, 3 and 4 February 1994

Date of handing down of judgment: 25 February 1994

________________

J U D G M E N T

________________

1. The Plaintiff is suing as the Assignee of Sea Horse Container Lines Inc. in respect of a cargo claim. The Defendants are freight forwarders in Hong Kong and at the relevant time were acting as Agents for Sea Horse who is a non vessel operating common carrier (NVOCC).

Rather than attempting to precis the relevant facts I propose referring to the Agreed Statement of Facts which was agreed by the parties.

"_____________________________

AGREED STATEMENT OF FACTS

_____________________________

1. On 25th December 1987, two cargoes consisting of 1,212 cartons of polyester/cotton 50/50 CVC yarn and 606 cartons of polyester/cotton 50/50 yarn respectively were shipped breakbulk on board the vessel "LINGJIANG" from Ningbo, PRC for carriage to Hong Kong.

2. Bills of lading Nos. 39 and 40, dated 25th December 1987, were issued by the China Ocean Shipping Company in respect of the two said cargoes, which were respectively consigned to the order of the Defendant under the said bills of lading.

3. Upon arrival in Hong Kong, the said cargoes were discharged from the "LINGJIANG" and containerised as follows:

3.1 the cargo of 1,212 cartons of yarn was stuffed into four containers, namely NYKU-670338/1, TOLU-216272/2, NYKU-695112/0 and NYKU- 678021/7; and

3.2 the cargo of 606 cartons of yarn was stuffed into two containers, namely NYKU-6602257 and NYKU-6924021.

4. The containerised cargo of 1,212 cartons of yarn was shipped in Hong Kong on board the m.v. "CALIFORNIA JUPITER" for shipment from Hong Kong to Los Angeles, California.

5. The Defendant issued a bill of lading No. NB WC005 dated 25th December 1987 on the Sea Horse Container Lines Inc. bill of lading form in respect of the cargo of 1,212 cartons of yarn indicating the shipment of the said cargo at Ningbo, PRC for carriage to Los Angeles, California.

6. A memo bill of lading No. 480-01806 was issued by NYK Line on its own form in respect of the shipment of the cargo of 1,212 cartons of yarn in Hong Kong for carriage to Los Angeles, California on board the "CALIFORNIA JUPITER".

7. The containerised cargo of 606 cartons of yarn was shipped in Hong Kong on board the m.v. "YAMATAKA MARU" for shipment from Hong Kong to Charleston, South Carolina.

8. The Defendant issued a bill of lading No. NB EC002 dated 25th December 1987 on the Sea Horse Container Lines Inc. bill of lading form in respect of the cargo of 606 cartons of yarn indicating the shipment of the said cargo at Ningbo, PRC for carriage to Charleston, South Carolina.

9. A memo bill of lading No. 480-02351 was issued by NYK Line on its own form in respect of the shipment of the cargo of 606 cartons of yarn in Hong Kong for carriage to Charleston, South Carolina on board the "YAMATAKA MARU".

10. Upon arrival in Los Angeles, California and Charleston, South Carolina respectively:-

10.1 the cargo of 1,212 cartons of yarn was surveyed by Hull and Cargo Surveyors Inc.; and

10.2 the cargo of 606 cartons of yarn was surveyed by Lucas and Brown Inc.; and both cargoes were allegedly found to be damaged by mildew and mould caused by wetting from fresh water and were rejected by the receivers thereof.

11. Both of the said cargoes were disposed of by salvage sales as follows:-

11.1 the cargo of 1,212 cartons of yarn was sold at US$0.8025 per lb. for a total of US$48,631.50; and

11.2 the cargo of 606 cartons of yarn was sold at US$0.7327 per lb. for a total of US$85,286.28.

12. A suit was brought by the Plaintiff, as insurer of the cargoes for the owners thereof and/or the indorsees of the said Sea Horse bills of lading, against Sea Horse in Admiralty Case No. 89 0189 SVW (JBX) in the US District Court for the Central District of California ("the US Suit") claiming damages in respect of the said damage to the cargoes in the respective sums of US$183,896.76 and US$87,493.50.

13. The US Suit was settled by Sea Horse on the terms of a Settlement Agreement and Mutual General Release in writing signed by Sea Horse on 26th June 1989, whereunder Sea Horse agreed to consent to judgment against it in the US Suit in the sum of US$271,390.26 with pre-judgment interest thereon in the amount of US$40,708.54 and costs in the sum of US$505.47.

14. Under the said Settlement Agreement and Mutual General Release, Sea Horse assigned its rights of action in connection with the carriage, storage or movement of, or insurance for, the said cargoes against the Defendant to the Plaintiff and notice of such assignment was given by the Plaintiff to the Defendant by a written notice dated 17th November 1989."

2. The main issue between the parties is the question as to whether the Defendant had authority to issue the Bills of Lading referred to having regard to the fact that the contract of carriage was from Ningpo PRC to ports in the United States and not from Hong Kong.

3. It is the Plaintiffs' case that by virtue of the freight Tariff which Sea Horse are required to comply with they would be contravening the Laws of the United States of America if they permitted their Agent to ship goods to United States ports otherwise than in accordance with the requirements of the Federal Maritime Commission.

4. Consequent upon this they claim that it is clear from the express authority given to the Defendants that they were in breach of their Agency Agreement.

Sea Horse's letter of the 16th June 1987 is in this form.

"Sea Horse Container Lines, Inc. P.O. Box 90099, Long Beach, Ca 90809-0099

(213) 595-0616 Telex 656342

June 16, 1987

Ace Protrans Consolidation Service
132-135 Tai Lin Pai Road
1/F King Sing Ind. Bldg.
Kwai Chung, New Territories
Hong Kong

To Whom It May Concern:

Please consider this letter as our notification that Ace Protrans Consolidation Service has been appointed as a Hong Kong agent for Sea Horse Container Lines, Inc.

As such, Ace Protrans has the authority to issue Sea Horse Container Lines bills of lading for all cargos shipped from Hong Kong to all United States Ports as named in Sea Horse Container Lines, Inc., Freight Tariff No. 5, FMC No. 5 and in accordance with the rules and regulations prescribed by the Federal Maritime Commission.

If further information is required, please contact this office. Thank you.

Sincerely,

Signed
Len Skoczen
President
LS:yyk"

5. It is the Defendants' case that there was express agreement between the parties that the scope of the authority should be extended so as to authorise the Defendants to issue Bills of Lading on behalf of Sea Horse even where goods were shipped from PRC ports. They also contended that during the course of dealings between the parties it was contemplated that Bills of Lading would be issued in respect of goods being shipped from PRC ports and that the contract of carriage of goods would be based upon this premise.

6. Again rather than attempting to spell out the various issues between the parties I propose referring to the Agreed List of Issues agreed by the parties.

"___________________________

AGREED LIST OF ISSUES

__________________________

1. What was the scope of the Defendant's authority to issue bills of lading on the Sea Horse Container Lines Inc. form and, in particular, was the Defendant authorised by Sea Horse Container Lines Inc. ("Sea Horse") to issue bills of lading Nos. NB WC003 and NB EC002 containing or evidencing contracts of carriage from Ningbo, PRC to Los Angeles, California and Charleston, South Carolina respectively?

2. Were bills of lading Nos. NB WC003 and NB EC002 issued by the Defendant in breach of its authority to sign bills of lading on behalf of Sea Horse? Alternatively, if the said bills of lading were issued in breach of the Defendant's authority, is Sea Horse estopped from claiming in respect of that breach of authority?

3. Were the cargoes shipped under bills of lading Nos. NB WC005 and NB EC002 found damaged upon arrival at Los Angeles and Charleston respectively and, if so, when had such damage occurred and what was the cause and extent of such damage?

4. If the Defendant was in breach of its authority in issuing the bills of lading Nos. NB WC003 and NB EC002, what was the loss and damage of Sea Horse caused by such breach?

(a) Did Sea Horse reasonably settle its liability to the claimants in the US Suit? Alternatively, what was the extent of Sea Horse Container Lines Inc.'s liability to the claimants in the US Suit?

(b) Did Sea Horse incur or was it rendered liable for legal fees in the sum of US$33,756.48 in connection with the US Suit?"

7. In this connection Mr, Fok for the Plaintiffs submitted that the issues of ratification and estoppel were sufficiently intertwined as to constitute in reality just one issue.

8. Mr. Skoczen, the President of Sea Horse gave evidence concerning the background to the business relationship between Sea Horse and the Defendants. Sea Horse had taken over from an Associated Company Interocean Express Ltd. (IEC) who had previously been conducting business with the Defendants.

9. Although some of the earlier bills of lading were IEC bills I do not think that it was a matter of great significance that the original dealings had been with IEC as Mr. Skoczen accepted that to a large...

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