HCA 208 / 2008
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 208 OF 2008
||YANG MING MARINE TRANSPORT CORPORATION
||YANG MING LINE (HONG KONG) LIMITED
||SHING LEE ENGINEERING CONTAINER COMPANY LIMITED
||STRONGER (H.K.) TRADE LIMITED
||STRONGER (H.K.) TRADE LIMITED
Coram: Before Deputy High Court Judge Au in Court
Dates of Trial: 16 & 17 July 2009
Date of Handing Down Judgment: 11 August 2009
J U D G M E N T
1. This is the trial of the Plaintiffs’ claim against the 1st and 2nd Defendants for the sum of US$253,655.50 as their loss in relation to the release of 2 containers of goods (“the Cargoes”) in Hong Kong.
2. It is common ground that the Cargoes were released to the 1st Defendant without the production of the original bills of lading, but against 2 letters of indemnity signed by the 1st Defendant in favour of the 1st Plaintiff. The 1st Defendant then subsequently passed the Cargoes to the 2nd Defendant for further handling and disposal.
3. There is also no dispute that on the face the letters of indemnity, each of it was signed and stamped with the 1st Defendant’s company chop.
4. The Plaintiffs’ causes of action against the Defendants are premised on the letters of indemnity, and alternatively conversion.
5. The 1st Defendant’s pleaded defence is that it issued the letters of indemnity as an agent for and on behalf of the 2nd Defendant, and that the Plaintiffs were aware of the same. Thus, the 1st Defendant is not liable under the letters of indemnity. The 1st Defendant also denies that there was any conversion of the Cargoes.
6. The 2nd Defendant’s pleaded case is however that the 1st Defendant was not its agent in signing and issuing the letters of indemnity. It also denies any conversion of the Cargoes.
7. The issues at trial between the Plaintiffs and the Defendants are thus:
(1) Whether the letters of indemnity were issued by the 1st Defendant as an agent for and on behalf of the 2nd Defendant.
(2) If so, whether the Plaintiffs were aware of this agency relationship.
(3) Whether the 1st and/or the 2nd Defendant is liable under the letters of indemnity.
(4) Whether there was conversion of the Cargoes by the 1st and/or 2nd Defendants.
(5) The quantum of loss and damage suffered by the Plaintiffs.
8. The 1st and 2nd Defendants were previously separately legally represented. The 2nd Defendant has filed a witness statement while the 1st Defendant has not. Some time before the trial, their respective solicitors have ceased to act for them.
9. The 2nd Defendant attended the trial through its representative, one Ms Lung Ye Lei.
10. The 1st Defendant however did not attend the trial by any representative. I was satisfied that it should be aware of the trial, and ordered the trial to proceed in its absence.
11. There is also a Third Party proceedings issued by the 1st Defendant against the 2nd Defendant. By the order of Registrar Au-Yeung dated 16 July 2008, the Third Party claim was ordered to be tried at this trial of the Plaintiff’s action against the Defendants.
12. However, in the absence of the 1st Defendant at this trial, I will treat the Third Party’s claim as not pursued.
B. The facts as established
B1. The evidence adduced at trial
13. The Plaintiffs have called Mr Yung Shun Hei as their witness to give evidence at trial. Mr Yung is the sales manager of the 2nd Plaintiff’s Business Department and is familiar with the subject matter transaction.
14. The 2nd Defendant has called Ms Lung Ye Lei to give evidence at trial. She is the manageress of the 2nd Defendant and had handled the release of the Cargoes at the material time.
15. Both Mr Yung and Ms Lung have filed their respective witness statements and were adopted as their respective evidence in chief at trial.
16. Both of them also gave oral evidence and were subject to cross-examination. Their evidence was not seriously challenged under cross-examination.
17. Mr Ko (counsel for the Plaintiffs) confirmed in his closing submissions that he was not generally challenging Ms Lung’s evidence, except the assertion that the 1st Defendant was not the 2nd Defendant’s agent in issuing the letter of indemnity.
18. Given the above, and having seen the witnesses in Court, and having had regard to the unchallenged documentary evidence, I accept the following evidence of the parties as the relevant facts established at trial.
B2. The proved facts
B2.1 The parties
19. The 1st Plaintiff is a shipping line established in Taiwan. The 2nd Plaintiff is the 1st Plaintiff’s local agency office in Hong Kong, responsible for handling cargoes arrived in Hong Kong and arranging for their delivery locally.
20. The Plaintiffs’ businesses are to provide carriage and transportation services to their customers, mainly by sea.
21. The 1st Defendant is apparently a forwarding agent in Hong Kong, while the 2nd Defendant is a trading company.
22. The 2nd Defendant was incorporated on 11 May 2007, and its “boss” is one Mr Zhang Wei.
23. Prior to the 2nd Defendant’s incorporation, Mr Zhang had entered into an oral agreement with Ms Siu Po Chu of the 1st Defendant to engage the 1st Defendant to handle the cargoes imported to Hong Kong by Mr Zhang and to be delivered at his instruction.
24. Under the above oral agreement (“the Oral Agreement”), the 1st Defendant would provide the following services:
(1) The 1st Defendant would deal with and handle all relevant procedures, including customs clearance procedures, required to enable the 1st Defendant to take delivery of those cargoes.
(2) The 1st Defendant would deal with and handle all documents necessary for and relevant to taking delivery of the cargoes and the related clearance matters.
(3) Mr Zhang would reimburse the 1st Defendant of any fees, charges and expenses incurred in discharging its services.
(4) Mr Zhang would also further pay a handling charge of HK$200 for the 1st Defendant’s services in respect of each delivery of imported cargoes in Hong Kong.
25. Before the incorporation of the 2nd Defendant, in relation to the cargoes imported to Hong Kong to be dealt with by Mr Zhang’s business, he would use the 1st Defendant’s name as the consignee under the relevant bills of lading.
26. After the incorporation of the 2nd Defendant, it would use its own name as the consignee for cargoes to be imported and dealt with by its business. However, for those cargoes that were traded by Mr Zhang before the 2nd Defendant’s incorporation, the 2nd Defendant would for convenience continue to use the 1st Defendant as the consignee in those bills of lading, and would continue to engage the 1st Defendant to take delivery of those cargoes for it.
B2.2 The transactions involving the Cargoes and their release
27. The Cargoes were 2 containers of copper scrap bars and metal scrap shipped on board the vessel “YM Hiroshima” from Haifa, Israel to Hong Kong on 28 May 2007. The undisputed value of the Cargoes was US$253,655.50.
28. The seller of the Cargoes was Jack Engle & Co (“Jack Engle”) in the United States, and the buyer was System Solding...