033-NLR-NLR-V-45-LOXLEY-v.-ATTORNEY-GENERAL.pdf
Loxley v. Attorney-General
109
[In the Colonial Court of Admiralty.]
1944Present: Howard C.J. (President).In Prize.1939—No. I
LOXLEY v. ATTORNEY-GENERAL.
Part Cargo ex m.vv “ Tarn
Prize—Condemnation of cargo—Sale of goods by contract—Consignor andconsignee—J ns disponendi.
TheCrown appliedfor thecondemnation of 29bundles of hides
shipped from Hong Kong on m.v. “ Tara ”, a Norwegian vessel, boundfor Hamburg. The hides were, by* virtue of a contract datedJuly7,1939,sold bythe claimants, aBritishfirm carrying on
business in Hong Kong, to Christian Poggensee (Shanghai)a German
firmwhich hada branchin Hamburg. Thecontractprovided thatthe
shipmentshould be from Hong Kong. On August 19,1939, the
claimants informed Christian Poggensee that shipment was madeby m.v. “ Tarn ” and asked for Bills of Lading for this vessel. TheBills ofLadingstatedthat thegoodswereshipped byChristian
Poggensee (Shanghai) totheirHamburg Branchandthat freightwas
payableat Hamburg.The BillsofLading together with a Bank Letter
of Credit,threeBillsof Exchangeand Insurance Certificateswere by
letter dated August30,1939, forwarded by Christian Poggensee
to theHong Kong &ShanghaiBank, whowere asked tocredit
the proceeds to the claimants. TheBills of Exchangewere made pay-able tothe Bank anddrawn onJ.Henry Schroeder &Co. (London) by
ChristianPoggensee (Shanghai).TheBank- wasaskedby the claimants
to credittheiraccountwith the proceedsonthe understanding that
they accepted full responsibility for the bills. On September 27 thegoods were seized in Colombo as contraband.
On April 1,1941. astatement of claimwasfiled by theclaimants
alleging that the seizureofgoodswas unlawfulonthe groundthat
they were the lawful property of the claimants.
Held, that the goods were sold by the claimants to Christian Poggenseesnd that the claimants, so far as the shipment of goods was concerned,were merely the agents of Christian Poggensee.
Held, further, that the claimants and Christian Poggensee did not standin the relationship of consignor and consignee,' and that the claimantshad not a jus disponendi on the goods as against Christian Poggensee.
110
HOWARD C. J.—Loxley v. Attorney-General.
T
HIS was an application by the claimants for damages for unlawfulseizure of goods shipped from Hong Kong ex m.v. “ Tarn ” to
Hamburg.
N.K. Ghoksy (with him R. A. Kannangara, instructed by Messrs-IF. J. & G. de Saram, Proctors), for the claimants.
M. W. H. de Silva, K.G., A.-G. (with him M. F. S. Pulle, G.G.,instructed by John Wilson, Proctor), for the Crown.
Out. adv. vult.
^February 1, 1944. Howard C.J.—
In this case the Crown asks for the condemnation of twenty-ninebundles of hides, or the proceeds thereof, shipped from Hong Kong on
m.v. " Tarn ”, a Norwegian vessel, for Hamburg. The hides in questionwere by virtue of a. contract No. 001 dated July 7, 1059 (marked P 1),sold by the claimants, a British firm carrying on business in Hong Kong,to Messrs. Christian Poggensee, (Shanghai), a branch of the same firmcarrying on business in Hamburg. On July 26, 1939, Christian Poggen-see were informed by the Deutsch-Asiatische Bank, Shanghai, of thaopening of an irrevocable credit. This letter of credit was forwardedto the claimants by Christian Poggensee, (Shanghai), in a letter (markedC 1) dated July 28, 1939. The contract originally provided that shipmentshould be from Hong Kong. In C l the claimants are given what aredescribed as final shipping instructions and are requested to arrange forshipment per s.S. “ Rheinland ”. Cl also enclosed blank endorsed Billof Lading forms of the Hamburg-Amerika Linie. The claimants arealso asked to return blank Bill of Lading forms if shipment cannot bearranged per s.s. “ Rheinland ”. Insurance was to be effected in Ham-burg, and in connection therewith a certificate was requested by Messrs.Christian Poggensee. By letter of August 3, 1939 (marked C 3), theclaimants informed Messrs. Christian Poggensee that the goods werebeing shipped by the “ Burgenland ” as they could not make use of the“ Rheinland ”. This letter also refers to the fact that with regard tothese goods Christian Poggensee figure as shippers, but suggest that infuture in order to eliminate extra troubles all shipments should be madein the claimants’ name. On August 19, 1939, the claimants by letter C 4informed Christian Poggensee that shipment was being made by m.v.“ Tarn ” and asked for signed Bills of Lading for this vessel. TheseBills of Lading were sent on the same day, but arrived unendorsed-Eurther copies endorsed were subsequently sent. The goods wereplaced on board m.v. “ Tam ” on August 30, 1939. The Billsof Lading—P 3-P o—stated that the goods were shipped by ChristianPoggensee (Hamburg) Shanghai Branch to Messrs. Christian Poggensee(Hamburg) and that freight was payable at Hamburg. P 3-P 5 areendorsed on the back “ Christian Poggensee (Hamburg) (ShanghaiBranch)”. P 3-P 5 together with the Deutsch-Asiatische Bank Letter ofCredit, three Bills of Exchange for total of £856, three Invoices andthree Insurance Certificates in duplicate were by letter P 9 dated August30, 1939, forwarded through the claimants by Christian Poggensee to theHong Kong & Shanghai Banking Corp., Ltd., who were asked to creditthe proceeds to the claimants. The Bills of Exchange were made payable
HOWARD C-J.—Loxley v. Attorney-General,
111
to the .Bank and drawn on Messrs. J. Henry Schroeder & Co., London,by Christian Poggensee (Hamburg) Shanghai Branch. Reference wasmade in the Bills .to the Letter of Credit. In forwarding the variousdocuments to the Hong Kong & Shanghai Bank the claimants by letterP 10 dated August 81, 1939, asked the Bank to credit their account withthe proceeds on the understanding that they accepted full responsi-bility for the bills in every way. On August 30, 1939, Christian Poggensee^Shanghai), cabled the claimants to suspend all shipments. The claim-ants, vide letter of August 31, 1939 (P 12), cabled that they were unableto stop shipment. On September 13, 1939, the Hong Kong & ShanghaiBank notified the claimants that the bills had been dishonoured asbeing drawn by an enemy firm. On September 25, 1939, the claimantsrequested the Bank to debit their account with the amounts of the billsand to hand over all documents to Messrs. Gillespie Bros. & Co., Ltd.,32, Fenehurch Street, London, to whom the claimants had entrusted(vide letter P 14) the task of selling the goods in London. On September27, 1939, the goods were seized in Colombo as being enemy property.In this connection it would appear that the Customs authorities requiredthat the cargo should be discharged at Colombo or else an undertakinggiven to take the cargo to London. (Vide P 15 dated September 27,1939.) By P 16 dated October 6, 1939, addressed to the Chief Secretary,the claimants applied for the release of the cargo on the ground thatimmediately after the Bills of Exchange had been dishonoured they tooksteps to re-establish ownership of the goods. On December 1,1939,
the goods were released to Messrs. Volkart Bros., the Agents of theclaimants, on a bail bond amounting to Rs. 13,500 being given on behalfjof the claimants. On April 18, 1941, a statement of claim was filed bythe claimants alleging that the seizure of the goods was unlawful on theground that they were the lawful property of the claimants, in theirownership at the date of seizure and continued to remain their propertythereafter.
The only question that requires decision is as to the ownership of thegoods at the time of seizure. The matter must be adjudged by Englishlaw and in this connection reference is made to the Sale of Goods Act,1893. The opening words of section 18 are as follows:—“ Unless adifferent intention appears, the following are rules for ascertaining theintention of the parties as to the time at which the property in the goodsis to pass to the buyer Rule 5 is as follows: —
“ (1) Where there is a contract for the sale of unascertained orfuture goods by description and goods of that description and in adeliverable state are unconditionally appropriated to the contract,either by the seller with the assent of the buyer or by the buyer withthe assent of the seller, the property in the goods thereupon passes tothe buyer. Such assent may be expressed or implied, and may be giveneither before or after the appropriation is made.
Where, in pursuance of the contract, the seller delivers the goodsto the buyer or to a carrier or other bailee (whether named by thebuyer or not) for the purpose of transmission to the buyer, and doesnot reserve the right of disposal, he is deemed to have unconditionallyappropriated the goods to the contract. ”
112
HOWABD C.J.—Loxley v. Attorney-General.
Section 19 is as follows: —
“ (1) Where there is a contract for the sale of specific goods, orwhere goods are subsequently appropriated to thej contract, the sellermay, by the terms of the contract or appropriation, reserve the rightof disposal of the goods until certain conditions are fulfilled. In suchcase, notwithstanding the delivery of the goods to the buyer, or to acarrier or other bailee for the purpose of transmission to the buyer,the property in the goods does not pass to the buyer until the conditionsimposed by the seller are fulfilled.
Where goods are shipped, and by the bill of lading the goods aredeliverable to the order of the seller or his agent, the seller is primufacie deemed to reserve the right of disposal.
Where the seller of goods draws on the buyer for the price,and transmits the bill of exchange and bill of lading to the buyertogether, to secure acceptance or payment of the bill of exchange,the buyer is bound to return the bill of lading if he does not honourthe bill of exchange, and if he wrongfully retains the bill of lading theproperty in the goods does not pass to him. ”
It is contended by Counsel for the claimants that they, by the termsof the contract, reserved the right of disposal of the goods until the Billsof Exchange had been honoured in London by Messrs. Sehroeder & Co.,and that, therefore, the property in the goods, notwithstanding deliveryto Christian Poggensee, (Shanghai) or the owners of m.v. “ Tam ” forthe purpose of transmission to Christian Poggensee (Hamburg) did anotpass to Christian Poggensee. Rule 5 of section 18 does not apply inas-much as “ a different intention ” appears from the terms of the contractand the opening words of the Section are applicable. The Bills of Ladingmade no provision that the goods were deliverable to the order of theclaimants and hence Section 19 (2) would seem to imply that no rightof disposal was reserved. In the circumstances and having regard to thefact that a claimant in a Prize Court is in the position of a plaintiff videThe Mowe1 the burden of proving the existence of such a right restson the claimants. Mr. Choksy for the claimants relies on various authori-ties. In The Miramiclii2 a cargo shipped under a c.i.f. contract by aneutral to a German buyer on a British vessel before the declaration orimminence of war between Great Britain and Germany, was held notto be subject to seizure and condemnation by the Prize Court, the propertyin the goods not having passed to the enemy subject, nor the documentsrepresenting the goods taken up by him, and money having' been advancedto the neutral seller on the faith of the documents by a neutral banker.In holding that the property in the goods had not passed to the buyers,the learned President held that the sellers had reserved a right of disposalor a jua disponendi over them and would so remain until the shippingdocuments had been tendered to and taken over by the buyers, and theBill of Exchange for the price had been paid. It would appear that thesellers in this case held the Bill of Lading which was not indorsed. Thesellers were to pay carriage, insurance and freight and payment was to be“ by check agafiist documents ”. In The Kronprinsessan Margareta,
1 {1915) P. D. 72.
{1915) P. D. at p. 7.
HOWARD C.J.—Loxley «. Attorney-General.IIS
The Parana and other Ships 1, the judgment of the Court was deliveredby Lord Sumner. In the case of The Parana the appellants, the pur-chasers, endeavoured .to show that the property passed to them beforethe beginning of the' voyage. The goods were sold before shipmentfor a c. & f. contract which under the terms of the contract was providedfor by a confirmed bank credit, the purchasers themselves effected in-surances in Europe and the Bills of Lading made the goods deliverableto the purchasers’ order. At pages 615-516 Bis Lordship stated as-follows: —
“ No authority was forthcoming which proved to be completelyin point.1 Cases, in which it has been held that taking the bill of lading;in the shipper’s own name negatives any unconditional appropriationto the buyer by the delivery of the goods on shipboard and indieates-one conditional on the documents being taken up, can throw only an.indirect light on the question here involved. Certainly no case was-found, in which it was held that taking the bill of lading in the buyer’sname, while withholding delivery of it until presentation and takingup of the documents, would not be, as an appropriation, equallyconditional. ”
I would also invite attention to the following passage from the judgment,which appears at page 517: —
“ In the present case it appears to their Lordships that the retention:by the seller of the bill of lading was inconsistent with an intention.to pass the property. They think that it was ‘ clearly intended by the-consignor to preserve his title to the goods until he did a further actby transferring the bill of lading ’. The special circumstance of theexistence of a confirmed banker’s credit in this case is only indirectlyrelevant. It no doubt enhances the likelihood that the bills of ladingwill eventually be taken up and the goods be paid for, and so diminishes-the importance to the seller of being still able to say that the-goods are his, but it is not direct evidence of intention; it is only areason why a particular intention is more likely to have been formedin such a case than in others. The intention has still to be inferred,principally from what was done and from the communications made-with reference to it, and these point to an intention not to pass theproperty till the drafts were paid, and it is really rather a reason for-intendihg to get the documents presented and taken up as soon aspossible, than for an intention not to retain the ownership even untilthat could be effected. If the seller was paid or was holder of anenforcible contract from a bank for payment, the sooner he passedthe property the better, for he was uninsured, but if he was neitherhe gained nothing by passing the property away. It was not onerous-property.
In The Prinz Adalbert* it was held that when shippers1 of goods discounta draft upon the consignee and authorize the discounters to hand to-him a Bill of Lading, to the order of, and indorsed by, the shippers, uponhis acceptance of the draft, the intention to be inferred,, according togeneral mercantile understanding, is that the ownership of the goods-1 (1921) A. C. 486.* (1917) A. C. 586.
114
HOWAKD O.J.—Loxley v. Attorney-General.
is to pass to the consignee when he accepts the draft. That inferencemay be modified, or rebutted, by particular arrangements between theshippers and the consignee, and is subject to the rules which arise out ofa state of war existing, or imminent at the beginning of the transaction.The transfer of the property upon the acceptance of the draft is consistentwith the consignee being either a purchaser from the shippers or theiragent for the sale of the goods. The following passage from Lord Sum-ner’s judgment on pages 589-590 is of interest: —
“ Possession of the indorsed bill of lading enables the acceptor toget possession of the goods on the ship’s arrival. If the shipper,.being then owner of the goods, authorizes and directs the banker,-to whom he is himself liable and whose interest it is to continue to hold-the bill of lading till the draft is accepted, to surrender the bill of ladingagainst acceptance of the draft, it is natural to infer that he intendsto transfer the ownership when this is done, but intends also to remainthe owner until this has been done. Particular arrangements madebetween shipper and consignee may modify or rebut these inferences,but in the absence of evidence to the contrary, and apart from rules-which arise only out of a state of war existing or imminent at thebeginning of the transaction, the general law infers under these cir-cumstances that the ownership in the goods is transferred when the -draft drawn against them is accepted.
In The Gabbiano1 it was held that a certain clause in the contract of saleafforded a valid business reason for taking the bills of lading to the sellers’order and that the inference to be drawn from tKeir so doing was that theyintended to reserve the right of disposal and thus retain the propertyin the goods. The local case of Othman v. Jinadasa2 was also cited byMr. Choksy. In this case it was held that, where a seller shipped goodsto a buyer and sent the receipt by value-payable post, thereby intendingto make the delivery of goods conditional on payment, the propertyin the goods did not pass to the buyer on delivery to the carrier and thatthe risk of loss in transport fell on the seller. The cases cited by Mr.'Choksy are in my opinion all distinguishable. In The Miramichi (supra)the shipping documents had not been tendered to and taken over by thebuyers, the sellers holding the Bill of Lading which was not indorsed.In The Parana (supra)' the sellers retained the Bill of Lading. In The PrimAdalbert (supra) the shippers discounted a draft upon the consignee and thediscounters were authorized to hand him the Bill of Lading only uponhis acceptance of the draft. In The Gabbiano the Bills of Lading weretaken to the seller's order.
In reply t© Mr. Choksy’s contention, the Attorney-General has arguedthat on July 7, 1939, the goods were sold by the claimants to ChristianPoggensee (Shanghai) and that thereafter, the claimants, so far as the-shipment of the goods was concerned, were merely the agents of ChristianPoggensee. The orders for shipment were given by the latter firm.The contract of insurance was made in Hamburg by Christian Poggensee.The Bills of Lading were not endorsed in favour of the claimants. The"Bills of Exchange were not negotiated by the claimants, but by ChristianPoggensee (vide P 9) who instructed the Hong Kong & Shanghai Banking1 (1940) P. D. 166.* 29 N. L. R. 149.
Welipenna Police v. Pinessa.
115
Corporation to credit the proceeds to the claimants. It was also main-tained that the Bills of Lading indicated that the shippers were onefirm—Christian Poggensee (Shanghai)—and the consignees were another—Christian Poggensee (Hamburg). In these circumstances the claimants-and Christian Poggensee did not, as regards each other, bear the relation-ship of consignors and consignee and the various cases cited by Mr.Choksy which deal with parties having such a relationship did not,,therefore, apply.
T have come to the conclusion that the contention of the Attorney-General is correct. The sale of the hides by P 2 was to include cost of'carriage And freight to Hamburg, but in effecting shipment the claimantsacted as the agents of Christian Poggensee. The name of ChristianPoggensee, (Shanghai), appears on the Bills of Lading as the shippers, the-freight due to the shipowners was payable in Hamburg and the in-surance was to be effected by them in the same place. The Bills ofLading have not been indorsed in favour of the claimants. The Bills of’Exchange were not negotiated by the latter and with regard to the state-ment that appears in their letter of August 31, 1939, to the Hong Kong& Shanghai Banking Corporation requesting that “ we shall be glad if'you will negotiate the documents as outlined in their letter and credit-our account with the proceeds as per bank statement herewith, on theunderstanding that we accept full responsibility for above bills in everyway ”, was a matter between the bank and themselves and cannot beconstrued as an intention to reserve a jus disponendi in the goods asagainst Christian Poggensee. In deciding whether the claimants retaineda jus disponendi it is also relevant to consider their conduct after warhad been declared and commercial relations with enemy subjects werenot possible. In a letter dated September 25, 1939 (P 14) addressed to-Messrs. Gillespie Bros’ & Co., Ltd., the claimants state that “ to facili-tate matters we have bought back the documents from the Hong KongBank ”. In P 16 dated October 6, 1939, the claimants in a letterto the Chief Secretary recapitulate the steps they have taken to “ re-establish ownership ” of the goods. The extracts from these lettersindicate that the claimants had not retained a right of disposal over thesegoods.
For the reasons I have given the application of the Crown asking for-eondemnation of these goods is granted together with costs.