SRI LANKA SHIPPING COMPANY LTD., Appellant, and THE INDIAN BANK LTD .,Responde

081-NLR-NLR-V-71-SRI-LANKA-SHIPPING-COMPANY-LTD.-Appellant-and-THE-INDIAN-BANK-LTD-.Responde.pdf


Sri Lanka Shipping Company Ltd. v. The Indian Bank Ltd.
381
1968 Present: H. N. G. Fernando, C.J., and Samerawiekrame, J.SRI LANKA SHIPPING COMPANY LTD., Appellant, and-THE INDIAN BANK LTD., Respondent
S. C. 44J164—J). C. Colombo, o2Sr4jM
Contract of carriage of goods by sea —Mis-delivery of the goods to wrong person—
Extent of carrier's liability—Time limitation—Buies 6 and 8 of Article 3 oj
Hague Rules—Rules 1 and 5 of Article 4 of Hague Rules.
The defendant Company had chartered a ship from the ship’s owner forthe carnage of goods between ports in Ceylon, India. Burma and the MaidiveIslands. Its agent in Tuticorin contracted with the Mercantile Corporation ofTuticorin for the carriage of a shipment of cane jaggery consigned to the StarLino Trades, Colombo, on whom the consignor drew a demand Bill for thevalue of the jaggery. The Bill was drawn in favour of the plaintiff, the IndianBank Ltd. of Colombo. This Bill; the Invoice for th*> shipment, tho Bill ofLading and the policy of insurance were transmitted to the plaintiff.
After the consignment was landed from the ship and lodgod in the Customsware-house, the plaintiff became entitled to it by established practice, becausetho shipping documents were in his possession. Nevertheless, the Customsauthorities woro compelled, in accordance with practice, to deliver the shipmentto Star Line Trades (the original consignoo) in consequence of the authorisationby the defendant’s agents in Colombo to give delivery to the Star Line Trades.
In the present action, which was instituted about 18 months after the arrivalof tho ship at tho Port of Colombo, the plaintiff claimed judgment for thevalue of tho shipment. The principal dofonco urged was that Condition 10in tho Bill of Lading issued by the defendant provided that “ in all casesthe carrier’s liability is to cease as soon os the goods are lifted from and leavethe ship’s deck ”,
Held, that the plaintiff was entitled to judgment in his favour. Therewas a fundamental breach of the defendant’s contractual obligation to deliverthe shipment of jaggery to the plaintiff, which obligation the defendant wasunable to perform bocause its local agents had already authorised delivery tobe made to some other person. That being bo, there was no need to decidewhether or not there was any liability based on delict.
Held further, that tho time limitation of one year provided in Rule 8 of Article3 of the Hague Rules could not apply in a case like the present one, whichinvolved only a mis-dolivery, and not actual physical loss, of goods.
.ApPEAL from a judgment of the District Court, Colombo.
Ranganathan, Q.C., with J. A. L. Cooray, for the Defendant*Appellant.
W. Jayewardene, Q.C., with L. C. Seneviratne, K. N. Choksy .and
Rodrigo, for the Plaintiff-Respondent.
lxxi—16
Cur. adv. vult.
362
H. M. G. FERNANDO, C.J.—Sri Lanka Shippimj Company Ltd. r.
The Indian Bank Ltd.
March 1, 1968. H. N. G. Fernando, C.J.—
The Defendant in this case, the Sri Lanka Shipping Co. Ltd., hadchartered from her owner the vessel ‘‘ Hansboye ” for the carriage ofgoods between ports in Ceylon, India, Burma and the Maidive Islands.The Defendant, by its agent in Tuticorin had contracted with theMercantile Corporation of Tuticorin for the carriage of a shipment ofcane jaggery consigned to the Star Line Trades, Colombo, on whom theconsignor had drawn a demand Bill for the value of the jaggery. TheBill was drawn in favour of the PlaintitF, tin; Indian Bank Ltd. ofColombo. This Bill and the Invoice for the shipment, the Bill of Ladingand the policy of insurance w ere transmitted to the Plaintiff in Colombo.According to the usual practice, the Star Line Trades were specified inthe Bill of Lading as the Party to be Notified ”, but the Bill wasendorsed to the Indian Bank Ltd. or Order.
The “ Hansboye ” arrived in Colombo some time prior to 13th October,1959 and delivery of the cargo was taken ex ship by the Ceylon Port CargoCorporation. The freight, list of the Defendant Company and customsdocuments establish that the shipment of jaggery to which this actionrelates was landed from the ship and lodged in the Customs ware-house.At this stage, the shipping documents were in the possession of thePlaintiff Bank, and the Plaintiff therefore entitled to the shipment ofjaggery. Nevertheless, the Customs authorities delivered the shipmentin three parts, on 14th, 15th and 24th October to Star Line Trades (theoriginal consignee) in circumstances which have been stated by the learnedDistrict Judge in his judgment.
The judgment refers to the practice of the Port of Colombo, which isthat the Port Cargo Corporation has sole authority to take delivery from,ships of incoming cargo, that, goods thus taken and unladen are landedashore and lodged in Customs ware-houses, and that goods are releasedfrom the ware-houses after payment of Customs and ware-house dues.The practice as to release is that the holder of the bill of lading presentsit to ship’s Agents in Colombo, who then authorise the Customs to releasethe corresponding consignment of goods. This authority takes one oftwo forms : either an endorsement on the Customs bill of entry, or aseparate document called a disposal order. The Customs make noinquiry as to the right to possession of a consignment of goods, and releasethe goods upon faith of the Ship’s Agents’ authorisation.
The learned Judge reached the following findings of fact: that a disposalorder (P39) bearing the seal of Messrs Freudenberg and Co. Ltd. and thesignature of one Abeynaike and dated 13th October 1959 was presentedto the Customs, and that the consignment of jaggery was then released toStar Line Trades who were authorised by the disposal order to takedelivery ; that Messrs Freudenberg and Co. were the local agents of theDefendant Co. and that Abeynaike, who was then employed by Freuden-berg and Co., was an employee with authority to act for the latter Co. ;
IT. N. O. KI3KNANDO, C.J. -Sri Lanka Shipping Company Ltd. i:. .563
The. Indian Bank lAd.
that the shipping documents were not presented to Freudenberg and Co.,and that accordingly the disposal order was issued in breach of theestablished practice. Upon consideration of the relevant evidence, Iconcur entirely with the findings of fact which are recited above. It seemsto me clear beyond doubt that Abeynaike did have custody of theseal of Freudenberg and Co. and did sign the disposal order at the officeof the Company in the ordinary course of business.
On the facts as just stated, the learned Judge held inter alia that theDefendant Co., acting through its agents or servants, wrongfully ornegligently gave delivery of the shipment to a person other than the.plaintiff, or alternatively, wrongfully enabled a person other than thePlaintiff to obtain delivery or possession of the shipment. Judgment wasentered in favour of the Plaintiff for the value of the shipment, andthis appeal was taken against that judgment.
In the District Court, and before us, several defences were taken to thePlaintiff’s claim. The principal defence urged before us was that Condi-tion 10 of the Conditions in the Bill of Lading provided that “ in all casesthe carrier’s liability is to cease as soon as the goods are lifted from andleave the ship’s deck Relying on this clause, it was argued that theliability of the Defendant Co. to deliver the shipment of jaggery wasperformed when the shipment was discharged from the ship into thecustody of the Port Cargo Corporation, and that thereupon the Defendantceased to be subject to an}' further contractual obligation. Even if theDefendant Co. did thereafter, by the issue of the disposal order, enablesome person other than the Plaintiff to obtain possession of the shipment,the liability (if any) of the Defendant for so doing arises not under thecontract, but as for a delict. That liability arises in English Law underthe doctrine of conversion, but, it was argued, that doctrine isnot recognized by the Roman Dutch Law (Daniel Silva- v. JohanisAppuhamyl). That case was decided in June 1965, which was quite longafter the District Judge gave judgment in the present action, and thejudgment clearly appears to .hold the Defendant liable as for a wrongfulconversion. '
In the District Court; however, reference does not appear to have beenmade to two' decisions of the Privy Council, which have an importantbearing on the construction of an exception clause in a bill of lading. InChartered Bank v. British India Steam Navigation Co.2, a shipment ofgoods had, according to the custom of the port of Penang, been deliveredto landing agents'appointed by the Shipping Company; but through afraud in which the landing agents participated, the goods were deliveredto a person other than the holder of the bill of lading. It wae held that
* (1965)67 N. L. R. 457.• (1909) A. Q. 369.364 H. N. G. FERNANDO, C.J.—Sri Lanka Shippiny Company Ltd. u.
The Indian Bunk Ltd.
the exception clause providing for cessation of the liability of the carrier“ when the goods are free of the ship’s tackle ” operated to protect theShipping Company from liability. At first sight this decision appears tobe much in favour of the Defendant in the present case.
The case just cited was however distinguished from the facts of a morerecent case also decided in the Privy Council (Sze Hai Tong Bank v.Rambler Cycle Co. Ltd.1). In this case, goods had been discharged froma ship at Singapore and placed in a ware-house of the Singapore HarbourBoard. Thereafter the Shipping Company’s agents authorised theHarbour Board to deliver the goods to a person specified by the agents,and the goods were so delivered. The agents gave this authority withoutrequiring production of the bill of lading, and with full knowledge thatthe person specified in the authority did not hold the bill of lading. Theaction of the agents Avas apparently in accordance Avith a practice thatgoods were thus released upon the agents receiving a bank indemnityagainst loss arising from the release. It was held that here the action, ofthe agents at Singa pore can properly be treated as the action of the Ship-ping Co. ; Avhereas in the earlier Chartered Bank case, the fraudulent act ofthe landing agent could in no wise be attributed to the Shipping Co. Thisdistinction I hold applicable in the instant case, because the Defendanthere has failed to establish that Abeynaike acted fraudulently or issued thedisposal order otherAA'ise than in the ordinary course of business of Freu-denberg and Co. (My reasons for this observation Avill be stated presently.)While I readily accept the distinction thus drawn, I think a distinctionalso arises on somewhat different grounds. In the Chartered Bank case,it was not necessary to decide whether or not a Shipping Comjjany isliable for non-fraudulent acts of a landing agent. If, according to thecustom of the port, goods have of necessity to be delivered into the custodyof a landing agent, who by the same custom lias thereafter a duty to givean order of release in favour of the holder of the bill of lading, the positionmight Avell be that it is on the landing agent, and not on the Shipping Co.,that the true owner relies for due release of the goods. It is no part ofthe duty of a carrier by sea to land goods ashore, and if he is compelledby custom to engage a “ landing agent ” to receive and land the goods,it does not necessarily follow that the “ landing agent ” thereafter actson behalf of the carrier. It seems at least equally reasonable to regardthe landing agent as a person acting on behalf of the true oAvner. In theinstant case, Freudenberg and Co., the ship’s agent, had no action toperform on its oato account. Its only function, according to the customof the port, was to inspect the bill of lading on presentation, and then toissue the disposal order ; and this it did solely for the reason that it was theagent of the Defendant Company.
» {1959) A. C. 576.
H. N. G. FERNANDO, C.J.—Sri Lanka Shipping Company Ltd. v.305
The Indian Bank Ltd.
Let me cite now from the judgment of Lord Denning in the recentcase:—
** It is perfectly clear law that a shipowner who delivers withoutproduction of the bill of lading does so at his peril. The contract is todeliver, on production of the bill of lading, to the person entitled underthe bill of lading. In this case it was “ unto order or his or theirassigns ”, that is to say, to the order of the Rambler Cycle Company,if they had not assigned the bill of lading, or to their assigns, if theyhad. The shipping company did not deliver the goods to any suchperson. They are therefore liable for breach of contract unless thereis some term in the bill of lading protecting them. And they deliveredthe goods, without production of the bill of lading, to a person who wasnot entitled to receive them. They are therefore liable in conversionunless likewise so protected. ”
“ For the contract, as it seems to their Lordships, has, as one ofits main objects, the proper delivery of the goods by the shippingcompany, “ unto order or his or their assigns ”, against production of thebill of lading. It would defeat this object entirely if the shippingcompany was at liberty, at its own will and pleasure, to deliver thegoods to somebody else, to someone not entitled at all, without beingliable for the consequences. The clause must therefore be limited andmodified to the extent necessary to enable effect to be given to themain object and intent of the contract.”
In the final paragraph of his judgment, Lord Denning Tefers to the pos-sibility that a Shipping Company might be excused for a failure of deliveryon the ground of the negligence or inadvertence of a servant or agent;let me assume also that fraud on the part of a servant or agent might be aground of excuse. In the present case, however, there was no evidence toestablish negligence or inadvertence or fraud on the part of Abeynaike,who issued the disposal order. The position taken up in the Defendant’sanswer was that no delivery orders relating to these goods were issuedby it, and the Defendant’s manager in his evidence denied both thepossibility that Abeynaike could have signed the disposal order in thiscase and the authenticity of the seal which the disposal order bears.The learned trial Judge had ample grounds for preferring the version ofthe Plaintiff's witness that on this occasion, as on others as well, Abeynaikedid sign the disposal order presented by the witness and affix the seal ofFreudenberg and Co. openly and in the ordinary course of business. Ifit was the Defendant’s case that Abeynaike hod acted negligently orinadvertently or fraudulently; there should have been both an issue on thepoint and some evidence to support it.
For the reasons I have stated, I would hold that there was a funda-mental breach of the Defendant’s contractual obligation to deliver theshipment of jaggery to the Plaintiff, which obligation the Defendantwas unable to perform because its local agents had already authorised
366 H. N. G. FERNANDO, C.J.—Sri Lanka Shipping Company Ltd. v.
The Indian Bank Ltd.
r—<
delivery to be made to some other person. That being so, the questionwhether any liability based on delict arose in this case does not need tobe decided.
The Defendant relied also on the fact that this action was filed onlyin May 1961, about 18 months after the arrival of the ship at the Port ofColombo. This objection was based on the following provision :—Article3, Rule 6, of the Hague Rules :—
“ In any event the carrier and the ship shall be discharged fromall liability in respect of loss or damage unless suit is brought withinone year after delivery of the goods or the date when the goods shouldhave been delivered.”
In commenting on the words “ loss or damage ” in the Hague Rules,Carver (“ Carriage of Goods by Sea ” 10th Ed., page 162) states thatthe meaning of these words is ambiguous, and may even refer to loss ordamage to a party to a contract. If the words do have this widemeaning, then the present action must fail on account of delay in itsinstitution.
I note, however, that the words “ loss or damage ” occur for the firsttime in the first paragraph of Rule 6 of Article 3, in a context whichrefers only to goods actually delivered to the person entitled to deliverythereof. That being so, the same words as they occur in the thirdparagraph of Rule 6 prima facie have the same limited meaning. Theopinion is however expressed in Carver that they have a wider meaning,because the wider meaning was adopted in the case of Renton v. PalmyraTrading Corporation1. That case however involved the construction,not of Rule 6, but of Rule 8. Rule 8 provides as follows :—
" Any clause, covenant, or agreement in a contract of carriagerelieving the carrier or the ship from liability for loss or damage to,or in connection with, goods arising from negligence, fault, or failurein the duties and obligations provided in this article or lesseningsuch liability otherwise than as provided in this convention, shall benull and void and of no effect.”
There seems to be in this Rule a deliberate addition of words for thepurpose of including not merely a loss or damage TO goods, but alsoto loss or damage IN CONNECTION WITH goods. Emphasis is laid,in the judgments of Lord Kilmuir and Lord Morton, on the use of thesewords in Rule 8.
From the fact that Rule 8 has been held to apply in a case of loss ordamage to a party arising from a dischargo at the wrong port, it doesnot therefore follow that the provisions of Rule 6 would equally apply
» (1957) A. O. 149. O
H. N. G. FERNANDO, CJ.—Sri Lanka Shipping Company Ltd. v. 367
The Indian Bank Ltd.
in the case of such an incorrect discharge. So to hold would be toignore the absence in Rule 6 of reference to loss or damage “ in connectionwith goods
I should notioe here that—
Rule 5 of Article 4 uses the same additional words “ or in connectionwith ”, which are used in Rule 8 of Article 3, but are not used inRule 6 of the latter Article ;
in Rule 1 of Article 4 the words “ loss or damage ” cannotreasonably cover anything but physical loS9 or damage, for thisRule refers only to loss or damage arising or resulting fromunseaworthiness.
Even if, in view of the decision in Renton's case, the discharge of goodsat a wrong port is a ‘ loss ' to which the provisions of Rule 6 of Article 3are applicable, it does not in my opinion follow that the Rule will apply inthe circumstances of the present case. There is in fact no provisionin the Hague Rules or in a bill of lading which contemplates the variationin the nature of the fundamental obligation of a carrier which resultsfrom the custom of the port $uch as was recognized in the Rambler CycleCo. case, namely, that the issue of authority by a ship’s agent for thedisposal of goods after their discharge from a ship is involved in thecarrier’s duty to deliver the goods “ to order While the Hague Rulestherefore are applicable to a case of the wrongful discharge from a ship,one would not expect those Rules to contemplate, and to be applicablein a situation in which some act has to be done by the carrier in pursuanceof his contractual obligation at a stage after goods have been dulydischarged ait the port of destination. In other words, the true positionmay be that the Rules do not apply in relation to any transaction performedor to be performed after the completion of a carriage by a due discharge.On these grounds also, Renton's case is probably distinguishable.
For these reasons, I would hold that the time limitation provided inRule 6 of Article 3 does not apply in a case like the present one, whichinvolved only a mis-delivery, and not actual physical loss of goods.
Another defence which the Defendant raised was formulated, in IssueNo. 16 framed at the trial:—
“ Did the bill of lading take effect as a contract only between theowner of the ship (? and the shipper ) and not with the defendantas his agent 1 ”‘
This defence was based on the last clause in the bill of lading which Jsin the following terms :—
“If the ship is not owned or chartered by demise to the company orLine by whom this bill of lading is issued (as may be the case not-withstanding anything that appears to the contrary) this bill of lading
• 368 H. N. G. FERNANDO, C.J.—Sri Lanka Shipping Company Lid. v.
The Indian Bank Ltd.
shall take effect only as a contract by the owner or demise Charterer asthe case may be as principal made through the Agency of the saidcompany or Line who act as agents only and shall be under no personalliability whatsoever in respect thereof.”
In the present case, the Bill of Lading appears to be a document issuedby the Defendant Co.; there is, at the head of the document, the nameof the company and the names of agents of the Company at differentPorts. At the foot of the Bill, before the space for the signature thereof,are the following words in print:—
“ In witness whereof the Master, or the duly authorised agent ofthe said vessel hath affirmed to one bill of lading….”
Then, immediately above the space for the signature, is a line in printwhich includes the words “ For Master ” and “ Carriers ” with somethingin between which is indecipherable, because over this line there hasbeen imposed in thick type the words “ Volkart Brothers Agency ”,i.e., the name of the Defendant’s agent in Tuticorin. Here the intentionappears to be to give prominence to the name of the agent. It wasadmitted in evidence that the signature on the Bill is not that of theMaster, but that of an Agent of Volkart Brothers Agency.
Statements in Carver (Chapter 6) refer to cases in which bills of ladingare given by a ship-owner to a charterer, and other cases , in which aMaster signs bills of lading when so required by the charterer. In suchcases the contract of carriage is ordinarily with the owner. The presentcase is of neither such description. What we have here is a bill of ladingappearing to be issued by the Defendant, and signed, not by the Master,but by the Defendant’s agent at Tuticorin. Hence I entirely agreewith the learned District Judge that the situation is covered by thefollowing statement in Carver (at p. 286):—
“ When the charterer does not ship the cargo himself, but procuresa cargo to satisfy the charterparty from other merchants, questionsarise as to who is responsible to those shippers for the performanceof the contracts of carriage made with them, and who may enforcethose contracts against them.
The question is really one of fact depending on the documents andcircumstances of each case. If the charterer has himself, or by hisagents, agreed with the shippers on his own behalf, he is answerablefor the carriage of the goods accordingly. So with the shipowner,if he made them. But uncertainty arises when the contract hasbeen made with the master, for he may possibly be regarded as agenteither for owner or charterer.”
The uncertainty mentioned in the last paragraph of this statementdoes not arise in the present case, which is not one where the Masterhas signed the bill of lading. I therefore agree with the answer in the
Atukorale v. Atukorale
369
negative which the learned Judge has given to issue No. 16, and holdthat the Defendant cannot rely on the last clause in the conditions ofthe Bill to disclaim liability for the mis-delivery in this case.
For these reasons, I would affirm the judgment and decree, and dismissthis appeal with costs.
Samerawickrame , J.—I agree.
Appeal dismissed.