The High Court of Hong Kong issued a Judgment on 3/2/2012 concerning which currency (US$ or Euro) should be the proper one for the cargo owners in a shipment to claim against the forwarder for compensation in a cargo damage case. [HCAJ 152/2010]
INTRODUCTION
By an interlocutory judgment dated 13/10/2011, the cargo owners obtained judgment with damages to be assessed and costs against the forwarder. They now sought final judgment for damages following assessment by the court against the forwarder.
background
A contract of carriage under an Express Cargo Bill dated 11/10/2009 was entered into between the cargo owners and the forwarder pursuant to which the forwarder agreed to deliver a cargo of 775 cartons containing 4,650 cans of a specialty medical food for treatment of children with epilepsy to Baltimore, USA. The cargo supplied from a warehouse in Germany was consolidated with other unrelated goods in a container for shipment. The container was loaded on board the “APL Malaysia” at Bremerhaven, Germany. The Express Cargo Bill was issued clean, acknowledging that the cargo had been received in good order and condition for shipment. The container was discharged on 20/10/2009 at Port Newark, New Jersey, USA. The cargo was devanned on 22/10/2009. The unloading report did not indicate any damage to the cargo that was later transported to another warehouse in Baltimore, MD. It was first discovered with wet damage prior to delivery by the truck driver on 30/10/2009. The Release document signed by the driver on the same day noted “Mildew on ctns. Ctns wet and crushed. Damaged”. The cargo owners contended that the cargo was damaged whilst in the custody and care of the forwarder.
The CARGO OWNERs’ claims
The cargo owners sought compensation for loss suffered in respect of 529 cartons or 3,174 cans of baby food in the amount of US$44,410.06 as converted from Euro, the currency of the consignment and the cost of the survey.
The forwarder accepted liability for the total loss of 437 damaged cartons. Liability for the remaining 92 cartons was refuted. The forwarder submitted that the cargo owners had failed to prove that these 92 cartons were either damaged, or if they were, that the damage was caused by the act or neglect of the forwarder. The survey fees were unchallenged.
The cargo owners had requested that the judgment for the damages to be assessed be entered in US dollars. The forwarder contended that damages should be awarded in Euro as the invoice was so denominated.
Then there was the dispute on the appropriate scale of costs with the cargo owners urging costs to be awarded on the High Court scale and the forwarder submitting that District Court costs should be ordered. Ancillary thereto, was the further dispute as to the time costs and indemnity costs sought by the cargo owners.
The extent of damage
The survey report described the consignment as medical food contained in cartons made of corrugated cardboard paper. Each carton had 6 cans that were basically cardboard tubes with foil lining and tin tops and bottoms. The cartons were stacked on wooden pallets and shrink wrapped. The pallets bore a sticker marked “Quarantine”. At the time of inspection, the damaged product had been hand sorted and placed in quarantine as required. The damage according to the surveyor was caused by exposure to fresh water or moisture during the transit from New Jersey to Baltimore prior to delivery to the consignee. More particularly, when the cargo was transported from the New Jersey warehouse, rain was recorded on October 24 and 27 both in NJ and MD. The report revealed that the cartons had dried, but showed evidence of moisture exposure and wrinkling in varying degrees. The cartons had evidence of minor exposure where they had minor water stain or wrinkling to heavy exposure where they were heavily stained and partially collapsed. Black mildew was evident on the cartons. In all, a total of 437 cartons were segregated as wet for which the forwarder had accepted liability.
The shipment consisted of 775 cartons. After hand sorting and removal of the 437 damaged cartons, the balance of the consignment of 338 cartons were accepted by the consignee. These cartons were on the interior stacking and lower in the pallet. They had not been exposed to moisture. The 338 cartons considered good or undamaged were dispatched to the customer. A week thereafter, a few customers complained of the cans being rust stained or exhibiting rust development. A further inspection was conducted (the 2nd survey on16/12/2009, some 26 days after the 1st survey on 20/11/2009) and new damage was uncovered. Of these 338 cartons, 65 were segregated as “possible damage/reject although there was no sign of any wetting on exterior or interior. Since customers had already complained of cans showing rust development on cans which were originally considered good, they decided not to take any chance of shipping those 65 cases as good but considered them as reject”. The 65 cartons were said to be “apparently good but possibly reject by consignee”. Sample cans from this lot were inspected. They exhibited no sign of wetting inside or out or of any rust or rust development except deep print marks of can bottom rims on cardboard boxes. 23 cartons of the same lot of 338 were “segregated as damaged. Although exterior and interior of cardboard boxes indicated dry and without any sign of wetting, individual cans exhibited very minor rust development on can rims or bleeding of minor rust spots through labels”.
The forwarder submitted that absent wetting on the cardboard cartons, it was inherently unlikely that any minor rusting was caused by rainwater as alleged. Silver Nitrate test indicated that the moisture exposure could have been from rain or condensation. It was contended that condensation damage was an equally plausible and probable scenario for which the forwarder would not be liable. It was further submitted that if condensation was a likely cause, there was no evidence that it had occurred when the cartons were in the forwarder’s custody through any neglect or omission on its part. The Court agreed.
The cargo owners bore the burden of proving their damages. This they had done only in respect of the 437 cartons for which liability had been conceded. Accordingly the Court should assess damages limited to this number of cartons.
The denomination of the award
The goods were invoiced in Euro. The damaged 437 cartons each containing 6 cans costing 9.3874 Euros per can had a value of 24,613.76 Euros. That without more represented the damages recoverable by the cargo owners. However the cargo owners had sought an award denominated in US currency. The forwarder disagreed, arguing that a Euro award was appropriate.
The proper test to determine this issue was to be found in The Folias [1979] AC 685. Damages for breach of contract in respect of sums expended in foreign currency should be calculated in the words of Lord Wilberforce at 701B-C:
in the currency in which the loss was felt by the plaintiff or ‘which most truly expresses his loss.’ In ascertaining which this currency is, the court must ask what is the currency, payment in which will as nearly as possible compensate the plaintiff in accordance with the principle of restitution, and whether the parties must be taken reasonably to have had this in contemplation.
The cargo owners submitted that although the invoice was expressed in Euro, the consignee was located in the US where the goods were destined to be sold in US dollars and the cargo underwriters had settled the claim in US dollars. US dollars would have to be sold for Euros by the assured/ buyer to settle the invoice. Accordingly, the loss would have been felt in that currency.
The forwarder countered that the consignee Nutricia North America had not been described as the Plaintiffs on the amended writ. Rather the Plaintiffs were said to be “THE OWNERS OF AND/OR OTHER PERSONS ENTITLED TO SUE IN RESPECT OF THE CARGO LATELY LADEN ON BOARD THE SHIP…” Nothing was known of the corporate identity of the Plaintiffs and there was no evidence of their usual operating currency. The Plaintiffs’ addresses on the amended writ are in the USA, Netherlands and Germany, the latter two being in the Euro zone.
As the evidence stood, a cogent case for an award in US dollars had not been substantiated. The Court was not persuaded on balance that the loss suffered by the cargo owners would necessarily have been felt in that currency. The Court therefore awarded damages of 24,613.76 Euros to the cargo owners for the damaged goods, the currency of the invoice with interest at Euro prime rate plus 1% from 30/10/2009 to the date of the Judgment and thereafter at judgment rate until full payment. To that must also be added the survey expenses of US$2,260.40 that had not been challenged. This head of claim should also be converted into Euros and shall carry the same Euro rate of interest from 2/3/2010 (the date of the survey report) to the date of the Judgment and thereafter at judgment rate until full payment.
costs
There were two distinct issues in contention in this regard. Firstly, the cargo owners had sought indemnity costs and secondly, they had pursued costs on the High Court scale, it being said that this action was on the Admiralty List. The forwarder contended otherwise on both matters.
As to indemnity costs, the cargo owners had relied on four matters they say cumulatively would entitle them to a more generous level of costs. They referred to abortive negotiations at settlement. Attempts at settlement always encouraged by the courts particularly in the post CJR culture often produce no dividend. Outright refusal to even attempt to do so with no good reason, however, would attract criticism that may be reflected in costs. In the Court’s view, there was no merit on this point. The second point referred to the forwarder ignoring the proceedings and then belatedly seeking to set aside the judgment in default only to abandon that attempt. The forwarder submitted that such conduct was hardly vexatious, scandalous, malicious, oppressive or for an ulterior motive. The Court concurred. Thirdly, the cargo owners described the forwarder’s conduct throughout as “come and get us approach” and that was vexatious to them. The Court was of the view that the forwarder was entitled to put the cargo owners to strict proof and that was what took place. There was no substance in this complaint. The last criticism hardly warranted any consideration, it being a reference to the many writs allegedly issued against the forwarder. Even if there was evidence to support this averment, the Court held that it was irrelevant to these proceedings.
The cargo owners cited Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd [1997 HKLRD 1327, a case where the plaintiff was entirely oppressive and vexatious in the conduct of the suit. There were no such features in the case in question.
The case for indemnity costs failed.
As for the scale of costs, the cargo owners argued that the suit being an Admiralty claim fell within the exclusive jurisdiction of the High Court. Additionally, as interlocutory judgment had been granted with costs, it must be inferred that costs should be on the High Court scale.
No such inference could be drawn as was evident from Lai Ki V B+B Construction Co Ltd & Ors [2003] 3 HKC 322 and the more recent decision of the Court of Appeal in Ng Shing Yan Vincent v Poon Kin Pong (CACV 170/2009). Costs are always a matter of discretion. In the instant case, even on full liability which the cargo owners failed to establish, the claim would have fallen well within the District Court jurisdiction of HKD 1 million. There was simply no reasonable prospect of achieving an award in excess of the District Court limit. Section 12A of the High Court Ordinance (Cap. 4) does not provide that the Court of First Instance has exclusive jurisdiction in Admiralty matters, or more particularly to hear and determine claims for loss of or damage to goods carried on ships. The District Court has regularly tried disputes involving loss or damage to goods in similar situations: see for instance Forsa Multimedia Ltd v C&C Logistics (HK) Ltd DCCJ 3467/2009, Red Chamber Co v Lau Siu Man DCCJ 2790/2009, Kind Respect Ltd v Apex Logistics Ltd DCCJ 502/2004. The fact that a ship or bills of lading featured made little difference to jurisdiction provided that the claims did not exceed the District Court’s limit. The Court ordered that the cargo owners’ costs of the suit and of the assessment should be party and party against the forwarder on the District Court scale.
The forwarder justifiably complained to having been brought before the High Court at additional expense when the matter was entirely suitable to be heard below. It sought costs on the issue limited to jurisdiction. That being a distinct dispute, the Court saw no reason not to grant costs to the forwarder who had succeeded in demonstrating that the High Court scale was inappropriate and was patently so when the writ was issued. It should have costs on the High Court scale with certificate for counsel.
Please feel free to contact us if you have any questions or you would like to have a copy of the Judgment.
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The Hong Kong High Court issued a Decision on 22 January 2021 dealing with an appeal against a Small Claims Tribunal’s award concerning a dispute over a container terminal’s storage charges. [HCSA 44/2020] [2021 HKCFI 200]
The High Court of Hong Kong issued a Decision on 23 May 2018 allowing a shipowner to be represented by 2 different firms of solicitors (one appointed by its hull underwriters and the other appointed by its P&I Club). [HCAJ84/2017] [2018HKCFI1136]
We recently have received a lot of uncollected cargo claim cases from our forwarder clients, which have kept our 6 claim handlers very busy. We would like to take this opportunity to talk about this troublesome problem of uncollected cargoes. Actually, the forwarders have been facing this real headache in at least these two decades.
The High Court of Hong Kong issued a Decision on 31/8/2018 concerning a feeder company’s claim against a shipping company’s lawyer for wasted costs. [HCA1919/2016] [2018HKCFI1879]
We have received some enquiries from our forwarder clients about the FCR e.g. what is FCR? How many types of FCR are there? What are the uses of FCR? We would like to discuss these in this issue.
This continues the Q&A in our off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Participants were keen to know more about seaway bills, how war plays in insurance? How modes of transport differ mis-delivery claims handling? What is insurers’ attitude towards transloading claims? And finally, why mis-delivery and uncollected cargo claims deserve special attention. SMIC deals with similar questions daily. Each case varies in its cause, and therefore healing recipe differs. But if you are conversant with fundamentals. They could be simple.
More and more junior staff of the banks insist all the Bills of Lading to be signed and issued with the above remark “As agent for the Carrier”. This is of course right if the concerned Carrier does not have its own office in the place of issuing the Bill of Lading and therefore instruct its agent there to issue the Carrier’s Bill of Lading.
The Hong Kong Court of Appeal issued a Judgment on 29/1/2016 dealing with a case of one or two days’ delay in appeal in relation to a barge sinking accident. [HCMP 3172/2015]
The Hong Kong Court of Appeal issued a Judgment on 20 September 2019 declining to give leave of appeal to Changhong Group in relation to the High Court Decision dated 29 January 2019 (reported in our Chans advice/221). [CAMP197/2019] [2019HKCA1061]
The Hong Kong High Court issued a Judgment on 23/12/2013 dealing with an application for security for costs in relation to a ship sinking case. [HCAJ 213/2009]
The Hong Kong High Court issued a Judgment on 9/4/2018 dealing with a cargo total loss case in which a NVOC in Malta was wrongly sued (because it had the same name as that of the correct NVOC in BVI). [HCAJ 65/2016], [2018 HKCFI 699]
The Hong Kong High Court issued a Judgment on 11 January 2019 dealing with a dispute of US$335,858.31 between a bunker supplier and a ship agent. [HCA119/2015] [2019HKCFI57]
The Hong Kong High Court issued a Decision on 29 January 2019 dismissing Changhong Group’s application for stay of the legal proceedings against it brought by the consignee and the insurer of the cargo on board the Sanchi. [HCAJ6/2018, 2019HKCFI263]
The Hong Kong High Court issued a decision on 11/9/2013 concerning a shipowner’s application to extend the validity of a writ of summons against a Taiwan hull and machinery insurer. [HCAJ 95/2012]
Without even knowing, we have published including this one 200 issues of the Chans Advice. As this is a monthly bulletin, 100 issues took more than 8 years and 200 issues took 17 years to run.
The Montreal Convention is an international treaty agreed by 140 states in respect of governing carriers’ liability for injury or death of passengers, damage to or loss of baggage and cargo and losses caused by delays. Hong Kong has adopted it through the Carriage by Air Ordinance (Cap 500).
The Hong Kong High Court issued a judgment on 30/4/2015 dealing with the legal principles in respect of the order of priorities in distributing the sale proceeds of an arrested ship. [HCAJ 129/2013]
The Hong Kong High Court on 18/11/2011 issued a Judgment concerning a quite confusing situation that three different laws (the USA, the PRC, and Hong Kong) might apply to the one shipment. [HCAJ 198/2009]
The High Court of Hong Kong issued a Judgment on 22/5/2017 holding that the District Court has jurisdiction to determine bill of lading and bailment cases. [HCAJ 150/2014]
The Hong Kong High Court issued a Judgment on 13 August 2021 holding a forwarder liable to pay nominal damages of HKD1,000 to a shipper in a cargo misdelivery claim case of USD1,299,189.87. [HCA 937/2016] [2021 HKCFI 2310]
The High Court of Hong Kong issued a Decision on 21/9/2017 dealing with the principles in respect of the real risk of dissipation of assets in a case of Mareva Injunction involving a shipowner and a charterer. [HCMP 1010/2017]
Remember Chans advice/142 dated 31/10/2012 that the High Court of Hong Kong held the forwarder liable for cargo misdelivery without production of original bills of lading? The High Court of Hong Kong issued another Judgment on 4/12/2012 dealing with the interest and costs. [HCCL 20/2011 & HCCL 21/2011]
The Hong Kong High Court issued a Decision on 30 September 2021 holding a shipowner’s Defences as an abuse of process in a case of unpaid crew wages. [HCAJ 76/2020] [2021 HKCFI 2961] [HCAJ 91/2020]
The Hong Kong Court of Appeal issued a Judgment on 12/2/2018 to deal with the cargo owners’ seeking leave to appeal against the High Court’s Judgment reported in our Chans advice/209 last month. [CAMP 38/2017] [2018 HKCA77]
The District Court of Hong Kong issued a Judgment on 21/4/2011 dismissing a forwarder’s cargo indemnity claim of US$46,201.81 against a trucking company. [DCCJ 2092/2009]
The VGM laws have come into operation in Hong Kong since 1/7/2016. They are mainly contained in Section 3 and Section 3A of the Merchant Shipping (Safety) (Carriage of Cargoes and Oil Fuel) Regulation (Chapter 369AV) as follows:
In our newsletter last month, we talked about some essential terms in house Air Waybills. In this issue, as the continuation of the loss prevention exercise for freight forwarders, we would like to discuss some essential terms in house Bills of Lading.
What is the difference between a straight bill of lading and an order bill of lading? This can be illustrated in the Wuhan Maritime Court’s Judgment dated 17 September 2019 concerning a cargo misdelivery claim of US$89,838.
Remember our Chans advice/163 about the English High Court’s Judgment holding the Hague Visby Rules instead of the Hague Rules to apply to the cargo damage claim case in excess of US$3.6 million? The English Court of Appeal issued a Judgment on 24/2/2016 upholding the High Court’s conclusion but with different reasons. [Case No: A3/2014/1285, 2016 EWCA Civ 101, 2016 WL 00692394]
The Hong Kong High Court issued a Decision on 22 Feb 2021 holding that the wreck removal claims of a ship sunk were not subject to the Convention on Limitation of Liability for Maritime Claims 1976. [HCAJ 98/2019] [2021 HKCFI 396]
According to the Hague-Visby Rules, the carrier shall be discharged of all liability in respect of the cargoes unless suit is brought within one year of their delivery or the date when they should have been delivered. The English High Court issued a Judgment on 22nd July 2025 explaining the meaning of “suit”. [2025 EWHC 1878 (Comm)]
Against the post-Covid tide, we ran an off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Attendance could not be compared with any webinars but the number of enthusiastic questions in the Q&A session reflected the demand for transport liability issue solutions. For the sake of recapitulations and sharing the Q&A among the Chan Advice readership, we like to report the Q&A in two issues. We welcome any other questions you may have on the following.
We refer to our Chans advice/251 last month reporting the Hong Kong High Court’s decision to sentence Mr Ma (Hyundai Hong Kong’s former deputy general manager) to 15 years’ imprisonment. The High Court issued another Judgment on 27 April 2022 holding Mr Ma liable to compensate HK$387,655,303.70 to Hyundai Hong Kong. [HCA 619/2016] [2022 HKCFI 1153]
Remember our Chans advice/165 (reporting the Hong Kong Court of Appeal holding the Hong Kong forwarder liable to pay US$852,339 plus costs and interest to the Indian bank in the air cargo misdelivery case)? On 19/5/2016, the Court of Final Appeal dismissed the Hong Kong forwarder’s application for seeking leave to appeal. [FAMV Nos 45 & 52 of 2015]
Remember our Chans advice/138 regarding the Hong Kong High Court’s Judgment holding the He Da 98’s owners fully liable in the collision that happened off Shanghai? The Hong Kong High Court issued its Decision on 18/1/2013 dealing with the damages to be paid to the Pontodamon’s owners. [HCAJ 200/2007]
The Court of Appeal of Hong Kong issued a judgment on 28 March 2019 dealing with a matter concerning the sale pendente lite of an oil tanker Brightoil Glory. [CAMP49/2019][2019HKCA395]
The Hong Kong Court of Appeal issued a Judgment on 17/7/2014 holding a Hong Kong forwarder liable to pay US$852,339 plus costs and interest (as damages for conversion) to an Indian bank in an air cargo misdelivery case. [CACV 282/2012]
The Hong Kong High Court issued a Decision on 15 March 2021 converting a domestic Mareva injunction into a worldwide Mareva injunction in a shipowner’s freight and demurrage claim against a charterer. [HCMP 1190/2020] [2021 HKCFI 680]
The High Court of Hong Kong issued a Judgment on 4/5/2012 explaining some legal principles as to when shipowners should fear the arrest of their ships. [HCAJ 141/2010]
The Hong Kong High Court issued a Judgment on 22/8/2016 dealing with a case that a forwarder wanted to strike out a cargo misdelivery claim on the ground that the claim disclosed no reasonable cause of action. [HCCL 5/2015]
The Hong Kong High Court issued a Decision on 19 March 2018 dealing with some legal principles in relation to granting relief against unless orders in a ship collision case. [HCAJ 84/2017] [2018 HKCFI 609]
The Hong Kong High Court issued a Judgment on 29/4/2013 relating to a discovery order ancillary to and in support of a Mareva injunction. [HCA 2124/2011]
The High Court of Hong Kong issued a Judgment on 26/8/2011 to determine which ship to blame in a collision case that occurred at Shanghai. [HCAJ 200/2007]
To continue our recent series of loss prevention articles, we would like to discuss in this issue the major provisions of the PRC Maritime Code as far as the international carriage of goods by sea is concerned.
The Hong Kong Court of Final Appeal (“the CFA”) issued a Judgment on 10/9/2014 dismissing a cargo owner’s (“the Assured”) cargo insurance claim of US$1,555,209.00 against an insurance company (“the Insurer”) on the ground that the Assured had breached an insurance warranty relating to the carrying vessel’s deadweight capacity. [FACV No. 18 of 2013]
The Hong Kong Court of Appeal issued a Judgment on 18/12/2014 in connection with a cargo misdelivery claim of US$27,835,000 involving also anti-suit injunction and worldwide freezing order issued by the English Court. [CACV 243/2014 & HCMP 1449/2014]
The Hong Kong District Court issued a Judgment on 26 April 2022 dealing with a case concerned with transfer of business and lifting the corporate veil, and held a forwarder and its shareholder and director jointly and severally liable for a debt of HK$975,733.71. [DCCJ 2104/2019] [2022 HKDC 289]
The Hong Kong Court of Appeal issued a Judgment on 20 February 2019 dismissing Changhong Group’s appeal against the High Court’s Decision of 15 November 2018 (reported in Chans advice/215) because Changhong Group had not obtained leave to appeal from the Hong Kong High Court. [CACV576/2018] [2019HKCA246]
The United States District Court (Southern District of New York) issued an order on 29 November 2021 to deny a shipping company’s motion to rely on the Singapore jurisdiction clause in its bill of lading. [1:19-cv-5731-GHW-RWL]
The Hong Kong High Court issued a Judgment on 25/8/2017 to determine whether the Hong Kong Court or the Yangon Court was the natural and appropriate forum in an in rem legal proceedings in relation to a cargo damage claim of USD143,852.02. [HCAJ 101/2015]
The English Court of Appeal issued a Judgment on 13/12/2017 dealing with a cargo damage claim of EUR2,654,238 and a charter hire claim of USD1,012,740 in connection with a NYPE charterparty. [2017 EWCA Civ 2107] [2017 WL 06343564] [Case No. A3/2016/4770]
In the issue of our Chans advice last month, we talked about the major provisions of the Montreal Convention (which is for the international carriage of goods by air). In this issue, we would like to discuss the major terms of an equally important international convention for the international carriage of goods by sea, viz. the Hague Visby Rules.
The amendment to the International Convention for the Safety of Life at Sea (SOLAS) 1974 Chapter VI, Regulation 2 in respect of the verified gross mass of a container carrying cargo (laden container) is for entry into force globally on 1 July 2016.
The Hong Kong District Court issued a Judgment on 28/4/2014 dismissing a seller’s cargo misdelivery claim of US$122,302.80 against a freight forwarder and holding the seller liable to pay the outstanding freight charges of US$28,855 to the forwarder. [DCCJ 344/2010]
The Hong Kong High Court issued a Decision on 2 October 2024 dismissing a shipping company’s application to strike out a forwarder’s third party indemnity claim in a cargo (frozen beef) damage case. [HCAJ 9/2023, HCAJ 22/2023, 2024 HKCFI 2708]
The Hong Kong Court of Appeal issued a Judgment on 9/7/2015 in relation to the High Court Judgment dated 21/7/2014 (reported in our Chans advice/167 dated 28/11/2014). [HCMP 2315/2014]
More than 10 years ago, we broke new grounds unheard of before among insurance brokers by introducing genuine claim support (by truly employing a team of professional transport claim handlers) independent of that from the insurers. Since then, the knowledge advantage of the insurer over that of the transport operator insured has been evened. Those who buy transport liability insurance are truly better protected with professionals standing at their side who really know the freight industry and are conversant in transport insurance and claims handling.
