The Hong Kong High Court issued a judgment on 12/4/2016 to dismiss a cargo owner’s action in respect of breaking a barge owner’s tonnage limitation. [HCAJ 178/2014]
Introduction
On 11/3/2015, the Court, upon application by the barge owner (Floata Consolidation Limited), granted a decree of limitation (“Decree”) under the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434 (“Ordinance”) in relation to an incident which took place on 23/3/2014 (“Incident”) when a barge “FLOATA 97” (“Barge”) was carrying out mid‑stream operations beside the vessel “Heung‑A Singapore” (“Vessel”) at the North Lamma Anchorage. The Incident resulted in inter alia damage to a number of containers of cargo.
There was an application by Mr Cheung Wai Yiu (“MrCheung”) by summons dated 18/5/2015 (“Summons”) for an Order setting aside the Decree. Mr Cheung claimed to be the owner of a cargo of automobile accessories stored in a container No. FCIU 9055093 (“Container”) leased by him. He said the Container fell into the sea and the cargo inside was lost.
The Law
Section 12 of the Ordinance provides:
“Subject to this Part, the provisions of the Convention on Limitation of Liability for Maritime Claims, 1976 set out in Schedule 2 [“1976 Convention”] …have the force of law in Hong Kong.”
The 1976 Convention as set out in Schedule 2 of the Ordinance provides:
“ ARTICLE 1 Persons entitled to limit liability
1. Shipowners and salvors, as hereinafter defined, may limit their liability in accordance with the rules of this Convention for claims set out in Article 2. ….
ARTICLE 2 Claims subject to limitation
1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability– (a) claims in respect of loss of life or personal injury or loss of or damage to property … occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom; ….
ARTICLE 4 Conduct barring limitation
A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”
In “Saint Jacques II” [2003] 1 Lloyd’s Rep 203, 207‑8, Gross J summarised the legal framework of the 1976 Convention in this way:
“The law on limitation under the Convention 16. For present purposes, the legal framework may be summarized as follows:
(1) For reasons of policy, the right of shipowners and certain others to limit their liability is long‑established in English Law and is now (as already remarked) contained in the Convention. Three features stand out when the Convention is compared with its predecessor Convention, the International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships (‘the 1957 Convention’); the Convention provides: (i) for a higher limit of liability; (ii) that the burden of proof now rests on the party seeking to ‘break’ the limit; (iii) that that burden is (intentionally) a very heavy burden, Mr. Justice Sheen’s observations in The Bowbelle, [1990] 1 W.L.R. 1330, that the Convention conferred on the shipowner an ‘almost indisputable right to limit’, were cited with approval in The MSC Rosa M, [2000] 2 Lloyd’s Rep. 399, esp. at paras 11 and following and in The Leerort, [2001] EWCA Civ. 1055; [2001] 2 Lloyd’s Rep. 291, especially at paras 9 and following. (2) A glance at art. 4 of the Convention suffices to indicate just how heavy is the burden resting on the party challenging the shipowner’s right to limit. As Mr. Justice David Steel expressed it in The ‘MSC Rosa M’ (sup.), at para 14; ‘… absent, as in the present case, any allegation of intent, the person challenging the right to limit must establish both reckless conduct and knowledge that the relevant loss would probably result.’ (3) The nature of these two requirements (recklessness and knowledge) and the relationship between them appear from two authorities on the Warsaw Convention (as amended) governing the carriage of goods and persons by air (‘the Warsaw Convention’). As to conduct being reckless, Lord Justice Eveleigh said this, in Goldman v. Thai Airways Ltd., [1983] 1 W.L.R. 1186, at p. 1194:
‘When conduct is stigmatized as reckless, it is because it engenders the risk of undesirable consequences. When a person acts recklessly, he acts in a manner which indicates a decision to run the risk or a mental attitude of indifference to its existence. That is the ordinary meaning of the word … One cannot therefore decide whether or not an act or omission is done recklessly without considering the nature of the risk involved …’
In Nugent v. Goss Aviation, [2002] 2 Lloyd’s Rep. 222, Lord Justice Auld, spoke (at p. 227) of recklessness as involving:
‘… an obvious risk of damage and failure to give any thought to the possibility of it or recognition of the risk and going on to take it …’
It is plain that ‘knowledge’ here means actual not constructive knowledge. Again, in Nugent, Lord Justice Auld, said (at p. 229):
‘… the additional ingredient is actual knowledge, in the sense of appreciation or awareness at the time of the conduct in question, that it will probably result in the type of damage caused. Nothing less will do.’
Plainly, the two requirements of recklessness and knowledge are separate and cumulative; a challenge to the right to limit will fail if (for instance) only recklessness but not knowledge is established…
…
(4) Valuable as are these authorities on the Warsaw Convention as to the meaning of “recklessly” and “knowledge” in the present context, matters do not end with them. The test under the Convention for defeating the right to limit is still higher than that found in the Warsaw Convention, in respect of both the act or omission in question and the relevant knowledge; so: (i) under the Convention, the act or omission in question must be the ‘personal’ act or omission of the party seeking to limit; by contrast, the exception to the right to limit contained in the Warsaw Convention applied to the act or omission of ‘the carrier his servants or agents’ (art. 25 thereof); (ii) under the Warsaw Convention, the relevant knowledge is that ‘damage would probably result’ (art. 25); under the Convention, the relevant knowledge under art. 4 is that ‘such loss’ would probably result.” (emphasis added)
In The Leerort [2001] 2 Lloyd’s Rep 291 at 294‑5, Lord Philips MR explained the “very heavy” burden on a claimant seeking to avail itself of Art 4 of the Convention as thus:
“10. At p. 535, col. 2; p. 1335 [of The Bowbelle [1990] 1 Lloyd’s Rep 532; [1990] 1 WLR 1330, Mr Justice Sheen] commented:
‘I return to consider the Convention of 1976, under which shipowners agreed to a higher limit of liability in exchange for an almost indisputable right to limit their liability. The effect of articles 2 and 4 is that the claims mentioned in art. 2 are subject to limitation of liability unless the person making the claim proves (and the burden of proof is now upon him) that the loss resulted from the personal act or omission of the shipowner committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result. This imposes upon the claimant a very heavy burden.’
11. It is worth pausing to consider just how heavy that burden is. The language of art. 4 of the Convention echoes, though not exactly, that of art. 25 of the Warsaw Convention as amended at The Hague, 1955, which addresses the right of limitation of liability in relation to carriage by air… …. 13. The limitation provisions in relation to merchant shipping provide even greater protection than those in relation to carriage by air. It is only the personal act or omission of a shipowner which defeats the right to limit. A shipowner is defined in art. 1 as the owner, charterer, manager or operator of a seagoing ship. Thus, to defeat the right to limit, it is necessary to identify the causative act or omission on the part of such a person that caused the loss. Furthermore, it is only conduct committed with intent to cause such loss, or recklessly with knowledge that such loss would probably result, that defeats the right to limit. It seems to me that this requires foresight of the very loss that actually occurs, not merely of the type of loss that occurs. That certainly appears to have been the conclusion of Mr. Justice Steel in The MSC Rosa M, [2002] 2 Lloyd’s Rep. 399 at p. 401…” (emphasis added)
Under RHC O 75 r 40, any person with a claim against the plaintiff in respect of the casualty may apply to set aside a limitation decree. The application must be supported by an affidavit showing he has “… sufficient prima facie grounds for the contention that the plaintiff is not entitled to the relief given him by the decree”.
In summary, in order to deprive the barge owner of the right to limit its liability under the 1976 Convention ie to “break the limit”, Mr Cheung had to establish (the burden being on him) sufficient prima facie grounds that the loss of the Container (i) resulted from the personal act or omission on the part of the barge owner; (ii) with intent to cause such loss or recklessly with actual knowledge that such loss would probably result.
Mr Cheung confirmed that he would only rely on recklessness.
According to the affirmations of Mr Ng Tai Sing Carven, vessel operations manager of the barge owner, what happened was this.
At 3:00am, the Barge arrived at the Anchorage and was anchored next to the Vessel. The Barge then began unloading containers from the Vessel. At or around 3:43am, some containers fell onto the Vessel while others fell into the sea.
The operation of the Barge was contracted out to Eastrend Development Limited (“Eastrend”) whose person in charge was Mr Sin Kwai Sam (“Mr Sin”). At the time of the Incident, there were three crew members on the Barge viz Mr Sin, Mr Khan Shoukit Abbas and Mr Tsoi Ming Wah.
Mr Sin was the derrick operator on the Barge. He had 25 years of experience in operating derricks. He held a Certificate of Safety Training Course for Works Supervisor for Shipboard Cargo Handling and a Certificate of Training for Shipboard Cargo Handling Basic Safety Training Course.
After the Incident, Mr Sin was prosecuted for an offence under sections 34(4) and 34(5) of Merchant Shipping (Local Vessels) (General) Regulation, Cap 548F (“Offence”) “as the cargo was not loaded, stowed and secured so as to prevent loss of the cargo overboard”. He pleaded guilty and was fined HK$2,500. This was the only criminal prosecution to date.
Mr Khan and Mr Tsoi were both experienced (10 years or more) barge hookers and held a Certificate of Training for Shipboard Cargo Handling Basic Safety Training Course.
In the course of the Incident, Mr Tsoi twisted his left foot when dodging the containers. A crew member on board the Vessel was fatally injured by the falling containers.
Sections 34 (4), (5) and (8) of Merchant Shipping (Local Vessels) (General) Regulation, Cap 548F, read:
“(4) Any cargo carried by a local vessel shall be so loaded, stowed and secured as to prevent loss of the cargo overboard. (5) If subsection (1) or (4) is contravened, the coxswain of the vessel commits an offence and is liable on conviction to a fine at level 3 and to imprisonment for 6 months. …. (8) In proceedings for an offence under subsection (5), (6) or (7), it is a defence for the defendant to show that he took all reasonable precautions and exercised all due diligence to avoid commission of the offence.”
It would therefore appear that a guilty plea to an offence under sections 34(4) and (5), at most, implies a defendant accepts he cannot avail himself of the defence under section 34(8). In other words, the defendant has not taken all reasonable precautions or exercised all due diligence – in legal parlance, he has been negligent.
In consequence of the death of a crew member on board the Vessel, the Marine Department launched an investigation and subsequently published a report dated 29/4/2015 (“Report”). The Report contains a succinct summary of what happened as well as the three factors which, in the view of the Marine Department, contributed to the Incident. It was set out in full as follows.
“6. Conclusion 6.1 At about 0130 on 23 March 2014, [the Barge], carried 67 containers of different sizes, was towed from the Stonecutters Island Public Cargo Working Area to the North West Lamma Anchorage for loading containers. 6.2 At about 0300, the derrick lighter was moored alongside the Vessel at the North West Lamma Anchorage. The port side of [the Barge] was secured to the starboard side of the Vessel. Cargo works was started shortly after [the Barge] was secured to the Vessel. 6.3 The cargo hold of [the Barge] had almost fully stowed with highly stacked containers at both the forward and aft leaving only the mid-section was vacated to receive containers. However, the unevenly distributed containers to one side caused [the Barge] to list to port. 6.4 At about 0345, a container in cargo hold bay no.15 of the Vessel was being lifted up by the derrick crane of [the Barge], [the Barge] then listed further to port resulting in the collapse of containers. Four containers fell onto the deck of the Vessel and ten containers fell into the sea. 6.5 At the material time, an able-bodied seaman was working on deck the starboard side of the Vessel, he was unfortunately hit and crushed to death by the falling containers. 6.6 The investigation into the accident revealed that the main contributing factors were:
i. The containers inside the cargo hold of [the Barge] were not evenly distributed to prevent unduly listing of [the Barge]; ii. The containers inside the cargo hold of [the Barge] were not properly stowed and secured; and iii. No risk assessment had been conducted prior to the commencement of cargo works.”
In order to “break the limit”, Mr Cheung had to establish by evidence sufficient prima facie grounds of the following:
the loss of the Container resulted from a personal act or omission of the barge owner which was reckless (“1st Requirement”);
actual knowledge of the barge owner that such loss would probably result (“2nd Requirement”).
It was the firm view of the Court that Mr Cheung failed to identify and establish on the evidence any causative personal act or omission of the barge owner, let alone that such act/omission was reckless. In other words, Mr Cheung failed to satisfy the 1st Requirement, even on a prima facie basis. That spelt the end of his application.
The “act or omission” that Mr Cheung primarily relied on was that of the crew on board the Barge, particularly that of Mr Sin. Mr Cheung variously referred to the unsatisfactory manner of loading and unloading of containers by crew members of the Barge, Mr Sin’s guilty plea to the Offence and so on. Mr Cheung relied on the conclusion in the Report that three factors had contributed to the Incident ie uneven distribution of containers in the cargo hold resulting in undue listing of the Barge, improper stowing, securing, lashing, stacking of containers and the absence of risk assessment prior to the commencement of cargo works. Mr Cheung identified Mr Sin as the person‑in‑charge of the Barge and submitted that Mr Sin’s acts had to be attributable to the barge owner.
The critical question was: could the crew members’ act or omission be regarded as the barge owner’s personal act or omission? In the view of the Court, the answer was no.
Where a ship is owned by a corporation, which is invariably the case in practice, the identification of the act or omission of the shipowner presents particular difficulty. This question frequently arose under sections 502 and 503 of the Merchant Shipping Act 1894 which excluded or limited the liability of shipowners for various kinds of loss or damage occurring without their “actual fault or privity”.
In The Lady Gwendolen [1965] P 294, the question arose as to whether a collision, caused principally by the fault of the master of the vessel traveling at excessive speed in very thick fog, occurred without the “actual fault or privy” of the company which owned the vessel. On the facts of that case, the Court of Appeal found certain failures on the part of the company’s management at board level which contributed to the collision, that the Company was therefore guilty of “actual fault” and upheld the first instance judge’s refusal to grant a decree of limitation of liability. Wilmer LJ was prepared to take it one step further. At 343G, his Lordship expressed the view that the head of the company’s traffic department with responsibility for running its ships, albeit not a director, could be regarded as someone whose action was the very action of the company itself, so far as concerns anything to do with the company’s ships. Hence, his “actual fault or privity” was attributable to the company for the purpose of defeating its attempt to limit its liability for the collision.
One thing is clear from The Lady Gwendolen – the fault of the master traveling at excessive speed, which should be obvious, was not regarded as the actual fault or privity of the company. At pp 342D – 343B, Wilmer LJ said:
“I think the true view is that where shipowners delegate the performance of a duty of the kind conveniently described as “non‑delegable” they are held constructively guilty of fault for its non‑performance. This means that so far as liability is concerned they cannot escape. But such fault falls short in my view of what is meant by “actual fault” within the meaning of section 503 of the Act of 1894. Constructive fault goes only to liability, and leaves untouched the question whether there is such actual fault on the part of the shipowners themselves as will defeat their right to limitation. This seems to me to accord with the view expressed by Buckley L.J. in Lennard’s Carrying Co. v. Asiatic Petroleum Co. Ltd., as follows: ‘The words ‘actual fault or privity’ in my judgment infer something personal to the owner, something blameworthy in him, as distinguished from constructive fault or privity such as the fault or privity of his servants or agents.’ It follows that, in my view, the question of actual fault or privity cannot be determined on the artificial basis contended for by the defendants. On the contrary, I think that it is necessary to examine in detail the facts of each particular case in order to see what in fact the shipowners did, or omitted to do, which could fairly be said to constitute actual fault on their part. Where, as here, the shipowners are a limited company, it is almost inevitable that difficult questions will arise. It is necessary to look closely at the organisation of the company in order to see of what individual it can fairly be said that his act or omission is that of the company itself.” (emphasis added)
The approach to the question of a ship‑owning company’s “actual fault or privity” in The Lady Gwendolen can be traced back to at least Lennard’s Carrying Co v Asiatic Petroleum Co Ltd [1915] AC 705. In that case, Viscount Haldane LC was of the opinion that the true construction of section 502 of the Merchant Shipping Act 1894 required the “fault or privity” of somebody who was not merely a servant or agent for whom the company is liable upon the footing “respondeat superior”, but somebody for whom the company is liable because his action was regarded as the very action of the company itself. It is therefore clear from Lennard’s Carrying Co v Asiatic Petroleum Co Ltd and the long line of cases which followed that the wrongs of servants or agents in themselves would not constitute the actual “fault or privity” of the shipowner.
The true principle upon which Lennard’s Carrying Co v Asiatic Petroleum Co Ltd was decided, in particular the celebrated test of “directing mind and will” of a company in Viscount Haldane LC’s speech, was subject to fresh explanation in Meridian Global Fund Management Asia Ltd v Securities Commission supra. At 509B‑E, Lord Hoffmann said:
“Against this background of general principle, their Lordships can return to Viscount Haldane. In the Lennard’s case the substantive provision for which an attribution rule had to be devised was s 502 of the Merchant Shipping Act 1894, which provided a shipowner with a defence to a claim for the loss of cargo put on board his ship if he could show that the casualty happened ‘without his actual fault or privity’. The cargo had been destroyed by a fire caused by the unseaworthy condition of the ship’s boilers. The language of s 502 excludes vicarious liability; it is clear that in the case of an individual owner, only his own fault or privity can defeat the statutory protection. How is this rule to be applied to a company? … Instead, guided by the language and purpose of the section, he looked for the person whose functions in the company, in relation to the cause of the casualty, were the same as those to be expected of the individual shipowner to whom the language primarily applied. Who in the company was responsible for monitoring the condition of the ship, receiving the reports of the master and ship’s agents, authorising repairs etc? This person was Mr Lennard, whom Viscount Haldane described as the ‘directing mind and will’ of the company. It was therefore his fault or privity which s 502 attributed to the company.” (emphasis added)
There is no doubt that under the 1976 Convention, a shipowner’s right to limit its liability will similarly not be defeated by the wrongs of its servants or agents.
First and foremost, Art 4 of the 1976 Convention uses the phrase “personal act or omission”. Moreover, by comparison with the 1957 Convention, the 1976 Convention is meant to impose a very heavy burden on the party seeking to “break the limit” in return for shipowners agreeing to a higher limit of liability than before – the 1976 Convention even reversed the previous burden of proof by resting it on the party seeking to break the limit: “Saint Jacques II” supra at [16] referred to in paragraph 7 above.
The “act or omission” that Mr Cheung relied upon in breaking the limit was that of the crew on board the Barge, particularly that of Mr Sin. Mr Cheung pointed to Mr Sin as the person in charge of the Barge whose act should be attributed to the barge owner.
Neither Mr Sin nor the two other crew members were servants or agents of the barge owner as such – they were employed by Eastrend which was an independent labor contractor. But even if they were, that would not improve Mr Cheung’s position. Their “act or omission” was not to be regarded as the “act or omission” of the barge owner for the purpose of Art 4 of the 1976 Convention. First, Mr Sin was not a director of the barge owner or part of its senior management. Second, while Mr Cheung argued that Mr Sin was the person in charge of the Barge, that, even if true, again would not improve Mr Cheung’s position. Every vessel has, or must have, someone in charge of it. Normally, it is the master but that does not make his act or omission that of the company which owns the vessel. The Lady Gwendolen is a good illustration of this point.
In the case in question, there was no evidence as to the organization structure of the barge owner. Nor was there evidence of the functions and responsibilities of any particular individual within the senior management of the barge owner whose act or omission may potentially be regarded as the act or omission of the barge owner.
Wilmer LJ said “Where, as here, the shipowners are a limited company… It is necessary to look closely at the organisation of the company in order to see of what individual it can fairly be said that his act or omission is that of the company itself.”
What was required of Mr Cheung, but was lacking in evidence, was the identification of (i) a person, either a director or, if not, at least someone sufficiently senior within the barge owern’s management, who could be regarded as the “directing mind and will” of the barge owner exercising its function as owner of the Barge; (ii) the act or omission which was said to be causative of the Incident and the loss of the Container; (iii) which act or omission was prima facie reckless.
Nowhere in Mr Cheung’s affirmations had he established who that person might be or what his causative act or omission was. Similarly, nowhere in the Report had the Marine Department identified failings on the part of an individual within the barge owner’s board of directors or senior management which were causative of the Incident. The three contributing factors set out in para 6.6 of the Report all pointed to the fault of the crew on board at the time of the Incident.
To conclude, for the above reasons, the Court was of the view that Mr Cheung had failed to meet the 1st Requirement even on a prima facie basis. The application had to fail.
Disposition
The Summons was dismissed.
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 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 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]
The Hong Kong High Court issued a decision on 31 May 2022 ordering a South Korean shipowner to provide a Hong Kong shipowner with security for costs in the amount of HK$600,000 in relation to a ship collision case that happened in Hong Kong during the super typhoon Hato in August 2017. [HCAJ 80-85/2019] [2022 HKCFI 1631]
The Hong Kong District Court issued a Decision on 8 May 2020 upholding a summary judgment ordering one forwarder to pay outstanding airfreight charges of HK$440,000 to another forwarder. [DCCJ1202/2018] [2020HKDC307]
The Hong Kong High Court issued a Decision on 4 March 2020 dismissing a shipowner’s application for a stay of proceedings in favour of arbitration in a case of cargo misdelivery without presentation of original bill of lading. [HCAJ 5/2019] [2020 HKCFI 375]
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]
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 Hong Kong High Court issued a Decision on 11 May 2021 staying a South Korea container terminal’s legal action in Hong Kong with respect to its allision claims of more than US$90,000,000 against the owners of a container ship. [HCAJ 31/2020] [2021 HKCFI 1283]
Following the Hong Kong Court of Appeal’s Judgment dated 11/3/2015 discharging the Mareva Injunctions and the receivership orders (mentioned in our monthly newsletter of Chans advice/171 two months ago), the Hong Kong High Court issued a Judgment on 12/5/2015 to determine the question of who should pay the remuneration to the receivers. [HCMP 1449/2014]
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]
In Chans advice/14 dated 28/2/2002, we discussed this topic 15 years ago. In its Judgment dated 16/10/2017, the District Court of New South Wales in Australia had to deal with, inter alia, a malpractice that a forwarder issued its own house B/Ls but signed off with as agent for China Ocean Shipping, Pacific International Lines, Mitsui O.S.K. Lines Limited or Orient Overseas Container Line without authority. [2017 NSWDC 279]
The English High Court issued a Judgment on 15/5/2015 maintaining an anti-suit injunction to restrain the Xiamen Maritime Court’s legal proceedings in breach of a London arbitration agreement. [Case No: 2015-515], [2015 WL 2238741], [2015 EWHC 1974 COMM]
In our Chans advice/169 last month, we mentioned the English Court’s Judgment dated 14/10/2014 holding CSAV’s bill of lading’s English jurisdiction clause to be an exclusive jurisdiction clause. In this issue, let’s look at that English High Court Judgment [2013 Folio No 1248, 2014 EWHC 3632 Comm, 2014 WL 5113447] issued by Justice Cooke in detail.
We reported in our Chans advice/252 that the Hong Kong High Court held Hyundai Hong Kong’s ex-Deputy General Manager (Mr Ma) liable to compensate HK$387,655,303.70 to Hyundai Hong Kong in the case of his theft of his employer’s money. On 23 December 2022, the Hong Kong High Court issued a decision ordering a sum of HK$500,000 (which was deposited by Mr Ma as bail money) to be released to Hyundai Hong Kong in partial satisfaction of Mr Ma’s judgment debt. [HCA 619/2016] [2022 HKCFI 3798]
The Hong Kong Court of Appeal on 1 December 2021 allowed a charterer’s appeal against a High Court’s Decision dated 13 April 2021 (which disallowed the charterer’s charter hire claims of US$234,955 against the shipowner because the High Court was not satisfied the claims were well founded). [CACV 294/2021] [2021 HKCA 1865]
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 High Court issued a Judgment on 3/2/2017 holding Natural Dairy liable to pay HK$4,360,948.38 to Schenker being the outstanding freight charges. In the Judgment, the Judge also explained the principles regarding the meaning of notice of the forwarder’s standard trading conditions. [HCA 1755/2011].
We have received a lot of cargo claims from our forwarder clients in the recent months. In this issue, we would like to discuss in general how the forwarders should handle the cargo claims.
The High Court of Hong Kong issued a Decision on 15 November 2018 concerning the tragic collision between the cargo vessel CF Crystal and the tanker Sanchi, which happened on 6 January 2018 and led to the death of all the officers and crew of the Sanchi. [HCAJ3/2018] [2018HKCFI2474]
The Hong Kong High Court issued a Judgment on 18/11/2016 dismissing a shipping company’s application for summary judgment against its former deputy general manager (Mr Ma) for restitution of the sum of HK$387,655,303.70 on the ground of money had and received and/or unjust enrichment. [HCA 619/2016]
The High Court of Hong Kong issued a Judgment on 21/7/2014, in which some legal principles relating to the in rem jurisdiction of the Court to arrest vessels were explained. [HCAJ 241/2009]
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 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 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 English High Court issued a Judgment on 31/7/2015 dismissing a cargo owner’s conversion claim US $565,891.58 against a shipowner in an uncollected cargo case. [(2015) EWHC 2288 (Comm), (2015) 2 C.L.C. 415]
The Hong Kong Court of Appeal issued a Judgment on 4 October 2019 upholding the High Court’s Decision dated 9 April 2018 (reported in our Chans advice/208). [CACV593/2018][2019HKCA1101]
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]
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 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 Hong Kong High Court issued a Decision on 13 May 2021 to deal with an interpleader action concerning the stakeholding of US$700,000 in relation to a dispute over some management fees between two transport operators. [HCMP510/2020] [2021 HKCFI 1373]
There are three ways of fulfilling the deposit requirement of the Ministry of Transport (“MOT”) in the People’s Republic of China (“PRC”) for your NVOCC license.
The Hong Kong High Court issued a Judgment on 16 January 2019 dealing with the appeal of the wasted costs’ case reported by our Chans advice/214. [HCA1919/2016] [2019HKCFI127]
The Hong Kong High Court issued a Decision on 20/12/2017 dealing with a dispute of US$948,802.05 (as the price of bunkers supplied to a vessel) between a vessel charterer and a bunker supplier. [HCA2265/2016]
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]
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]
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 Ningbo Maritime Court issued a Judgment on 25/5/2016, and dismissed a cargo insurer’s (PICC Ningbo) recovery claim of USD25,238.40 against Mitsui O.S.K. Lines Ltd (“MOSK”) in relation to the vessel MOL Comfort sinking into the Indian Ocean on 17/6/2013.
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.
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]
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.
On 12/4/2017, the Hong Kong High Court dismissed an application made by a cargo owner for stay of proceedings commenced by two forwarders in relation to an uncollected cargo case. [HCA 1927/2016]
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]
In our last issue of Chans advice/253, the Hong Kong District Court’s judgment dated 26 April 2022 mentioned a case authority of China Ocean v Mitrans Shipping. We would like to discuss this judgment dated 11 July 1995 of the Hong Kong Court of Appeal in our Chans advice this month. [1995 No. 71 Civil]
The Hong Kong High Court issued a Decision on 21 July 2023 in relation to a case that an aircraft (worth at least USD 80 million) and its cargoes were destroyed by a fire caused by the goods of chlorine dioxide disinfection tablets. [HCA 837/2022] [2023 HKCFI 1896]
Are Standard Trading Conditions (“STC”) equivalent to the House Bill of Lading (“HB/L”) terms or the House Air Waybill (“HAWB”) terms? We have been frequently asked this question by our forwarder clients.
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 District Court issued a Decision on 30 April 2021 dealing with a personal injury case in relation to a container terminal. [DCPI 110/2020] [2021 HKDC 463]
SMIC has finally jumped on the bandwagon of the cyber media rush by its presence on the Facebook. We would have done this for a long time had it not been for the daily chores and that we were then not too convinced of its value in the commercial world. Thereafter, it becomes obvious that more and more firms are capitalizing on this new media; and unlike the old economies where information flow was imperfect, consumers of the new economies tend to prefer looking up for information by themselves from the web, or augmenting information they are given.
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.
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 Hong Kong High Court issued a Judgment on 5/8/2015 holding that a shipment of formula milk powder without the legally required export licence should not be forfeited. [HCMA171/2015]
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.
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).
In the transport industry, the contracts of carriage (e.g. Bills of Lading, Air Waybills) usually contain an exclusive jurisdiction clause for settling disputes. However, it is not uncommon that the shippers and consignees sue the transport operators in a court other than the one specified in the exclusive jurisdiction clause. In Hong Kong, the transport operators may rely on the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance to tackle this kind of situation.
The Hong Kong High Court issued a Decision As To Costs on 5 December 2024 ordering a shipowner (which lost in an anti-suit injunction court case) to pay the winning party’s (a cargo owner) costs on an indemnity basis. HCCT 66/2024 [2024 HKCFI 3511]
The PRC Supreme Court on 26/11/2015 issued a Judgment holding a shipping company’s container demurrage claim against a shipper time barred. [2015民提字第119號]
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 issued a judgment on 21/4/2016 and disallowed a cargo owner’s application for summary judgment against a forwarder in connection with a cargo (a diamond) missing claim of US$900,000. [HCCL 10/2015]
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]
In the last issue of Chans advice, we reported the case that the Hong Kong Court of Appeal rejected the mortgagee’s appeal against the High Court’s order of granting a stay until 24 April 2019 for the sale of the Vessel Brightoil Glory. On 17 May 2019, the Court of Appeal issued another judgment refusing the shipowners’ appeal in respect of their application for a further stay of the sale of the Vessel until 22 May 2019. [CAMP81/2019] [2019 HKCA 561]
As reported in our Chans advice/170 dated 27/2/2015, the English High Court on 14/10/2014 held CSAV’s bill of lading’s English jurisdiction clause as an exclusive jurisdiction clause. On 23/4/2015, the English Court of Appeal issued its Judgment reaching the same conclusion. [Neutral Citation No: 2015 EWCA Civ 401, Case No: A3/2014/3584]
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]
The Hong Kong High Court issued a Judgment on 2/6/2017 dealing with the liability apportionment among 3 vessels in 2 almost simultaneous collisions that happened near Hong Kong on 14/5/2011. [HCAJ158/2012 and HCAJ49/2013 and HCAJ48/2011]
The Hong Kong Court of Appeal issued a Judgment [CACV144/2017] [2018HKCA299] on 29/6/2018 upholding the High Court’s Judgment dated 2/6/2017 (which was reported in our Chans advice/201).
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]
Remember our Chans advice/171 of 31/3/2015 reporting that the Hong Kong Court of Appeal discharged the Mareva injunctions against Hin-Pro? The Hong Kong Court of Final Appeal issued a Judgment on 14/11/2016 reversing the Court of Appeal’s Judgment of 11/3/2015. [FACA No. 1 of 2016]
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]
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.
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]
We mentioned in our Chans advice/225 that the limit of liability under the Montreal Convention for carriage of cargoes was increased from 19 SDR/kg to 22 SDR/kg of the gross weight of the cargoes effective on 28 December 2019. We have recently received some forwarders’ request asking us to talk about the major terms in the Montreal Convention. We in this issue would like to introduce the Montreal Convention’s major provisions as follows:
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]
