Breffka & Hehnke Gmbh & Company Kg and Others v Navire Shipping Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Simon |
| Judgment Date | 07 November 2012 |
| Neutral Citation | [2012] EWHC 3124 (Comm) |
| Docket Number | Claims: 2009 Folio 1326/1327 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 07 November 2012 |
[2012] EWHC 3124 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Simon
Claims: 2009 Folio 1326/1327
Mr Robert Thomas QC (instructed by Clyde & Co) for the Claimants
Mr Sudhanshu Swaroop (instructed by Swinnerton Moore LLP) for the Defendants
Hearing dates: 8–11 and 15 October 2012
Introduction
This claim arises from the carriage of a consignment of steel pipes on the M/V 'Saga Explorer' from Ulsan in Korea to ports on the West Coast of North America (Los Angeles, San Francisco and Vancouver, WA) between September and October 2008; and which it is claimed were found damaged on arrival.
The relevant contracts of carriage were 13 Bills of Lading signed by Orion Shipping Co Ltd 'as agent'; naming the 'Shipper' as Nexteel Co Ltd of Korea and the 'Consignee' and 'Notify Party' as the 2nd Claimant ('KOP').
The Bills of Lading were dated 25 September 2008 and contained a description of the goods:
E.R.W Steel Pipes
Spec: ASTM A53B/ASME SA53B
…
Details are as per attached rider
The Bills of Lading included the following words on the front of the printed form:
SHIPPED in apparent good order and condition, weight, measures, marks, numbers, quality, contents, and value unknown, for carriage to the Port of Discharge … to be delivered in the like good order and condition at the aforesaid Port unto Consignees or their Assigns … In accepting this Bill of Lading, the Merchant expressly accepts and agrees to all its stipulations on both pages, whether written, printed, stamped or otherwise incorporated as fully as if they were all signed by the Merchant. One original Bill of Lading must be surrendered in exchange for the Goods or delivery order.
In addition the Bills of Lading included a RETLA Clause.
RETLA CLAUSE: If the Goods as described by the Merchant are iron, steel, metal or timber products, the phrase 'apparent good order and condition' set out in the preceding paragraph does not mean the Goods were received in the case of iron, steel or metal products, free of visible rust or moisture or in the case of timber products free from warpage, breakage, chipping, moisture, split or broken ends, stains, decay or discoloration. Nor does the Carrier warrant the accuracy of any piece count provided by the Merchant or the adequacy of any banding or securing. If the Merchant so requests, a substitute Bill of Lading will be issued omitting this definition and setting forth any notations which may appear on the mate's or tally clerk's receipt.
The attached rider contained details (including the length and weight of the bundles of steel pipes) and the reverse of the Bills of Lading contained 'Terms and Conditions' which included an English Jurisdiction clause and an applicable US General Paramount Clause incorporating the US Carriage of Goods by Sea Act 1936 ('COGSA').
The 1st Defendants are the Registered Owners, the 2nd Defendants are the Demise Charterers and the 3rd Defendants are the Time Charterers of the vessel. It is agreed between the parties that any claim for damage to the cargo lies only against the 3rd Defendants and it is convenient to refer to them as the Owners.
The main issue in the case relates to the nature of the representation as to the condition of the pipes on shipment, whether it was relied on and what damage flows from any breach.
A second issue arises as to the entitlement of the 1st Claimant (B&H) to sue and recover damages. It is common ground that KOP is the only one of the 2nd to 9th Claimant that can be said to be a party to any contract contained in or evidenced by the Bills of Lading: it was the named consignee and the Bills of Lading were not negotiable. KOP was indemnified against their loss by their German Insurers, who at all times acted through and by B&H. B&H claims against the Owners on the basis that it satisfies the conditions of a 'Procedural Agency' under German law, being authorised to bring a claim in its own name on behalf of the Insurers. This gives rise to an issue of German law, on which evidence was called.
There was also an issue as to whether, even if it had title to sue, B&H brought suit within the one-year time limit provided by s.3(6) of the COGSA or the relevant provisions of the Hague/Hague Visby Rules. By the conclusion of the hearing that was no longer an issue.
The facts in outline
A load port survey was carried out by Korea Surveyors and Adjusters Co. Ltd ('KOSAC'), whose report was dated 25 September 2008. This report noted that the cargo was,
in apparent good order & condition with the following damage/exception.
There then followed 16 pages of what was described as 'Damage/Exception Prior to Loading'. This consisted of descriptions of the steel as 'partly rust stained', and variations of this description, 'wetted before shipment by rain and partly rust stained and slightly scratched on surface', 'wetted before shipment by rain and partly rust stained in white oxidation on surface.'
The survey also noted:
All of the above damages/exceptions were acknowledged by the vessel's master and duly noted/appended to the relevant Mate's Receipt.
Attachment No.1 of the Survey Report (also dated 25 September) was a Recommendation Letter to the Master signed by the KOSAC Surveyor and the Chief Officer as follows,
As a result of the survey, we found that all the shipments loaded on board the vessel to be in apparent good order & condition except the shipments mentioned on the 'Cargo Damage/Exception List' attached hereto.
With regard to the noted damages/exceptions to the shipments, we recommend that they shall be claused in or appended to the relevant Mate's Receipt and Bills of Lading.
The Mate's Receipts issued in respect of the cargo and signed by the Chief Officer contained a short form of Retla Clause (omitting reference to timber products) which was printed prominently:
The term 'apparent good order and condition' when used in this Bill of Lading with reference to iron, steel or metal products does not mean that the goods when received, were free of visible rust or moisture. If the shipper so requests, a substitute Bill of Lading will be issued omitting the above definition and setting forth any notations which may appear on the mates' or tally clerks' receipts.
and noted the receipt on board
Condition of Cargo as per Survey Report.
The Survey Report was identified as the KOSAC report.
The terms of a Booking Note dated 12 September which was signed by Nexteel (as shippers) and Orion Shipping, Co, Ltd (the Owners' Shipping Agents) for the Carrier, included a term as to the form of the Bills of Lading to be issued,
3. Bills of Lading: Carrier's B/L to be issued as per Mate's Receipt and the terms condition and exceptions contained in the reverse side of the B/L are deemed fully incorporated in this Booking Note as if they were all signed by the Shipper.
As already noted, although the Mate's Receipt contained the reservation that the cargo was received in the condition as noted in the KOSAC report, the Bills of Lading contained no such reservation. The reason why they were not claused was explained in §15 of the witness by Mr Jinsoo Kim, the General Manager of the Operations and Commercial Department of Orion Shipping Co. Ltd.
The shippers in this case, Nexteel, did not demand or request any bill of lading showing 'notations'. Instead Nexteel (having seen the KOSAC Report) requested that the Bills be issued unclaused against LOIs. I read the Mate's Receipts and the KOSAC Report (including the section headed 'Damage/Exception found Prior to Lading'), which I compared with what was stated in the RETLA clause and (on that basis) I considered there was no need to clause the Bills. Accordingly I agreed to Nexteel's request and proceeded to sign the Bills. It was certainly not my intention to mislead anybody.
The Letters of Indemnity referred to by Mr Kim, dated 25 September and headed 'Letter of Indemnity for Issuance of Clean Bills of Lading', were addressed to the Owners. After noting the 'exceptions to the cargo's apparent condition observed prior to shipment' as noted on the Mate's Receipt 'per surveyor's cargo exception', the details of which were set out, the letters continued,
but we hereby request you to issue 'clean' bills of lading without making any remarks on the bill as to the cargo damaged condition whatsoever and to deliver the said cargo accordingly against production of a least one original bill of lading
In consideration of your complying with our above request, we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of complying with our request.
2. In the event of any proceedings being commenced against you or any of your servants or agents, in connection with our request aforesaid, to provide you or them on demand with sufficient funds to defend the same.
The indemnity was stated to be governed and construed according to English Law, and was reinforced by undertakings to put up bail if the vessel were arrested at the suit of cargo interest, and to submit to the Jurisdiction of the High Court in London.
In his oral evidence Mr Kim elaborated on his description of comparing the KOSAC Report and the Mate's...
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