FEDERAL COURT OF AUSTRALIA

 

Ahmad v Mitsui O.S.K. Lines Limited (ARBN 008 311 831) [2005] FCA 731

MARITIME JURISDICTION – Shipping – Bills of Lading – cargo shipped in two containers –cargo in first container released without presentation of original Bills of Lading – whether cargo in first container was the subject of conversion because it was released without presentation of the Bills of Lading – cargo not converted, but released erroneously and negligently, giving rise to breach of contract - second container held in storage and not claimed – second container the subject of cross-claim for storage fees.

MARITIME JURISDICTION – Shipping – Sea Carriage of Goods – Governing Rules – Bill of Lading expressly excludes operation of Hague Rules – Limitation of liability in Bill of Lading to apply.

Carriage of Goods by Sea Act 1991 (Cth), Schedule 1A, Art IV r5

Sea-Carriage Documents Act 1997 (NSW) ss 5(c), 8(1)(a), 9(1), 10(2)

Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation Behad (1989) 167 CLR 219 (applied)

ABRAR AHMAD v MITSUI O.S.K. LINES LIMITED (ARBN 008 311 831)

 

NSD83 OF 2003

 

 

 

EMMETT J

6 JUNE 2005

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD83 OF 2003

 

BETWEEN:	ABRAR AHMAD PLAINTIFF
AND:	MITSUI O.S.K. LINES LIMITED (ARBN 008 311 831) DEFENDANT

 

JUDGE:	EMMETT J
DATE:	6 JUNE 2005
PLACE:	SYDNEY

THE COURT ORDERS THAT:

1.         The parties bring in short minutes to give effect to the reasons of [2005] FCA 731.

2.         The matter be stood over to 7 June 2005.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD83 OF 2003

 

BETWEEN:	ABRAR AHMAD PLAINTIFF
AND:	MITSUI O.S.K. LINES LIMITED (ARBN 008 311 831) DEFENDANT

 

JUDGE:	EMMETT J
DATE:	6 JUNE 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     This proceeding concerns a Bill of Lading relating to 55 packages of readymade garments intended to be shipped from Mumbai, India, to Sydney.  The plaintiff, Mr Abrar Ahmad (‘Mr Ahmad’), claims that the defendant, Mitsui O.S.K. Lines Limited (‘Mitsui’), wrongly delivered 43 of the 55 packages, in breach of its duty and obligations as carrier or bailee for reward under the contract of carriage evidenced by the Bill of Lading.  Mitsui, on the other hand, claims from Mr Ahmad storage fees in respect of the remaining 12 packages. 

SHIPMENT

2                     In about February 2001, Mr Ahmad came to an arrangement with Mr Goldie Sud, the proprietor of a business conducted in Mumbai, under the name ‘A.J. International’ (‘the Seller’), to buy certain quantities of readymade garments.  On 7 March 2001, an agreement (‘the Sales Contract’) was entered into between the Seller and Mr Ahmad for the sale and purchase of 1,320 men’s T-shirts, 3,348 men’s knitted T-shirts and 15,168 pieces of ladies’ lingerie.  The Sales Contract provided for shipment at any Indian port to Sydney, the cargo to reach Sydney on or before 8 May 2001.  Payment was to be made ‘90 DAYS D.A. THROUGH BANK’.  An invoice for the sum of GB £40,042.26 (‘the A.J.I. Invoice’) was raised by the Seller on 21 March 2001, addressed to Mr Ahmad in Singapore in his trading name ‘Kambil Trading’.

3                     On 30 March 2001, Mitsui issued Bill of Lading number MOLU396328541 (‘the Seller’s Bill of Lading’).  The space in the Seller’s Bill of Lading for ‘Shipper’ was completed with the name ‘A.J. INTERNATIONAL’ together with an address in Mumbai.  The space for ‘Consignee’ was completed with the words ‘TO ORDER’.  In the space for ‘Notify Party’, the following was inserted:

‘FASHION CO

12 WEBB ROAD

BOOKER BAY-NSW 2257

AUSTRALIA’

 

Fashion Co is the name of a business conducted in Australia by Mr Ajay Sud, who is the Seller’s brother. 

4                     The Seller’s Bill of Lading is described on its face as ‘COMBINED TRANSPORT BILL OF LADING’ and provides as follows:

‘RECEIVED in apparent external good order and condition… the total number of Containers or other packages or units enumerated below… for transportation from the Place of Receipt to the Place of Delivery subject to the terms hereof. 

One of the original Bills of Lading must be surrendered duly endorsed in exchange for the Goods or Delivery Order unless otherwise provided herein. 

In accepting this Bill of Lading the Merchant expressly accepts and agrees to all its terms whether printed, stamped or written, or otherwise incorporated, notwithstanding the non signing of this Bill of Lading by the Merchant.’

Mumbai was stated as the Port of loading and the Place of receipt. Sydney was stated as the Port of discharge and Place of delivery.  The vessel named in the Seller’s Bill of Lading was Ocean Strength, for voyage No. 132B.

5                     The goods that were the subject of the Seller’s Bill of Lading were described as follows:

Alongside the reference to container MOGU 2561787 (‘the First Container’) a stamp appeared as follows:

‘CFS/CY’

 

Near the reference to container MOLU 2209839 (‘the Second Container’), a second stamp appeared as follows:

‘CFS/CFS’

I shall say something further as to the meaning of those stamps below.

6                     In the space for freight and charges, both prepaid and collect charges were specified.  The prepaid and collect charges were divided into two parts.  One part of the charges was designated ‘FCL Part 20’ and the other part of the charges was designated ‘LCL’.  The endorsement ‘LCL’ was inserted opposite a reference to ‘12 PKGS’.  I shall say something about those endorsements later.

7                     On 30 March 2001, Mitsui issued two other Bills of Lading for carriage of readymade garments by the same vessel from Mumbai to Sydney.  Bill of Lading No. MOLU396330416 and Bill of Lading No. MOLU396330400 each show as Consignee ‘TO ORDER’ and as Notify Party ‘FASHION CO’.  Bill of Lading No. MOLU396330416 (‘the RRI Bill of Lading’) for 140 packages marked ‘RRI 1-140’ shows the Shipper as ‘RR INTERNATIONAL’ and Bill of Lading number MOLU396330400 (‘the Vismaad Bill of Lading’) for 79 packages marked ‘VE 1-79’ shows the Shipper as ‘VISMAAD EXPORTS’.  Both of those Bills show both prepaid and collect freight charges with the designation ‘Part 20 FCL’.  In addition, each of the Bills has the stamp ‘CFS/CY’ alongside the reference to the container number.  The significance of the other two Bills of Lading is that each refers to the First Container.  That is the same container as is shown in the first line of the Seller’s Bill of Lading. 

8                     It is clear enough that 43 of the 55 packages that were the subject of the Seller’s Bill of Lading, together with the 140 packages that were the subject of the RRI Bill of Lading and the 79 packages that were the subject of the Vismaad Bill of Lading, were packed in a single container, namely, the First Container.  The balance of 12 packages that were the subject of the Seller’s Bill of Lading were packed in container the Second Container.  The seal numbers for each of the three lots of packages in the First Container were identical, namely number 295231.  A different seal number was specified for container the Second Container, namely number 295223.

9                     On 16 April 2001, the Seller drew a bill of exchange (the ‘Bill of Exchange’) on Kambil Trading for the sum of GB£40,042.26 payable ‘AT 90 DAYS AFTER D.A.DATE’.  The Bill of Exchange was payableto the order of Punjab and Maharashtra Cooperative Bank Limited.  The Bill of Exchange referred to ‘55 PACKAGES SHIPPED PER OCEAN STRENGTH VOYAGE 132B’ and also referred to the AJI Invoice and the Seller’s Bill of Lading.  There is an issue in the proceeding as to whether the Bill of Exchange was ever accepted.  The copy in evidence shows no evidence of acceptance.  I shall deal with the question of whether the Bill of Exchange was accepted in due course.

10                  During April 2001, Mr Ahmad entered into an arrangement with Mr Sumeet Raval (‘Mr Raval’) for the sale by Mr Ahmad to Mr Raval of the 55 packages of readymade garments.  An invoice dated 22 April 2001 (‘the Abrar Invoice’) was raised by Mr Ahmad in the name ‘Abrar Textiles’, a name under which Mr Ahmad carried on business in Singapore.  The Abrar Invoice was addressed to Mr Raval and was expressed to be ‘accepted’ on his behalf on 29 April 2001.  The Abrar Invoice and an attached packing list, which detailed the numbers of garments in each package, stated the following:

‘DATE OF DELIVERY:  FINAL DATE OF MERCHANDISE TO REACH SYDNEY (DESTINATION 07.05.02).’

The reference to the date appears to be incorrect, although no question as to the authenticity of the Abrar Invoice and packing list was raised in the proceeding.  The total price shown in the Abrar Invoice was $S137,980. 

11                  Both the First and Second Containers were transhipped in Singapore to the vessel Bunga Teratai Dua for voyage 127SB.  A preliminary freight manifest and a final cargo manifest were prepared for voyage 127SB.  Both contained particulars of the three Bills of Lading.  The final cargo manifest differed from the preliminary freight manifest in some respects. 

12                  The final cargo manifest stated that the ‘ultimate consignee’ in respect of each of the three Bills of Lading was Fashion Co. No particulars for any ultimate consignee were contained in the preliminary freight manifest.  The Consignee was stated to be ‘TO ORDER’ on both versions of the manifest.  The manifests contain the following note in relation to each of the Seller’s Bill of Lading, the Vismaad Bill of Lading and the RRI Bill of Lading:

‘One of three part cargoes in container number MOGU2561787 [the First Container]’

A handwritten endorsement appears opposite that note in the preliminary manifest in relation to the Vismaad Bill of Lading and the RRI Bill of Lading as follows:

‘Refer to B/L 396328541’

No such endorsement appears in relation to the Seller’s Bill of Lading.  Both versions of the manifest refer to arrival of the vessel in Sydney on 26 April 2001 and it appears that the vessel arrived on that day. 

MITSUI’S PRACTICE IN RELEASE OF CONSIGNMENTS

13                  Mitsui O.S.K. Lines (Australia) Pty Ltd (‘Mitsui Australia’) is the Australian agent of Mitsui.  In April/May 2001, Mistui Australia adopted a standard practice with regard to release of goods carried to Sydney under Bills of Lading issued by Mitsui.  It is desirable to describe that practice.

14                  Upon receipt of a vessel’s manifest, Delivery Orders for all consignments shown in the manifest would be prepared by Mitsui Australia, prior to the expected time of presentment of Bills of Lading described in the manifest.  The particulars of the Bill of Lading number, the container number, the name of the shipper, the name of the consignee and the description of the goods, taken from the manifest, would be inserted in a form of Delivery Order.  Upon arrival of the vessel, the ‘Notify Party’ would be informed of the arrival.  Upon discharge of a container at the discharge port, the container would be stored at the port terminal or freight station operated by stevedores engaged by Mitsui Australia on behalf of Mitsui. 

15                  Upon presentation of an original Bill of Lading and payment of any outstanding charges, the pre-prepared Delivery Order relating to that Bill of Lading would be released by Mitsui Australia to the presenter.  The holder of the Delivery Order would then present the original Delivery Order to the stevedores at the port terminal or at the freight station where the consignment was stored.  The stevedores would release the consignment described in the Delivery Order to the holder of the Delivery Order. 

16                  When goods are shipped in containers, they might be carried either as a full container load (‘FCL’) (where the shipper ships sufficient cargo to fill a container), or as less than container load (‘LCL’) (where the shipper ships less than sufficient cargo to fill a container).  In the latter case, the cargo of several shippers might be consolidated to form one container load. 

17                  An FCL shipment meant that a container was received by Mitsui already packed and sealed by the shipper.  A Bill of Lading for an FCL shipment would have the notation ‘CY’ on the face of the bill, signifying that the container, as sealed by the shipper, was to be delivered to the consignee at the terminal’s container yard following discharge from the carrying vessel.  A container shipped on an FCL basis would be delivered sealed to the presenter of the relevant Delivery Order. 

18                  An LCL shipment means that each shipper of the cargoes consolidated into one container is issued with a separate Bill of Lading relating to that shipper’s cargo.  Each Bill of Lading makes reference to the same container number.  In an LCL shipment, the cargoes may be for the same consignee or for different consignees.  Where a Bill of Lading contains an LCL shipment, an additional notation ‘CFS’ is placed on the Bill of Lading.  ‘CFS’ means ‘container freight station’.  That notation signifies that several cargoes have been consolidated into one container and that, following discharge, the container will be transported to a container freight station where the cargo will be unpacked and warehoused.  In the case of LCL shipments, it is the responsibility of Mitsui to unpack the container and to place in bond the cargoes shipped under each separate Bill of Lading.

19                  A cargo may also be shipped on an FCL/LCL basis or a LCL/FCL basis, in each case with the notation ‘CY/CFS’ and ‘CFS/CY’ respectively.  The endorsement CFS/CY on such a Bill of Lading indicates that a Delivery Order is not to be issued in respect of any part of a container unless all Bills of Lading for all consignments in the container are produced at the same time.  In the case of an FCL/LCL shipment, upon presentation of the Bill of Lading, Mitsui Australia would issue a Delivery Order specifically identifying the goods to be collected upon presentation of that Delivery Order at the container freight station or unpacking depot.  In such cases, the cargoes were usually shipped by one shipper but addressed to different consignees.  In the case of an LCL/FCL shipment, the cargoes are shipped by multiple shippers but addressed to a single consignee.  Each shipper receives a separate Bill of Lading and each of the Bills of Lading must be presented by the consignee or receiver in order to obtain a Delivery Order in respect of each Bill of Lading presented.  

ACTUAL DELIVERY OF THE CONSIGNMENTS

20                  Two Delivery Orders were prepared in respect of the Seller’s Bill of Lading, one relating to the First Container and the other relating to the Second Container.  In fact, the second Delivery Order in respect of the twelve packages in question refers to container MOLU2252497.  It is common ground that that reference is to the Second Container and that, at some stage in the course of the carriage, the number of the container was changed.  The circumstances of the change do not appear to have any relevance. 

21                  The Seller’s Bill of Lading has never been formally presented to Mitsui Australia or Mitsui.  Hence the two Delivery Orders prepared by Mitsui Australia have never been released.  Further, the goods in the Seller’s Bill of Lading should therefore never have been released.  However, as will be explained, some of the packages were in fact released.

THE FIRST CONTAINER

22                  There were two complete shipments, being the RRI Bill of Lading and the Vismaad Bill of Lading, together with part of a third shipment, being the Seller’s Bill of Lading, in one container, namely the First Container.  Consistently with the practice described above, Mitsui Australia, as the agent of Mitsui, should have issued three separate Delivery Orders in respect of the consignments in the First Container, being one for each of:

• the 140 packages of the RRI Bill of Lading
• the 79 packages of the Vismaad Bill of Lading and
• packages AJI 1 to 43 of the Seller’s Bill of Lading. 

The First Container should have been unpacked by Mitsui Australia and the consignments delivered to the presenters of those three Delivery Orders respectively.  However, as will appear shortly, delivery was not effected in accordance with the practice described. 

23                  It appears that, consistently with the practice described, Delivery Orders were prepared in advance in respect of each of the RRI Bill of Lading and the Vismaad Bill of Lading.  As indicated above, two Delivery Orders were prepared in respect of the Seller’s Bill of Lading, one in respect of each container described in it. 

24                  Fashion Co, as Notify Party on all three Bills of Lading, was notified of the arrival of the Bunga Teratai Dua and, on 10 May 2001, Mr Ajay Sud presented the RRI Bill of Lading and the Vismaad Bill of Lading to Mitsui Australia.  In exchange for those Bills of Lading he received Delivery Orders in respect of the two consignments in those Bills of Lading.  However, according to the practice described above, he should not have been given a Delivery Order for any of the consignments in the First Container without also presenting the Seller’s Bill of Lading. 

25                  Mr Ajay Sud presented the Delivery Orders to the stevedores and, in exchange for those two Delivery Orders, was given the First Container, with its seal apparently still intact.  Mr Ajay Sud took the container and its contents.  The container was returned empty the following day.  The obvious inference is that Mr Ajay Sud received the 43 packages in that container that were the subject of the Seller’s Bill of Lading, as well as the packages that were the subject of the other two Bills of Lading. 

The Second container

26                  On 14 May 2001, Mr Ajay Sud attended at the Sydney office of Mitsui Australia seeking release of the twelve packages shipped in the Second Container.  Mr Ajay Sud had a discussion with Mr Brett Matthew who was the manager of the Sydney office of Mitsui Australia.  The discussion was along the following lines:

Mr Matthew then handed to Mr Sud some standard forms and Mr Sud said that he would obtain a bank guarantee.

27                  In the course of the discussion, a further exchange took place along the following lines:

28                  Mr Sud then signed a handwritten note addressed to Mitsui Australia, dated 14 May 2005, saying as follows:

‘As discussed we accept the charge of $450 to move this unit to CFS as free goods.’

The note is written on Fashion Co writing paper. 

29                  In 14 May 2001, Mitsui Australia made arrangements for the Second Container to be transported from its stevedores’ yard to Seatons Container Freight Station Pty Limited (‘Seatons’).  Seatons were asked to hold the container ‘as FCL’ until further notice, with instructions not to unpack.  The stevedores were authorised to release the container to Seatons against a photocopy of the Delivery Order prepared in respect of the twelve packages in the container.  On 14 May 2001, the container was transported to the container freight station operated by Seatons. 

30                  Several weeks later, Mr Matthew telephoned Mr Sud who said ‘I am having some difficulty in getting the bank guarantee finalised’.  Sometime after that telephone discussion, Mr Sud made attempts to pick up the twelve packages from the container freight station without presentation of a Delivery Order.  Mr Matthew then spoke to Mr Sud again who said ‘I am still having trouble finalising the bank guarantee’. 

31                  On 7 June 2001, Mr Sud faxed to Mitsui Australia a copy of a banker’s undertaking by Westpac Banking Corporation.  That undertaking relevantly provided as follows:

‘At the request of Ajay Sud (the “Customer”) and in consideration of [Mitsui Australia] accepting this Undertaking to non arrival of Bill of Lading, Westpac Banking Corporation (the “Bank”) unconditionally undertakes to pay on demand any amount or amounts which may from time to time be demanded in writing purporting to be signed by or on behalf of the [Mitsui Australia] up to a maximum aggregate sum of $1,500.28…’

32                  Mr Matthew phoned Mr Sud after receipt of that document and a conversation occurred as follows:

33                  On 30 July 2001, Mitsui Australia instructed Seatons to arrange to unpack the Second Container and to ‘bond the goods’.  Storage charges have been made by Seatons to Mitsui in respect of those goods and the charges continue to accrue.  They are the subject of the cross-claim by Mitsui against Mr Ahmad.

MR AHMAD’S TITLE TO THE SELLER’S BILL OF LADING

34                  On 7 May 2002, the originals of the Seller’s Bill of Lading were sent, on behalf of Mr Ahmad, from Singapore to Mr Ahmad’s solicitors in Sydney.  However, there is no reliable evidence as to the precise time when, or the circumstances in which, Mr Ahmad obtained custody of those originals.  Equally unclear are the precise circumstances concerning payment by Mr Ahmad for the consignment that was the subject of the Seller’s Bill of Lading. 

35                  Evidence as to those matters was given orally and by affidavit by the Seller and orally by Mr Ahmad.  The Seller’s oral evidence was by video link from Mumbai.  Mr Ahmad’s evidence was given through an interpreter.  Some of the evidence given by Mr Ahmad indicated that he may have had limited comprehension of the process.  For example, he denied ever having seen the originals of the Seller’s Bill of Lading when they were shown to him in the witness box.  While he acknowledged that his signature appeared on the reverse of the originals, he simply said that they were bank documents that he was asked to sign. 

36                  There had been previous dealings between the Seller and Mr Ahmad.  In cross-examination, the Seller agreed that, in each prior dealing he had with Mr Ahmad, the procedure was that, in the first instance, he would send an invoice and original Bills of Lading to his bank in Mumbai.  Mr Ahmad would then organise payment, to the Seller’s bank, of the sale price for the consignment described in the invoice.  Upon receipt of payment for the consignment, the Seller’s bank would send the invoice and Bills of Lading to Mr Ahmad’s bank. 

37                  Mr Ahmad also agreed in cross-examination that the usual procedure in his prior transactions with the Seller was that the Seller would deposit an invoice and original Bills of Lading for goods with the Seller’s bank in Mumbai.  Mr Ahmad would then authorise his own bank in Singapore to pay, for the benefit of the Seller, such amounts as appeared on the invoice.  Upon receipt of payment from Mr Ahmad’s bank, the Seller’s bank would send the invoice and original Bills of Lading to Mr Ahmad’s bank.  He would then attend his bank in Singapore and pick up the invoice and original Bill of Lading.  Mr Ahmad also agreed that that was the procedure he adopted in relation to the consignment that was the subject of the Seller’s Bill of Lading. 

38                  However, the usual procedure was changed for the consignment in question.  In his affidavit, the Seller did not mention that there was such a departure.  When asked in cross-examination whether there was any reason to depart from the usual procedure, the Seller responded that the reason for the departure was that Mr Ahmad had requested time to pay. 

39                  In his oral evidence in chief, the Seller asserted that he and Mr Ahmad changed the terms of their arrangement from cash on delivery of documents to 90 days from day of acceptance.  He delivered the documents to his bank in Mumbai for them to be sent to Mr Ahmad’s bankers.  While his evidence was not entirely clear, he appears to have intended to say that the originals of the Seller’s Bill of Lading were delivered in exchange for acceptance of the Bill of Exchange. 

40                  The Seller said that, in mid-March 2001, a telephone conversation occurred between him and Ajay Sud.  The conversation was to the following effect:

41                  The Seller said that he requested Mitsui to state Fashion Co as the Notify Party so that his brother would be notified when the consignment arrived in Sydney.  That would allow him to keep track of the movement of the consignment as his brother would contact him when the goods had arrived in Sydney.  The Seller said that he did that so that, if Mr Ahmad had not provided him with payment for the consignment prior to its arrival in Sydney, he would know the consignment had arrived and, if he felt he needed to, he would seek to regain possession of the three originals of the Seller’s Bill of Lading and take possession of the consignment.  He said that he adopted that procedure as a way of keeping track of the movements of the consignment and to enable him to feel secure that he would minimise any loss should Mr Ahmad fail to pay under the Sales Contract. 

42                  The Seller claimed in cross-examination that, once the Bill of Exchange had been accepted by Mr Ahmad, there was a guarantee to Mr Ahmad’s bank that, on the due date, he would pay.  The Seller asserted that it was enough for him when Mr Ahmad accepted the Bill of Exchange and there was no longer any reason for him to be insecure about payment by Mr Ahmad. 

43                  There was no evidence, other than the Seller’s assertion, that the Bill of Exchange was ever accepted by Mr Ahmad.  The Seller made no mention of the Bill of Exchange in his affidavit and no copy of it was discovered by Mr Ahmad.  Only a less than perfect copy of the Bill of Exchange was in evidence and that copy was not produced to Mitsui until the eve of the commencement of the hearing.  When shown the copy, Mr Ahmad could not recall whether or not he signed the Bill of Exchange.  While the Seller asserted in cross-examination that the Bill of Exchange was accepted by Mr Ahmad in May 2001, he had no recollection as to when in May.  He did not give any evidence that he actually saw the accepted Bill of Exchange. 

44                  When shown a photocopy of the Seller’s Bill of Lading, Mr Ahmad acknowledged that the signature on the reverse is his.  He said that he received the original from his bank in Singapore in April 2001.  He claimed in his oral evidence that he saw the Seller’s Bill of Lading for the first time when his bank released it.  He could not recall if that was when he signed it.  However, as I have said, when shown the originals of the Seller’s Bill of Lading in the witness box, he said he had never seen them before. 

45                  Notwithstanding the assertion that the Bill of Exchange was accepted in March 2001 and the fact that it was a 90 day bill, there was no evidence of the Bill of Exchange being presented for payment or being paid.  However, on 29 September 2001 and 31 October 2001 amounts of $S51,379.52 and $S53,483.06 respectively were debited to a bank account in the name of Kambil Trading.  It was accepted that that was an account of Mr Ahmad’s and that those debits relate to the transaction involving the Seller’s Bill of Lading.  The two amounts are more or less equivalent to the price shown in the AJI Invoice.  However, the circumstances in which the debits came to be made on those days are unclear.  Whether, for example, they were debits as a consequence of presentation of accepted bills of exchange is a matter of pure speculation. 

46                  On 26 April 2001, the date of arrival of the vessel in Sydney, Mitsui Australia received an email communication from Orient Ship Agency Pvt Limited, the shipping agents of Mitsui in Mumbai (‘the Shipping Agents’).  The email referred to the Shipper’s Bill of Lading and said, relevantly:

‘PLS BE ADVISED SHPR HAS AUTHORISED TO DELIVER CARGO AGAINST CONSIGNEE’S BANK GUARANTEE IN ABSENCE OF ORIGINAL B/L. 

PLS INFORM CNEE AND CONFIRM CLEARANCE OF CARGO.’

The circumstances that led to that communication are difficult to discern.  It is not clear who was intended by the reference to ‘CONSIGNEE’.  The only possible consignee, other than the Seller, as Shipper, was the Notify Party, namely, Fashion Co, whose proprietor was Ajay Sud. 

47                  Following the email of 26 April 2001, the Shipping Agents sent a further email to Mitsui Australia saying:

‘…shipper now request to extend free period (storage/demurrage) as original documents delayed in Banking process. 

Further shpr wants to know whether possible to arrange LCL delivery of the cargo as there are total 3 Bills of Lading involved out of which 2 Bills of Lading reached to cnee and one still under Banking process hence cnee cannot clear cargo as FCL. 

Kindly advise whether possible.’

Again, it is unclear who was intended by ‘cnee’.  As I have said, Ajay Sud presented the RRI Bill of Lading and the Vismaad Bill of Lading. 

48                  Ms Renee Macdonnell of Mitsui Australia responded on 8 May 2001 saying:

‘I regret unable to assist in extending storage.  FYI, in Australia stevedores progress any storage directly from CNEE prior to releasing goods.  Please note these units have been on storage since 4/May/2001 & are now incurring AUD$110.00 per day.  CNTR can be moved to our LCL depot.  We calculate costs for this exercise & will revert.  CNEE claims he is intending to abandon cargo due to the extra costs being incurred.  We are in contact with the CNEE to try to minimise storage costs, though we expect that we will not be able to obtain any concession.’

49                  The communications from the Sipping Agent appear to have been prompted by the Seller in Mumbai.  They suggest that, at that stage, Mr Ahmad may not have paid the Seller and therefore had not been able to obtain the originals of the Seller’s Bill of Lading.  On the other hand, it is reasonable to conclude that the originals were still within the banking system and therefore it was not possible for the Seller to regain possession of them immediately.  That could explain the suggestion that the cargo be released against production of a bank guarantee rather than the originals of the Seller’s Bill of Lading. 

50                  There was no suggestion that Mr Ahmad or Mr Raval made any approach to Mitsui or Mitsui Australia during May 2001 for delivery of any part of the consignment that was the subject of the Seller’s Bill of Lading.  The consignments that were the subject of the RRI Bill of Lading and the Vismaad Bill of Lading were intended for Ajay Sud and he obtained delivery of them.  Thus, in relation to Seller’s Bill of Lading, it appears likely that Ajay Sud was performing the function intended for him by his brother, namely, to keep track of the consignment in Sydney until payment was made by Mr Ahmad. 

51                  Ajay Sud would then properly be treated as the consignee.  The fact that he was still acting as consignee at that stage suggests that, whether or not the Bill of Exchange was subsequently accepted by Mr Ahmad, it had not been accepted at the time when Ajay Sud presented the originals of the RRI Bill of Lading and the Vismaad Bill of Lading and took delivery of the First Container.  Mr Ahmad had certainly not paid for the consignment in the Seller’s Bill of Lading at that time. 

52                  Another obscure aspect of the circumstances of the transaction concerns the steps taken to obtain delivery of the 12 other packages in the Seller’s Bill of Lading.  It is significant that, four days after obtaining release of the First Container, Ajay Sud sought release of the 12 packages in the Second Container.  He did not seek delivery of the other 43 packages.  The clear inference is that he did not do so because he already had possession of them. 

53                  There is no reason why Ajay Sud would be seeking delivery of the remainder of 12 packages unless he were continuing to monitor the consignment, as he had been asked to do by his brother, and was still acting as though he were the consignee of the Seller’s Bill of Lading.  That suggests that, during the days after 14 May 2001, when there were discussions about a bank guarantee for the remaining 12 packages, there had still been no acceptance of the Bill of Exchange by Mr Ahmad or, if there had been acceptance, the Seller was not prepared to rely upon mere acceptance as sufficient security for payment to permit release of the Seller’s Bill of Lading. 

54                  Mr Raval gave evidence by affidavit without being required to attend for cross-examination.  In his affidavit, Mr Raval said that, in April 2001, he was informed by Mr Ahmad that the consignment that was the subject of the Abrar Invoice was to be shipped to Sydney.  He said that, in early or mid July 2001, he attended the office of Mitsui Australia in Sydney and requested details of the arrival of the consignment.  He was told that the consignment had already been released. 

55                  Mr Raval then telephoned Mr Ahmad in Singapore and had a conversation to the following effect:

56                  The Seller said in his affidavit that, in mid to late June 2001, he received a telephone call from Mr Ahmad and a conversation to the following effect took place:

57                  The Seller says that, in early July 2001, he had a further telephone conversation with Mr Ahmad during which the Seller said:

‘Mr Ahmad, I have spoken with my brother, Mr Ajay Sud in Sydney.  He denies that he picked up packages from Mitsui.  He has checked and does not have any of your packages.  Mitsui must have lost your consignment and are trying to blame somebody.  Ajay assures me he has nothing to do with the consignment going missing.’

58                  If Mr Ahmad had accepted the Bill of Exchange in May 2001, as the Seller asserted, he would have been entitled to delivery of the originals of the Seller’s Bill of Lading.  It is very curious why no attempt was made by Mr Ahmad to obtain delivery of the goods at that time.  There was no suggestion that Mr Raval had paid the price shown in the Abrar Invoice or that he ever had custody of the originals of the Seller’s Bill of Lading.  It is also curious, therefore, that Mr Raval sought delivery of the goods.  It is even more curious why it was not until late June, at the earliest, that any attempt was made by Mr Raval to seek delivery. 

59                  It was within the power of Mr Ahmad to produce documentary evidence from his bankers as to whether, and if so, when, the Bill of Exchange was accepted and whether, and if so, when, it was presented for payment.  No such evidence was produced.  Nor was evidence led to suggest that attempts had been made to produce such evidence. 

60                  I consider that it is more likely than not that Ajay Sud obtained the 43 packages in the First Container and continued to attempt, up to at least 7 June 2001, to obtain delivery of the other 12 packages that were in the Second Container.  An inference is open that he was doing so in the interests of the Seller because the Seller had not been paid for the consignment described in the Seller’s Bill of Lading.  That is the inference that I draw. 

61                  I am not persuaded, on the balance of probabilities, that the Bill of Exchange was accepted by Mr Ahmad in May 2001, if at all.  He certainly did not make any payment in respect of the consignment in the Seller’s Bill of Lading until September and October 2001.  By that time, it was tolerably clear that he would not be able to obtain delivery of the whole consignment.  He did not, in fact, produce the originals of the Seller’s Bill of Lading to Mitsui at any time. 

62                  Why payments were made in September and October 2001, in circumstances where the goods were not received by Mr Ahmad, is a matter for speculation.  At some stage, the originals of the Seller’s Bill of Lading came into the custody of Mr Ahmad, but the circumstances are not capable of determination on the evidence before me.

63                  Mr Ahmad contends that he became the holder of the Shipper’s Bill of Lading upon acceptance of the Bill of Exchange.  He says that the contract with Raval could not have been ‘accepted’ on 29 April 2001 without access to the originals of the Seller’s Bill of Lading because, he said, he did not know the name of the ship on which the cargo was loaded until after he received the shipping documents.  However, there is nothing in the Abrar Invoice that refers to the name of the ship.  There was no evidence that the details contained in the Abrar Invoice and packing list could have been obtained only from the Seller’s Bill of Lading.

64                  Mr Ahmad also contends that, even if he took possession of the originals of the Shipper’s Bill of Lading after becoming aware that part of the consignment had been released by Mitsui, that would not preclude him from being a lawful holder within the meaning of s 5(c) of the Sea-Carriage Documents Act 1997 (NSW) (‘the Documents Act’). 

65                  Section 8(1)(a) of the Documents Act relevantly provides that all rights, under the contract of carriage in relation to which a sea carriage document is given, are transferred to each successive lawful holder of a Bill of Lading.  Under s 5 of the Documents Act, a Bill of Lading means a Bill of Lading that is capable of transfer by endorsement of, as a bearer bill, by delivery without endorsement.  The term ‘lawful holder’ in relation to a Bill of Lading relevantly means a person who:

a)      has come into possession of the bill, in good faith, as a result of the completion, by delivery of the bill:

(i)         of any endorsement of the bill;

(ii)        in the case of a bearer bill – of any other transfer of the bill; or

b)      would be the lawful holder of the bill under that provision had not the person come into possession of the bill as a result of a transaction effected at a time when possession of the bill no longer gave a right, as against the carrier, to possession of the goods.

66                  Under s 9(1) of the Documents Act, where s 8 operates in relation to a Bill of Lading to transfer rights under the contract of carriage, the transfer extinguishes any entitlement to those rights that derives from a person having been an original party to the contract of carriage.  Section 10 applies to a person where rights in the contract of carriage in relation to a Bill of Lading are transferred to the person under s 8.  Under s 10(2), such a person is subject to the liabilities under the contract as if the person had been an original party to the contract.

67                  Mitsui does not assert that Mr Ahmad took possession of the Shipper’s Bill of Lading so as to perpetrate a fraud on Mitsui.  Mr Ahmad says that he took possession of the Seller’s Bill of Lading in good faith, pursuant to the Sales Contract, made with the Seller, notwithstanding that he did so after becoming aware that the 43 packages had been released by Mitsui.  Further, the Shipper’s Bill of Lading was not completely spent, since 12 of the 55 packages comprised in it have not yet been released and it could still be presented at least for release of those packages.  However, Mr Ahmad has not in fact presented the Shipper’s Bill of Lading in order to obtain delivery of the 12 packages and has steadfastly declined to do so.

68                  I am not persuaded, on the balance of probabilities, that Mr Ahmad ever became a lawful holder of the Seller’s Bill of Lading or a holder in due course of the Seller’s Bill of Lading so as to entitle him to sue for non-delivery of the packages described in the Seller’s Bill of Lading. 

QUANTUM

69                  If Mr Ahmad is entitled to sue Mitsui in respect of wrongful delivery under the Seller’s Bill of Lading, there is a question as to the basis upon which his damage should be assessed.  Mr Ahmad claims damages equal to the price for which he was proposing to sell the readymade garments to Mr Raval.  It is agreed that that price was $102,449.69. Mr Ahmad contends that that is the value of the 43 missing packages.

70                  However, Mr Ahmad does not contend, and there was no evidence, that the price for which he was proposing to sell the packages to Mr Raval was above the market price for the readymade garments. There was no evidence that Mr Ahmad could not have bought equivalent readymade garments for the same price from the Seller or some other source. There was no suggestion that, if Mr Ahmad obtained replacement garments, he would not have been able to sell those replacement garments for the same price.  Thus, there was no lost opportunity to make the same profit.    Accordingly, I consider that the appropriate measure for damage for Mr Ahmad would be the landed cost of such replacement garments in Sydney. 

71                  That cost would include the purchase price, insurance and freight to Sydney.  It is common ground that that cost was $A85,882.40 in respect of the missing 43 packages, calculated as follows:

‘Principal Claim:                 GBP 31,273.00                AUD 84,765.80

 Plus

Freight                                 USD     380.00                               724.60

Freight                                                                                          92.00

Insurance                                                                                    300.00

TOTAL                                                                        AUD 85,882.40’

If Mr Ahmad is entitled to sue in respect of the Seller’s Bill of Lading, and Mitsui is not entitled to rely on any limitation of liability provision in the Seller’s Bill of Lading, that would be the quantum of any judgment.

LIMITATION OF LIABILITY OF MITSUI

72                  Clause 5(1)(a) of the Seller’s Bill of Lading relevantly provides that if loss or damage is proved to have occurred during ‘the Waterborne Carriage’, the liability of Mitsui is to be determined by the Hague Rules, Articles 1-8 inclusive.  It is common ground that the loss of the 43 packages in question occurred during the Waterborne Carriage, as that term is defined in the Seller’s Bill of Lading. 

73                  Rule 5 of Article IV of the Hague Rules relevantly provides as follows:

‘…neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding [£100] per package or unit…’

Mitsui contends that its liability for the breach of the contract of carriage evidenced by the Seller’s Bill of Lading is limited, by the operation of Clause 5(1)(a) and Rule 5 of Article IV, to £100 in respect of each missing package, namely, £4,300.

74                  Mr Ahmad, however, draws attention to Clause 6(1) of the Seller’s Bill of Lading which relevantly provides as follows:

‘If the Hague Rules are applicable by national law, the liability of the Carrier shall in no event exceed the limit provided in the applicable national law.  If the Hague Rules are applicable otherwise than by national law, the liability of the carrier shall in no event exceed 100 pounds sterling per package or unit.’

It is common ground that the Hague Rules are not applicable to the Seller’s Bill of Lading by national law. 

75                  Mr Ahmad says that the Hague Rules are applicable, otherwise than by national law, namely, by the operation of Clause 5(1)(a), and that the question of limitation of Mitsui’s liability is to be determined according to the language of Clause 6(1) of the Seller’s Bill of Lading rather than Rule 5 of Article IV of the Hague Rules.  He then contends that clause 6(1) should not be construed as operating in relation to liability for a breach of an obligation that constitutes the primary object of the contract of carriage, evidenced by the Seller’s Bill of Lading.  He says that the primary object of the contract of carriage is the transportation of the consignment from Mumbai to Sydney and delivery in Sydney of the consignment only upon surrender of one of the originals of the Seller’s Bill of Lading, duly endorsed.  A breach of that obligation, he says, should not be construed as an event in which the liability of Mitsui is to be limited by Clause 6(1) or, for that matter, Rule 5 of Article IV of the Hague Rules. 

76                  The meaning of a limitation or exclusion provision ultimately depends upon its language, read in context, and not on any a priori notion that non-delivery of goods under a contract of carriage is not intended to be protected.  In determining whether an exemption clause should be construed so as to apply to any event that has defeated the main object of a contract of carriage, much must depend on the nature of the events that are identified by the clause as giving rise to the limitation on, or exemption from, liability (see Nissho Iwai Australia Ltd v Malaysian International Shipping Corporation Behad (1989) 167 CLR 219 at 227). 

77                  Neither Rule 5 of Article IV nor Clause 6(1) are exemption clauses in the sense that they absolve the carrier from responsibility for failing to carry out the main object of the contract of carriage.  Rather, each provision is designed to limit the liability of the carrier in the event of such a failure.  In any event, I do not consider that there is no reason why either provision should be construed as containing an implicit exception to the unequivocal language used. 

78                  In the case of Rule 5 of Article IV, the carrier is not to be, or become, liable in any event.  That includes the event of failure to deliver the goods in circumstances such as those presently under consideration.  Clause 6(1), if applicable, provides that in no event is the liability of the carrier to exceed the limit.  There is no reason to construe that phrase as excluding an event such as has occurred in the circumstances presently under consideration.

79                  The form of the Bill of Lading contains a provision on its face whereby a Shipper can declare the value of the goods shipped as follows:

‘Shipper’s Declared Value………USD subject to clause 6(2) overleaf’. If no value declared, liability limit applies as per clause 5(2)(c), 6(1) or 29 as applicable.’

Clause 29 is concerned with the limitation of liability in respect of carriage to or from a port or place in the United States of America.

80                  Thus, the limitation can be avoided.  It may be that if there is a declaration of value there will be an increase in freight charges.  There was no evidence on that question.  Nevertheless, it is clear that it was open to the Seller to have the limitation of liability waived.  That is another consideration why the limitation in clause of 6(1) should not be construed as containing implied exceptions as to the failure to perform the main object of the contract of carriage. 

81                  I consider that, as a matter of the proper construction of the Seller’s Bill of Lading, if Mr Ahmad is entitled to sue on the Seller’s Bill of Lading, the liability of Mitsui is not to exceed £100 in respect of each missing package, namely, £4,300. 

CONVERSION

82                  However, Mr Ahmad contends that Mitsui was guilty of conversion of the First Container because Mitsui made a deliberate decision to give the Delivery Order to Ajay Sud, thereby authorising release of the First Container without production of the Seller’s Bill of Lading.  He makes that claim by reason of a handwritten notation on a Freight Slip that had been prepared in respect of the Seller’s Bill of Lading.  That notation was ‘Telex Release’.  He contends, therefore, that Mitsui committed a breach of the main object of the contract of carriage evidenced by the Seller’s Bill of Lading such that it is not entitled to rely upon any exception or exclusion contained in its terms. 

83                  Mitsui does not dispute that there was a breach of the contract of carriage evidenced by the Seller’s Bill of Lading.  Further, Mitsui does not dispute that there was negligence in issuing to Ajay Sud, on 10 May 2001, a Delivery Order that would indicate to the stevedores that they were authorised to deliver to the holder of that Delivery Order the container described in it, namely, the First Container.  Mitsui accepts that that was the effect of giving the Delivery Order to Ajay Sud.  It says that it was negligent because it should not have issued such a Delivery Order without production of all of the Bills of Lading relating to consignments contained in the First Container. 

84                  According to Mr Matthew, the notation ‘Telex Release’ was usually written on a Freight Slip when the shipper surrendered the original Bill of Lading to Mitsui’s office at the load port and the load port sent a message to say that the cargo could be released without presentation of the original Bill of Lading.  Such a notation would not be used where a request for delivery was made against a banker’s guarantee without production of the original Bill of Lading.

85                  In October 2001, there was an exchange of email communications between Mr Matthew at the Sydney office of Mitsui Australia and Ms Sakharkar of the Shipping Agents in Mumbai.  The exchange began with an enquiry from Ms Sakharkar as to the delivery status and delivery date of a cargo described by reference to the Shipper’s Bill of Lading and the First and Second Containers.  Mr Matthew replied as follows in relation to the First Container:

‘This unit was picked up by the client on 10/5/01 and empty returned to our depot 11/5/01.  All manifested charges were paid by cnee.’

86                  Ms Sakharkar then sent a further email saying:

‘KINDLY CONFIRM THE FLWG:

1.         IF ORIGINAL B/L OR BANK GUARANTEE SURRENDERED BY CNEE. 

2.         AGAINST WHAT DOCUMENTS CARGO CLEARED BY CNEE WHEN ORIGINAL B/L OR BANK GUARANTEE NOT SUBMITTED.

3.         HOW CLEARANCE OF PART CONSIGNMENT ALLOWED WHEN CNEE DID NOT KNOW ABOUT LCL CARGO UNDER SAME B/L.

4.         HOW YOUR ARE PROPOSE TO REPLY TO THE SHPR.

FYI: AS PER SHPR CARGO STILL UNCLEARED AND HENCE WANTS TO RE-SHIP TO SINGAPORE.

FYG:  IF SHPR OR HIS BANKERS STILL IN POSSESSION OF ORIGINAL B/L THEY WILL CLAIM “MOL” FOR WRONGFUL DELIVERY OF CARGO WITHOUT PROPER DOCUMENTS AND INSIST DIVERSION OF CARGO AT THEIR LOST [SIC].

YOUR URGENT REPLY WILL ASSIST US REPLY SHPR ACCORDINGLY.’

87                  There is no evidence of any response to that email.  However, Mr Matthew made handwritten notes on a copy of the email.  In relation to Item 1 he made the following note:

‘OBL for MOGU2561787

 BG for MOLU2252497.’

Mr Matthew said that ‘OBL’ stands for original Bill of Lading and that ‘BG’ stands for bank guarantee.  Against Item 2 Mr Matthew wrote:

‘OBL provided for MOGU2561787.’

Again, ‘OBL’ signified original Bill of Lading.  Mr Matthew accepted that those notations were made when he was investigating the enquiry from the Shipping Agents but could not be certain how or whether he replied.

88                  Mr Matthew’s notations suggest that his understanding in October 2001 was that all of the original Bills of Lading were produced in respect of the First Container.  Such an understanding was clearly erroneous since, while the originals of the RRI Bill of Lading and the Vismaad Bill of Lading were produced, the original of the Seller’s Bill of Lading was not.  Further, while the exchange of emails in late April 2001 indicated that a bank guarantee was to be provided in order to procure release of the whole of the consignment in the Shipper’s Bill of Lading, no bank guarantee was ever provided.  Thus, it seems likely that Mr Matthew was under a misapprehension, in October 2001, as to what had happened.

89                  The Delivery Order in respect of the RRI Bill of Lading was released by Ms Osoba-Buttrose, who, at that time, was team leader for exports and imports at Mitsui Australia.  Ms Osoba-Buttrose, who gave evidence, agreed that she knew in May 2001 that only one Delivery Order needed to be presented at the container yard in order to obtain delivery of a full container.  Ms Osoba-Buttrose’s usual practice was that a delivery order would be signed by her when the original Bill of Lading was produced.  Her signature appears on the copy of the Delivery Order given to Mr Ajay Sud in exchange for the original RRI Bill of Lading. 

90                  The pre-prepared Delivery Order and attached Freight Slip in respect of packages AJI 1 to 43, being part of the consignment in the First Container, remains on the file of Mitsui Australia in complete form.  Such documents are prepared in triplicate and all three copies remain on the file.  It is on that Freight Slip that the endorsement ‘Telex Release’ appears.  That endorsement was written by Ms Renee Macdonnell, who also initialled a stamp on the Delivery Order. 

91                  Ms Osoba-Buttrose explained that, where a telex release is received, the usual practice was to staple the telex release to the copy of the Delivery Order retained by Mitsui Australia.  The triplicate original Delivery Order and Freight Slip relating to packages AJI 1 to 43 contains a staple in its top left hand corner.  Ms Osoba-Buttrose accepted that nothing other than a telex release ever needed to be stapled to Delivery Orders.  There was no evidence as to what other document might have been stapled to the Delivery Order in question. 

92                  A possible explanation for the staple is that it holds the three copies together.  There is also a staple mark, but no staple, in the same position on the top left corner of the three copies of the Delivery Order in respect of the 12 packages in the Second Container.  On the other hand, there is no staple mark on the third copy of the Delivery Order in respect of the RRI Bill of Lading that remained in the files of Mitsui Australia.  The other two copies of that Delivery Order are not in evidence. 

93                  Mr Ahmed contends that, in the light of the above evidence, an inference should be drawn that Ms Osoba-Buttrose gave the Delivery Order in respect of the RRI Bill of Lading, and probably a Delivery Order in respect of the Vismaad Bill of Lading, to Ajay Sud deliberately, with careful consideration and full intention, because Ms Osoba-Buttrose believed, albeit erroneously, that there was a Telex Release in relation to the First Container.  He contends, therefore, that Mitsui committed a breach of the main object of the contract of carriage evidenced by the Seller’s Bill of Lading, such that it is not entitled to rely upon any exception or exclusion contained in its terms. 

94                  However, it is by no means clear that Ms Osoba-Buttrose ever saw the Telex Release note on the Freight Slip for packages AJI 1-43.  The note is not hers, but was placed there by Ms Renee Macdonnell, who also initialled the Delivery Order to which the Freight Slip is still attached. That Delivery Order, of course, was never released by Mitsui Australia.

95                  I do not consider, on the balance of probabilities, that a conscious and deliberate decision was made to release the Delivery Order for the RRI Bill of Lading.  Rather it was, as is conceded by Mitsui, released erroneously.  That erroneous release was negligent and gave rise to a breach of contract on which the holder of the Seller’s Bill of Lading could sue.  However, the effect of clause 5(1)(a) of the Seller’s Bill of Lading is to limit the liability of Mitsui. 

LIABILITY OF MR ABRAR FOR STORAGE CHARGES

96                  Condition 20 of the Seller’s Bill of Lading deals with ‘NOTIFICATION AND DELIVERY’.  Clause 20(1) provides that any mention of parties to be notified of the arrival of the Goods is solely for information of Mitsui and that failure to give such notification is not to involve Mitsui in any liability nor relieve the Merchant of any obligation under the Bill of Lading.  The term ‘Merchant’ is defined in the Seller’s Bill of Lading as including: ‘the Shipper, Holder of this Bill of Lading, Consignee, Receiver of the Goods, any Person owning or entitled to the possession of the Goods or of this Bill of Lading…’

97                  Under Clause 20(2), the Merchant is to take delivery of the Goods within the free storage time provided for in Mitsui’s applicable tariff or otherwise.  If the Merchant fails to do so, Mitsui may, without notice, unload the Goods from the vessel or the container and store the Goods at the sole risk of the Merchant.  Such storage is to constitute due delivery and thereupon all liability whatsoever of Mitsui in respect of the Goods is to cease. 

98                  Clause 20(2) provides that the cost of such unloading or storage (if paid or payable by Mitsui) shall forthwith upon demand be paid by the Merchant to Mitsui.  Clause 20(3) then provides as follows:

‘If the Merchant fails to take delivery of the Goods within 30 days of becoming due under Clause 20(2), or if in the opinion of [Mitsui] they are likely to deteriorate, decay, become worthless or incur charges whether for storage or otherwise in excess of their value, [Mitsui] may without prejudice to any other rights which he may have against the Merchant without notice and without any responsibility whatsoever attaching to him, sell, destroy or dispose of the Goods and apply any proceeds of sale in reduction of the sums due to [Mitsui] from the Merchant in respect of this Bill of Lading.’

99                  It is common ground that Mitsui has incurred a liability to pay storage charges in respect of the 12 packages in the Second Container.  That liability is to Seatons, with whom the 12 packages have been stored since 30 July 2001, following the instructions referred to above.  The storage charges have accrued at the rate of $A43.30 per day and amounted to $A62,481.90 as at 26 April 2005.

100               Mr Ahmad has two answers to the claim for reimbursement of storage charges pursuant to Clause 20(2).  The first is that it was unreasonable for Mitsui to continue to incur the liability for storage and not to have exercised the powers that it has under Clause 20(3) after 12 months had expired.  The second is that the charges are unreasonable and that it would have been possible to have the packages stored at a rate of $A6.00 per day rather than $43.30 per day. 

101               Mr Ahmad, although he has had physical custody of the three originals of the Seller’s Bill of Lading, has not made any attempt to present them and ask for delivery of the 12 packages in question.  Nor has he requested Mitsui to exercise the power conferred by Clause 20(3) to sell, destroy or dispose of the 12 packages and thereby terminate the continuing accrual of liability for storage charges. 

102               Mr Ahmad’s only explanation for his failure to present the Seller’s Bill of Lading in order to obtain delivery of the 12 packages is an assertion that the sizes of the garments in those packages would be ‘unbalanced’.  It is by no means clear how Mr Ahmad would know what sizes are in particular packages.  While the particulars attached to the Sales Contract indicate how many pieces of each size are included in the total consignment, there is nothing in the evidence to indicate which sizes are in particular packages.  The packing list attached to the Abrar Invoice indicates whether particular packages contain shirts, t-shirts or lingerie and the number of pieces in each package.  However, there is no indication of the sizes of the pieces in each package. 

103               Clause 20(3) is clearly for the benefit of Mitsui.  It does not impose any obligation upon Mitsui.  I do not consider that the failure by Mitsui to exercise the power conferred by Clause 20(3) in any way discharges Mr Ahmad from the liability imposed by Clause 20(2). 

104               Mr Kevin Swaine, the business development manager of Seatons at the relevant time, gave evidence on behalf of Mitsui.  Mr Swaine said that the charge made by Seatons for providing storage and handling facilities for Mitsui’s consignees was $A15.00 per day per cubic metre.  The 12 packages in question comprise 2.887 cubic metres.  Accordingly, the storage charge for the 12 packages was $43.30 per day.  If the storage had terminated after 365 days, the total would have been $A15,804.50.  In cross-examination, Mr Swaine agreed that one could store a container with Seatons at the rate of $6 per day.  As at 26 April 2001, the storage charge on that basis would have been $8,658.  If the storage had ceased after 365 days, the total charge would have been $2,190. 

105               In the absence of bad faith, the fact that a container could have been stored at a lower rate than that charged by Seatons to Mitsui for storage of the 12 packages in question, or that Mitsui might have been able to negotiate a more favourable rate with Seatons, is not to the point.  The rate charged by Seatons was the normal rate charged to Mitsui’s consignees.  There was no evidence that the rate actually charged by Seatons to Mitsui is other than that its usual storage charge.  It was always open to Mr Ahmad, if he wished, to take delivery of the packages.  Even now, he has not asked for delivery.  There is no basis for any complaint by Mr Ahmad that the charge was unreasonable. 

CONCLUSION

106               It follows from the conclusions reached above that Mr Ahmad’s claim for damages against Mitsui should be dismissed with costs.  Mitsui should succeed on its cross-claim for recovery of storage charges.  There should be judgment for Mitsui against Mr Ahmad in the amount calculated from 30 July 2001 to the date of judgment, at the rate of $43.30 per day.  Mr Ahmad should also pay Mitsui’s costs of the cross-claim.

 

 

I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

 

 

Associate:

 

Dated:              26 July 2005

 

Counsel for the Applicant:	Mr M G McHugh
Solicitor for the Applicant:	Michel Sillar
Counsel for the Respondent:	Mr E G H Cox
Solicitor for the Respondent:	Norton White
Date of Hearing:	18, 19, 20 and 21 April 2005
Date of Final Submissions:	16 May 2005
Date of Judgment:	6 June 2005