Federal Court, Malaysia

Thomson LP, Wee Chong Jin CJ (Singapore), Wylie CJ (Borneo)

17 August 1964

KEYWORDS

Bill of Lading – Misdelivery by Shipowner without production of bill – Cargo claim by holder of Bill, one year after misdelivery – Art. III(6) One-Year Time Limitation – Application of Time Limit where liability arises outside of loading to discharge period, that is at point of delivery

FACTS AND DECISION

Cycles were shipped from the UK to Singapore under five bills of lading, subject to Hague Rules. The bills of ladings were indorsed to and held by bank. Goods were misdelivered by the Shipowner to another without production of the bill upon letter of indemnity. The bank took action one year after the misdelivery. The shipowner relied on Art. III(6) one-year time limit.

The court held that the one year time limit did not apply as the application of the Hague Rules was limited to liability arising from the time of loading to the time of discharge. They do not apply when liability arises in connection with delivery after discharge, as in this case. This was because the entire Hague Rules applies only between the time of loading and the time of discharge, by virtue of Art. II of the Rules.

OBSERVATION

In many cases, delivery will be after discharge. In such case, as per this decision, the one-year time limit, and the liability limitation in Art. IV(5), will not apply where any damage occurred between discharge and delivery or for misdelivery. However, there are instances where the delivery will be together with discharge, such as where the consignee takes delivery and discharges the cargo from the ship (eg. free-in and free-out). In such cases, if a misdelivery happens together with discharge, then the the one-year time limit will apply. The ratio in this case is applicable both to cases under Hague and Hague-Visby Rules, and both to time limitation in Art. III(6) and liability limitation in Art. IV(5). To overcome the effect of this decision, it will be possible for the carrier to insert a specific time and liability limitation clause for misdelivery.

The case was was approved and followed by the Malaysian Federal Court in The Lung Yung & Thai Yung, Owners & Ors v Sadit Timber Sdn Bhd & Ors [1984] 1 MLJ 29. The Alhani [2018] EWHC 1945 (Comm) will support the decision in this case.

Hague-Visby Rules discharges the carrier and shipper from all liability ‘whatsoever’ ‘in respect of the goods’. In the case of Hague Rules, the word ‘whatsoever’ is not there, but the words ‘in respect of the goods’ is there. Arguments have been advanced based on these words, in contrast to The Alhani and Peninsular and Oriental Steam Navigation, that the intention of the Rules is to globally provide the time limitation including in misdelivery and post-discharge damage cases. Even if that was not so in the case of Hague Rules, the argument goes, it is at least so in the case of Hague-Visby Rules with the additional word ‘whatsoever’. Similar argument can be advanced in the case of application of liability limitation regime in Art. IV(5) to misdelivery and post-discharge damage delivery cases with the words ‘in any event’ and ‘loss or damage to or in connection with the goods’. The words ‘in any event’ here has been widely interpreted, though not in the context of misdelivery or post-discharge damage: see Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd, The Kapitan Petko Voivoda [2003] EWCA Civ 451; [2003] 1 All ER (Comm) 801; [2003] 2 Lloyd’s Rep 1; (2003) Times, 17 April; [2003] All ER (D) 46 (Apr) (English CA), and Parker Distributors (Singapore) Pte Ltd v A/S D/S Svenborg & Anor [1982-1983] 1 SLR 153 (Singapore CA).

Overview by ARUN KASI