Court of Appeal, Malaysia
David Wong JCA, Mary Lim JCA, Harmindar Singh JCA
14 February 2017
CATCH WORDS
International Trade – Bill of Lading – Misdelivery without presentation of bill – Consignee did not hold bill at time of misdelivery, but held it after that – Conversion by wrongful receipt – Conversion by continued retention – Conversion by processing cargo – Cargo claim against person receiving cargo -Role of bona fide of the person receiving the cargo – Interplay between proprietary right and possessory right – Estoppel by suits of consignee against other wrongdoers in respect of loss of same cargo.
FACTS
A buyer purchased about half a million tons of crude palm oil from a seller, shipment from Belawan (in Indonesia) to Chittagong (in Bangladesh). The buyer paid the full contract price (USD1,874,317.25) to the seller in advance of shipment. The shipment was made on board the vessel Suppavan 1 on 8 November 2003. Bills of ladings were issued on the same date. In the meantime, the buyer had made an arrangement to on-sell the cargo to a sub-buyer (for USD1,917,965.75), which did not go through.
On 9 November 2003, seemingly at the instance of the sub-buyer, the shipowner delivered the cargo at Port Klang (in Malaysia) to the sub-buyer’s nominee without presentation of the bills. The delivery was made by discharge of the oil into the nominee’s shore tanks on 9 and 10 November 2003 (whereafter the nominee processed the cargo and produced resultant products). On 10 November 2003, the buyer received the bills.
The buyer sued the nominee in ‘conversion’ for the sub-sale price, USD 1,917,965.75. The nominee challenged the action with the following contentions.[i] First, the buyer obtained the bills only on 10 November 2003, and hence did not at the time of the alleged conversion have the possessory right (immediate right to possession) to maintain the action in conversion. Second, the nominee was a purchaser of the cargo in good faith by a chain of further sub-sale transactions flowing from the sub-buyer. Third, the buyer had sued the sub-buyer for the sub-sale price as well as conversion in two other actions and had obtained a judgment in one of them and lost the other. However, no was payment received from the sub-buyer who had by then been wound up.
The High Court found for the buyer and allowed the buyer’s claim. Hence the appeal by the nominee.
HELD (BY COURT OF APPEAL – UNANIMOUSLY)
On the first contention (standing of buyer to sue in conversion):
1. The buyer had made full payment to the seller before 8 November 2003. Thus, upon shipment on 8 November 2003, the property in the goods was transferred to the buyer.
2. As the buyer had the title to the goods at the time of discharge, the buyer had the possessory right at that time.
3. Accordingly, the buyer had the standing to maintain an action in tort of conversion in relation to the discharge (Leigh & Sullivan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon).[ii]
4. Even if the property in the goods did not pass to the buyer on 8 November 2003, it had at least passed on 10 November 2003 when the buyer received the bills and thus the possessory right, which the buyer retained at all material times thereafter (Enichem Anic SpA and Others v Ampelos Shipping Co Ltd, The Delfini).[iii]
5. Accordingly, by 10 November 2003, the buyer had the standing to maintain an action in tort of conversion.
As to act of conversion:
6. It was an act of conversion for the nominee to receive the cargo belonging to the buyer, without authority, on 9 and 10 November 2003 (Clerk & Lindsell on Torts).[iv]
7. As the nominee continued to retain the cargo and processed it after 10 November 2003, the nominee had committed conversion at least by these acts.
On the second contention (good faith purchase claim):
8. For a conversion action, it does not matter whether the defendant – nominee – acquired the cargo in good faith (Marfani & Co Ltd v Midland Bank Ltd).[v]
On the third contention (two other suits against sub-buyer):
9. The buyer has an independent right of action against each tortfeasor (Clerk & Lindsell on Torts).[vi]
- Accordingly, the two other suits are not a bar to this action
Disposition:
- Appeal dismissed with costs of RM20,000.
OBSERVATION
On standing of the buyer:
1) When did the buyer acquire title to the goods?
Property in goods passes when it is intended to pass as between the seller and the buyer.[vii] For property to pass, the goods must be ascertained and unconditionally appropriated to the contract.[viii]
When goods are delivered to the carrier to transmit them to the buyer, without reservation of right of disposal, unconditional appropriation is deemed to happen, so property will pass.[ix] Where bill of lading is to the order of the seller, prima facie right of disposal is reserved, so property will not pass.[x] When goods are shipped and payment is made, generally, property will pass.[xi]
In this case, the property (also called ‘title‘ and ‘proprietary right‘) would have passed when the cargo was shipped on 8 November, since full payment was already made by then.
2) Are proprietary right and possessory right interconnected?
When goods are in transit, the possessory right (also called ‘immediate right to possession‘ and ‘constructive possession‘) is with the lawful holder of the bill.[xii] The proprietary right will pass according to the Sale of Goods Act. They may not coincide, although in some cases like bearer bill both the possessory and the proprietary rights will be represented by the bill. Accordingly, the two are not necessarily interconnected.[xiii]
In fact, in the UK and in Singapore, s. 2(4) of their respective Acts[xiv] envisages the possessory rights and the proprietary rights falling in different persons, and expressly makes provision for the holder of the bill to take action against the carrier for the benefit of any other person having interest or right over the goods. There is no equivalent statutory provision to this in Malaysia. However, even in the absence of such statutory provision, the position is the same at common law, which will apply in Malaysia.[xv] As early as 1839 it was held in Dunlop v Lambert[xvi] that the holder of the bill who has suffered no substantial damages may, at common law, obtain substantial damages for the benefit of a third party who has actually suffered those losses.
3) When did the buyer acquire the possessory right?
Ordinarily, the buyer would acquire the possessory right when it received the bill, in this case on 10 November. However, the point is more complex in this case.
The immediate right to possession is one against the carrier.[xvii] If one comes to hold the bill when the carrier has the actual possession, then the holder will have the constructive possession because he has the immediate right to possession against the carrier. In such case, if the carrier subsequently misdelivers the goods – misdelivery meaning delivery to a wrong person – then the carrier has interfered with the constructive possession (i.e. immediate right to possession) of the holder of the bill at the point and time of misdelivery.[xviii] Thus, at that point and time, the carrier has committed the tort of conversion.[xix] It is a fact that once the conversion has happened the holder of the bill no longer has any right to possession against the carrier, as the carrier himself does not have possession.[xx] So what happens is that at the time of conversion, the right to possession against the carrier that existed up to and at the time conversion is turned into a right for damages for the conversion against the carrier as the tortfeasor.
However, if the carrier did not have the actual possession of the goods at the time when the holder of the bill came into possession of the bill, then the holder of the bill cannot acquire any constructive possession by coming to hold the bill. Accordingly, the holder of the bill cannot sue the carrier in conversion, as there was no interference by the carrier of any possessory right of the holder of the bill.[xxi] But this does not affect the transfer of the contract embodied in the bill to the holder of the bull, so that he can sue the carrier for breach of the contract in non-delivery of the goods to him,[xxii] as the contractual rights of the shipper under the bill of lading contract are transferred to the holder of the bill.[xxiii]
In this case, as the carrier no longer had the actual possession at the time the buyer received the bill, the buyer could not, and did never, acquire any immediate right to possession against the carrier (constructive possession).
However, one case will support an argument contrary to this. That is Bristol and West of England Bank v Midland Railway Company.[xxiv] In this case, an action was taken by a holder of a bill of lading, the bank to which the bill was pledged, against the carrier for conversion committed prior to the bank coming to hold the bill. The court allowed the claim. It appears that the court had treated that the rights of suit in earlier conversion in respect of the cargo had been transferred to the subsequent holder of the bill. However, this is a difficult proposition as both under s. 1 of the Bills of Lading Act 1855[xxv] and under s. 2(1) of the Carriage of Goods by Sea Act 1992[xxvi] what passes on are only the rights in contract and not tort.[xxvii] The court seemed to suggest that independent of the 1855 Act, applicable at that time, the rights for a conversion-action had been transferred to the holder of the bill, at common law. But there does not seem to be any precedent at common law that a bill of lading contract carries with it tort-action rights. What might have influenced the court to arrive at the result that it arrived is possibly the need to to do overriding justice to the case, since it cannot be doubted that the bank had a right of action against the carrier for non-delivery based on the bill of lading contract, although the case did not seem to be so pleaded. If this case were to be followed, that will mean the rights of action in conversion that happened before the buyer came to hold the bill was nevertheless transferred to the buyer, hence the buyer can maintain an action in conversion. It is opined that this case should not be followed for reasons already discussed and there is no need to expand the law as suggested by this case as the holder of the bill in such a situation will always have his rights of action under the bill of lading contract.[xxviii]
4) On 9 and 10 November (dates of delivery), who had the possessory right, if not the buyer?
The possessory right, until 10 November, was with the seller as the holder of the bill or shipper named in the bill[xxix]. Hence, the right to sue the carrier for any conversion in delivery of the cargo to the nominee on 9 and 10 November would be with the seller,[xxx] although he had sold the cargo and collected full payment before that. For an action in conversion, it matters not whether the claimant was the owner of the goods at the time of conversion, as a conversion action is based purely on possession or right to possession.[xxxi] In fact, it is common for banks, as holder of bill of lading, to sue carriers for conversion – although the banks are not the owner of the cargo.[xxxii]
5) What was the wrong committed by the carrier, the liability for it and to whom the liability is owned?
It is a most settled law that it is a misdelivery for a carrier, carrying goods subject to a bill of lading, to deliver otherwise than against presentation of the original bill of lading.[xxxiii] This is a strict liability.[xxxiv] This is so even if the person receiving the bill gives a letter of indemnity to the carrier (which is quite common), he is the actual owner (whilst the bill may be held by his bank), the carrier delivers against a bill that turns out to be a forged one.[xxxv] If a carrier misdelivers, he will be liable to the holder of the bill: (i) in tort of conversion for interfering with the possessory right of the holder of the bill; (ii) for breach of contractual obligation in the bill of lading to deliver to the holder of the bill, i.e. liability for non-delivery.
The two things – misdelivery and non-delivery – are often confused.[xxxvi] Non-delivery is a nonfeasance. Misdelivery is a misfeasance or malfeasance. For ‘non-delivery’, an action lies in contract for breach of contract embodied in the bill of lading. The breach is committed at the time the carrier is supposed to deliver but fails or at a time when the carrier incapacitates itself from performing the delivery obligation in the contract by a misdelivery. For ‘misdelivery’, an action lies in tort for conversion. The tort is committed at the time when the carrier misdelivers to a person without presentation of the bill of lading. The distinction is thus, although both may coincide. A misdelivery will necessarily also be a non-delivery, but a non-delivery may or may not be also a misdelivery.
Accordingly, in this case, the carrier has committed both misdelivery and non-delivery. The carrier’s liability for misdelivery in conversion is only to the person who had the possessory right at the time of conversion.[xxxvii] Hence, it is to the seller, in this case.[xxxviii] The carrier’s liability for non-delivery is to the holder of the bill, to whom all the rights under the bill of lading contract is transferred to,[xxxix] extinguishing the rights of the shipper.[xl]
6) Did the nominee acquire title to the cargo?
The general rule is that nemo dat quod non habet, that is ‘no one gives what he does not have.’ This in effect means that only an owner of the goods can pass title, hence if a purchaser purchases or gets them from someone who is not the owner, the purchaser will not acquire the title.
This rule has been statutorily codified in Malaysia, Singapore and the UK. In Malaysia, the general rule is in s. 27 of the Sale of Goods Act 1957, and the exceptions in ss. 27 – 30. In Singapore, the general rule is in s. 21 of the Sale of Goods Act, and the exceptions in s. 21, 23 – 26. In the UK, the same section numbers, in the Sale of Goods Act 1979, except that there is an additional exception in s. 22. Generally, the exceptions are when a buyer purchases the goods in good faith for value where (i) the goods had been sold with authority of the owner; (ii) the owner is estopped from denying the seller’s authority by conduct; (iii) sale is by a person holding a voidable title that has not been avoided at the time of the sale; (iv) sale is by the seller or purchaser in possession after sale or sub-sale of the goods or document of title to the goods; or (v) sale is by a mercantile agent, having customary authority, of the said seller or purchaser. If a purchaser purchases the goods in transit, in the ordinary way, by transfer of the bill of lading, then he will fall within the exception nos. (i), (ii) or (iv).[xli] It must be observed that ‘good faith’ of the purchaser is irrelevant unless the purchase falls within one of the excepted categories.
In this case, the nominee purchased it without the bill of lading. Hence, no exception to the general rule will apply and the nominee could not get title. This will mean the title at all material times from 8 November has been with the buyer.
7) On 9 and 10 November (dates of delivery), was there any conversion by the nominee, and if so, who had the right of action?
In attempting to answer this question, it will be helpful first to visit some of the popular definitions of ‘conversion’. Salmond[xlii] defines conversion as “[t]he wrong of conversion consists in any act of wilful interference with a chattel, done without lawful justification, whereby any person entitled thereto is deprived of the use and possession of it.” Clerk & Lindsell[xliii] defines it as “an act of deliberate dealing with a chattel in a manner inconsistent with another’s right whereby that other is deprived of the use and possession of it”. This was accepted by the English Court of Appeal in Kuwait Airways Corp v Iraqi Airways Co (Nos 4 & 5)[xliv] as accurately summarising the tort of conversion. In this case, Lord Nicholls enunciated the test for ‘conversion’ as:
First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession).
Second, the conduct was deliberate, not accidental.
Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods.
Conversion is a tort of strict liability[xlv] ‘in which the moral concept of fault in the sense of either knowledge by the doer of an act that it is likely to cause injury, loss or damage to another, or lack of reasonable care to avoid causing injury, loss or damage to another, plays no part.’[xlvi]
Some of the categories Clerk & Lindsell[xlvii] give of conversion include:
- when property is wrongfully taken or received by someone not entitled to do so;
- when it is wrongfully parted with;
…
(e) when it is wrongfully retained;
…
(g) when the defendant, without physically interfering with it, wrongfully denies access to it to the claimant.
From the above, it cannot be doubted that wrongfully receiving a cargo will amount to conversion.
As the nominee received the cargo, without the bill of lading and without the authority of the person having the possessory rights at that time namely the seller, the nominee had committed a conversion. The right of action for this is with the seller.[xlviii]
The bona fide argument, which it will be hard to advance when a purchaser purchased goods in transit without bill of lading, is nevertheless irrelevant to a case in conversion – a strict liability tort. A purchaser who purchases goods in transit without bill of lading should know the risk that he takes in so doing and that any of his remedy will be against the seller if subsequently there is a claim by any other person entitled to the cargo.
8) After 9 and 10 November (dates of delivery), was there any conversion by the nominee in continuing to retain and process the cargo, and if so, who had the right of action?
One of the categories of conversion identified by Clerk & Lindsell[xlix] is wrongful retention of the goods against the one having the possessory rights – this in fact recognises conversion can be a recurring tort.[l] Another is wrongfully denying access to the person having the possessory rights.
Both the categories beg the question who had the possessory rights over the cargo, during the time they were retained by the nominee and until they were processed and transformed into some other products.
The starting point, generally in law, is that ordinarily the one having the proprietary right will also have the possessory right. However, by action subsequent to his becoming the owner or by circumstances subject to which he became the owner, his possessory rights might be or become detached and pass on to another. For example, one buys a car. Upon becoming the owner, he must also have the possessory right. But if he lets the car on hire, then he has parted with his possessory rights for the period of the let. The same thing may be true if he buys a the car that is already subject to a lease to a hirer. During the period of the let or lease, if the owner interferes with the possession of the hirer, the hirer will have an action in conversion against the owner.[li]
A bill of lading is an instrument that will so detach the possessory rights from the owner to the holder, where the two are different persons. When the bill of lading is spent, by delivery of the goods by the carrier whether rightly or wrongly, the bill no longer represents the goods and the detachment by the bill comes to an end. After this if there is no person other than the owner acquiring the possessory rights as allowed by the law, then they must come back to or vest in the owner.
Accordingly, in this case, the possessory rights after 10 November must have been held by the buyer. This proposition is supported by the fact that after 10 November, the buyer could have gone to the court for an order of specific relief[lii] to compel the nominee to deliver the cargo to the buyer. Hence, the buyer would have the right of action in respect of any conversion that has happened after 10 November.
When the nominee retained the cargo after 10 November, that was contrary to the possessory rights of the buyer. Hence, the nominee committed conversion. Similarly, the nominee acted contrary to the possessory rights of the buyer by processing the cargo to produce other products, and hence committed conversion. However, once the cargo has been processed, there will no longer be any immediate right to possession of the cargo that no longer exist. Accordingly, the buyer would have a right of action in conversion against the nominee for the conversion that took place from the starting time of retention after 10 November to the time of processing.
9) Is an action in detinue available to the buyer for the retention and processing by the nominee after 10 November?
Detinue (tort) is another possible action in this case. Detinue is similar to conversion, but is more centered on refusal by a person to deliver up goods when demanded by a person having the right to immediate possession. If the buyer had demanded such delivery before the goods were processed, then it will also have an action in detinue. A claim in detinue will be for return of the goods coupled with a claim for value of the goods as damages in the alternative.[liii] The time for assessment of damages will be at the time of judgment rather than at the time when the wrong was committed, demand was made or when they should have been returned.[liv] This is because detinue, unlike conversion, is considered to be a continuing wrong.[lv]
Whilst ‘detinue’ as a cause of action survives in Malaysia[lvi] and in Singapore,[lvii] it was abolished in England, Wales and N. Ireland by s. 2(1)Torts (Interference with Goods) Act 1977 and apparently replaced with a scheme of tort called interference with goods.[lviii]
If an action in detinue was to be taken, that must have been by the buyer, as the person having the right to immediate possession and upon whose demand the nominee refused to delivery up the cargo.
10) Are there any other remedies available to the buyer, as the ‘owner’, against the nominee for ‘infringement of proprietary right’?
This is an area of gap in the common law. That was well said by Lady Hale in OBG Ltd and another v Allan and others Douglas and others v Hello! Ltd and others (No 3) Mainstream Properties Ltd v Young[lix] as follows:
The common law, as is well known, lacked any general proprietary remedy equivalent to the Roman law vindicatio. It provided three separate remedies for wrongfully taking away, keeping, or disposing of another’s goods: trespass, detinue and trover or conversion.
Trespass to goods will be where such as a one interferes with goods in possession of another with the result that the later suffers a loss. For example, in Transco Plc v United Utilities Water Plc,[lx] the court held that it was a trespass to goods where workmen performing repairs underground mistakenly closed a gas stopcock servicing the claimant, and hence liable for the interrupted gas supply to the claimant.
It must be observed that all the three causes of action in relation to interference with goods – (i) conversion (also called trover); (ii) detinue and (iii) trespass to goods – are all based on possession or possessory right of the claimant, and not the proprietary right.
Comparatively, Roman law had direct relief when one’s ownership in goods has been infringed by another interfering with the goods, of which there is no equivalent at common law. A brief statement of the Roman law on this point appears in A Casebook on Roman Property Law[lxi] as follows:
The Roman action called vindicatio or rei vindicatio (“vindication of property”) is the action through which an owner who is out of possession sues to recover possession of his property. It is used both for movable and immovable property. The defendant in a vindicatio is the current possessor (or someone who holds for the possessor). If the defendant’s possession is lawful (i.e., with iusta causa), then the defendant has an affirmative defense to the action based on the nature of that causa. As shown by the formula at the head of this chapter of the Casebook, if the defendant loses the action and refuses to restore the property, then he will be assessed the value of the property in dispute.
But what is available in Malaysia, Singapore and the UK is largely what is there in the common law and equity, subject to some statutory additions. In England, Wales and N. Ireland, there is Torts (Interference with Goods) Act 1977. In Malaysia, there is Specific Relief Act 1950,[lxii] which deals with reliefs of equitable nature and injunctions and will be of relevance in restoring when one’s proprietary rights have been wrongfully interfered with or infringed.
However, it has been seen in a number of cases that courts have used the words ‘proprietary right’ and ‘possessory right’ interchangeably when dealing with conversion.[lxiii] That does not seem to be in line with the law. In any event, that does not seem to be intended to extend the law of conversion, by ratio, to cover proprietary right. The statement by Lady Hale in OGB Ltd case[lxiv] appears to accurately state the position of the common law in this area.
Overall:
11) Commentary on overall result arrived by the court
It is opined, with due respect, that the net result arrived by the court can be sustainable but on largely different, limited and arguable grounds: namely conversion or detinue by retention and processing of the cargo by the nominee after 10 November.
Overview by ARUN KASI
[i] Among others.
[ii] [1986] 2 All ER 145, speech of Lord Brandon at p. 149(UK HL).
[iii] [1990] 1 Lloyd’s Law Rep 252, speech of Lord Justice Mustill at p. 268 (EW CA).
[iv] 20th edn, at para 17-09. It is at the same para in the latest Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017.
[v] [1968] 1 WLR 956 (EW CA), speech of Diplock LJ at pp 970-971; RH Willis & Son v British Car Auctions Ltd [1978] 1 WLR 438, speech of Lord Denning MR at 441 (EW CA).
[vi] 20th edn, at para 17-125. It is at para 17-125 in the latest Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017.
[vii] Sec. 19 Malaysian Sale of Goods Act 1957 / s. 17 Singapore Sale of Goods Act / s. 17 UK Sale of Goods Act 1979.
[viii] Sections 18 and 23 in Malaysia / ss. 16 and 18 r. 5(1) in Singapore / ss. 16 and 18 r. 5(1) in the UK. In Singapore and the UK, there are exceptions to the requirement of ascertainment in s. 20A of their respective Acts, when a specified quantity of unascertained goods forming part of an identified bulk is sold.
[ix] Sec. 23(2) in Malaysia / ss. 18 r. 5(2) in Singapore / ss. 18 r. 5(2) in the UK.
[x] Sec. 25(2) in Malaysia / s. 19(2) in Singapore / s. 19(2) in the UK.
[xi] Mitsui & Co Ltd v Flota Mercante Grancolombiana SA (The Ciudad de Pasto and The Ciudad de Neiva); The Ciudad de Pasto [1989] 1 All E.R. 951; [1988] 2 Lloyd’s Rep. 208; [1988] 4 WLUK 98; Times, April 27, 1988; [1989] C.L.Y. 3330 (EW CA), speech of Staughton LJ at [1989] 1 All ER 951 at p. 957: “It seems to me that in the ordinary way a seller will not wish to part with the property in his goods if they are shipped overseas until he has been paid in full.” In this case, when 80% of the contract price has been paid in advance of shipment, the court held that the property in the goods did not pass to the buyer.
[xii] Enichem Anic SpA and Others v Ampelos Shipping Co Ltd; The Delfini [1990] 1 Lloyd’s Law Rep 252; (1989) Times, 11 August (EW CA), speech of Lord Mustill at [1990] 1 Lloyd’s Law Rep 252 p. 268: “the bill of lading fulfils two distinct functions. 1. It is a symbol of constructive possession of the goods which … can transfer constructive possession by endorsement and transfer; it is a transferable ‘key to the warehouse’. 2. It is a document which, although not itself capable of directly transferring the property in the goods which it represents, merely by endorsement and delivery, nevertheless is capable of being part of the mechanism by which property is passed.”
[xiii] The Delfini, supra.
[xiv] Carriage of Goods by Sea Act 1992 in the UK, and Bills of Lading Act in Singapore.
[xv] By virtue of ss. 3(1)(a) and 5 of the Civil Law Act 1956.
[xvi] (1839) 6 Cl & F 600.
[xvii] In the context of the law relating to bill of lading.
[xviii] Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-43: “A person has title to sue for conversion if and only if he had, at the time of the conversion, either actual possession or the immediate right to possess the property concerned.”
[xix] General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 2 All ER 314; [1963] 1 WLR 644, 107 Sol Jo 29 (EW CA), speech of Diplock LJ at [1963] 2 All ER 314 at p. 317: “There are important distinctions between a cause of action in conversion and a cause of action in detinue. The former is a single wrongful act and the cause of action accrues at the date of the conversion; the latter is a continuing cause of action which accrues at the date of the wrongful refusal to deliver up the goods and continues until delivery up of the goods or judgment in the action for detinue.”
[xx] Primetrade AG v Ythan Ltd [2005] All ER (D) 05 (Nov); [2005] EWHC 2399 (Comm) at paras 68, 70: “there cannot be a right (against the carrier) to possession of the goods if the goods no longer exist … If the reason for the loss is a breach of contract by the carrier, there may at that stage spring up a contractual right to damages”. Although this case mentions that there may spring a right to contractual damages, that does not rule out damages for conversion in tort, a right well settled in law when one’s possession or immediate right to possession has been unlawfully interfered with – see Kuwait Airways Corp v Iraqi Airways Co (Nos 4 & 5) [2002] UKHL 19; [2002] 2 AC 883; [2002] 3 All ER 209; [2002] 2 WLR 1353; [2002] 1 All ER (Comm) 843; [2003] 1 LRC 430; (2002) Times, 21 May; [2002] All ER (D) 252 (May) (UK HL).
[xxi] The Cherry and Others [2003] 1 SLR 471 (Singapore CA): In this case, the owners of the vessel Cherry misdelivered the goods. The cargo owner, who did not hold the bill at the time of misdelivery, sued the shipowner for conversion. The court disallowed the claim, as a claim in conversion was only available to a person who held the immediate right to possession, i.e. holder of the bill. The Future Express [1993] 2 Lloyd’s Rep. 542; [1993] 7 WLUK 364; [1994] C.L.Y. 4046 (English CA): In this case, the bank received the bill of lading after the cargo had been misdelivered by the carrier. The bank sued the carrier for conversion, which the court disallowed as the bank did not have possessory right at the time of conversion. Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-45: “The right on which a conversion claimant relies must have existed at the time of the alleged conversion.
[xxii] Primetrade AG v Ythan Ltd, supra.
[xxiii] In Malaysia, by s. 1 of the UK Bills of Lading Act 1855 (effective in Malaysia by virtue of s. 5 of the Civil Law Act 1956). In the UK, by s. 2(1) of the Carriage of Goods by Sea Act 1992, subject to ss. 2(2) and 5(2). In Singapore, by same section numbers of the Bills of Lading Act.
[xxiv] [1891] 2 Q.B. 653; 61 LJQB 115, 7 Asp MLC 69, 40 WR 148; 65 LT 234, 7 TLR 627 (WA CA).
[xxv] Applicable in Malaysia by virtue of s. 5 of the Civil Law Act 1956.
[xxvi] Currently in force in the UK.
[xxvii] See Primetrade AG v Ythan Ltd, supra.
[xxviii] In Malaysia, by s. 1 of the UK Bills of Lading Act 1855 (effective in Malaysia by virtue of s. 5 of the Civil Law Act 1956). In the UK, by s. 2(1) of the Carriage of Goods by Sea Act 1992, subject to ss. 2(2) and 5(2). In Singapore, by same section numbers of the Bills of Lading Act.
[xxix] Depending on the terms the bill was issued (eg. to order of the shipper, to order of any other person like buyer’s bank, to bearer or straight consigned to consignee). If a bill has not gone out of the hands of the shipper, irrespective of to order of whom it is issued, the seller will have a right to return the bill to the carrier for switching or delivery of the cargo, hence the possessory right.
[xxx] Subject to a contrary argument that can be advanced based on Bristol and West of England Bank v Midland Railway Company, supra, the limitations to which has been discussed earlier.
[xxxi] Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-43: A person has title to sue for conversion … It is not necessary to prove ownership, and indeed even an owner may not sue unless he either possesses or has the immediate right to possess.”
[xxxii] eg. Bristol And West Of England Bank v Midland Railway Company [1891] 2 Q.B. 653; 61 LJQB 115, supra.
[xxxiii] Chabbra Corpn Pte Ltd v Jag Shakti (owners); The Jag Shakti [1986] AC 337; [1986] 1 All ER 480; [1986] 2 WLR 87: [1987] LRC (Comm) 228; [1986] 1 Lloyd’s Rep 1, 130 Sol Jo 51; [1986] LS Gaz R 45 (PC on appeal from Singapore).
[xxxiv] Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5), supra: conversion is a tort of strict liability.
[xxxv] The Jian He [2000] 1 SLR 8 (Singapore CA); Motis Exports Ltd v AF 1912 [2000] 1 Lloyd’s Rep 211 (EW CA).
[xxxvi] Minmetals South-East Asia Corp Pte Ltd v Nakhoda Logistics Sdn Bhd [2018] MLJU 859 (Malaysia CA).
[xxxvii] Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-43, supra.
[xxxviii] However, if Bristol and West of England Bank v Midland Railway Company, supra, is followed, then the buyer can be treated as a person who can maintain an action in conversion. The limitations to accepting this case as representing the right law has been discussed, supra.
[xxxix] Sec. 1 of the UK Bills of Lading Act 1855 (effective in Malaysia by virtue of s. 5 of the Civil Law Act 1956), s. 2(1) of the Carriage of Goods by Sea Act 1992 in the UK and s. 2(1) of the Bills of Lading Act in Singapore provide for transfer of rights of suits under the bill of lading contract to the lawful holder of the bill. Sections 2(2) and 5(2) in the UK and Singapore Act specifically provide for the transfer of rights where the holder of the bill comes into possession of the bill when the bill no longer gives a right (as against the carrier) to possession of the goods, provided that (i) he so came to possess by virtue of a transaction made when the bill represented the cargo or (ii) the bill is returned to him upon rejection of the bill or goods by another.
[xl] Sec. 2(5) in the UK Carriage of Goods by Sea Act 1992 and the Singapore Bills of Lading Act. There is no equivalent statutory provision applicable in Malaysia. However, even in the absence of such provision, there is no restriction in transfer of rights in such situation under the s. 1 of the Bills of Lading Act 1855, applicable in Malaysia.
[xli] His good faith will usually not be an issue, as he has purchased by transfer of bill of lading – an instrument recognised as document of title.
[xlii] Salmond on Torts (1907), p 284.
[xliii] 22nd edn., UK, Sweet & Maxwell, 2017, para 17-17.
[xliv] Supra.
[xlv] Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5), supra.
[xlvi] Marfani & Co Ltd v Midland Bank Ltd [1968] 1 WLR 956 (EW CA), speech of Diplock LJ at pp. 970-971.
[xlvii] 22nd edn., UK, Sweet & Maxwell, 2017, para 17-08.
[xlviii] This point had already been discussed at length earlier, together with possible contrary argument by reference to Bristol And West Of England Bank v Midland Railway Company, supra.
[xlix] 22nd edn., UK, Sweet & Maxwell, 2017, para 17-08.
[l] Although General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd, supra says that conversion is a single wrongful act as opposed to a continuing cause, but that does not mean that conversion cannot be committed by recurring acts such as retention.
[li] See Brierly v Kendall (1852) 17 QB 937; 21 LJQB 161; 16 Jur 449; 117 ER 1540; 18 LTOS 254.
[lii] Perpetual mandatory injunction.
[liii] See Rosenthal v Alderton & Sons Ltd [1946] KB 374; [1946] 1 All ER 583; 174 LT 214 (EW CA). See also Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-43.
[liv] See Rosenthal v Alderton & Sons Ltd, supra. See also Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, para 17-43.
[lv] General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd, supra.
[lvi] See Rules of Court 2012 – Order 13 rule 3 and Order 19 rule 4.
[lvii] See Antariksa Logistics Pte Ltd and others v McTrans Cargo (S) Pte Ltd [2012] SGHC 154; [2012] 4 SLR 250, para 158 (SG HC).
[lviii] Clerk & Lindsell on Tort, 22nd edn., UK, Sweet & Maxwell, 2017, paras 17-03, 17-88, 19-94. One of the extensions made by this Act is to extend conversion to include ‘loss or destruction of goods which a bailee has allowed to happen in breach of his duty to his bailor … which is not otherwise conversion’ (s. 2(2)).
[lix] [2007] UKHL 21; [2008] 1 A.C. 1 (UK HL), speech of Lady Hale at para 308.
[lx] [2005] EWHC 2784 (EW QB).
[lxi] Herbert Hausmaninger, et al, A Casebook on Roman Property Law, USA, Oxford University Press, 2012, Ch 4.
[lxii] A similar statute in India is Specific Relief Act 1872 (as in a number of commonwealth jurisdictions).
[lxiii] Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5), supra.
[lxiv] infra.