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08 January 2020
In Minmetals South-East Asia Corporation Pte Ltd v Nakhoda Logistics,(1) the plaintiff contracted with the respondent (defendant-carrier) to carry a cargo comprising several consignments of timber. The plaintiff had paid in full for the timber and became the legal and beneficial owner thereof. However, there was no physical purchase of timber, only the purchase of the 25 sets of bills of lading (House B/Ls), which would enable the plaintiff to sell the timber to other buyers – Jiangsu Sopo and Shanghai Unidev. The House B/Ls were issued by the defendant-carrier. The ocean liner Yang Ming Marine Transport Corporation issued ocean bills of lading (Ocean B/Ls) for the cargo in favour of the shipper to the defendant-carrier for the voyage from Port Klang to Shanghai Port. Both bills of lading had the same terms.
In the House B/Ls, Jiangsu Sopo was listed as the notifying party. However, issues arose and payments could not be made by Shanghai Unidev. The original House B/Ls were returned to the plaintiff by its bank and the plaintiff remained the owner of the cargo. Subsequently, the plaintiff decided to collect the cargo itself, as it remained the owner and held the original bills of lading, which were blank endorsed.
When the original House B/Ls were checked, it was found that they bore no particulars of the carrier or agent in Shanghai from which the plaintiff should collect the cargo. It was also discovered that the bills of lading were House B/Ls and that there should have been a corresponding set of Ocean B/Ls. There was no information of the ocean carriers or Ocean B/Ls to be exchanged with the House B/Ls so that the plaintiff could collect the cargo. The plaintiff thus commenced an action seeking damages for the defendant-carrier's failure to deliver the cargo despite the demands made on the presentation of the original House B/Ls.
The plaintiff claimed that the defendant-carrier's failure, refusal or neglect to deliver the goods when the original bills of lading had been presented amounted to a fundamental breach of the underlying contract to carry goods, which subjected the carrier to liability for breach of the contract of carriage and/or conversion.
In the High Court, it was held that the defendant-carrier had not breached the contract by refusing to facilitate the exchange of the master bills of lading for the House B/Ls because the plaintiff was the party which had failed to take delivery of the cargo through the proper procedure and had failed to plausibly explain the seven-month delay from the discharge of the cargo in Shanghai Port. In the event that the High Court had erred in its decision and the defendant-carrier was liable for breach of contract, the plaintiff was entitled only to RM2,256,968.70 as losses suffered, Article III, Rule 6 of the Hague Rules would apply and the plaintiff's claim would be barred by the one-year limitation period.
The plaintiff was allowed to appeal to the Court of Appeal based on liability and quantum.
The plaintiff moved the court to decide whether:
Having considered the facts and the High Court's decisions, the Court of Appeal found as follows:
In conclusion, the Court of Appeal made the following rulings:
For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2070 0644) or email (firstname.lastname@example.org). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.
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