Singapore Airlines Ltd and Another v Fujitsu Microelectronics (Malaysia) Sdn Bhd and Others

• Jurisdiction: Singapore
• Judgment Date: 05 January 2001
• Date: 05 January 2001
• Docket Number: Civil Appeal No 21 of 2000
• Court: Court of Appeal (Singapore)

Singapore Airlines Ltd and another

Plaintiff

and

Fujitsu Microelectronics (Malaysia) Sdn Bhd and others

Defendant

[2000] SGCA 66

Yong Pung How CJ

,

L P Thean JA

and

Chao Hick Tin JA

Civil Appeal No 21 of 2000

Court of Appeal

Carriage of Goods by Air and Land–Carriage of goods by air–Contracts of carriage –Consignment of seven packages with non-delivery of one package–Whether limited liability extending to carrier and/or its agents–Issue of recklessness and knowledge that damage would probably result–Actual knowledge required–Recklessness alone insufficient–No evidence of probable loss or damage–Conduct of officer negligent, not reckless–Articles 22 and 25 of Warsaw Convention 1929 as amended by Hague Protocol 1955

Seven packages of goods were shipped to Kuala Lumpur by Singapore Airlines Ltd (“SIA”), the first appellant. The consignment arrived at Kuala Lumpur and was placed into the custody of the Malaysian Airlines System (“MAS”) Bhd's cargo centre. The next day, only six packages could be found and delivered to the consignee. The respondent sued for the loss of the seventh package. At the trial, it was not disputed that the respondents should be compensated for the loss.

The issue was whether in the light of circumstances under which the seventh package was lost, the appellants were entitled still to enjoy the limits of liability under Art 22 of the Warsaw Convention as amended by the Hague Protocol (“the amended convention”).

Article 25 provided that the limitation would not apply if it was proven by the claimant that the damages resulted from an act or omission of the carrier, or its agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result.

Though the trial judge found that neither MAS nor its employees had acted with intent to cause damage (which was undisputed), he ruled that the loss of the package was precisely the kind of loss that MAS had to have known would probably result from its practice of leaving a package which was found where it should not be in a warehouse.

In his view, MAS acted recklessly when it continued with that practice and that such continuation was “with knowledge that damage would probably result”. He further found that the loss of the seventh package resulted from this practice. Thus, he held that MAS, and thus SIA, were deprived of the right to rely on Art 22 to limit their liability for the loss of that package.

Held, allowing the appeal:

(1) Since the court below found no evidence that the carrier or its agent intended to cause the loss, only the second limb of Art 25 applied. It had to be established that (a) there was recklessness and (b) the carrier, or its servants or agents, knew that their act or omission would probably cause the loss. Recklessness per se was insufficient as the fact that there was recklessness did not necessarily mean that the person knew that damage would probably result. Knowledge which had to be proved was the actual knowledge of the wrongdoer, be it an individual or a group of individuals in a company: at [12], [23], [34] and [35].

(2) There was no evidence that the loss of the seventh package was due to the practice adopted at the warehouse of leaving a package which was found in a position that was not its rightful location. The practice did not necessarily amount to negligence, let alone recklessness. Neither MAS nor its cargo centre knew what happened to the missing package. There was no evidence which could infer knowledge of probable loss or damage to the package. The conduct of the second appellant's officer was not reckless; it was at most negligent: at [37] and [41].

Caswell v Powell Duffryn Associated Collieries, Limited [1940] AC 152 (refd)

Goldman v Thai Airways International Ltd [1983] 1 WLR 1186; [1983] 3 All ER 693 (folld)

Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 (refd)

Nugent v Michael Goss Aviation LtdThe Times (10 May 2000) (folld)

Seagate Technology International v Changi International Airport Services Pte Ltd [1997] 2 SLR (R) 57; [1997] 3 SLR 1 (distd)

SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288 (distd)

Carriage by Air Act (Cap 32A, 1989 Rev Ed)

P Selvadurai, Lok Vi Ming and Lawrence Teh (Rodyk & Davidson) for the appellants

Belinda Ang Fong SC and Gerald Yee (Ang & Partners) for the respondents.

Judgment reserved.

Chao Hick Tin JA

(delivering the judgment of the court):

Introduction

1 On 17 April 1996, seven packages of flash memory integrated circuit (“IC”) dies were shipped from Tokyo to Kuala Lumpur via Singapore by Singapore Airlines Ltd (“SIA”), the first appellant. The consignment arrived at Kuala Lumpur the next day and were placed into the custody of the Malaysian Airlines System (“MAS”) Bhd's cargo centre. However, on the following day, only six packages could be found and delivered to the consignee. The respondents instituted an action to claim for the loss. At the trial, it was not disputed that the respondents should be compensated for the loss. The issue was whether the appellants were entitled to invoke the limitation of liability under the Warsaw Convention as amended by the Hague Protocol (“the amended Convention”). The High Court ruled that the appellants were not entitled to the protection of the limitation of liability provided in the amended Convention. [See Fujitsu Microelectronics (Malaysia) Sdn Bhd v Singapore Airlines Ltd [2000] 1 SLR (R) 874.] This has led to the present appeal.

The background

2 SIA is the national carrier of Singapore and operates scheduled international commercial flights between,inter alia, Singapore/Tokyo and Singapore/Kuala Lumpur. The second appellant, MAS, is the ground handling agent of SIA at Kuala Lumpur.

3 The goods in the seven packages were sold by the second respondent to the first respondent. The third respondent was the consignor of the goods and the fourth respondent, the consignee and they both acted as agents for the second respondent and the first respondent respectively.

4 It was not in dispute that the seven packages were carried from Tokyo to Kuala Lumpur (via Singapore) and was delivered into the MAS cargo centre (“Cargo Centre”) at Subang International Airport, Kuala Lumpur at about 7.05am on 18 April 1996. For that carriage SIA issued Air Waybill No AWB 618-4101-8994 (“AWB 8994”) and the packages bore that number.

5 The computer system at the Cargo Centre maintained by MAS showed that as at 10.47am on the same day, the seven packages, after being unloaded from the aircraft, were placed in Bin No H031/C-6. However, about two hours later, a cargo clerk at the warehouse, Mr Nordin bin Abdullah (“Nordin”), found a package bearing air waybill AWB 8994 at Bin F095/B-2. He made an entry to that effect in the computer. However, as was the practice at the Cargo Centre, he left the package where he found it and did not put it back into its proper bin. But Nordin did enter the new bin number into the computer. There is no evidence as to how the package found its way into Bin F 095/B-2.

6 At about 6.19pm the same day, the fourth respondent asked for the delivery of the consignment. By 3.49am on 19 April 1996, only six of the seven packages could be found, five from Bin H031/C-6 and the sixth from Bin F095/B-2. The seventh package was never found and never delivered.

7 The claim of the respondents was on the basis of a breach of the contract of carriage and/or a breach of duty as carrier under the amended Convention and/or a breach of the common law duty of care.

Decision below

8 The trial judge ruled that the amended Convention applied to the carriage. This was not really in dispute. Article 22 of the amended Convention limits the liability of the carrier (and its agents) to 250 francs per kilogramme. However, Art 25 provides that the limitation would not apply if it is proven by the claimant that the damage resulted from an act or omission of the carrier or its agents done with intent to cause damage or recklessly and with knowledge that damage would probably result.

9 While the trial judge found that neither MAS nor its employees had acted with intent to cause damage, he nevertheless, having examined the operational systems adopted at the Cargo Centre, including the practice of leaving “unlocated” cargo where it was found without putting it back to its designated bin, the understaffed manpower condition, the volume of shipment handled, the numerous instances of cargo/mail reported lost or missing, held that the situation prevailing at the Cargo Centre exposed the imported air cargoes to a huge risk of loss through theft or misdelivery to the wrong consignee. He felt, in particular, that ( [1]supra at [50]):

The loss of that package was precisely the kind of loss that MAS must have known would probably result from its practice of leaving a package which is found where it should not be in a warehouse where cargo can be concealed to pass through the exits undetected.

In his view, MAS acted recklessly when it continued with that practice and that such continuation was “with knowledge that damage would probably result” (at [51]). He further found that the loss of the seventh package resulted from this practice. In the light of this finding, he held that MAS, and thus SIA, were deprived of the right to rely on Art 22 to limit their liability for the loss of that package.

Relevant provisions of the amended Convention

10 As stated, the sole issue in this appeal is whether, in the light of the circumstances under which the seventh package was lost, the appellants are still entitled to enjoy the limits of liability under Art 22. Also relevant in this regard are Arts 25 and 25A (1) and 25A (3). We should mention that the provisions of the amended Convention have been incorporated as part of the law of Singapore by virtue of the Carriage by Air Act (Cap 32A) and...