The "Neptune Agate"

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 19 July 1994
• Neutral Citation: [1994] SGHC 187
• Date: 19 August 1994
• Docket Number: Admiralty in Rem No 196 of 1988
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: S Suresh and Tan Chau Yee (Allen & Gledhill)
• Citation: [1994] SGHC 187
• Defendant Counsel: Steven Chong and Sin Lye Kuen (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Goods stored with carrier's agents at container terminal,Whether mere negligence sufficient to render limitation clause inapplicable,Whether carrier had discharged burden of showing that damage could not have been prevented by the exercise of reasonable diligence,Principles governing limitation clauses different from exemption clauses,Whether limitation clause applicable,Limitation clauses,Bills of lading,Voyage charterparties,Damage to goods by flooding,Damage caused by flooding,Whether consignor of goods can sue carrier for substantial damages,Admiralty and Shipping,Carriage of goods by sea,Title to sue

Cur Adv Vult

This is a claim by cargo interest for flood damage to goods in the custody of the defendants` agents at a container terminal along the Keelung River near Hsichi, Taiwan.

By a contract entered into between the first plaintiff and the defendants` agents, Southward Corp, the defendants agreed to carry six containers containing computer goods from Keelung to Dublin, Ireland. On or about 21 October 1987, two of the containers were delivered to a container terminal owned and operated by Worldwide Freight Terminal Ltd (WFT). The container terminal is situated along the left bank of the Keelung River. The containers were left on open grounds of the terminal awaiting customs clearance. In the next three days, the combined effect of a typhoon (Lynn) and the then prevailing northeast monsoon resulted in increasingly heavy rainfall and in the Keelung River breaking its banks and flooding the WFT terminal. The flood water went into the containers to a height of about a metre and some of the goods in the containers were damaged. The plaintiffs claim for the consequent loss and damage.

The following matters are agreed or are not disputed. Firstly, there was a contract of carriage entered into orally between officers of the first plaintiffs and the defendants` agents, Southward Corp, for the carriage of the two containers. Secondly, although no bill of lading had in fact been issued in respect of the two containers, it is agreed that the contract of carriage incorporated the defendants` standard form of combined transport bill of lading for use in their Far East-Europe services, and all its provisions are applicable. Thirdly, delivery of the two containers to WFT constituted delivery to the defendants.

The applicable law

Clause 30 of the bill of lading provides that Singapore law is the applicable law, as follows:

Law and jurisdiction

The contract evidenced hereby or contained herein shall be governed by Singapore law. Any claim or other dispute thereunder shall be solely determined by the Singapore courts unless the carrier otherwise agrees in writing.

Clause 7 provides, inter alia, for the application, at the option of the parties, of the mandatory rules of any applicable international convention or the national law, in this case, the law of Taiwan. However, I was informed by counsel that the parties had agreed that Singapore law should apply. It was not made clear to me whether that would include the Carriage of Goods by Sea Act (Cap 33). As no reference is made by counsel in their submissions to that Act, I shall assume that it does not apply. I shall, as agreed by counsel, decide the parties` rights and liabilities in accordance with the provisions of the bill of lading and the general law of Singapore, except for one point raised by the plaintiffs under cl 7 (2) of the bill of lading, where they contend that the Hague Rules package limit is applicable, if any limit is applicable.

I shall now deal with the issues raised. There are three: first, the title of the plaintiffs to sue; second, whether the defendants can avail themselves of what I might call the force majeure provisions of the bill of lading; and, third, whether they can avail themselves of the limitation of liability provisions of the bill of lading.

Plaintiffs` title to sue

First, the plaintiffs` title to sue. Zenith appears to be an American conglomerate of companies headquartered in Chicago with subsidiaries in various parts of the world organized along functional lines. The first plaintiffs, which I shall refer to as Zenith Taiwan, are responsible for the production of the products required to meet orders by customers. Orders are placed with the USA entity, Zenith Electric Corp, which I shall refer to as Zenith USA. The orders are transmitted by Zenith USA to Zenith Taiwan by electronic mail or telephone. After the goods ordered are produced, they are shipped to the Zenith entity in the part of the world where the goods are required.

In the case of the goods in question in this suit, they were to be shipped to Zenith Ireland, the third plaintiffs, who served as the distribution centre for Europe. Although the goods were to be shipped to Zenith Ireland, two invoices were issued purporting to show a sale, not to Zenith Ireland, but to an entity registered in Hong Kong, the second plaintiffs, which I shall refer to as Zenith Hong Kong. Zenith Ireland is shown as the party to whom the goods were to be delivered. The purported sale to Zenith Hong Kong is shown as on c & f terms.

Zenith Hong Kong is described by the plaintiffs` witness Mr Sio as nothing but a `paper company`. Mr Sio says that all sales must be shown on paper as sales going to Hong Kong, but the goods never go anywhere near Hong Kong. He describes Zenith Hong Kong as the `consolidators` of all sales in Asia. The price of the goods shown on the invoices was also fixed according to Zenith`s standard costing practice.

There is a note at the bottom of each of the invoices which reads:

This transaction is between Zenith Elec Corp and its 100%-owned subsidiary Zenith Taiwan Corp. Selling price is fob Port of Export from Taiwan, Republic of China.

Defence counsel contends that this note shows that there was a sale from Zenith USA to Zenith Taiwan on fob terms, and that this was followed by a sale from Zenith Taiwan to Zenith Hong Kong on c & f terms. He says that the sale from Zenith USA to Zenith Taiwan was a sale of unascertained goods, because there is nothing in the evidence to show that the goods were ascertained or specified at the time the contract of sale was made between Zenith USA and Zenith Taiwan. Counsel says that according to the [UK] Sale of Goods Act 1979, which is applicable in Singapore, in a contract for the sale of unascertained goods, the property in the goods passes only when the goods are unconditionally appropriated to the contract. He says that the sale by Zenith USA to Zenith Taiwan being a sale on fob terms, goods were appropriated to the contract only when they crossed the ship`s rail, and, as the goods never crossed the ship`s rail, property in the goods remained with Zenith USA.

I must point out, firstly, that the note at the bottom of the invoice does not say who, as between Zenith USA and Zenith Taiwan, is the seller. That Zenith USA was the seller was an interpretation put by defence counsel to Mr Sio, to which Mr Sio at one point said `yes.` However, Mr Sio later clarified as follows:

Q: [The invoice] Does [Zenith Taiwan] make payments to Zenith USA for these goods?

A: No. Zenith Taiwan makes the goods. We get the money from the USA. We pass it through Zenith Hong Kong.

No, it is not correct to say we buy the goods from the USA. Until the goods are manufactured they do not exist. When made, the goods belong to Zenith Taiwan.

Secondly, there is nothing to show the date of the purported `transaction` between Zenith USA and Zenith Taiwan, and nothing that leads to the supposition that the purported transaction relates to unascertained goods. Thirdly, the goods described in the invoices had clearly been set aside after manufacture, by being packed in the containers and forwarded to WFT for delivery to Zenith Ireland.

Finally, perhaps more to the point, in the light of Mr Sio`s evidence, I do not think that the transactions purportedly shown in these invoices are entirely susceptible of analysis on conventional sale of goods law terms. I do not need to consider, nor on the evidence am I in a position to consider, how far what is stated in the documents represents the reality. It suffices to say that the documents on the face of them and the evidence do not bear out what counsel seeks to put forward.

Counsel also submits that his contention is fortified by the fact that Zenith USA was named as the assured in the insurance policy in respect of the goods, that the insurance claim was made by Zenith USA and that the insurance moneys received were not paid over to Zenith Taiwan. On this point, Mr Sio explained that Zenith`s insurance functions are centralized in Chicago and claims are handled there. He did not see any significance in the fact that the insurance moneys were paid to Zenith USA. He said: `Zenith is Zenith.`

It appears from internal correspondence between Zenith USA and Zenith Taiwan that the loss was treated as the latter`s loss, but in the correspondence between Zenith USA and the insurers relating to the claim, although Zenith Taiwan`s name was mentioned, no significance was attached by those involved to any distinction between Zenith Taiwan and Zenith USA. The insurance money was paid to Zenith USA. However, there is no evidence as to how the money was dealt with in the accounts between Zenith USA and Zenith Taiwan. Counsel for the defendants certainly did not pursue the point in evidence. I do not think that the view which the insurers took as to the rightful recipient of the insurance money can possibly have any bearing on the question at hand.

What I have before me therefore is a case where Zenith Taiwan was at the lowest in possession of the goods before they were handed over to the defendants` agents. In the absence of anything to the contrary, Zenith Taiwan can be assumed to be the owner of the goods. There is indication in the invoices that the goods were sold to Zenith Hong Kong. However, the terms of the sale, particularly terms concerning the passing of property, are not before me. No bill of lading was ever issued, although for the purpose of this suit the parties have agreed that the defendants` standard bill of lading govern their rights and liabilities. It follows there is no endorsement over of the bill of lading to the consignee so as to pass property in the goods to the consignee.

The general rule of law is that apart from nominal damages a plaintiff can only recover in an action for breach of contract the actual loss he has himself sustained. The position of the consignor of goods in a...