International Rice and Products Co Ltd (the seller) shipped two containers said to contain 1760 bags of jasmine rice on board Mitsui OSK Line’s (the plaintiff's) vessel in Bangkok, Thailand for carriage to Sydney, Australia. The plaintiff issued a combined transport bill of lading that identified the seller as the shipper. The consignee was recorded ‘To the order of shipper’ and notify party was described as Jack Fair Pty Ltd (the defendant) with its address. The plaintiff delivered the cargo to the defendant on production of a non-negotiable copy of the combined transport bill of lading. The non-negotiable copy was endorsed on the reverse side with the corporate seal of the defendant and signed by a company director of the defendant.

At the time of presenting the non-negotiable copy of the bill of lading, the defendant had not paid the seller. The contract between the seller and the defendant required payment before release of the original bills of lading. An import seafreight co-ordinator of the plaintiff gave evidence that she mistakenly thought the bill of lading with the endorsement of the defendant was a negotiable bill of lading and in fact the original bill of lading as having been surrendered. The plaintiff therefore issued delivery orders to the defendant.

The seller as the holder and true owner of the bills of lading, sued the plaintiff in Thailand for conversion. The plaintiff settled by paying the seller THB 1,518,711.04.

The plaintiff brought a claim under the Australian Consumer Law in respect of alleged misleading conduct of the defendant to obtain delivery orders in respect of cargo, which had not been, and never was, paid for. The pleading gave rise to a claim in conversion against the notify party by the carrier and a breach of an implied contract, by the failure of the defendant to surrender a duly endorsed bill of lading.

Held: The mistake made by the plaintiff in issuing the delivery orders was one made despite the exercise of reasonable care by the plaintiff. The mistake was due solely to the defendant’s company-sealed endorsement signed by a director on the reverse of the bill of lading and presentation thereof by the defendant to the plaintiff. The defendant intended to cause the economic loss that the plaintiff claimed.

In addition to damages, the defendant was ordered to indemnify the plaintiff in respect of legal costs incurred in defending the Thai proceedings including the costs incurred by the representation of the plaintiff’s agent who was joined to those proceedings. It was reasonable for the seller to join the agent given the potential one-year time bar under the Hague-Visby Rules.