The plaintiff shipper claimed against the defendant carrier for loss of cargo. The contract of carriage between the plaintiff as shipper and the second defendant was evidenced by three house bills of lading. The plaintiff claimed that its cargo was released at discharge port without due production or presentation of the original house bills issued by the second defendant to it. In the normal course of events, the cargo would only have been released against production of the original bills, ensuring that the plaintiff had been paid the purchase price prior to their release. The plaintiff would only have released the original house bills to the consignee, through its bank, upon receipt of the purchase price. In the instant case, the goods were released against ‘switch’ bills of lading issued at the consignee’s behest by the delivery agent. As a result, delivery was effected directly to the consignee’s customer, without payment of the purchase price. The plaintiff claimed that the defendants acted in breach of contract and/or duty of care as carrier, and/or bailee under the terms of the bill of lading and/or in conversion.

The defendants argued that the plaintiff’s action was time barred under the Hague Rules incorporated into the house bills as it was not brought within one year after delivery of the cargo.

Held: Claim allowed.

The plaintiff did have locus standi to bring this action against the defendants. The plaintiff’s causes of action included a breach of the contract of carriage and bailment other than conversion. The issue of title to the cargo was not pivotal in determining whether there was in fact a breach of the contract of carriage or bailment.

The defendants maintain that the cargo was released to the consignee’s customer on 5, 23 and 25 June 2012. In response, the plaintiff argued, inter alia, that (1) misdelivery or wrongful delivery does not fall within the Hague Rules, accordingly the prescribed one-year time limit under art 3.6 is inapplicable; and (2) there is no evidence produced by the defendants as to the precise delivery dates, as such it is not possible to determine when the claim was extinguished because the delivery date had not been identified. The issue is whether misdelivery at the discharge port without production of the bills falls within the Hague Rules’ operational ambit, such that the carrier could rely on the time bar.

'Carriage of goods' under the Hague Rules covers 'the period from the time when the goods are loaded on to the time when they are discharged from the ship'. Art 2 provides that 'every contract of carriage of goods by sea and by the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereafter set forth' - beginning when the goods are loaded (hoisted on board over the ship's rail) and ending when they are unloaded from the vessel (hoisted over the ship's rail and placed on the quay). A strict reading of the Hague Rules therefore suggests that they do not apply after 'discharge' and thus not to misdelivery since delivery is outside their scope.

In Malaysia, there is binding authority that the Hague Rules do not encompass 'delivery' or 'misdelivery' but cease to have effect upon 'discharge' (Peninsular & Oriental Steam Navigation Co Ltd & Ors v Rambler Cycle Co Ltd [1964] 1 MLJ 443 (CMI670).

In Cia Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd's Rep 310, the plaintiff carrier sought a declaration that the cargo interests' claim for cargo theft had been extinguished by the Hague-Visby Rules time bar on the grounds that suit was not brought within one year of the date when the cargo should have been delivered. The English Court of Appeal held that the rules and the time bar were applicable during the time of the cargo theft by the carrier (which was a breach of art 3.2) and not a case of misdelivery. However, the decision is distinguishable as the incident giving rise to the loss occurred prior to discharge, when the goods were in the custody and possession of the carrier. Further, Lord Bingham also acknowledged that the definition in art 1.e of the Rules assigned a temporal term to the carriage of goods under the Rules.

However, there are conflicting case authorities. In Chellaram (P S) & Co Ltd v China Ocean Shipping Co, The Zhi Jiang Kou [1991] 1 Lloyd’s Rep 493, the New South Wales Court of Appeal held that the Hague Rules' operational ambit are not so strictly confined and includes 'custody and care, loading and handling as well as the carriage and discharge of the goods. "Custody" and "care" [in art 3.2] are apt to cover events after discharge and until delivery of the goods. Any other construction would artificially terminate their effect at the ship’s rail.' The Hong Kong Court of Appeal in Hecny Shipping v Wily Products Co Ltd [1995] 3 HKC 47 (CMI1171) cited The Zhi Jiang Kou with approval. The case involved cargo loss after discharge and before the cargo was delivered to the land carrier. The Court concluded that the article ought not to be strictly construed so as to limit it to events from loading to discharge. Art 2 extended the period beyond discharge and up until the goods were handed over to the land carrier.

The weight of case authority seemed to favour the plaintiff's case. In Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 1 Lloyd’s Rep 207, the Supreme Court of Victoria, Australia, held that completion of discharge results in the cessation or termination of the sea carriage, thereby ending the Hague-Visby time bar. The Hong Kong Court of Appeal in the later case of Computronics International v Piff Shipping Ltd [1997] 2 HKC (CMI1218) expressly disapproved of the reasoning in The Zhi Jiang Kou. The goods were 'not under a "contract of carriage" at the time of any misdelivery'. In that case the plaintiff agreed with the defendant carrier for goods to loaded into a container and delivered to the relevant port where they subsequently went into the custody and control of a third party who released them without the plaintiff’s authority. The Court held that the Hague-Visby Rules ceased to be applicable after discharge.

In the alternative, it is not possible to determine with any degree of certainty the precise dates when the cargo was delivered to the consignee's customer. The second defendant's witness confirmed that the dates were not the dates of delivery to the consignee’s customer but the dates of the vessel’s arrival at the discharge port. Further, the first defendant had no delivery order to evidence the date of delivery. Its witness's knowledge of such dates was derived from its shipping and logistics agent and was, to that extent, hearsay.

A carrier is under a duty to deliver goods carried under a bill of lading only against the production of the original bill. To deliver otherwise, either without the original bill or against a ‘switch’ bill would, prima facie amount to a breach of the contract of carriage and/or conversion. Conversely, the shipper to whom a bill is issued has a contractual right to take delivery of the goods at the delivery port on production of the relevant bill. This right arises from the issuance of the bill. The fact that it was a straight bill (consigned specifically to the consignee) meant that the defendants were under a contractual obligation to deliver the goods on production of such bills. In this case, the cargo were not delivered against production of the original bills, but against the provision of a second set of bills for the same cargo or by the provision of 'switch' bills.