Sirunyan v NCO Europe Ltd

LORD JUSTICE LONGMORE: This is an application for permission to appeal arising out of an alleged loss in respect of coltan ore said to be contained in 76 drums worth approximately $2 million. As I understand it, coltan ore is a mixture of columbite and tantalite, which is a product of the country of Tanzania.

The Claimants in this case say that the drums were inside two containers loaded on to the Defendant's vessel, the Anafi, at Dar es Salaam in Tanzania in May 2012. The containers were loaded on to the vessel for shipment to China under a bill of lading issued in Antwerp on 19 May 2012. When the containers arrived in China, they were found to contain not coltan ore, but just sand and pebbles.

Obviously there was a major fraud perpetrated of some kind. The Claimants say that the contents of the drums were switched during the voyage. The ship owners say that would have been impossible and the drums must have been stuffed with sand and pebbles before they were loaded on to the vessel.

The position is that the Claimants did obtain a judgment by default, but that was set aside by Andrew Smith J sitting in the Commercial Court. After that judgment had been set aside, the Defendants then applied for summary judgment on two points, firstly, that the Claimants had no title to sue and secondly, that the claim was doomed to fail on the facts for reasons which I will mention. Males J sitting in the Commercial Court granted summary judgment.

An application has already been made to Arden LJ on the papers. She dismissed the application on the papers saying that even if the title to sue points were solved, it would remain the case that it was highly unlikely that there was any lack of care by the carrier since the drums were sealed at the port to which the drums were delivered.

The factual background is that the First Claimant is a United Kingdom company. The Second Claimant is a Tanzanian company and were the owners and original sellers to the First Claimant of coltan ore. The First Claimant had an agreement with the Second Claimant whereby the First Claimant would purchase the coltan ore from the Second Claimant for onward sale to a third party. For the purposes of this application, the ship owners accepted that that sale was never completed and the Second Claimants were, at all material times, the owners of the coltan ore.

Some months before the shipment, the First Claimant instructed a firm of Inspector's Wakefield Inspection Services (T) Ltd (which I shall call Wakefield) to inspect the coltan ore and pack and seal the product ready for shipment to a third party buyer. Their report said that there were around 160,000 kilogrammes of coltan ore packed into 266 drums. The drums were sealed and placed into seven containers which were then themselves sealed by, firstly, the Tanzanian customs, secondly, by Wakefield themselves and thirdly, a representative of the ship owners.

Once the seals were attached, the seven containers were placed in storage under the supervision of the Tanzanian customs pending a grant of an export licence to China and the issue of the ship owners' bill of lading. In the event, the seven containers were held for around five months. It was the Second Claimant who made arrangements with a firm called CMF to obtain all necessary export licences and store the coltan ore pending the grant of such licences.

Then in March 2012 the First Claimant entered into a contract for the onward sale of three of the containers to a third party, King-Tan Tantalum, which is the consignee named on the bill of lading. An export licence was granted and a bill of lading for carriage from Dar es Salaam to Shanghai was issued on 19 May 2012. Neither of the Claimants was named as the shipper or the consignee on the bill of lading. As I have said, King-Tan Tantalum was the consignee and CMF were named as the shipper. The First Claimant did appear as a notified party on the bill of lading.

The judge in due course held that neither the First Claimant nor the Second Claimant could sue in contract, not being named as parties in the bill of lading and the bill of lading not being a negotiable document of title, unless there was evidence that one of the named parties in the bill of lading was acting as the agent of either the First Claimant or the Second Claimant. He said that there was no such evidence.

Returning to the narrative, the First Claimant organised the transport of three containers to the port of loading to be loaded on the Defendant's vessel. But when those containers were inspected on arrival at the loading port, it appeared that the ship owners' seal had been tampered with on one of the three containers. So that container was not loaded, but the remaining two containers were loaded on to the Anafi with their three seals as recorded in the loading port survey intact.

The vessel sailed for China at the end of May 2012. When the ship arrived in China, it discharged at a port called Jiujiang and it was at that stage that the drums were found to be full of sand and pebbles.

There was a discharging survey report issued by Wakefield of Shanghai, who were at the discharge port on 1 August 2012 to supervise the unsealing of the containers and the opening of the drums. That report recorded in section B as follows:

They recorded the details of each container, the container numbers, and the numbers of the ship owners' seal called the liner seals. The TRA seals, the customs seals, corresponded with the numbers as recorded in the loading port.

The consignee refused to take delivery of the containers when it was discovered what was in the drums and the containers were placed in a warehouse.

Just before the expiry of the one year time bar under The Hague-Visby Rules, the First Claimant issued its claim against the ship owners. The Second Claimant, the goods owners, were joined as a party one month later in August 2013 after the time bar had expired, subject to one point which it now made on behalf of the Claimants.

In due course, in the circumstances I have described, the matter came on before Males J on the application for summary judgment by the Defendant ship owners. The judge said that the claim was initially formulated in contract on the basis of the bill of lading, but that it was accepted before him that neither Claimant had any contractual right to sue under the bill of lading and that the First Claimant did not have title to the goods but was merely the notify party on the bill of lading, which was not negotiable. Therefore, a straight bill of lading on which a notify party such as the First Appellant would not have any right to sue under the provisions of The Hague-Visby Rules.

He found further that any claim of the Second Claimant based in ownership of the goods or in bailment was time barred because The Hague-Visby Rules applied and all claims were extinguished after one year after delivery of the cargo or the date when the cargo should have been delivered. The Second Claimant was only joined after the time bar had expired.

Before the judge it was argued that a claim in bailment should be allowed to proceed on the basis that the consignee named in the bill of lading had bailed the goods to the First Claimant who had in turn bailed them to the ship owner. The First Claimant, having issued its claim in time, should be allowed to proceed, therefore, in bailment. It was also argued that the shipper named in the bill of lading, CMF, was acting as agent for the First Claimant and not for the Second Claimant.

The judge rejected those arguments because the evidence showed that the First Claimant was just an intermediate party in a chain of buyers and sellers and did not have any right to possession of the cargo. Therefore, a claim in bailment could not succeed. Anyway, CMF was acting as an agent of the Second Claimant, the goods owner, not the First Claimant, so no agency argument could succeed either.

Quite apart from that, the judge said that any claim would require to be assessed by reference to clause 11 of the bill of lading, which made clear that the carrier was not liable for any shortage of goods if one of the seals from the port of loading was intact. The judge accepted the evidence that there were three seals, one of which might not have been intact on arrival in China, but said that there was no evidence that the other seals were not intact. Therefore, clause 11 of the bill of lading would prevent any claim made by the Claimants.

So both on the law and on the facts, he said there was no reasonable prospect of any claim succeeding and therefore, it was not necessary for there to be a trial.

Mr Megha has today appeared for the Claimants and has submitted that the judge was wrong both on the facts and on the law and that, in any event, it is not a suitable case for summary judgment.

As far as the facts of the matter are concerned, Mr Megha relies on passage B in the discharge report to say that the judge was wrong to infer that two of the three seals on the containers were intact at the port of delivery. He says further that if one looks at the bill of lading itself, what was shipped under the bill of lading was not a container sealed with the ship owners' seal with the number 8372808 as recorded in the survey reports at both loading and discharge, but a container 837208. He points out further the curiosity that 40 drums were tallied as discharged when in fact only 38 drums were said to be shipped in the first container.

As far as those matters are concerned, the latter two are raised here now for the first time and are points that cannot, in my assessment, be taken in the Court of Appeal for the first time. Such points as these need to be taken, of course, within the one year time limit governed by The Hague Rules so that they can be investigated at a time when memories are fresh. It cannot be right that new points can be taken in the Court of Appeal which have not been examined by the judge at first instance.

In any event, the overwhelming probability in relation to the numbering of the container is that the bill of lading just contains a misprint. Since the information in the bill of lading is provided by or on behalf of the Claimants, the ship owners cannot be responsible for that.

As far as the point made by the judge is concerned that the evidence is that two of the seals at the discharging port were intact and that according to clause 11 of the bill of lading there can, therefore, be no claim against the ship owner, it seems to me that the judge was inevitably right about that. Clause 11 says what the judge said it says.

The evidence contained in the discharging port survey report does not go anywhere near as far as Mr Megha would like it to go because what it says is that the liner seals and the TRA seals "as advised, namely as stated in both the loading port survey and the discharging port survey, were unsealed". It does go on to say that red wax seals on the right door of the containers had no number on them. It is not perhaps clear whether the reference to the red wax seals is a reference to the Wakefield's own seals or to the liner seal or the TRA seal, but on any view, it relates only to one of the seals.

The fact that no identification number was noted indicates that it must, in fact, have been the Wakefield seals on which no number was noted because the number of the liner seal and the TRA seal is actually recorded at the bottom of that page. It seems to me that the judge's inference about that was, as I say, inevitably correct.

So on the facts of the case, the claim is sadly hopeless. That was the thinking behind Arden LJ's dismissal on the papers of the application to appeal. Therefore, even if the title to sue to point could be overcome, there would be no point in letting the case go forward to a full appeal here and then, on the assumption that any such appeal were successful, to a full trial.

It is perhaps a fair comment to say that no judge likes to dismiss a claim purely on the basis of title to sue. Nevertheless, the judge's points on title to sue likewise seem to me to be unanswerable. Mr Megha relies on the definition of merchant in the bill of lading as including someone who acts on behalf of the goods owners, but as the judge recorded, the First Claimant was not acting on behalf of the goods owners, nor were CMF acting on behalf of the First Claimant.

It may be that there is a good claim in tort or bailment to be made if the facts justified it by the Second Claimant, but the Second Claimant, as I have indicated, the judge decided, is time barred. As to that, Mr Megha says there cannot be a time bar according to Article 3, Rule 6 of The Hague-Visby Rules because the goods were never delivered, the goods by which he means the coltan ore which he claims was shipped having been swapped, according to the allegation, for sand and pebbles during the voyage.

But the actual wording of Article 3, Rule 6 says that the time bar applies 12 months from the date of delivery or when the goods should have been delivered. So I fear there is nothing in that point.

He also refers to section 1(4) of the Carriage of Goods by Sea Act by showing that the First Claimant has a good cause for action, but as the judge pointed out the Act refers to negotiable documents and not to what are called trade straight bills of lading.

It does look very much as if the claim has not been brought in the name of the right parties, but like Arden LJ, I would be reluctant to decide the case on that point alone. That is why I have in what I have said concentrated on the factual aspects of the matter. In relation to those, the judge said this:

Mr Megha points out that this is a summary judgment application and that only in the clearest cases should summary judgment be given. This is a case which has matters of fact which are relevant on which he says there should be evidence. He said bits of disclosure may throw up matters which would be relevant to any inquiry.

But the judge was quite satisfied that this was an appropriate case for summary judgment and so am I. In that situation, it cannot be right for me to give permission to appeal in this case, which would be doomed to fail. I must, therefore, refuse permission.

I am grateful to Mr Megha for the concise and forceful way in which he put such arguments as were available to him.