A/S D/S Svendborg v Akar

The claimants in this matter trade in partnership as Maersk Sealand, one of the largest operators of container lines in the world. The present claims are for damages consisting of costs and other losses and expenses incurred by the claimants in defending claims brought by various of the defendants in respect of two containers of textiles carried by the claimants from respectively China and India to Conakry, Guinea. The defendants are members of the Akar family, of Lebanese origin but based in Conakry, and companies established by them for their business purposes. The first defendant is the son of the fifth defendant and the third defendant is the sister of the fifth defendant. Mr Paolo Ghirardani, the claimants’ solicitor, who gave evidence before me, has investigated a number of alleged shortage claims made by the Akar family over recent years. He said in his evidence that he had met both the first and the fifth defendants and that the fifth defendant was very much the patriarch of this business family, who funded and ran the operation and who was more dominant than his son. I accept that evidence. The second defendant is a company incorporated under the laws of Guinea through which both the first and fifth defendants conduct business, as is asserted on their behalf in proceedings against cargo underwriters in Hong Kong in respect of one of the containers. The second defendant is currently insolvent and the first defendant is in the process of putting it into liquidation. The fourth defendant (as its name suggests) is a company established by the third defendant through which she conducts her business.

The second claim is made against the third and fourth defendants and relates to a container said to contain 182 bales of cotton printed textiles shipped from India to Conakry claims have been made by these defendants in the Guinea courts in respect of an alleged delay in delivery of the goods Although the alleged delay was only for five days, these defendants are claiming for losses suffered by virtue of that delay equivalent to US$75,000,seven and a half times the value of the goods. The claimants’ pleaded claim in these proceedings is for damages for breach of the contract of carriage, specifically again the exclusive English law and jurisdiction clause at clause 27 of the Maersk bill of lading. In their skeleton argument, the claimants reserved the right to plead an alternative claim in deceit, but it does not seem to me either necessary or appropriate to give permission to amend. The damages claimed are essentially as in the case of the first claim, the costs and expenses incurred by the claimants in investigating and defending the claims in Guinea. The claimants also claim an indemnity in respect of future costs and expenses. On further analysis and investigation at trial it emerged that at present, the claimants claim is really for the indemnity, no actual expenses separately relating to the second claim having been identified.

The bill of lading in respect of the first claim was dated Shenzhen 3 July 1999 and evidenced the shipment on the claimants’ vessel MAERSK ANTWERP at Hsinkang, China on that day of a container UXXU 2441852 said by the shipper to contain 200 bales of 100 per cent cotton real wax in apparent good order and condition for carriage to Conakry. The shipper was named as Hebei Textiles Imp and Exp (Group) Corp of Shijiazhuang, China and the container was consigned to the order of the Beirut Riyad Bank SAL. The notify party was “Mr Aly Hossen Akar-Lamtex”, ie the first and second defendants. The container had already been sealed by the shipper with seal number ML-CN0590345 before delivery to the claimants’ agents in China.

The container was transhipped twice, first onto the SUSAN MAERSK at Hong Kong and then onto the CMBT OCEANIA at Algeciras, Spain. Whilst at Algeciras, the seal on the container was cut and the container was opened and inspected by SGS at the request of the shippers and/or the relevant defendants in order to present to Guinean Customs a “Bordereau de Taxation” from SGS enabling the Customs to assess duty payable on importation. According to Mr Neilsen, SGS is contracted by the Government of Guinea to conduct this assessment and does so by relying on inspections by its offices in other countries. In the present case, the Bordereau de Taxation (which is dated 3 September 1999) contains information which evidently derived from an invoice produced by the relevant defendants to SGS. It shows the seller as Benex International Corp of Hamburg, Germany, the importer as the first defendant and his transit agent as Sail Cheik Oumar. It also states the total value of the goods as 116,200 French Francs, with an FOB value after deduction of freight of 106,200 French Francs, equivalent to about US$15,000.

It was submitted by the claimants that Benex may not have been a genuine seller to the first and/or second and/or fifth defendants but named to secure some tax benefit deriving from purchase from Europe. Some support for that submission derives from the fact that in the proceedings which the first and fifth defendants commenced against their cargo underwriters in Hong Kong, they identified the seller as Mantex Trading Company and no mention is made of Benex. However, as Mr Diwan accepted, whether or not Benex was a genuine seller was not of any direct relevance to the claim in deceit advanced by his clients and, accordingly, I do not have to decide that question.

Inevitably, because the container was opened and inspected at Algeciras, it had to be resealed and a seal number ML-ES0500631 was placed upon the container. In fact, the claimants’ own records incorrectly recorded the number as ML-ES0500630, one digit out. Upon arrival of the vessel at Conakry on 20 August 1999, the claimants had a cargo surveyor, Mr David Gossanou of CEM, present to inspect containers upon their discharge. The practice which the claimants had developed apparently because of excessive numbers of claims against shipowners was that if the seal was missing on discharge or there was a discrepancy between the seal number and that recorded, the cargo surveyor would open up the container at the ship’s side and conduct a brief visual examination of the container and its contents.

That is what happened in the case of this container. Because of the discrepancy between the number on the seal and that recorded by the claimants, Mr Gossanou broke the seal and opened the container. His findings are set out in his survey report dated 23 August 1999 and reflected in the photographs he took attached to that report and in his witness statement in the present proceedings. He found the container essentially full of bales of fancy textiles although there was what he recorded as “an important empty space” towards the roof of the container. Although inclined at one time to consider that this suggested that a small number of bales had been removed from the container at some stage, now that it has been explained to him that the capacity of this container was 220 bales whereas only 200 were shipped, he thinks that this is the most likely explanation for the empty space he saw. In the light of all the evidence, I find that is the most likely explanation.

After his inspection, the container was resealed with a new seal number ML-WA0195915, applied by Mr Gossanou to the left hand lever of the right hand door. In the normal way, the container would then have been taken to the container stack in the port where it would remain until the relevant defendants had completed customs formalities and had the necessary documentation to take delivery of the container. The procedure for taking delivery and clearing Customs is described in Mr Neilsen’s witness statement and is of some importance in relation to the claim in deceit. Once the container has been loaded on a truck, it is taken to the port gates, where customs officers inspect the receiver’s documentation and insist upon the container being opened for a brief visual inspection, for them to check that the goods are as described in the documentation and that the quantities are roughly correct. If they are satisfied, the container will go through the gates accompanied by one or two customs officers. As it goes though the gates, the customs officers in the office there record the details in a register or ledger which they keep. The container will then be driven to the receiver’s premises, where it is unstuffed in the presence of the customs officer(s). They will note any adverse comments, for example a different type of merchandise or quantity from that declared. The empty container is then driven back to the port and stacked in an area for empty containers.

So far as this particular container is concerned, the transit agent for the relevant defendants, Mr Oumar, seems to have been responsible for submitting the relevant customs documentation. In particular, the customs declaration or Mise a la Consommation was submitted by him and officially registered by the Customs on 2 September 1999. That document stated the FOB value of the goods as 106,200 French Francs, as had the Bordereau de Taxation. There are a number of stamps and signatures of customs officers on the document with the date 6 September 1999, being the date when the relevant defendants came to the port to collect the container.

After Mr Gossanou’s inspection on 20 August 1999, the next that he or the claimants were involved was on the afternoon of 6 September 1999 when the first defendant contacted both Mr Gossanou and the claimants’ office in Conakry to say that when they had come to collect the container, the fork lift truck driver lifting it from the stack found it suspiciously light. They insisted upon a survey with the claimants and Mr Gossanou present. Mr Neilsen sent Mr Keita from the claimants’ office and he was accompanied by Mr Arzur the claimants’ manager at the port and by Mr Gossanou. Various members of the Akar family including the first defendant appear to have been present. The survey took place at about 18.00 hours.

The findings made are set out in detail in Mr Gossanou’s report dated 19 October 1999 and confirmed in his witness statement. The seal which he had affixed on 20 August 1999, number ML-WA0195915 was intact and the container appeared at first inspection to be in the same condition as when inspected on 20 August 1999, with none of the panels or the roof broken. The seal was cut and the doors opened. The container was empty. After further investigation as to how the container could have been opened without breaking the seal, Mr Gossanou concluded that the riveted bolt which fixed the left hand handle of the right hand door to the locking mechanism had been cut, enabling the handle to be taken away from the lock and the door opened, providing access to the container without breaking the seal. The riveted bolt had been replaced with a rusty threaded bolt and nut. There was scratching of the surface of the. door in way of where the bolt was located. Mr Gossanou was able to demonstrate how the container had been entered by unscrewing the bolt, taking the handle away from the lock without breaking the seal and rotating the lock with a crowbar to open the door.

Mr Gossanou’s view expressed in his second report was that the riveted bolt had already been replaced with the threaded bolt and nut at the time of his first inspection on 20 August 1999, although in his first report he had noted neither any scratching of the door nor any discrepancy between the various bolts, which one would have expected him to if replacement had already occurred. I suspect that his opinion was influenced by his (mistaken) assumption that a small quantity of the goods had already been removed from the container prior to 20 August 1999. I was shown the original photograph of the left hand handle of the right hand door which he took on 20 August 1999, in which the bolt does not appear to have been either rusty or any different from the other bolts. I agree with Mr Nielsen’s assessment that the riveted bolt had not been removed until after 20 August 1999.

Thus it seems to me overwhelmingly likely that the removal of all the goods stuffed in the container in China took place at some time between the survey at the ship’s side on 20 August 1999 and the second survey at 18.00 hours on 6 September 1999. However, this does not answer the question who stole the goods. The claimants’ case is that it was the defendants themselves or at least someone at the instigation of the first and/or fifth defendant and that the first and/or second and/or fifth defendants then made fraudulent claims for loss of the goods against their cargo insurers in Hong Kong and against the claimants and their agents in Hong Kong and Guinea. It is the latter claims which are the foundation for the claimants’ case of deceit against those defendants which I consider in more detail below.

The claimants’ case that the Akar family stole their own goods is essentially based on four pieces of evidence. first and foremost they rely upon an entry in the Customs container register or ledger, a copy of the relevant page of which has been obtained by the claimants. This shows the sixth entry for 6 September 1999 as being this container with the customs number from the Mise a la Consommation. The container is recorded as containing textiles and as being taken away on behalf of the first defendant by the transit agent Mr Oumar, ostensibly for unstuffing at the premises of SGS. On the basis that the port gates open at about 08.00 hours and that. there are between 100 and. 150 containers per day leaving the port and being recorded in the register, the claimants say that this entry shows that the container was removed from the port by Mr Oumar early on 6 September 1999. The claimants then contend that in all probability the container was taken to the defendants’ premises, the goods removed and the container returned to the port area before the first defendant contacted the claimants and Mr Gossanou to call for the survey later that day. The claimants also contend that the defendants’ surprise and consternation when the container was opened and was found to be empty was no more than theatrical.

Secondly, the claimants rely upon the conduct of the relevant defendants in calling for the survey on the very day when they went to collect the container and ostensibly at least before it had been opened by them. Indeed, the circumstances do seem curious and I was somewhat doubtful as to whether the fork lift truck driver could in truth have detected that the container was suspiciously light. Thirdly, the claimants rely in essentially the same context upon the rather odd letter of 8 September 1999 from the first defendant referred to above which Mr Diwan submitted indicated that the relevant defendants were acting suspiciously. fourth and finally, the claimants rely upon previous suspicious or dishonest alleged shortage claims made by the Akar family as investigated by Mr Ghirardani and referred to in his witness statement, which is said to evidence a propensity to make fraudulent claims for shortages which the defendants know have not in fact occurred.

In evaluating this evidence I bear in mind that, even at an uncontested trial (and in one sense above all at such a trial where I have not heard any explanation or evidence from the defendants) where fraud is alleged against the defendants as it is here, the Court must be satisfied by cogent evidence that, on a balance of probabilities, the claimants have proved that there was fraud by the first and/or second and/or fifth defendants (see per Denning LJ in Hornal v Neuberger Products[1957] 1 QB 247 and per Lord Nicholls in Re H (minors)[1996] AC 563). In considering whether there is such cogent evidence which satisfies me that the case of deceit is made out on a balance of probabilities, two matters have given me cause to pause for thought.

First, one obvious problem with the claimants’ case that the Customs register demonstrates that the container was removed from the port and unstuffed at the defendants’ or other premises prior to the defendants returning the empty container to the port and calling for the survey which took place on the evening of 6 September 1999, is that if that sequence of events took place and the normal practice referred to by Mr Nielsen as summarised in paragraph 12 above was followed, the container should have been opened at the port gates at the insistence of the Customs to check the contents. It seems to me that if that occurred, it is highly unlikely that the container would have been opened in the presence of the Customs other than by breaking the seal, which cannot explain how the seal was still intact at the time of the inspection at the defendants’ request on the evening of 6 September 1999. Equally, how the container came to be returned to the port area without any apparent record with the Customs is unexplained.

The second matter is the alleged other instances of similar claims referred to by Mr Ghirardani. It seems to me that on principle, those other claims should only be admissible in evidence or, at the least, given any weight, if they are of probative value in relation to this particular claim. I have considerable doubts as to whether they are of such probative value and therefore I disregard that material in considering whether the claimants have made out their case that the relevant defendants abstracted the goods themselves and then made fraudulent claims.

However, even disregarding that alleged “similar fact” evidence, the court has to consider the rest of the evidence as a whole and reach a common sense conclusion as to what was really going on. In doing so, I am satisfied that, on a balance of` probabilities (and despite the defendants not having been present to put forward any contrary explanation) the first and/or second and/or fifth defendants did abstract the goods and make a fraudulent non-delivery claim In reaching that conclusion, I am influenced in particular by two matters.

First, it seems to me that the Customs register (which was inspected by Mr Nielsen and a photocopy taken of the relevant page) does provide cogent evidence that the container was removed from the port area by the first defendant or his transit agent some time soon after 08.00 hours on 6 September 1999, in which case it is highly likely that the contents were removed at that stage. True it is that if the normal practice described by Mr Nielsen was followed, the container should have been opened and inspected by Customs prior to it leaving the port, in which case the seal should have been broken At its most extreme, the claimants’ case was that the Customs must have been complicit in the fraud or must have connived at the defendants opening the door of the container without breaking the seal in the manner described by Mr Gousannou. In the absence of any evidence adduced by the claimants to implicate Guinea Customs in this way, it seems to me that it would be quite wrong to accede to this submission. However, less sinister explanations are possible, particularly that Customs allowed Mr Oumar to remove the container without insisting that it be opened up because for example they were aware of the earlier inspection on 20 August 1999. This would not involve implicating Customs in a fraud. Whilst I appreciate that this is speculation, I do consider that the register entry provides strong evidence that the container was removed from the port by or on behalf of the defendants early on 6 September 1999, from which it seems to me that (in light of the somewhat suspicious call for a survey later that day) it is not difficult to conclude that the defendants opened the container as Mr Gossanou postulates and removed its contents prior to returning it to the port. It does not seem to me on reflection that the doubt as to Customs’ involvement (which is explicable in a non-sinister manner as discussed) displaces that strong evidence.

Secondly, the evidence as to the inflation of the claim being made by the defendants in Guinea seems to me to suggest very strongly that this is not a genuine claim. That evidence is quite stark. The FOB value of the goods as declared to the Guinea customs in the Bordereau de Taxation (apparently derived from an invoice produced by the defendants) and in the Mise a la Consommation was 106,200 French Francs, equivalent to slightly less than US$15,000, whereas the amount claimed from Maersk Guinee is US$174,440. Even if one discounts what appears to be a 10 per cent mark-up, this is still more than ten times the declared value. It might be said that (at least according to the claim against cargo insurers in Hong Kong) the defendants had insured the goods for a value of US$171,600 (including a 10 per cent mark up). If that were a true value, then the defendants must have been seeking to defraud Guinea Customs by under-declaring the value of the goods, which hardly reflects to their credit. However, in view of the other evidence, I consider it much more likely that they were over-insuring the goods with a view to pursuing precisely the sort of false claims which they have. This seems to me to be borne out by the fact that, according to their own particulars of claim in Hong Kong, the sum insured was increased to US$171,600 (from US$ 154,440) by an endorsement dated 8 September 1999, two days after the goods had been found to be stolen.

Accordingly, I consider that the claimants have established that the first and/or second and/or fifth defendants removed the goods from the container prior to the second survey on 6 September 1999 and that the claims which they have pursued against the claimants and/or Maersk Guinee are fraudulent claims. In those circumstances, their claim in deceit is made out, the relevant false representations being as Mr Diwan submitted, that the goods had been stolen and that they had thereby suffered losses of US$174,440, those representations having been repeated by the pursuit of the claims in Hong Kong and Guinea. It seems to me that to the extent that the claimants have incurred costs and expenses in investigating and defending those claims, they are entitled to recover those as damages for deceit. If support were needed for that proposition it can be found to an extent in the judgment of Mr Justice Clarke in Svendborg v Wansa[1996] 2 Lloyd’s Rep. 559 at 568 lhc, recognising (albeit only on the basis of a good arguable case for interlocutory purposes) the recoverability of costs and expenses incurred in foreign proceedings as damages for deceit, in circumstances very similar to those of the present case. Furthermore, I consider that the claimants are also entitled to the declaration they seek that the claim by the first and/or second and/or fifth defendants for alleged non-delivery of the goods is false and fraudulent.

The alternative claims for damages for breach of clauses 3 and 27 of the contract of carriage contained in the bill of lading can be dealt with more shortly. An initial question arose as to whether the claimants could establish that the first and/or second defendants and/or the fifth defendant, given that the fifth defendant trades in the name of the second defendant, were parties to the contract of carriage contained in or evidenced by the bill of lading and, hence, bound by its terms, given that the reverse of the bill (which would show whether or not it was endorsed to the first and/or second defendant, named on the face as Notify Party) is not available. I consider that the court can properly infer that the first and/or second defendants were indeed endorsees of the bill and hence parties to the contract it contains and bound by its terms (a) from the fact that in the in rem proceedings in Hong Kong the defendants positively assert that they were consignees and/or holders and/or endorsees of the bill of lading; (b) from the internal Maersk computerised instruction dated ₉th August 1999 which states that: “full sets of abv mentioned obls [which appears to mean ‘original bills of lading’] hv been surrendered to our office and a written confirmation has been received to deliver cargo to cnee [consignee] LAMTEX (MR ALY HOSSEN AKAR) without presentation of abv obls “. This suggests that the bank had released the bill of lading and endorsed it to the first and/or second defendants; (c) the surrounding circumstances generally including the fact that in relation to the second claim the bill of lading was endorsed to the third and/or fourth defendant.

In the circumstances, it is strictly unnecessary to consider the claimants’ alternative case that the effect of the instruction referred to in paragraph 33 (b) above was that there was an attornment to the first and/or second defendants and hence as the party or parties entitled to immediate possession of the goods they were bound by the terms of the bailment to the claimants, which terms were of course the terms of the bill of lading. However, I do consider that if it were necessary for the claimants to rely upon bailment alone rather than contract, the first and/or second defendants would have been bound by the terms of the bill of lading as the terms of the bailment, on the principle recently reiterated by the Court of Appeal in East West Corporation v N5 D/S Svendborg[2003] EWCA Civ 83; [2003] 1 Lloyd’s Rep 239 (see per Lord Justice Mance at paragraph 69).

I will consider the claim for breach of clause 27 first. No question arises of the application of US COGSA and accordingly, the contract of carriage is subject to English law and jurisdiction. Furthermore, there is no doubt that this clause is an exclusive jurisdiction and law clause. This was determined by the Court of Appeal in Svendborg v Wansa[1997] 2 Lloyd’s Rep 183, where, in considering precisely the same clause, Lord Justice Staughton said (at p 186 rhc):

“I conclude that the clause does confer exclusive jurisdiction on the English courts. My reasons are in substance, first those which I stated in Sohio Supply Co v Gatoil (USA) Inc [1989] 1 Lloyd’s Rep 588 at pp 591-592, and in particular that I could think of no reason why businessmen should choose to go to the trouble of saying that the English courts should have non-exclusive jurisdiction. My second reason is that the parties in the second part of the clause were plainly saying that English law was to be mandatory if the American Carriage of Goods by Sea Act did not apply, it seems to me that they must have intended English jurisdiction likewise to be mandatory in that event.”

I can deal with the facts of the second claim more briefly. The bill of lading in respect of the second claim was dated Mumbai 17 February 2001 and evidenced the shipment on the claimants’ vessel MAERSK TOYAMA at the Jawal Nehru Port Terminal at Mumbai on that day of a container JHTE 210939 said by the shipper to contain 182 bales of printed cotton textiles in apparent good order and condition for carriage to Conakry. In the bill of lading, the container was consigned to order. The notify party was the third defendant. As appears from the reverse of the bill, it was endorsed in due course to the third and/or fourth defendants who thus became parties to the contract of carriage contained in the bill and were bound by its terms.

For the purposes of the present judgment I do not have to decide whether or not the claim made by the third and/or fourth defendants in these proceedings in Guinea is a genuine one, but only whether or not in bringing claim those defendants were in breach of the exclusive jurisdiction clause in clause 27 of the bill of lading terms. Nonetheless, if it were necessary to decide the point, irrespective of whether or not the claimants were responsible for the five day delay in delivery, it seems to me that the size of the alleged claim is unjustifiable. However, given that there is no plea that the claim is fraudulent, I do not need to say any more than that there cannot be any doubt that by bringing this claim in Guinea, the third and/or fourth defendants were in breach of clause 27.

The claimants produced a schedule attached to Mr Nielsen’s statement of losses consisting of legal and investigative fees and other expenses, together with supporting documentation. I am satisfied that on the basis of that material and Mr Nielsen’s statement, the claimants have established that they have suffered a loss currently quantified at US$130,941.48. Although prior to the trial, it was thought by the claimants that this sum represented expenses incurred in respect of both claims, on closer analysis at the hearing, it emerged that this sum in fact relates only to the first claim No separate current expenses relate to the second claim which has not been pursued further by the third and/or fourth defendants since the writ was issued in Guinea on 25 April 2001. As matters currently stand therefore, the claimants are not claiming damages in respect of the second claim but just an indemnity.

The claimants produced a schedule at trial of interest on the damages claimed under the first claim of US$130,941.48. The interest has been calculated for the periods since particular items of claim were expended at 1 per cent over LIBOR. The total interest is US$7,414.73. I am satisfied that the claimants are entitled to that interest.

The claimants also produced a schedule of costs of the present proceedings totalling £158,898.40 and asked the court to assess those costs summarily in accordance with the practice for hearings of one day or less under the CPR. In assessing the costs, I noted that the hourly rates charged by the claimants’ solicitors were lower than the applicable guideline rates. I was told that this was because of a special fee arrangement with the claimants. In considering the reasonableness of the costs claimed, I also bore in mind, as Mr Diwan invited me to, that (at least in relation to the first claim to which the bulk of the costs related) it was a case of fraud in which indemnity costs would almost certainly have been ordered in the claimants’ favour had they succeeded at a contested trial. Doing the best I can and recognising that there is an element here of the ‘blunt instrument’, I award the claimants £140,000 costs.