The seller, Foshan Sundy Trade Co Ltd (the plaintiff), received an order from Bliss Success Ltd (BSL) for the purchase of jeans priced at USD 114,706.80. In May 2005, the goods were delivered to the carrier, Air Sea Transport (HK) Ltd (the defendant). The defendant packed the goods into nine containers for shipment to the USA. In June 2005, the plaintiff paid the defendant the freight and other charges for shipment of the goods and received an original clean bill of lading (BL).

The BL named the plaintiff as the shipper 'to order of HBZ Finance Ltd' as the consignee, and BSL as the notify party. The goods were shipped from Hong Kong to the USA in June 2005. BSL then informed the defendant that BSL had lost the BL. BSL asked the defendant to release the goods to BSL. Without consulting the plaintiff, the defendant released the goods to BSL upon obtaining a letter of 'Indemnity and Guarantee' issued by Israel Discount Bank of New York, holding the defendant harmless from the release of the goods. Subsequently, BSL provided three newspaper advertisements dated late July 2005 stating that BSL had lost the BL.

In March 2006, the plaintiff asked the defendant to return the goods because the plaintiff was the holder of the BL. The defendant failed to do so as the goods had been released to BSL. On 18 May 2006, the plaintiff sued the defendant. The defendant filed a defence and joined BSL as a third party to this action. The plaintiff then applied for summary judgment.

The defendant disputed liability, but not quantum. The defendant accepted that the Hague-Visby Rules (HVR) applied. The defendant argued that the shipper of the goods was BSL and alleged that: (1) things were 'peculiar and mysterious'; (2) there was a trading dispute between the plaintiff and BSL that the defendant was in the dark about; and (3) there was a conspiracy between the plaintiff and BSL to defraud the defendant.

The defendant also raised HVR art 4.2.i, which reads:

Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from [an] … (i) Act or omission of the shipper or owner of the goods, his agent or representative.

Without citing supporting authority, the defendant argued that the plaintiff had a duty to keep the defendant informed that the plaintiff was in possession of the BL, and that the plaintiff had failed to comply with this duty, which was an omission on the part of the plaintiff.

Held: Judgment for the plaintiff.

On the evidence, the shipper of the goods was the plaintiff, as named in the BL. The defendant's conspiracy allegation was without basis.

By operation of the Carriage of Goods by Sea Ordinance in Hong Kong, the HVR were incorporated into the contract of carriage.

As to the defendant's reliance on HVR art 4.2.i, the plaintiff did not owe a duty to keep the defendant informed. No such duty arises from the contract of carriage. Given the historical and commercial background of the use of a BL, there cannot be such a duty on the shipper, who would not expect the carrier to release goods without instruction from the shipper in the absence of the BL.

The defendant was negligent and/or in breach of its duty as carrier and bailee, having released the goods without production of the BL.

Any trading dispute between the plaintiff and BSL is not a defence to the action between the plaintiff and the defendant.