The defendant was a freight forwarder who issued a bill of lading for the shipment of goods from Zhangjiang, China, to Santos, Brazil. The defendant sub-contracted the voyage to another freight forwarder, who in turn sub-contracted the voyage to Mitsui Line. The goods were carried on board the vessel Nedlloyd Van Nassau, and were discharged to a customs warehouse on 23 November 1995. They were then destuffed and transferred to another customs warehouse on 28 November 1995. Eventually, the goods were released to a company called Impax Commercial Ltd without the production of the defendant’s original bill of lading on 19 December 1995. The plaintiff, who was the receiver, sued the defendant for misdelivery of the goods on 22 July 1997, which was more than a year since the misdelivery of goods to Impax Commercial Ltd.

The defendant applied for summary hearing of two issues, namely: (i) whether the defendant could rely on a nine-month contractual limitation period contained in the defendant’s bill of lading; and (ii) whether the Hague Rules or the Hague-Visby Rules (the Rules) applied to the contract of carriage and if so, whether the Rules continued to apply whilst the goods were in storage, notwithstanding art 1.e of the Rules. The second issue was of particular importance because if it was found that the Rules applied, the plaintiff would be entitled to rely on art 3.8 of the Rules to argue that the nine-month time bar in the defendant’s bill of lading was void.

The defendant argued that, pursuant to the wording of arts 1.e, 2 and 7 of the Rules, the Rules only applied up to the point of discharge and ceased to apply when the goods were placed in storage, because by that juncture the carriage of goods by sea had been completed and the carrier's obligations had been discharged.

Held: The defendant's summary judgment application is dismissed.

On the issue as to when carriage of goods by sea ends and when the Rules cease to apply, there are conflicting obiter dicta in two Hong Kong decisions. In Wily Products Company Ltd v Hecny Shipping Ltd [1995] 3 HKC 47 (CMI1171), the Court stated that the sea carriage did not terminate after discharge and that the Rules still applied at the time of loss before the goods were handed over to the land carrier. This was supported by The Zhi Jiang Kou [1991] 1 Lloyd’s Rep 493, where the Court opined that the words 'custody and care' under art 2 of the Rules were wide enough to include events after discharge and until the final delivery. On the other hand, in Computronics International v Piff Shipping Ltd (Hong Kong Civil Appeal 109/1996) (CMI1218), the Court relied on a strict reading of art 1.e which defined the carriage of goods as the period from the time when the goods were loaded on to the ship, to the time when they were discharged from the ship. Since the carriage of goods ended when the cargo was discharged, the Rules did not apply thereafter.

In light of the conflicting case law and the lack of evidence on: (i) the nature of the vessel’s instrument of delivery; (ii) the documents against which the goods were discharged; and (iii) when precisely discharge took place, it was difficult to reach a decision on the disputed issues. This was especially so since the Court was of the preliminary view that the Rules were not expressed in a temporal or geographical terms, but applied to the whole contract between the shipper and the carrier. It was therefore necessary for the Court to be apprised of the circumstances surrounding the various stages of discharge in all the different warehouses, so that the Court could make an informed decision as to when the carriage of goods by sea ended. The Court held that this case was not suitable for summary determination and dismissed the defendant's application for a summary judgment.