Failure to produce original bill of lading hinders cargo delivery

HATFORD RESOURCES NIG. LTD. v. SHARAF SHIPPING AGENCY LTD.

FEDERAL HIGH COURT
(LAGOS DIVISION)

(YUNUSA, J)

FACTS
Hatford Resources Nigeria Limited (the Plaintiff) entered into a transaction for the importation of goods from China into Nigeria. In furtherance of this transaction, three containers containing the Plaintiff’s goods were shipped from China with Nigeria as the agreed port of destination. The goods were carried by Compania Sus Americana DE Vapores S.A. (CSAV), while Sharaf Shipping Agency Limited (the Defendant) acted as CSAV’s shipping agent in Nigeria and was responsible for handling the arrival and release of the cargo.

Upon the arrival of the vessel in Nigeria, the Plaintiff expected to take delivery of the three containers at Apapa Port, Lagos, in accordance with the shipping arrangement. However, when the Plaintiff demanded release of the containers, the Defendant refused to deliver them because the Plaintiff failed to produce the original bill of lading. According to the Defendant, the original bill of lading was required as proof of ownership and entitlement to the goods, and the Plaintiff did not present the document. While the containers remained under the control of the Defendant, it claimed that it received instructions from the CSAV to change the port of destination of the goods. Acting on those instructions, the Defendant arranged for the three containers to be transferred from Nigeria to Tema Port in Ghana, rather than being released to the Plaintiff in Nigeria.

Dissatisfied with the refusal to release the containers and their subsequent transfer to Ghana, the Plaintiff instituted an action before the Federal High Court, Lagos Division. The Plaintiff sought to recover the value of the goods, interest, general damages, and the cost of the action. The Plaintiff’s case was that the Defendant, although an agent, was liable for the loss suffered. The Defendant denied liability and contended that it acted only as an agent of a disclosed principal, in line with shipping practice and the carrier’s instructions, in the absence of the original bill of lading. One of the issues for determination was: Whether the Plaintiff is entitled to and could rightfully demand from the Defendant the release of the containers covered by Bill of Lading No. PBQHRT800, without the production of the original Bill of Lading in the circumstances of the case.

ARGUMENTS
Learned counsel for the Plaintiff argued that the evidence before the Court was uncontroverted and clearly established that the Plaintiff had fully paid for the goods, insurance, and freight in respect of the consignment contained in three containers. Counsel contended that the Plaintiff was not indebted to the shipper or carrier in China, a fact which informed the issuance of a genuine bill of lading in the name of the Plaintiff. Counsel further contended that the Defendant had engaged in fraudulent and criminal conduct by transferring the Plaintiff’s three containers to Tema Port, Ghana, using a forged bill of lading bearing the same number and date as the genuine bill of lading issued to the Plaintiff same having been established during cross-examination of the Defendant’s witness showing that the bill of lading relied upon by the Defendant lacked essential features.

Learned counsel further argued that the genuine bill of lading issued by CSAV and bearing all the necessary features established the Plaintiff as the notify party. Counsel submitted that, notwithstanding the Defendant’s awareness of the Plaintiff’s ownership of the containers upon the presentation of a copy of the bill of lading, the Defendant fraudulently transferred the containers to Tema Port, Ghana, without payment of customs import duties and other statutory charges due to the Federal Government of Nigeria.

In response, learned counsel for the Defendant submitted that it is settled law and established shipping practice that only the holder of an original bill of lading is entitled to demand delivery of goods from a carrier or its agent. Counsel emphasized that delivery without production of the original bill of lading would expose the carrier to liability to subsequent claimants, and that worldwide commercial practice requires the release of cargo only upon presentation of the original bill of lading. Learned counsel further argued that the evidence before the Court showed that the Defendant’s disclosed principal, the carrier, had received instructions from the shipper requesting a change of destination, and that upon compliance with the requirements, a new set of original bills of lading was issued changing the port of discharge to Tema Port, Ghana, with another party named as consignee.

Counsel contended that the new bill of lading superseded the earlier bill of lading relied upon by the Plaintiff. Consequently, counsel submitted that since the Plaintiff failed to produce the original bill of lading at the time the containers were in Nigeria, it had no legal right to demand delivery of the containers. He maintained that the Defendant was only bound to deliver cargo upon the production of the relevant original bill of lading. Learned counsel further argued that the Plaintiff’s inability to produce the original bill of lading raised the possibility that the shipper had withheld it to protect its financial interest, as would ordinarily occur where full payment had not been made. Counsel therefore submitted that any grievance the Plaintiff had lay against the shipper, and not against the Defendant, who was merely an agent of a disclosed principal and bound to act in accordance with the shipper’s instructions, particularly in the absence of the original bill of lading.

DECISION OF THE COURT
In resolving this issue, the Federal High Court held that:
A shipowner is not entitled to deliver a cargo without the production of the original bill of lading except where there is an agreement for delivery upon the provision of a letter of indemnity or a bank guarantee, or where the shipowner is reasonably satisfied that the person seeking delivery is entitled to the goods and has given a reasonable explanation for the absence of the bill of lading. Where cargo is delivered without complying with these conditions, the person lawfully entitled to possession may recover damages for financial loss and damage suffered.
The Court further held that, in the present case, there was no evidence demonstrating that, in the absence of the original bill of lading, any agreement existed requiring the provision of a letter of indemnity or a bank guarantee. Additionally, no reasonable explanation was provided regarding the whereabouts of the missing bill of lading. Consequently, the Court found that the Plaintiff failed to establish entitlement to the reliefs sought.

Issue resolved in favour of the Respondent.
F. B. Odesanya Esq., for the Plaintiff.
Ayo Olorunfemi Esq., with Adedolapo Aromire (Miss) for the Defendant.

This summary is fully reported at (2020) 4 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.