Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corporation [2001] NSWCA 16 (2 March 2001)

Last Updated: 12 March 2001

NEW SOUTH WALES COURT OF APPEAL

CITATION: Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corporation [2001] NSWCA 16 revised - 9/03/2001

FILE NUMBER(S):

40705/00

HEARING DATE(S): 13 December 2000

JUDGMENT DATE: 02/03/2001

PARTIES:

Australian Tallow & Agri-Commodities Pty Ltd - Appellant

Malaysia International Shipping Corporation - Respondent

JUDGMENT OF: Meagher JA Sheller JA Powell JA

LOWER COURT JURISDICTION: Supreme Court Equity Division - Admiralty

LOWER COURT FILE NUMBER(S): 7/2000

LOWER COURT JUDICIAL OFFICER: Brownie AJ

COUNSEL:

A S Bell - Appellant

J E Sexton SC - Respondent

SOLICITORS:

James Neill - Appellant

Middletons Moore & Bevins - Respondent

CATCHWORDS:

Shipping and Navigation - Sea Carriage of Goods - Bills of Lading - interpretation of lien on cargo clause - privity of contract - whether contract to be read so as to impose obligations on an agent of a party to the contract - clauses to be read so as to be commercially acceptable - whether carrier can exercise lien over a shipper's goods to secure amounts payable to the carrier by another party for whom the shipper acts as an agent.

LEGISLATION CITED:

Bills of Lading Act 1855

DECISION:

1. Appeal allowed in respect of the goods the subject of the ATAC bill of lading to the extent those goods have been detained for payment of freight payable under the Concordia bills of lading

2. Otherwise the appeal should be dismissed

3. Brownie AJ correctly dismissed the summons so far as it was concerned with goods the subject of the ATC bills of lading

4. Parties to bring in short minutes of order to give effect to these reasons together with any submissions they wish to make about costs at first instance and on the appeal.

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40705/00

ED 7/00 (Admiralty)

MEAGHER JA

SHELLER JA

POWELL JA

Friday, 2 March 2001

AUSTRALIAN TALLOW & AGRI-COMMODITIES PTY LIMITED v MALAYSIA INTERNATIONAL SHIPPING CORPORATION

The appellant, ATAC, took over the existing commodity contracts of another company, ATC, when ATC became insolvent. The respondent, MISC, was a shipping company, whose services ATC used in two different capacities. ATC acted as a freight forwarder for another company, Concordia, and as an exporter in its own right. Three of the shipments that formed the subject of this dispute were shipped under the name of ATC, and one was shipped under the name of ATAC.

A dispute arose when Concordia failed to pay the freight on goods shipped on its behalf under several bills of lading issued by MISC. MISC claimed that, under the terms of the bill of lading, ATC, as the agent of Concordia, was liable to pay MISC the freight that Concordia owed. MISC asserted a lien over goods that ATC and ATAC had shipped in their own capacity as exporter.

Cl 14(5) of the bill of lading provided that "persons falling within the definition of Merchant in cl 1 shall be jointly and severally liable for the payment of Freight". "Merchant" was defined in cl 1 to include the "Shipper" of the goods, and "anyone acting on behalf of such person". Cl 15 provided that the carrier was to have a lien on the goods "for all sums payable to the Carrier under this or any other contract by any of the persons defined as Merchant in cl 1".

ATAC began proceedings against MISC in the Admiralty Division of the Court. ATAC sought orders that the property subject to the lien be released, and a declaration that MISC was not entitled to assert any lien over ATC or ATAC's property on the basis of outstanding freight for property that did not belong to ATAC. The trial Judge found that, according to general principles, ATAC would not be liable to pay the freight owing on Concordia's goods since ATAC was merely Concordia's agent in the transaction. However, the particular terms of the bill of lading had the effect of altering this position, so that MISC was entitled to assert a lien over ATC and ATAC's cargo.

ATAC appealed against this decision. Its main contention was that, as it was not a party to the contract of carriage between Concordia and MISC, it could not be rendered liable for payment of moneys owing under that contract. ATAC submitted that cl 15 should be read down to make commercial good sense.

Held: (Per Sheller JA, Meagher and Powell JJA agreeing):

1. Prima facie, at common law, where a party contracts as an agent for a principal, the contract is that of the principal, and the agent may neither sue or be sued under the contract.

2. But this general principle is subject to important exceptions, one of which is that the parties can by their express contract provide that the agent shall be liable, either concurrently with or to the exclusion of the principal.

3. ATC, having acted as Concordia's freight forwarder, must be taken to have known the terms of the bills of lading for the Concordia goods. Since it acted on Concordia's behalf, ATC was a "Merchant" within the definition in cl 1 and under cl 14(5) became jointly and severally liable for the payment of the freight. By arranging the contract of carriage on the terms set out in the bill of lading, ATC became a party to the contract, although it received no consideration from MISC.

4. A clause in a bill of lading must be construed in a way which would render it commercially acceptable. Clear language is required to confer a right to seize A's goods to secure B's debt, when A has no interest, actual or potential, in the goods the subject of the lien. Cl 15 should be read down so as only to operate to secure MISC as against the agent of a Merchant as defined owing money as agent of that Merchant. Cl 15 should not be read so as to secure MISC a lien for sums payable by such an agent in its capacity as an agent for another person not included within the definition of "Merchant", such as Concordia.

5. It followed that the appeal should be allowed in respect of the goods the subject of the ATAC bill of lading to the extent that those goods have been detained for payment of freight payable under the Concordia bills of lading.

6. However, the appeal in relation to the goods the subject of the ATC bills of lading should be dismissed. ATC could be regarded as the shipper of these goods within the definition of "Merchant", and it had an interest in the goods.

Miramar Maritime Corporation v Holborn Oil Trading Limited [1984] AC 676 applied; Turner v Hajji Goolam Mahomed Azan [1904] AC 826 applied.

Legislation:

Bills of Lading Act 1855

Cases cited:

Montgomerie v United Kingdom Mutual Steamship Association Limited [1891] 1 QB 370

Australian Trade Commission v Goodman Fielder Industries Ltd [1992] FCA 307; (1992) 36 FCR 517

Teheran-Europe Co Limited v ST Belton (Tractors) Limited [1968] 2 QB 545

Scott v Geoghegan & Sons Pty Ltd (1969) 43 ALJR 243

Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; (1967) 119 CLR 460

Miramar Maritime Corporation v Holborn Oil Trading Limited [1984] AC 676

Scotson v Pegg (1861) 6 H & N 295; 158 ER 121

Turner v Azan [1904] AC 826

ORDERS

1. Appeal allowed in respect of the goods the subject of the ATAC bill of lading to the extent those goods have been detained for payment of freight payable under the Concordia bills of lading.

2. Otherwise the appeal should be dismissed.

3. Brownie AJ correctly dismissed the summons so far as it was concerned with goods the subject of the ATC bills of lading.

4. Parties to bring in short minutes of order to give effect to these reasons together with any submissions they wish to make about costs at first instance and on the appeal.

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JUDGMENT

1    MEAGHER JA: I agree with Sheller JA.

2    SHELLER JA:

Introduction

This appeal, from a decision of Brownie AJ given on 17 August 2000, is about whether a lien on cargo clause in a shipowner's standard form bill of lading enabled the carrier to retain possession of the cargo to secure amounts payable by the shipper's agent to the carrier under other contracts between the carrier and the agent or its principal.

3    Concordia Agritrading Pte Limited ("Concordia") shipped goods to overseas destinations on vessels of the respondent, Malaysia International Shipping Corporation ("MISC"). The terms of the six contracts of carriage were to be found in MISC's standard form bill of lading. I shall refer to these six bills of lading as the Concordia bills of lading. Concordia retained Australian Tallow & Commodities Pty Limited ("ATC") as its freight forwarder. ATC retained another company, Australian Grouping Services Pty Limited ("AGS") to act as the forwarding agent. AGS was a wholesaler of freight space. MISC's standard form bill of lading contained the following relevant clauses:

"1. DEFINITIONS

....

`Merchant' includes the Shipper, Holder Consignee, Receiver of the Goods, any person owning or entitled to the possession of the Goods or of this Bill of Lading and anyone acting on behalf of such person.

`Holder' means any person for the time being in possession of this Bill of Lading to whom the property in the Goods has passed on or by reason of the consignment of the Goods or the endorsement of the Bill of Lading or otherwise.

...

14. FREIGHT

(1) Freight shall be deemed fully earned on receipt of the Goods by the Carrier and shall be paid and non-returnable in any event.

.......

(5) The persons falling within the definition of Merchant in Clause 1 shall be jointly and severally liable for the payment of Freight and liquidated damages as provided in this Clause.

(6) Any person, firm or corporation, engaged by any party to perform forwarding services with respect to the Goods shall be considered to be the exclusive agent of the Merchant for all purposes and any payment of Freight to such person, firm or corporation shall not be considered payment to the Carrier in any event. Failure of such person, firm or corporations shall not be considered payments to the Carriers in any event. Failure of such person, firm or corporation to pay any part of the Freight to the Carrier shall be considered a default by the Merchant in the payment of Freight.

15. LIEN

The Carrier shall have a lien on the Goods and any document relating thereto for all sums payable to the Carrier under this or any other contract by any of the persons defined as Merchant in Clause 1 ...." (emphasis added)

4    MISC submitted that the lien on goods to be carried pursuant to the standard form bill of lading was expressed to extend to sums payable to MISC under any other contract made by the agent of the shipper, even on behalf of different shippers, by force of the inclusion in the definition of "Merchant" of both "Shipper" and "anyone acting on behalf of such person".

5    MISC carried the goods shipped under the Concordia bills of lading to their various destinations but as the result of a dispute Concordia refused to pay the agreed freight. ATC was unable to recover the freight from Concordia and was unable to pay the freight itself. In early 2000 ATC became insolvent.

6    ATC had two businesses, that of freight forwarder and that of commodity dealer. As a commodity dealer it had established a reputation using the name "Australian Tallow". It was party to several unfulfilled contracts to acquire goods in Australia and re-sell them in Pakistan and Bangladesh. In respect of those contracts the end buyer had opened a letter of credit naming ATC as the seller of the goods. On ATC's insolvency the appellant, Australian Tallow & Agri-Commodities Pty Limited ("ATAC"), took over ATC's existing commodity contracts. For commercial reasons, not said to involve any impropriety, but substantially so as not to lose the benefit of the letter of credit, goods were purchased by ATAC to fulfil the contracts and re-sold to ATC which arranged with MISC for their shipment to Pakistan. MISC had no knowledge of these arrangements. Thus ATC in its own name as shipper arranged for MISC to carry what were found to be ATAC's goods on the terms of MISC's standard form bill of lading. ATAC also shipped its own goods with MISC on the terms of MISC's standard form bill of lading. In reliance upon the lien in cl 15, MISC detained in Pakistan the cargoes which are the subject of this litigation.

7    By a summons filed in the Admiralty Division of the Court ATAC brought these proceedings against MISC. ATAC sought orders that, upon ATAC tendering to MISC an amount of $23,093, the freight payable to MISC in respect of property described in the schedule to the summons, set out below, MISC cause the property to be delivered to ATAC or its nominated agent in the Port of Karachi. ATAC also sought a declaration that MISC was not entitled to assert any lien over the property to secure freight owed for the carriage of property neither owned nor shipped by ATAC.

8    The property described in the schedule to the summons was the following cargo:

Vessel	Bill of Lading	No of containers	Description of cargo	Freight
Freight unpaid
Kota Perwira	MISC45000087390	4	Australian Origin Tyson Chick Peas	A$5,765.00
OOCL Great Wall	MISC45000085100	4	Tyson Chick Peas	A$5,765.00
Bunga Teratai 3	MISC45000090070	1	Feed Tallow	A$1,493.00
OOCL Great Wall	MISC45000085080	7	Rape Seed	A$10,070.00
Freight unpaid
Bunga Teratai Satu	MISC45000083090	5	Inedible mixture of vegetable fats and oil	A$7,675.00

The bills of lading are conventionally referred to by the last five digits only. ATAC did not press its claim in relation to 83090. ATC was named as the shipper in 87390, 85100 and 85080. I shall refer to these as the ATC bills of lading. The goods described in 85080 were subsequently sold by ATAC. Accordingly, ATAC did not press its claim in respect of these goods. ATAC was named as the shipper in 90070. I shall refer to this as the ATAC bill of lading. The freight due under the ATC and ATAC bills of lading remained unpaid.

9    Brownie AJ ordered a separate determination of the issue of liability. MISC claimed that ATC as agent was liable to pay the freight due under the Concordia bills of lading that Concordia had refused to pay as well as the freight due under the ATC and ATAC bills of lading. A considerable amount was outstanding. MISC's claim meant that the price for the release of the goods shipped under the ATC and ATAC bills of lading, in addition to the freight payable thereon, was the freight payable on the Concordia bills of lading.

10    Brownie AJ found that ATAC was the true owner of the cargo shipped under each of the three ATC bills of lading and the ATAC bill of lading. His Honour said that as a matter of practice until some time in February 2000 AGS paid the freight, together with various incidental expenses claimed by MISC and then rendered an account to ATC, adding its own charges. In the case of shipments arranged by ATC on behalf of Concordia, ATC invoiced Concordia. When Concordia stopped paying ATC, "both ATC and [MISC] took the stance that ATC was liable to pay the freight." In his Honour's view "the correct analysis of the position is that these shipments were arranged in the name of and on behalf of Concordia, as principal, and that both ATC and AGS acted as agent for that named ......principal; and there is no suggestion that they acted otherwise than upon the authority of Concordia." In its oral submissions on the appeal ATAC took no issue with this conclusion.

11    Brownie AJ accepted MISC's submission that the effect of the terms of the Concordia bills of lading, and particularly cll 14(5) and 15, was that ATC by acting as Concordia's agent became bound by the terms of the Concordia bills of lading. His Honour said:

"The reasoning leads to the conclusion that [MISC] has a lien, exercisable as against [ATAC], not only in relation to cargo shipped in the name of ATC, but also in relation to cargo shipped in the name of [ATAC]. In relation to some of these cargoes, ATC acted, with the authority of [ATAC], as the agent of [ATAC] in arranging contracts of carriage of cargoes for [ATAC]. As between [ATAC] and [MISC], and in relation to these cargoes, [ATAC] agreed with [MISC] that [MISC] would have a lien in respect of goods carried under other contractors (sic, contracts), in respect of sums payable to [MISC] by others who fell within the definition of Merchant, including ATC. That leads on to the further conclusion that, even in respect of contracts arranged by [ATAC] directly and in its own name, and in its own right, [MISC] has a lien protecting [MISC] in respect of the debts of ATC to [MISC]. This is not a conclusion that I happily embrace, but I conclude that it is correct."

12    Accordingly, Brownie AJ dismissed the summons with costs. ATAC appealed from this decision on the following grounds which I summarise:

1. Having held that ATC acted as agent for Concordia in respect of cargo carried by MISC pursuant to the Concordia bills of lading, the trial judge erred in holding

· that ATC was a party to or bound by the terms of the Concordia bills of lading,

· that cll 14(5) and 15 of the Concordia bills of lading had the effect that ATC became bound by the terms of those bills in circumstances where ATC was not a party to any of the Concordia bills of lading,

· that ATC was indebted to MISC in respect of freight unpaid in respect of the Concordia bills of lading, and

· that MISC was entitled to assert a lien over ATAC's cargo by reason of freight outstanding in respect of the Concordia bills of lading.

2. The trial judge erred in failing to hold that all of the Concordia bills of lading were booked by AGS, and that AGS and not ATC incurred a principal liability to MISC in respect of freight payable in respect of the Concordia bills of lading.

3. The trial judge erred in holding that in February 2000 ATC took the stance that it was liable to pay the freight.

13    In its written submissions ATAC said that in essence, when a Concordia cargo required shipment, ATC would contact AGS and AGS would make a booking of the required container space on a particular voyage directly with MISC. AGS would pay for the freight payable upon the respective bills of lading to MISC, together with incidental expenses claimed by MISC and would then render an account to ATC, adding its own charges. The background of the cessation of this practice in mid-February 2000 was that the payment of funds down the chain from Concordia through ATC which, in turn, reimbursed AGS for payments it had made to MISC, dried up. In short, Concordia ceased putting ATC in funds and AGS refused to make payments directly to MISC which then looked for payment directly from ATC. Accepting what ATAC said, the fact remained that Concordia retained ATC as its agent to arrange for shipment of the cargo carried under the Concordia bills of lading. The last two grounds of appeal as I have summarised them do not seem to me to advance ATAC's appeal against MISC. Within the meaning of the definition of "Merchant" in the Concordia bills of lading ATC was acting on behalf of the shipper.

14    ATAC submitted that ATC did not incur any personal liability to MISC under the Concordia bills of lading relying on Wright J's statement in Montgomerie v United Kingdom Mutual Steamship Association Limited [1891] 1 QB 370 at 371 of the general rule as regards an agent. Wright J said

"that where a person contracts as agent for a principal the contract is the contract of the principal, and not that of the agent; and, prima facie, at common law the only person who may sue is the principal, and the only person who can be sued is the principal".

15    However, Wright J also acknowledged that there were many exceptions to the general rule and said at 372:

"Also, and this is very important, in all cases the parties can by their express contract provide that the agent shall be the person liable either concurrently with or to the exclusion of the principal, or that the agent shall be the party to sue either concurrently with or to the exclusion of the principal."

16    In my opinion, ATC, having acted as Concordia's freight forwarder in arranging the Concordia bills of lading, must be taken to have known that the terms of those bills of lading included cl 14(5). In consequence, ATC being a person falling within the definition of "Merchant" because it acted on Concordia's behalf in arranging the shipping, was jointly and severally liable for the payment of freight. In Greig and Davis, The Law of Contract, 1987, at 999 and following the learned authors discussed several restrictions on the doctrine of privity and observed that in one sense any application of the principles of agency is an exception to that doctrine. At 1000 the authors said:

"But if a contract is made by an agent, it is he who is the person to whom the promise is addressed, or by whom an obligation is undertaken. The principal is not in any way involved in the process of negotiation or acceptance of duties under the agreement. However, in many situations the agent is regarded as no more than an instrument by whom the contract is made; once it is formed, he drops out and is neither liable nor entitled under the contract, so that the agreement is considered as being made with the principal. The latter, far from being a `third party', is seen as being the real party to the contract, and no breach has been made in the fundamental concept that a contract has effect only between the parties thereto."

17    But this does not mean that the contract may not impose obligations both on the principal and the agent. In Australian Trade Commission v Goodman Fielder Industries Limited [1992] FCA 307; (1992) 36 FCR 517 at 521-2 the Full Federal Court (Beaumont, Gummow and Einfeld JJ) approved the statement by Donaldson J in Teheran-Europe Co Limited v S T Belton (Tractors) Limited [1968] 2 QB 53 at 59-60, affirmed by the English Court of Appeal in Teheran-Europe Co Limited v S T Belton (Tractors) Limited [1968] 2 QB 545, that an agent can conclude a contract on behalf of his principal in one of three ways:

(a) by creating privity of contract between the third party and his principal, without himself becoming party to the contract;

(b) by creating privity of contract between the third party and his principal, while also himself becoming a party to the contract;

(c) by creating privity of contract between himself and the third party, but no such privity between the third party and his principal.

18    Their Honours referred to the second passage in the judgment of Wright J in Montgomerie which I have quoted and what was said by Mr F M B Reynolds in Chitty on Contracts, 25th ed, 1983, Vol 2, Ch 1 at para 2274:

"The fact that a person is an agent and is known to be so does not, however, of itself necessarily prevent him incurring personal liability. .... Whether this is so is to be determined by the construction of the contract, if written, and by its nature and the surrounding circumstances."

Reference was also made to Article 105 in Bowstead on Agency, (15th ed), 1985 at pages 426-9; see now Bowstead & Reynolds on Agency, (16th ed), 1996 at 550-555 (Article 100) and Scott v Geoghegan & Sons Pty Limited (1969) 43 ALJR 243 at 245 per Taylor J.

19    ATC, by arranging the contract of sea carriage on the terms set out in the Concordia bills of lading, which by cl 14(5) and the expansive definition of "Merchant", expressly made ATC jointly and severally liable for the payment of freight, became a party to the contract carrying with it a liability by it for the payment of the freight. That no consideration moved from MISC to ATC does not matter. The consideration that moved to Concordia was enough. On the question of privity see generally Coulls v Bagot's Executor and Trustee Co Limited [1967] HCA 3; (1967) 119 CLR 460, particularly at 486 in the judgment of Taylor and Owen JJ, two members of the majority, and at 478 in the judgment of Barwick CJ and 493 in the judgment of Windeyer J. As a result ATC itself was liable to pay MISC the freight owing by Concordia.

20    The next question was whether cl 15 of the ATC bills of lading gave MISC a lien on the goods the subject of the ATC and ATAC bills of lading, for the sums payable by ATC to MISC under the Concordia bills of lading. One must be careful to keep consideration of the meaning of the definition of "Merchant" in the ATC and ATAC bills of lading separate from the meaning of the same definition in the Concordia bills of lading. MISC submitted that the bills of lading did give such a lien. However, Mr Bell, who appeared for ATAC, the true owner of the goods shipped under the ATC bills of lading, submitted that the principles stated by Lord Diplock in Miramar Maritime Corporation v Holborn Oil Trading Limited [1984] AC 676 at 682 applied to require that cl 15 or the definition of "Merchant" be read down.

21    In May 1980 Mirimar as owners chartered a vessel to S.E.A. Petrochem for a voyage from Singapore to Calcutta. On 5 June 1980 a cargo of diesel oil was shipped in the vessel in Singapore for carriage to Sri Lanka under a bill of lading on the form stipulated for use in conjunction with the charterparty. The bill of lading provided that the shipment was carried under and pursuant to the terms of the charter "and all terms whatsoever of the said charter except the rate and payment of freight specified therein apply to and govern the rights of the parties concerned in this shipment." One term of the charter required the charterer to pay demurrage. The question was whether the consignees of the shipment of diesel oil as parties to the contract contained in the bill of lading were personally liable for demurrage computed in accordance with the terms of the charterparty. At 682 Lord Diplock, with whose reasons the other members of the House of Lords agreed, said:

"The words in the ..... bill of lading upon which this appeal turns are the same irrespective of whether it is issued in respect of a complete or a part of the cargo, received on board at the first or any subsequent loading port for carriage to and discharge at the last or any previous discharging port. There must be ascribed to the words a meaning that would make good commercial sense if the ..... bill of lading were issued in any of these situations, and not some meaning that imposed upon a transferee to whom the bill of lading for goods afloat was negotiated, a financial liability of unknown extent that no business man in his senses would be willing to incur."

22    The conclusion about the meaning of the clause in the bill of lading was reached by examining how the clause would apply in all situations where it could apply. That examination exposed its commercial unacceptability. ATAC submitted that MISC's claim that by operation of the liens created by cl 15 of the ATC bills of lading and the ATAC bill of lading the goods shipped under those bills were security for the payment of freight due by ATC under the Concordia bills of lading, was, for like reason, commercially unacceptable. The clause should be read down to make commercial good sense.

23    The persons included in the definition of "Merchant" in the standard form bill of lading were persons likely to have an interest in the goods with rights of suit under modern successors to the Bills of Lading Act 1855 or under the developed doctrine of implied new contracts whereunder the carrier was obliged to deliver the goods on the terms of the bill of lading ; see Scrutton on Charterparties, 18th ed, at 28-29; compare 20th ed at 42-43; see also Scotson v Pegg (1861) 6 H & N 295 at 299; 158 ER 121 at 123. So far as is known Concordia not only was not the shipper but did not otherwise come within the definition of "Merchant" in the ATC bills of lading or the ATAC bill of lading. It had no interest in the goods shipped under those bills of lading. The basis upon which MISC claimed that the goods shipped under the ATC and ATAC bills of lading secured freight owing under the Concordia bills of lading was that ATC happened to be the shipper or the agent for the shipper of the goods covered by the ATC and ATAC bills of lading and also the agent for Concordia as shipper under the Concordia bills of lading. By that process MISC was entitled to detain ATAC's property as security for freight owed to MISC under bills of lading in which ATAC had no interest.

24    The link depended on the definition of "Merchant" extended by the expression "anyone acting on behalf of such person". So, under cl 15 "any other contract by any of the persons defined as `Merchant' in cl 1" included contracts not only by the shipper but by anyone acting in the capacity defined, that is to say, on behalf of the other persons mentioned in the definition of "Merchant" in those bills of lading. Under the ATC and ATAC bills of lading that included ATC as shipper or agent. But I would not read the expression to include "any other contract" by an agent, acting on behalf of some person not included in the definition of "Merchant" in the ATC and ATAC bills of lading, in this case, Concordia.

25    Put another way, the lien secured MISC for the freight payable under the ATC and ATAC bills of lading and for sums payable to MISC by the various persons stipulated in the definition of "Merchant" in those bills of lading. The lien also secured MISC as against the agent of any such person owing money in that capacity. It did not, however, secure MISC for sums payable by that agent in its capacity as agent for some other person, not included in the definition, such as Concordia. If there were doubt about whether this was the correct construction, as opposed to the wider construction claimed by MISC, it is resolved by the exercise which Lord Diplock described. It would, I think, be commercially unacceptable to extend a right to retain the possession of goods to secure amounts payable to MISC by persons or the agents of persons who had no interest, actual or potential, or, in that capacity, had no interest, actual or potential, in the goods the subject of the lien.

26    In Turner v Hajji Goolam Mahomed Azan [1904] AC 826, under a time charter with power to sub-let, shipowners retained legal possession of the ship through the captain they appointed and paid. The captain was to be the agent in several respects for the charterers, and in particular was to sign bills of lading at any rates of freight that they might direct "without prejudice to this charter". The shipowners were also entitled to a lien upon all cargoes for freight or charter money due under the charter. The Privy Council held that the words "without prejudice to this charter" meant that the time charter remained unaltered as between the owners and the charterers, notwithstanding the bills of lading. They did not limit the power of the captain to issue bills of lading at different rates of freight, or entitle the shipowners to a lien on the goods comprised therein for freight payable under the time charter. In giving the judgment of the Privy Council, Lord Lindley remarked, at 837:

"A right to seize one person's goods for another person's debt must be clearly and distinctly conferred before a court of justice can be expected to recognise it."

27    What I have said resolves in favour of ATAC the case in respect of the goods the subject of the ATAC bill of lading to the extent that MISC may not detain the goods the subject of that bill of lading to secure payment of freight payable under the Concordia bills of lading. However, to the extent that ATAC is liable to pay freight as the "Merchant" under other bills of lading issued by MISC, any amounts of freight payable are secured by the lien.

28    Nor does it resolve in favour of ATAC the case in respect of the goods the subject of the ATC bills of lading. The goods ATC shipped under the ATC bills of lading ATC had purchased from ATAC. ATC could, quite appropriately, be regarded as the shipper within the definition of "Merchant" with an interest in the goods. To my mind no principle of construction avoids the clear consequence of the contract of carriage entered into, namely that ATC agreed as shipper that the goods, the subject of the shipment, in which it had an interest, should be subject to a lien to secure amounts payable by it under any other contract by it, albeit as agent for a different shipper, with MISC. The claim was against it as shipper not as "anyone acting on behalf of a person" specified in the definition of "Merchant" in the ATC bills of lading.

29    Accordingly the appeal should be allowed in respect of the goods the subject of the ATAC bill of lading to the extent those goods have been detained for payment of freight payable under the Concordia bills of lading. Otherwise the appeal should be dismissed. In my opinion, Brownie AJ correctly dismissed the summons so far as it was concerned with goods the subject of the ATC bills of lading.

30    The parties should bring in short minutes of order to give effect to these reasons together with any submissions they wish to make about costs at first instance and on the appeal.

31    POWELL JA: I agree with Sheller JA.

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LAST UPDATED: 09/03/2001