Kisko Products Gh Ltd v. D.A.A. [2001-2002] 1 GLR 368, Holding 1 @ P.373, H.C.

Ref: Bills of Lading Act, SS.1,2&7

The plaintiffs are a limited liability company, incorporated under the laws of Ghana and deals in used car spare parts and accessories. In 1998 Ocean Marine Shipping Incorporated, freight forwarders who were engaged by the plaintiffs, contracted the defendants, a shipping company based in the United States to tranship the plaintiffs’ cargo from Canada to Ghana. On taking


delivery of the consignment, the plaintiffs discovered to their chagrin that a number of the items were damaged, while others which were taken off the container in New York, on the grounds that it was overweight, were not shipped at all to them, contrary to an agreement to that effect. The plaintiffs therefore sued in their capacity as owner-consignees, for both general and special damages for the loss arising from the alleged breaches of contract or duty or both. The plaint was founded on a number of material facts most of which were however flatly denied by the defendants. These were that:
(1) They were the owners, consignees or holders of the bill of lading in respect of the subject matter.
(2) The defendants expressly or impliedly contracted to deliver the goods in the same good order and condition in which they were shipped.
(3) Before shipment, the defendants reworked the cargo and removed the excess from the container.
(4) At all material times, it was their duty to exercise reasonable care in the loading, carriage and discharge of the goods.
(5) They breached, rather fundamentally, that duty of care, reasonable and necessary in the circumstances, and failed to provide adequate protection for the goods in the container, resulting in loss and damage.

Unsurprisingly, the defendants denied liability for the loss and damage complained of. More particularly, they contended that there is no privity of contract between them and the plaintiffs since the consignees were Ocean Lane Shipping Co Ltd. They therefore challenged the plaintiffs’ right to sue under the contract.

The unchallenged facts are that the plaintiffs were the owners of the cargo which was sealed in Canada and transported by road to New York for onward shipment to Ghana. The clear evidence is that the contract for carriage was between the defendants and the plaintiffs’ agents, Ocean Marine. It is also not disputed that the international bill of lading, exhibit N, named the consignors as the Ocean Marine Shipping Incorporated and the consignees as Ocean Lane Shipping Co Ltd, the consignors’ local counterparts or better still agents. Therefore, the first fundamental question I would like

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to determine is whether the plaintiffs who are not privies to the contract of carriage are nevertheless entitled to sue under it.

It was submitted by the defendants’ counsel that under section 7(1) of the Bills of Lading Act, 1961 (Act 42) the only persons who can sue under the contract are: (1) the consignees named in the bill of lading; and (2) the endorsees of that document. The argument therefore was that, since the plaintiffs are neither consignees nor endorsees, they lack the capacity to institute these proceedings.

While admitting that they are neither the consignees named in the bill of lading nor the endorsees, counsel for the plaintiffs has advanced four main reasons why they can sue under the contract. In my view, only one of them provides a sufficient and valid answer to the submission made on the other side. I intend to deal with that one only and simply dismiss the others as affording no answer to the arguments raised. It was formidably argued that they are pursuing this action, not under the statute, but at common law and in their capacity as undisclosed principals, since on all the evidence available, Ocean Marine were their agents who nevertheless took out the contract in their own name without disclosing their true principals.

The arguments on both sides of this legal divide therefore raised this critical question: Under our laws, in a contract of carriage by sea, are the consignees of goods named in a bill of lading or the person to whom the bill of lading has been endorsed, known as the endorsees, the only persons who may sue under the contract in the event of any loss or damage to the goods during the carriage? The bill of lading is said to be a very important document in international trade. It normally would contain evidence about the terms of the contract of carriage, rather than the whole contract itself, and does operate as a document of title. From the Service Issue No 14 of Contracts for the Carriage of Goods by Land, Sea and Air by David Yates we learn that:

“The bill may be used to enable a consignee to obtain constructive possession of the goods and a valid holder of the bill of lading will be able to require the carrier to deliver the goods at the port of destination. By endorsement, the bill may also be used to pass property in the goods or to effect please in them.”

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Section 7(1) of Act 42 stipulates:
“7. (1) Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading to whom the property in the goods therein mentioned passes under the contract in pursuance of which the endorsement was made, shall have transferred to and vested in him all rights, and be subject to the same liabilities in respect of the goods as if the contract expressed in the bill of lading had been made with himself.”

I think that this law merely confers a statutory right on holders of this document—the two described therein as the consignees named in the bill of lading, and the endorsee—to sue under the contract of carriage, as expressed under the bill of lading itself. The right the holder has is against the carrier, so we see clearly that it gives rights only to one in possession of a bill of lading.

But I do not find any words in the statute, express or implied, which take away or extinguish the common law right of a consignor for example or a true owner of goods but who is not nevertheless a holder of a bill of lading, to sue, in appropriate cases, in protection or vindication of his or her rights. If the defence’s argument was carried to its logical conclusion, then it would mean the other party to a contract of carriage, who may not necessarily be a bill of lading holder, has no right to sue. I cannot conceive of such a situation. In the law of construction or interpretation of statutes, one of the well-known presumptions as understood and applied as an aid to interpretation, is the presumption against unclear changes in the law. This principle which helps to unearth the legislative intent is that, the legislature does not intend to effect an alteration in the existing common law, unless such a change is stated in the enactment in question, either expressly or impliedly: see Ohene-Mensah v Subin Timbers Ltd [1982-83] GLR 601.

The plaintiffs, the undisputed owners of the goods, sue not under the statute as a bill of lading holder, but in their capacity as the principal of the consignor, who is a party to the contract of carriage. The well-settled rule of law is that an undisclosed principal can sue or be sued on the contract of his agent. The learned authors of Chitty on Contracts, Specific Contracts, Vol 2, para 55, p 28 has outlined the legal principles as follows: “Where an

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agent makes a contract in his own name, parol evidence is generally admissible to show that another person was the real principal, so that that principal can sue.” As stated above, its effect is to add a liability not vary the contract as to who can be sued as the principal: see Drughorn (Fred) Ltd v Rederiaktiebolaget Transatlantic [1919] AC 203, HL. Exceptions to this general rule would include:
(1) Where such intervention would be inconsistent with the terms of the contract itself: see Teheran-Europe Co Ltd v S T Belton (Tractors) Ltd [1968] 2 QB 545 at 552, CA, or
(2) By statutory exclusion where statute takes away that right.

Where the agent is known to be an agent and names his principal, the general rule as stated by Wright J in Montgomerie v United Kingdom Steamship Association Ltd [1891] 1 QB 370 at 371 is that: “. . . 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.”

The mere fact that the principal is not named does not per se vary the rights and liabilities of the principal vis-à-vis third parties. The principle of law is that if, having regard to the form of the contract and the agent’s business, the clear inference is that he contracted merely as an agent, then despite the fact that the principal for whom he acted has not been named, the agent drops out of the transaction. A more apposite authority in support of the proposition that in a contract of carriage by sea, the real owner of goods may sue the carrier in his capacity as an undisclosed principal is, CMR Moto Vespa SA v MAT Britannia Express [1979] 1 Lloyd’s Rep 175. It was held in this case that, the fact that the freight forwarding agents “arranged for the carriage of someone else’s goods and did not disclose his name did not prevent him from suing as an undisclosed principal.” The only question left for consideration then is whether the plaintiffs were able to establish this capacity. I think the evidence led clearly showed that Ocean Lane, who were freight forwarders, acted merely as agents in the transaction involving the shipment of used car spare parts to Ghana, West Africa.

The only small matter which has agitated my mind is the question of whether or not having regard to the pleadings, the

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plaintiffs are entitled to set up this plea. In their pleadings, they had sued as owners/consignees. It is regrettable that although they were granted leave to amend their claim to disclose this capacity as far back as 21 July 2000, they had failed to do so, thus making the order ipso facto void. What has however inured to their benefit is that, no objection was raised by the defendants when they led evidence to establish the principal/agent relationship and the fact that Ocean Marine were mere freight forwarders. The Service Issue No 14, Part 7, para 7, 2, 6, 5 in freight forwarding explains the role of the freight forwarder as follows:
“The forwarder may contract in the more traditional role for being an agent, ie contracting to arrange carriage (see the Maheno Paragraph 7, 2, 6, 3. This is commonly associated with a finding that privity of contract exists between the customer and the actual carrier (even as an undisclosed principal; see eg. In respect of CMR Moto Vespa SA v MAT Britannia Express” (supra).

Apart from raising no objection, it was plain at the hearing that the defendants were not taken by surprise, put to any embarrassment or prejudiced by these matters. Indeed, questions put to the plaintiffs, under cross-examination, two of which are reproduced here, would confirm that they suffered no miscarriage of justice.
“Q. I am putting it to you that having nominated your forwarders, Delmas America Africa Lines being a shipping agent had only to deal with your forwarders, not you personally.
Q. Mr Agyarko I am putting it to you that the matter of reducing weight or not is a matter between your shipping agent and your forwarding agent—finito etc.”

I find that Ocean Marine, as a contracting party, performed their purely traditional roles as agents of the plaintiffs. The evidence does justify a finding that the plaintiffs were an undisclosed principal and further that a privity of contract existed between them and the defendant-carriers.

It was when the container, which the defendants had contracted to ship to Ghana arrived in New York, that it was discovered that its


weight was in excess of the allowable limit. The container had to be reworked for the excess load to be taken off. The plaintiffs contend that:
(1) the rework was the responsibility or duty of the defendants;
(2) they undertook to do it and hired labour for the purpose;
(3) their servant, agents or workmen carried out the work so negligently, without such reasonable care, skill and diligence;
(4) they breached the contract or duty; and thereby,
(5) resulting in the loss and damage complained of.

The defendants have flatly denied being responsible for the rework and hiring of labourers or workmen for the purpose. Their contention is that it was the responsibility of the shipper or his agents. It has become essential, therefore, that we resolve this issue: Was the rework of the container undertaken by the defendants and who therefore hired workmen for the purpose?

The burden of persuasion on this issue, undoubtedly lay on the plaintiffs who asserted the fact. Plainly, the rework was not within the contemplation of the parties at the initial stage of the transaction. The problem of the overweight container was a much latter development. It does not therefore come as a surprise that no express written term of this contract was produced by the plaintiffs at the trial. It appears that these matters were dealt with, largely through conferencing. But that does not absolve the plaintiffs from proving, on the balance of the probabilities, that the rework was undertaken by the defendants through their hired workmen, servants or agents. Counsel for the defendants has submitted that the rework was the responsibility of the plaintiffs’ forwarders and also that the work was carried out by independent contractors. That cannot be, in view particularly of exhibits C and D, fax messages from the defendants to the plaintiffs’ forwarders. I reproduce the main text of these two documents:

Exhibit C
“The above container exceeds the maximum allowable weight for this unit by 8740#. This extra cargo must be removed prior to loading the Phraedae 808. Following are the charts that will

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be assessed against this load. These charges will be added to your bill of lading. As you know Red Hook has agreed to rework this container . . . These charges must be agreed upon prior to the work order given. Please sign and return this page to me at fax no 800-442-2235.”

Exhibit D
“The above container has been reworked by American Stevedoring and the new cargo weight is 58180. Please see the following charges for all associated costs involved with the rework of the container. All of the below charges must be paid to Delmas A A L prior to the container loading on the Phraedae 808 ... As mentioned above the charges must be paid prior to the container loading on the Phraedae 808 . . .”

If the rework was the responsibility of the plaintiffs’ forwarders, why did the defendants not simply write to notify them of the problem on hand, and invite them to have it rectified to enable them load the ship? In exhibit C they speak of giving a work order. If the rework was not their responsibility, why did they concern themselves with the giving of a work order? As the plaintiffs rightly explained, their signature on exhibit C was merely to affirm that they would pay for the cost involved in the exercise. This explanation is amply corroborated by the defendants’ own witness. He said in answer to a question:
“A If you look at the fax from the office of Ocean Marine, it stipulated that it has exceeded the allowable limitation in one of the exhibits so as a result of that we told him how much it was going to cost to have this container reworked and we made it quite clear that the charges would be borne by him as per the regulations and he sanctioned it.”

Secondly, and even more importantly, if they were not responsible for the rework, and they did not engage the services of American Stevedoring (Not Red Hook as originally agreed upon) why did they, per exhibit D direct that payment for the work done be made directly to them? Not even a single correspondence between the plaintiffs or their freight forwarders and the American Stevedoring

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was produced at the trial. How can it be argued that they were independent contractors and/or also that it was the plaintiffs’ responsibility to rework the container? Although, the container was in their custody, control and possession, the defendants themselves led not a shred of evidence on who had to do the rework, the circumstances under which American Stevedoring had access to the cargo, how payment was effected, and the circumstances under which they wrote exhibits C and D. Yet, all these are facts very well within their peculiar knowledge. I am satisfied that they undertook the rework. In the process, some of the goods were taken off the container and others re-arranged. The surveyor’s report condemned the stowage as being unsatisfactory, with spare parts not arranged in the kinds and metal items mixed with plastic. Worse still there were 110 bolts packed in the container which were not for the plaintiffs. How did these find their way into the plaintiffs’ container? The plaintiffs had led evidence to establish that they packed their goods in the container properly before the defendants took it into their custody. On the other hand, we have no evidence from the defendants showing the goods were found to be improperly packed when the container was opened, a fact which would have absolved them wholly from blame. On the evidence, I find the negligence or breach of duty or both, as pleaded, proved.

The defendants’ counsel has however submitted that they were, by virtue of article 4(2)(i) of Act 42 exempt from liability. It is provided thereunder that:
“2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from—
(i) Act or omission of the shipper or owner of the goods, his agent or representative.”

Exemption clauses are not unknown in the law governing carriage of goods by sea. Unfortunately, I do not think the defendants can take advantage of this statutory exemption as provided for under Act 42. This law, quite clearly, is applicable only in respect of carriage of goods by sea, to ships carrying goods from any port in Ghana to any other port whether in or outside Ghana. I reproduce section 1 of Act 42:

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“1. Subject to the provisions of this Act, the Rules contained in Articles 1 to 8 of the Convention which are set out in the Schedule to this Act (hereinafter referred to as ‘the Rules’) shall have effect in relation to and in connection with carriage of goods by sea in ships carrying goods from any port in Ghana to any other port whether in or outside Ghana.”

The law is therefore inapplicable to the facts of this present case.


I would now finally deal with the question of damages. The plaintiffs claim special damages for:

(a) Non-delivery.
(b) Damaged goods.
(c) Cost of survey report.

Their unchallenged evidence, which in any case I find reasonably probable, is that the defendants agreed to ship these items which were removed from the container to them. I thought it does make sense. If they contracted to bring down the container, but had to take off some of the goods in order to meet United States customs regulations, the probabilities are that they would agree to bring down these items also! Again, they led evidence in proof of the various steps they took to “assist in all matters arising to this particular container.” They drove all the way from Toronto to New York but they were prevented from seeing the container. Also, they promptly complained to their freight forwarder when they were refused access to their goods. They also intervened to have the defendants forward the removed items. Even after the survey, they sent copies to the defendants by a special courier. In all of these instances, they were met with a rebuff and the defendants did not respond to any of their requests. In law, a plaintiff would not be allowed to recover damages to compensate him for any loss or damage which he would not have suffered if he had taken reasonable steps to mitigate his losses. Certainly, it cannot be said of these plaintiffs that they took no such reasonable steps. Exhibit K contains the list of items, which were not delivered in accordance with the agreement. The values as pleaded and proved by the plaintiffs were confirmed by the exhibit B, an invoice from

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their suppliers. The principle under which special damages would be quantified is the age-old principle of restituo in integrum. I will thus assess damages for the non-shipment at US$84,018. Also the evidence of the third plaintiff witness, the independent cargo surveyor claims adjuster, as per his report, confirmed the plaintiffs’ evidence of the list not only of items but the fact that they were damaged so badly that he described them as goods which cannot be marketed on the Ghanaian local market. The fact that they were not produced in court is not fatal to the plaintiffs’ case. The plaintiffs are entitled to recover by way of special damages the value of these goods assessed at $24,680. Thirdly, the plaintiffs would be entitled to the cedi equivalent of the US$641 being the cost of preparation of the survey report.

The claim for general damages

The authorities show that normally damages for breach of contract relate to financial loss but non-pecuniary losses are recoverable if it is proved that they were within the parties’ contemplation as likely to result from the breach. Therefore, damages might be recovered for substantial physical inconvenience of discomfort, nervous shock, mental distress or the like.

Generally, therefore, no damages will be awarded for injured feelings, mental distress, annoyance, loss of reputation. However, none of these matters were proved by the plaintiffs. I would therefore hesitate to award general damages in this instant action.

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