THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
HCT - 00 - CC – CS - 262 - 2012
ROYAL CITY GOLD LLC ::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF
2.EMIRATES SKY CARGO :::::::::::::::::::::::::::::::: DEFENDANT
BEFORE: THE HON. JUSTICE DAVID WANGUTUSI
J U D G M E N T:
Royal City Gold LLC, a company carrying on gold smith business in the United Arab Emirates (UAE), herein referred to in this judgment as the Plaintiff sued Emirates Airlines and Emirates Sky Cargo, the first and second defendants respectively, for recovery of 6.329kgs of gold or it’s equivalent of USD $ 301,551.
Briefly the facts of this case as they emerged from the pleadings were that the Plaintiff, a dealer in gold used to buy and export gold to the UAE. On 1/11/11, it handed over 15kgs of gold bars to the first defendant for transportation to the UAE and paid all the necessary charges.
On 2nd November 2011, the Plaintiff’s agent, Bhimji Sameer received information from the 2nd defendant‘s cargo manager, Angura Samuel that the seals of the consignment had been broken and the gold stolen. Investigations commenced by the Aviation Police in Entebbe where the matter had been reported and 8.61kgs of gold was recovered. It was also the finding of the Aviation Police that the gold was actually stolen off the plane after it had been loaded. It became clear that the theft took place during the time the plane’s departure was delayed. The Plaintiff contended that this consignment having been handed over to officials of the 1st and 2nd defendant, it went missing during an international carriage within the meaning of article 18 of the Warsaw convention 1929. The Plaintiff contending that there had been willful misconduct by the defendants brought this action seeking the recovery of 6.239kgs of gold or it’s equivalent of USD $ 301,551 being the value of the gold as at 1st November 2011. It also sought the recovery of USD $ 291.35 which was the total carriage charge. Further, it prayed for general damages, aggravated damages and costs of the suit.
On interest it sought 30% p.a on each and every claim from the date of judgment till payment in full.
The defendants denied liability but admitted that they were entrusted with the gold, which through Entebbe Handling Services Ltd (ENHAS), the authorized ground handling company, sealed the boxes in which the gold was and placed them in a red container and loaded them onto the plane.
In their defence, they contented that they had followed due process and fulfilled all the requisite measures expected of them when handling such a consignment. They denied misconducting themselves in any way and that since there was no willful misconduct on their part, they could not be held liable. They claimed to have acted with all speed when the theft was discovered by immediately alerting the Aviation Police which was immediately followed by arrests, none of whom were their employees.
Their defense also stated that they were willing to compensate the Plaintiffs an amount in line with the Warsaw Convention but the Plaintiff refused.
The defendants insisted that since the airway bill was proper and regular and there was no willful conduct, the limits of liability would apply and much so since at the loading of the consignment, the Plaintiff had not declared a higher value of the consignment.
It is important at this stage to state that the defendants, seeking compensation in the event of being found liable, took out a third party notice against ENHAS Ltd who had actually sealed and loaded the plane with the gold. This third party notice was granted and the third party denied liability. It contended that the Plaintiff had not declared the value of its cargo and having failed to do so, it limited the carrier’s liability in case of loss or damage.
It further contended that it had discharged its duty diligently and with integrity.
Lastly, relying on Article 8 of the International Air Transport Association(IATA) and Standard Ground Handling Agreement (SGHA) it contended that an indemnity under those provisions would only accrue from the carrier, in this case the defendant, to the third party which was the ground handling company.
That therefore no such indemnity could accrue from the Third Party to the Defendant.
The issues agreed upon by the parties were as follows:
Whether the limits of liability on the airway bill apply?
Whether there was willful misconduct on the part of the defendant’s officials /employees?
Issue 1: Whether the limits of liability on the airway bill apply?
PW3, a director of Midas All Minerals, an agent of the Plaintiff told court that on the 31/10/11 he called the Emirates office at Entebbe and booked cargo space to transport gold bars to the Plaintiff’s in Dubai. He got such space on flight EK 724 EBB-DXB ON 1/11/11. He delivered gold bars packed in a metallic case, met Steven an employee of Emirates who led him to the cargo terminal to weigh the consignment, generate an airway bill and present the packing list to customs.
He was charged USD $291.35; that it was him who sealed the gold and left. The following morning, he received a phone call from Angura Samuel who informed him that a notification from Dubai had indicated that the containers arrived with the seals broken and gold missing.
DW1, Angura Samuel, the cargo manager of the defendant’s company told court that PW3 delivered gold bars which were weighed and found to be 15kgs and an airway bill number 176-22-0564 was issued and it clearly indicated that no value of the goods had been declared.
This airway bill which was marked “A”, clearly indicated under declared value for customs as NVD which meant “No Value Declared”.
From the evidence of all the witnesses of the Plaintiff and the defendant, there is no doubt that the plaintiff indeed entrusted its gold worth 15kgs to the defendants.
Further, there is no doubt that someone broke the seals of the container in which the gold bars were and stole the contents.
Article 8 of the Warsaw Convention 1929 provides:
The air consignment note shall contain the following particulars:-
(a) the place and date of its execution;
(b) the place of departure and of destination;
(c) the agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and that if he exercises that right the alteration shall not have the effect of depriving the carriage of its international character;
(d) the name and address of the consignor;
(e) the name and address of the first carrier;
(f) the name and address of the consignee, if the case so requires;
(g) the nature of the goods;
(h) the number of the packages, the method of packing and the particular marks or numbers upon them;
(i) the weight, the quantity and the volume or dimensions of the goods;
(j) the apparent condition of the goods and of the packing;
(k) the freight, if it has been agreed upon, the date and place of payment, and the person who is to pay it;
(l) if the goods are sent for payment on delivery, the price of the goods, and, if the case so requires, the amount of the expenses incurred;
(m) the amount of the value declared in accordance with Article 22 (2);
(n) the number of parts of the air consignment note;
(o) the documents handed to the carrier to accompany the air consignment note;
(p) the time fixed for the completion of the carriage and a brief note of the route to be followed, if these matters have been agreed upon;
(q) a statement that the carriage is subject to the rules relating to liability established by this Convention.
In the instant case, the Plaintiff contended that Airway bill issued to them did not contain the agreed stopping places which excluded the Defendants from the limits of liability set out therein. However, in his evidence, PW3 stated that he was given a slot to transport gold bars by the Defendant on flight EK 724 EBB-ADD-DXB. It is evident that he was aware of the stopping places the flight would make irrespective of the fact that the same were not reflected on the airway bill he was issued.
Under the Warsaw Convention, the stopping places are relevant in determining the character of the flight. In Tai Ping Insurance Co. Ltd & Anor V Northwest Airlines Inc 897 F. Supp 127 (1995), it was held:
“The purpose of that requirement is sufficiently served if the airway bill refers the reader to a source of information which is readily available. Thus it would be consistent with the Convention’s purpose to construe the phrase “shall contain… the stopping places” to include incorporation by reference of an available timetable listing the stopping places.”
In the present case, the airway bill to which the PW3 signed stated on the front:
“It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF THE CONTRACT ON THE REVERSE HEREOF..”
The reverse of the airway bill subsequently provided in Clause 2.2
“To the extent not in conflict with the foregoing, carriage and other related services performed by each carrier are subject to:
2.2.2 provisions contained in the airway bill, carrier’s conditions of carriage and related rules, regulations, and timetable..”
PW3 must have had access to the timetable which explains how he knew the stopping places. Moreover the Plaintiff was a frequent user and had done so for 8 years; the Plaintiff can therefore not turn around and say the same were not reflected in the airway bill.
Further, the bill did not reflect an the amount of the value declared in accordance with Article 22 (2) of the Convention which provides:
“In the carriage of registered luggage and of goods, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery.”
It was the Plaintiff’s duty to make a special declaration as to the value of the consignment which they did not; the provision for it on the airway bill having the entry “NVD” meaning No Value Declared.
In light of the foregoing, the Defendant discharged it’s obligations fully in relation to the airway bill successfully bringing them within the limits of liability set out therein.
Issue 2: Whether there was willful misconduct on the part of
the defendants officials/employees?
The Plaintiff contended that the Defendants’ employees had willfully misconduct themselves and listed several things in their opinion which pointed to Willful Misconduct.
The Plaintiff alleged that after loading the gold, the plane did not leave immediately as it was delayed for over two and a half hours. That since the defendants’ officials knew that what it was transporting was valuable cargo, they should have unloaded it, failure of which amounted to Willful Misconduct. Further, that Richard Mayanja, the cargo supervisor, abandoned the delayed plane on the tarmac and did not come back until it was taking off which amounted to abandonment of the consignment yet he ought to have known that it could be stolen.
Furthermore, that the 2nd defendant’s cargo manager should have inspected the cargo before the plane left and more over it was not even checked at its transit stop in Addis Ababa which would have helped in the early hunt of the cargo.
The Plaintiff contended that this being valuable cargo, it should not have been mixed up with other cargo and that the Defendant’s conduct therefore amounted to reckless carelessness in complete breach of the provisions of the Cargo and Mail Handling Manual.
In the alternative, the Willful Misconduct was occasioned by the stealing of the consignment by employees and or agents of the defendants who were acting within the scope of their employment and who knew that their conduct was un lawful.
Counsel for the Plaintiff submitted that PW3 had made reservations for the transportation of gold before, this relationship had been going on for 8years with the defendants knowing that they were transporting gold which was valuable cargo and that in knowing that this was valuable cargo, the Defendants should have given it proper attention.
Section D of the Cargo and Mail Handling Manual provides for cargo needing special attention. It defines valuable cargo as any article having a declared value for carriage of USD $1000 or more per gross kg .This included gold, whether refined or unrefined.
Since the amount of gold that was entrusted with the defendants far over shot the USD $1000 minimum limit, it should have been given the treatment deserving valuable cargo under Section D4(2) which deals with security arrangements. The manual provides that valuable cargo being highly sensitive must be well secured throughout its handling, starting from acceptance, storage, transportation to aircraft, loading, unloading, in-transit until it is delivered to the consignee.
The Defendants therefore having this consignment and recognizing that it was valuable cargo should have ensured security arrangements appropriate in the circumstances by putting them in special containers and avoiding mixing them up with other baggage. Similar attention should have been given to the cargo in all ports of transit.
PW3 told court that when he delivered the gold, he was given a special container and a seal and he himself sealed the metal container. Further that the manner in which the gold was sealed left him satisfied.
DW1 told court that the gold bars were properly sealed and put in special containers with additional seals and loaded onto the aircraft and that it was after the airplane had arrived in Dubai that the airport officials realized the seals had been broken. Investigations revealed that the bars were stolen while the plane was on the ground which was during a delay period caused by a technical fault. He said investigations also revealed that ENHAS Limited’s employees, the official ground handling company, were responsible for the theft.
There is no doubt that this theft took place at Entebbe airport, because when ENHAS Ltd employees who were suspects were arrested, 8.761kgs of gold bars were recovered from them. In my view, the ENHAS staff who loaded the plane are the ones who stole the cargo. That the containers with broken seals arrived in Dubai makes it clear that the gold was loaded and stolen during the delay which position is also supported by the evidence of PW3 who attributed the loss to the negligence of Richard Mayanja, the cargo supervisor of the Defendant company.
PW3 told court that when the plane was delayed, instead of Mayanja remaining behind and keeping watch over the cargo, he left and went to his office only returning when the plane was about to leave, thus availing the thieves an opportunity to steal the gold.
From the foregoing, can one say that there was willful misconduct by the Defendants?
Article 25 of the Warsaw convention 1929 provides:
The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limits his liability, if the damage is caused by his willful miscount or by such default on his part as , in accordance with the law of the court to which the case is submitted , is considered to be equivalent to willful misconduct.
Similarly the carrier shall not be entitled to avail himself of the same provisions, if the damage is caused under the same circumstances by any agent of the carrier acting within the scope of his employment
Defining willful misconduct, Barry J in Horabin V British overseas Airways corporation  2 AIIE.R 10116 stated:
“Willful misconduct is misconduct to which the will is a party, and it is wholly different in kind from mere negligence or carelessness, however gross that negligence or carelessness maybe. The will must be a party to the misconduct, and not merely a party to the conduct of which complaint is made.
As an example, if the pilot of an aircraft knowingly does something which subsequently a jury find amounted to misconduct, that fault alone does not show that he was guilty of willful misconduct.
To establish willful misconduct on the part of this imaginary pilot, it must be shown not only that he knowingly (and in that sense willfully) did the wrong act, but also that when he did it, he was aware that it was a wrongful act, ie, that he was aware that he was committing misconduct.”
Further, in the order to establish Willful Misconduct it must be shown that the person who did the act knew at the time that he was doing something wrong and yet did it notwithstanding or alternatively, that he did it quite recklessly, not caring whether he was doing the right thing or the wrong thing, quite regardless of the effects of what he was doing on the safety of the aircraft and of the passengers for which and for whom he was responsible.
The actor must have intended the result that came about or must have launched on such a line of conduct with the knowledge of what the consequences probably would be and still gone ahead recklessly despite his knowledge of those conditions. Froman V Pan American Airways Inc (284 App Div, 935).
The element of willfulness is essential in the present case. Doing a wrongful act may amount to mere negligence, however the intention or state of mind of the person who did it is what will constitute willful negligence. The Plaintiff is entitled to recover if he satisfies court that it is more probable that a certain act was an act of misconduct and that it involved willful misconduct on the part of the person who did it than that it was an act of mere negligence or carelessness. One must look at the matter as a whole. Horabin V British Airways Corpn (supra).
In the instant case, the Defendant properly sealed the gold bars and put them in special containers with additional seals and loaded them onto the aircraft. After discovering the theft, the Defendant instigated investigations with the Aviation Police and was able to recover 8.61 kg of the gold.
Further, it was employees of ENHAS, the authorized ground handling company that orchestrated and carried out the theft.
The conduct of these employees may be imputed on the Defendant as they were their agents and carried out the theft during the scope of their work, however the above notwithstanding, the Plaintiff had to show that the Defendant knowingly placed their cargo in an unsecure place and that when the Defendants did this, they knew it would be stolen.
The Defendant had been transporting the Plaintiff’s cargo for 8 years within which period a business relation had formed. The conduct of the Defendant does not relate to that of one who intended to lose the Plaintiff’s shipment. They secured the cargo in sealed containers, which packaging satisfied PW3 and which the thieves even had to break in order to steal the gold. That the Defendant acted as fast as it did as soon as it was notified of the loss and was able to recover most of the consignment also waters down any concept of ill intention.
However, when the plane was delayed for such a long time, the defendants should have employed more stringent efforts toward securing the gold either by taking it off the plane for safe keeping or ensuring that the supervisor did not abandon his post.
That at most imputes gross negligence on the Defendants and Willful Misconduct is wholly different in kind from mere negligence however gross that negligence may be Horabin V British Airways inc (supra).
In the present case there is no direct evidence of the state of mind or the intentions of the Defendant to have willfully misconduct themselves and therefore I find that there was no willful misconduct on the part of the Defendants.
Furthermore, I must also add that the Plaintiff’s conduct in withdrawing and stopping the prosecution of people they had, in their opinion red handedly caught with the stolen gold, stopped the recovery of the remaining missing one bar of gold or its equivalent in monetary value.
In a situation such as this, the Plaintiff was expected to do anything possible to mitigate the loss.
Ironically, in this case the Plaintiff strived to stop the mitigation. It would therefore be unjust that the person who played a role in stopping the recovery process of the gold or its value should benefit from his actions by uninsulating the Defendant of his protection of limitation.
The above notwithstanding, the Defendants did lose the Plaintiff’s 6.329 kgs of gold of which the Plaintiff seeks to recover or its equivalent of USD $ 301,551. The Plaintiff did not did not however declare the value of their consignment before it was transported in accordance with Article 22(2) of the Warsaw Convention as seen earlier in this judgment.
The purpose of Article 22(2) was considered by the House of Lords in Abnett v British Airways PLC (Scotland) Sidhu & Ors V British Airways PLC  2 WLR 26. The Learned Lord Justice stated:
“… Article 22(2)(a) begins with the words "In the carriage of registered baggage and of cargo." The intention which emerges from these words is that, unless he agrees otherwise by special contract - for which provision is made elsewhere in the article - the carrier can be assured that his liability to each passenger and for each package will not exceed the sums stated in the article. This has obvious implications for insurance by the carrier and for the cost of his undertaking as a whole…”
This position was relied on by the Supreme Court in Katumba Ronald V Kenya Airways Ltd SCCA 9/2008 where Justice Katureebe JSC stated:
“There is obviously a public interest consideration here. Airlines would find it impossible to operate if passengers were allowed to claim the value of luggage they had not previously declared. They would have had to pay for any extra charges, but importantly, the Airline would have considered appropriate insurance in the matter. This goes to the whole purpose of the convention…”
In view of the foregoing, I find that the protection of limitation of liability still applies and the Plaintiff is entitled to such amounts as provided for in the Convention
Thus considering the Conventions provision of 250 francs for each kg, whose equivalent is 255.39 dollars per kg; the same is applied to 6.329 kgs which amounts to USD $ 1,616.4 as the total amount due to the Plaintiff by the Defendant. The Defendant will also pay the Plaintiff USD$ 291.35 being the carriage charge
The Defendant had attempted to indemnify the Plaintiff In accordance with the Convention, which the Plaintiff resisted; if it had not resisted then this entire suit would have been avoided. In light of that, each party should bear their own costs.
David K. Wangutusi