Court name
Commercial Court of Uganda
Judgment date
2 February 2015

Aya Investments (U) Ltd v DAMCO Logistics (U) Ltd (Miscellaneous Application-2015/15) [2015] UGCommC 21 (02 February 2015);

Cite this case
[2015] UGCommC 21

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC APPLICATION NO 15 OF 2015

ARISING FROM CIVIL SUIT NO 5 OF 2015

AYA INVESTMENTS (U) LIMITED}........................................................APPLICANT

VS

DAMCO LOGISTICS (U) LTD}.............................................................RESPONDENT

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

Pursuant to the ruling of this court delivered on 27 January 2015 in which the written statement of defence of Maersk Shipping Line was struck out for being filed by a party who was not served with summons to file a defence and secondly on the ground that the lawyers representing the said shipping line were acting without instructions of the person or party served with the summons. Similarly the affidavit in reply filed on behalf of Maersk Shipping Line in the current application was struck out on the same grounds. Thereafter the Applicant’s Counsel filed written submissions in support of the application.

The Applicant’s Counsel relied inter alia on section 3 of the Civil Procedure Act for the submission that where there is no specific provision to the contrary, nothing in the Civil Procedure Act shall be deemed to limit or otherwise affect any special jurisdiction or power conferred or any special form of procedure prescribed by or under any other law for the time being in force. Secondly he relied on section 98 of the Civil Procedure Act which gives this court inherent power to grant the orders sought in the application. Furthermore he submitted that section 14 of the Judicature Act, subject to the written law, preserves the inherent powers of the court. Before the application could be considered the question was whether the Applicant could amend the names Maersk (U) Ltd to read Damco Logistics (U) Ltd. Secondly whether the Respondent has a claim to the goods and thirdly whether the Applicant is exercising a legal right to the goods.

At the hearing of the application, the Applicant established from certified documents obtained from the Uganda Registration Services Bureau that the Respondent had changed its names on various occasions and is currently known as DAMCO Logistics Uganda Ltd. It was registered under the name in which it was sued on 28 July 1997 and later changed its name to APM Global Logistics Uganda Limited on 26 November 2008. Finally the Respondent changed its names to DAMCO Logistics Uganda Ltd on 27 August 2009. Counsel submitted that DAMCO Logistics Uganda Limited is the same company that received court process. The company just underwent change of name and is still the same company. In the circumstances, it was necessary for an amendment of the name to be made. Amendment is permissible according to the case law in Hassanali versus Singh (1994) 21 (i) KLR at page 29 where the court held that the amendment of the Plaintiffs name is permissible if there was a bona fide mistake of law or fact. Secondly in the case of Abdullah Jiwanjee & Co Ltd versus Highline Commercial Union (1995) 26 KLR 1 it was held that an amendment of the Defendant's name is permissible if the application is made bona fide and the other party is not grossly prejudiced. Counsel submitted that in this case the Respondent would not be prejudiced because they were served with court process and never filed a defence to the plaint or an affidavit in reply to the application.

Secondly the application seeks a mandatory injunction against the Respondent which is the shipping company to release the Applicant's goods held in the Respondent’s custody. The facts of the application are that the Applicant bought goods FOB from a supplier in China. A sale agreement was made.  Payment terms of two instalments were agreed upon. 30% was payable on the signing of the contract and 70% upon delivery. The Applicant paid 30%.

Payment of the second instalment was due upon the supplier obtaining all the documents required. On 12 September 2014 the supplier sent an e-mail from one Suzanne confirming receipt of all documents and requesting for payment. The documents were sent. On 22 September the supplier sent an e-mail that there was an alert on a restriction to receive money and on the 23rd of the supplier was informed that the funds were wired back to the Applicant. That is when the supplier advised that an alternative account be submitted. The supplier was requested to send the original documents and the original documents including the bill of lading were not sent.

What is important at this stage is that the payment for the goods was done and the goods were delivered in Uganda. The supplier has not raised any complaint about the goods. The goods were shipped by the seller and upon the Applicant’s request the seller sent the Applicant vessel tracking numbers, attached to the application. The Respondent shipped the goods to Uganda in two containers namely MRKU 061 3428 and MRKU 002 4921 which containers arrived in Uganda by 16th of October 2014 according to copies of the container tracking printed off the Respondent’s website. The Applicant's goods arrived in Uganda and are in the Respondents premises on 5th Street industrial area Kampala.

The Respondent is aware that the goods are the Applicant’s goods and accordingly invoiced the Applicant for handling charges through their logistics company DAMCO and these fees were paid. They are holding the goods and continued to charge demurrage which is unnecessary. The Respondents do not have any legal claim to the goods. There is a claim that the original bill of lading was recalled in China by a court, but no details of who claimed in court have been supplied. The supplier is silent. If there was a theft of goods there would have been an INTERPOL alert of seizure of goods by the Ugandan police but nothing of that nature has happened. There is no reciprocal enforcement of judgment between China and Uganda where the Respondent could have claimed to be obeying court orders. The Respondent has also not going to the court for inter-pleader proceedings. Counsel submitted that the Respondent is not in doubt about the Applicant’s ownership of the goods. Secondly the Respondent is not claiming ownership of the goods.

In light of the Respondents lack of a legal claim to the goods, he submitted that this is a clear case where a mandatory injunction ought to be granted.

The Applicant has demonstrated by affidavit that it would suffer irreparable damages if the goods continue to be in the Respondent’s hands.

The Respondent is not ready to remedy the damage the Applicant shall suffer because the Respondent has no claim to the goods and the Applicant is likely to suffer irreparable damage which cannot be adequately remedied by an award of damages. The Respondent has been paid the handling charges. Unfortunately the Respondent is charging demurrage so that it is benefiting unjustly by holding onto the goods. The Applicant in any case is willing to pay all the demurrage charges up to the date of an order of this court.

The Applicants Counsel further maintains that the application is an urgent application because if it is not granted the Applicant is likely to breach the contract with the contractor waiting to install the Hotel to UMEME electric power and generators. In light of the above submissions Counsel seeks the court to grant the Applicant a mandatory injunction against the Respondent to release the Applicant's goods. The Applicant’s Counsel relies on the case of Liberty Construction Company Ltd versus Dr Daniel Kaitaita and Centenary Bank HCMA number one of 2011 to the effect that where the right of the Applicant that needs to be protected is obvious, and the Respondent has no possible defence to it, a mandatory injunction may be granted. Following the case of the Despina Pontikos [1975] EA 38 the East African Court of Appeal set out for requirements for an order of a mandatory injunction to issue namely:

  1. The order will issue if there is likely to be irreparable damage caused to the Applicant. That is, irreparable damage that may not be atoned for by an award of damages.
  2. The right to be protected must be obvious and the Respondent must have no defence to the claim.
  3. The Respondent must have no lawful claim over the goods.
  4. A mandatory injunction can be granted for the release of goods even if it has the effect of resolving the main prayer in the suit.

Furthermore the principles for the grant of temporary a restraining injunction also apply to a positive order for the Respondent to do something.

Where the Defendant has no defence to the claim an application is brought for an exercise by the Plaintiff of their legal rights, the interim reliefs can be granted even if it is in the substance of the whole relief claimed in the action. On the ground that the Respondent has no claim to the goods, and the Applicant is exercising his legal right, the injunction ought to be granted. On the question of irreparable damage, the goods are specialised high-voltage electric cables for the electricity installation from power lines and generators to the Hotel of the Applicant. Any further delay to complete the Hotel will cause the Hotel of US$200,000 in revenue and penalties from the contractor waiting to install the electricity using the said cables. Counsel further contended that damages would be difficult to be recovered given the fact that the amount would continue to rise if the goods are not released.

On the question of production of bills of lading, it is the Applicant’s case that upon receipt of payment the seller sent to the Applicant a copy of the bill of lading but for fraudulent reasons, they refused to release the original bills of lading to the Applicant on the allegation of a Chinese court order restraining them. The court order was never produced. As far as the question of release of goods without original bills of lading is concerned the Court of Appeal in the case of the Despina Pontikos (supra) held at page 58 and that the trial judge was justified in ordering the discharge upon an indemnity. The court noted that there were a great many bills most of them in other countries and to have required the production would have involved substantial delay which the judge rightly was anxious to avoid. In the case of Sze Hai Tong Bank vs. Rambler Cycle Co. Ltd (1959) AC 576, on the question of indemnity it was held that the release of goods without bills of lading upon indemnity is ordered to avoid circumstances where goods may be released to a non-owner rendering the Carrier liable. Counsel maintained that in the instant case however an indemnity is not necessary because the issue of ownership of the goods is not disputed. The documents attached to the application indicate that the Applicant paid for the goods and purchase agreement was duly executed. Consequently the fear of releasing the goods to a non-owner does not arise. As far as the balance of convenience is concerned, it favours the Applicant who stands to suffer more than the other parties.

Ruling

I have carefully considered the Applicant’s submissions as well as the Applicant’s application and the authorities cited in the submissions. The Applicant seeks a mandatory injunction to issue against the Respondent, ordering them to release the Applicants good’s held in its custody and for costs of the application to be provided for.

Briefly the grounds of the application in the notice of motion are that the Applicant bought goods from China, obtained the pre-export verification of conformity, CE certificate of conformity and certification of conformity. The Respondent was contracted to ship the goods to the Applicant. The Respondent shipped the goods to Uganda and detained the goods at its premises on 5th Street, Industrial Area, Kampala. The Respondent has refused to deliver the goods and is threatening to ship the goods back to China on a purported Chinese court order. The Respondent has no claim whatsoever to the goods, because its entitlement is payment off its shipping charges or the demurrage charges which the Applicant is ready to pay immediately upon presentation of its invoice to the Applicant. The Applicant filed a main suit against the Respondent for release of the cables and general damages which is yet to be determined. The Applicant further avers that this is a simple and summary act which can be remedied and decided at once and merits the grant of a mandatory injunction. Finally that it is in the interests of justice and equity that the application is granted and that if the application is not granted the Applicant shall suffer irreparable damage which is far greater than the value of its goods which arrived in the country and are being illegally held by the Respondent.

The application is supported by the affidavit of Mawlana Hamid, a director of the Applicant Company. He deposes that the Applicant bought goods from China. The contract is embodied in an agreement in which the Applicant was required to pay 30% and on the seller's advice the Applicant paid the balance of 70%. The agreements are attached. Annexure "A" provides that the Applicant would pay the 30% down payment at the execution of the contract and the balance of 70% would be paid against documents before delivery. As far as delivery is concerned it is provided that the seller will arrange production after down payment and complete the production within 30 days after down payment. The buyer is to complete the rest of the payment via T/T against documents and all certificates before delivery. The contract was executed the parties thereto on the 28th of July 2014.

Subsequently the seller obtained the pre-export verification certificate of conformity and the CE certification of conformity. Upon receipt of payment the seller sent the Applicant a copy of the bill of lading, packing list, commercial invoice, and certificate of origin. The seller further shipped the goods upon the Applicant’s request and sent the Applicant a vessel tracking number. The Respondent shipped the goods (power cables) to Uganda in two containers which arrived in Uganda by the 16th of October 2014. The property which arrived is kept at the Respondent's premises on 5th Street, industrial area, Kampala. The Applicants paid all the handling and local clearance charges and filed all the necessary customs papers to obtain the goods from the Respondent. However the Respondent verbally informed the Applicant that they were due to ship the goods back to China due to a purported Chinese court order. Mr Hamid deposes that the Respondent has no claim whatsoever to the goods and its entitlement is for payment of its shipping charges or demurrage charges which the Applicant is willing to pay immediately upon presentation of an invoice to the Applicant. He further deposes that the goods are specialised high-voltage electric cables for installation of electricity from UMEME lines and generators to the Hotel of the Applicant at Nakasero Hill in Kampala. Further delays would cause the Applicant over US$200,000 in revenue and penalties to the contractor who is waiting to install electricity using the cables in issue. If the application is not granted, the Applicant shall suffer irreparable damage which is greater in value than the goods which arrived in the country and are being illegally held by the Respondent. Finally that it is in the interest of justice and equity that the application is granted.

Before the application could be heard, a defence had been filed by Maersk Shipping Line represented by Messieurs MMAKS advocates who filed a written statement of defence on behalf of their client and an affidavit in reply to the application by one Daniel Mwangi in which it was deposed that the Respondent as entitled in this application does not exist. While Messieurs MMAKS advocates objected to the suit on the ground that it is a nullity; the Applicants Counsel objected to the advocates on the ground that they had no locus standi in the proceedings. In the ruling of this court delivered on 27 January 2015, I agreed with the Applicant’s Counsel that the person served with summons was DAMCO Logistics Uganda Ltd and therefore the pleadings of the Defendant were struck out. This application proceeded in default of filing a defence and a reply to the notice of motion seeking a mandatory injunction against the Respondent.

The Applicant’s Counsel has applied for amendment of the Defendant's name to read DAMCO Logistics Uganda Limited and the grounds of the amendment are contained in the further affidavit in rejoinder of Ms Angeret Diana, the Applicant’s Company Secretary filed on 21 January 2015 after both parties were given time to obtain information from the Ugandan Registration Services Bureau. The letter of the Registrar General dated 20th of January 2015 addressed to the Applicant’s lawyers on the subject matter of Maersk Shipping Line (U) Ltd provides that the name does not appear in the system as a company and they requested for more particulars to enable them conduct a further search. Secondly as far as the Defendant is concerned it shows that it was registered on 28 July 1997 and subsequently had its name changed to APM Global Logistics Uganda Ltd on 26 November 2008. Finally the company name was again changed to DAMCO Logistics Uganda Ltd on 27 August 2009. The certificates of change of name as well as the certificate of incorporation are attached to the affidavit of the Applicant’s Company Secretary.

The question to be considered is whether an amendment to the name can be made in the circumstances of the Applicant’s case. In the case of A.N. Phakey vs. World Wide Agencies Limited [1948] Vol XV EACA at page 1 the East African Court of Appeal considered a suit where the Plaintiff’s Advocate made a mistake by describing the Plaintiff’s name as “Traders Limited”. The court found as a question of fact that the Defendant was not misguided at all but answered all the allegations in the plaint in its written statement of defence. It was discovered that no company by the name “Traders Limited” existed. What existed in the company register was the company “World Wide Agencies ltd”. An amendment to the name of the Plaintiff was held to be proper and the contention that the suit was a nullity was overruled. The Court observed that the Defendant was no prejudiced and knew who was suing him. His appeal on the ground that the plaint was a nullity was dismissed.

In the case of Mitchell v Harris Engineering Co Ltd [1967] 2 All ER 682, the Plaintiff had sued Harris Engineering Co (Leeds), Ltd instead of Harris Engineering Co Ltd. These were two distinct companies. An application to amend the names of the Defendant was allowed but appealed and on appeal Lord Denning dismissed the appeal when he held that the suit was filed against the wrong Defendant due to a genuine mistake which had not misled the Defendants and the amendment was rightly allowed. At page 686 he held:

“In my opinion, whenever a writ has been issued within the permitted time, but is found to be defective, the Defendant has no right to have it remain defective. The court can permit the defect to be cured by amendment: and whether it should do so depends on the practice of the court.”

In Rodriguez v Parker [1966] 2 All ER 349 the Plaintiff sued R J Parker instead of R S Parker. These were two distinct persons. NIELD J held at 365 that:

“In my judgment before the court will grant leave to amend as proposed here the court must be satisfied of three things: first, that the mistake sought to be corrected was a genuine mistake; secondly, that the mistake was not misleading nor such as to cause any reasonable doubt as to the identity of the person intended to be sued; thirdly, that it is just to make the amendment.”

In Alexander Mountain & Co v Rumere Ltd [1948] 2 All ER 144, the deceased AM was the sole proprietor of a business which he carried on under the name of “AM & Co.” After his death his executrix, who continued to carry on the business under the same trading name, brought an action in the name of “AM & Co (trading as a firm)” the action being on a contract made by AM during his lifetime. An application to amend the writ by substituting the executrix as Plaintiff was refused by Lord Goddard C.J when he defined what a mistake under the rules for substitution meant. The rule he interpreted is RSC, Ord 16, r 2, which is close to the order 1 rule 10 (1) of the Ugandan Civil Procedure Rules. RSC, Ord 16, r 2, provides:

Where an action has been commenced in the name of the wrong person as Plaintiff, or where it is doubtful whether it has been commenced in the name of the right Plaintiff, the court or a judge may, if satisfied that it has been so commenced through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as Plaintiff upon such terms as may be just.

The decision of Goddard C.J was overturned on appeal in Alexander Mountain & Co v Rumere Ltd [1948] 2 All ER 482. The Court of Appeal agreed with Lord Goddard in so far as his interpretation of the rule 2 of Order 16 RSC is concerned but held that the action did not fall within RSC, Ord 16, r 2, as having been “commenced in the name of the wrong person as Plaintiff,” the case might properly be treated as one of misnomer and the writ amended by substituting the executrix as Plaintiff.

In Halsbury’s Laws of England 4TH Ed. Vol. 37 paragraph 260 it is written that where a party has made a mistake as to the name of a party and the period of limitation prescribed by the statute has expired, the court may allow an amendment of the statement of the case to correct the mistake, but only where the mistake was genuine and not one which would cause a reasonable doubt as to the identity of the party in question.

According to Osborn's Concise Law Dictionary 11th edition at page 273 a misnomer is:

“A misnaming. An amendment in consequence can be made in either civil or criminal causes.”

The above writings and precedents are persuasive authorities for holding that where the name of a party is wrongly described owing to a genuine mistake, it may be corrected. The correction may be made even if the effect is to substitute a new party provided the wrong name was issued through a genuine mistake which was not misleading as to the identity of the party or such as to cause any reasonable doubt as to the identity of the intended Plaintiff or Defendant.

In this case there was clearly a problem of the Plaintiff giving an old name of the Defendant/Respondent. However the party who was served with summons was served at the same address of the company with the changed name and only described in error with the previous name. Secondly the party which acknowledged is DAMCO logistics Uganda limited which is the current name in which the Defendant Company is described according to the changes made to its name. There was no mistake about the identity of the Defendant and the correctly described Defendant Company which was intended to be sued by the Plaintiff was apparently sued on the ground of having kept the same address. The property described Defendant Company was served with summons though and its acknowledgement describes itself with the proper company name. In the circumstances there was a genuine mistake in the description of the Defendant who has since changed its name to DAMCO Logistics Uganda Limited. Secondly no prejudice was occasioned since the proper Defendant did receive the summons and was aware of its old name as and could not have mistake in the summons to be meant for someone else. Consequently there was a mere misnomer and the application for amendment of the names of the Defendant is allowed. The name of the Defendant and of the Respondent shall be amended to read the names mentioned in paragraph 4 of the affidavit in further rejoinder deposed on 21 January 2015 and filed on the court record on the same day of Angeret Diana, the Applicant's company secretary. Attached to paragraph 4 is a letter from the Registrar General Uganda Registration Services Bureau dated 20th of January 2015 in which it is written that Maersk Uganda Ltd changed its name is to APM Global Logistics Uganda Ltd on 26 November 2008. The company name was again changed to DAMCO Logistics Uganda Limited on 27 August 2009 and the information is contained in the latest annual returns filed in the year ending 2013 showing that the company’s registered office is plot number 78 – 80 5th Street industrial area. Secondly DAMCO logistics Uganda limited duly received summons to file a defence in the main suit and in the application for the issuance of a mandatory injunction. The name of the Defendant/Respondent Company intended to be sued by the Plaintiff is apparently DAMCO Logistics Uganda Limited which changed its name from the original name of Maersk (U) Limited and which shall be the amended names of the Defendant/Respondent Company in the main suit and the application respectively.

I have further considered the Applicant’s application on the merits. The Applicant seeks a mandatory injunction to issue against the Respondent Messieurs DAMCO logistics Uganda limited for the release of goods namely electric cables imported from China. I agree with the law as presented in the submissions of the Applicants Counsel and there is no need to repeat the law which has been set out above.

In paragraphs 9 of the affidavit in support of the application deposed to by one Mawlana Hamid, the Respondent verbally informed the Applicant that they were due to ship the goods back to China due to a Chinese court order. However the Applicant asserts that the Respondent has no claim whatsoever to the said goods and its entitlement is the payment of its shipping charges or demurrage. Secondly the Applicant is ready to immediately upon presentation of an invoice from the Applicant to pay the said charges.

In paragraphs 4, 5 and 6 he deposes that the seller upon receipt of payment from the Applicant sent the Applicant bills of lading (verify), packing lists, commercial invoice and certificate of origin. Secondly the seller shipped the goods and upon the Applicant’s request sent the Applicant a vessel tracking number. The goods were shipped in two containers namely MRKU0613428        and MRKU0024921 and the goods arrived in Uganda by 16 October 2014. A copy of the contract annexure "A" was attached to the affidavit in paragraph 2 thereof. Annexure "A" which is a sales contract number GYC2014071601 is dated 28th of July 2014 between JIANGSU BOAN CABLE CO. LTD and the Applicant. At page 2 of the contract the trade method agreed to is F.O.B.

An FOB contract term is a standard international trade contract term. According to PS Atiyah in the textbook "The Sale of Goods" 9th Edition, at page 368, the seller's duty is to place the goods free on board a ship to be named by the buyer during the contractual shipment period. On the face of it the expression F.O.B. determines how the goods shall be delivered, how much of the expense shall be borne by the sellers and when the risk of loss or damage shall pass to the buyers. The seller's obligation extends to all charges incurred before shipment including loading charges but not freight or insurance. In a classic contract of this type the contract for the carriage of the goods is made between the seller and the ship owners. The goods are delivered to the buyer when they are loaded on the ship. General terms of such a contract as to delivery are provided for by section 32 of the Sale of Goods Act cap 82 Laws of Uganda which provides that:

“32. Delivery to carrier

(1) Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer.

(2) Unless otherwise authorised by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case.

(3) If the seller omits to make the contract in accordance with subsection (2) and the goods are lost or damaged in the course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself or herself or may hold the seller responsible in damages.

(4) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him or her to insure them during their sea transit; and if the seller fails to do so, the goods shall be deemed to be at his or her risk during the sea transit.”

As can be noted from the above provisions of the Sale of Goods Act cap 82, the Ugandan law provides that risk in the goods passes on to the buyer upon the seller placing the goods on the ship or handing them over to the carrier. Secondly delivery of the goods to the carrier is deemed to be delivery to the buyer by the seller. According to Atiyah (supra) at page 371:

"Once they are on board, the seller has delivered them to the buyer and it is natural that they should thereafter be at the buyer's risk."

The main controversy in this application as I see it is that the buyer who is the Applicant is not in possession of the original documents of title namely the bill of lading. It only has a copy of the bill of lading. Secondly the seller is not a party to the proceedings as the proceedings have been brought against a carrier. The Applicant submits that the carrier has no defence to the action because it has no right to the goods. This is a strange submission in light of the fact that the seller is not a party to the suit. Thirdly the Applicants Counsel submitted that in certain circumstances, the goods can be delivered without bills of lading and upon an indemnity undertaking to indemnity the carrier against any future claims. He relied on the case of the Despina Pontikos [1975] EA 38 where the East African Court issued a mandatory injunction for the delivery of goods by a carrier.

As far as the issue of bills of lading is concerned Halsbury’s Laws of England 4th edition reissue, vol. 43(2) paragraph 1532, writes that it is a document signed by the ship owner, or by the master or other agent of the ship owner, which states that certain specified goods have been shipped in a particular ship and which purports to set out the terms on which the goods have been delivered to and received by the ship. The general rule is that the owner of the goods is the person named in the bill of lading as consignee and the one who holds the original bill of lading. The B.O.L is a document of title entitling the holder to claim the goods accordingly to the Uganda Court of Appeal case of P & O Nedloyd Uganda Ltd Vs Tesco International Ltd C.A. C.A. 86/2004. The assertion that a bill of lading is a document of title is supported by the case of Heskell v. Continental Express [1950] 1 All E.R. 1033 wherein Devlin J held at page 1042 that: 

“The reason why a bill of lading is a document of title is because it contains a statement by the master of a ship that he is in possession of cargo, and an undertaking to deliver it.

A ship owner is obliged to deliver the goods in accordance with the terms agreed upon in the bill of lading with the consignor. Annexure "F" to the affidavit in support of the application has a copy of the bill of lading. There is a contract between the consignor of the goods and the consignee who is the Applicant. In the bill of lading, the person named as consignee is the Applicant. A carrier of Bailee delivers goods without the claimant thereof presenting the original bill of lading at his or her own risk. Even in such cases the carrier may be protected by an indemnity clause in which the buyer or claimant undertakes to indemnify the carrier against any damage for parting with possession of the goods without receiving from the buyer or claimant an original bill of lading. In the case of Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] 3 All ER 182, the Privy Council and in particular the judgment of Lord Denning at page 184 on the issue is as follows:

“It is perfectly clear law that a ship-owner who delivers without production of the bill of lading does so at his peril. The contract is to deliver, on production of the bill of lading, to the person entitled under the bill of lading. In this case it was “unto order or his or their assigns”, that is to say, to the order of the Respondents, if they had not assigned the bill of lading, or to their assigns, if they had. The shipping company did not deliver the goods to any such person. They are, therefore, liable for breach of contract unless there is some term in the bill of lading protecting them. And they delivered the goods, without production of the bill of lading, to a person who was not entitled to receive them.”

In the circumstances of the Applicant’s application the Seller has withheld the documents of title when the property in the goods (under the Uganda FOB terms are deemed prima facie to have passed to the Buyer). The seller already delivered the goods to the carrier who is the Respondent. In this specific term on delivery the contract annexure "A" provides as follows:

"Delivery: The seller will arrange production after down payment, and complete the production within 30 days after down payment. The buyer should complete the rest payment via T/T against documents and all certificates before delivery."

The provision on delivery deals with production of the goods and therefore the standard terms of an F.O.B contract could apply as far as Ugandan law is concerned. However the contract provides that the governing law of the contract is the law of the People's Republic of China. There is no submission as to the applicable law concerning delivery. In any case the seller is not a party to the proceedings. Going by the contractual terms in annexure "A" the contract is also subject to an arbitration clause in accordance with the rules of International Arbitration. Finally the Applicant adduced evidence of payment of the whole price of the purchase price of the goods to the consignor/seller. The Respondent additionally is not a party to the contract between the Applicant and the seller.

I have carefully considered this application and the submission that it is a straight forward matter. I do not agree at all as the application as can be seen from the various issue is quite complex and requires a lot of caution. As I have noted above, the seller is not a party to the application or the suit. It is the seller who contracted the carrier. The submission that the Respondent ought to have filed an inter-pleader action can be considered on its own merits. There can however be no inter-pleader where there is no other party contesting the goods before the court. Furthermore the consignor named in the copy of the bill of lading is not the Respondent but Maersk Line. The bill of lading is described as a bill of lading for ocean travel or multi modal transport.

Finally I have considered circumstances in which a carrier may dispose of goods or part with possession of the goods without direction from the owner. The question of who is the owner is even more controversial. In this particular application prima facie the Respondent is only a bailee charged with the duty of delivering goods to the buyer who is the Respondent.  The goods were conveyed from China to Uganda pursuant to a contract between the Applicant and a third party who is not in court. It is the third party who engaged the services of the Respondent/carrier. It is however clear that the goods were consigned to the Applicant. The bailee is a person is possession of the goods.

As far as the main application for a mandatory injunction is concerned, the first complexity as noted above is that the Plaintiff sued the bailee or carrier and not the supplier. This problem is however overcome by the fact that the bailee is in possession. The second complex problem is in the fact that the Applicant is not in possession of the original bill of lading. This may be brushed off on the ground that the action is against the bailee and goods were consigned under an F.O.B contract to the Applicant. The third complex issue is that the bill of lading annexure "F" is issued by MAERSK LINE. The connection of Maersk Line to the Respondent is not apparent from the documentation attached to the application.  According to the further affidavit in rejoinder of Angeret Diana and from information obtained from the Uganda Registration Services Bureau, annexure “DD”, there is no company known as Maersk Shipping Line (U) Ltd which name does not appear in the system. The registrar requested for more particulars to carry on a finer search. It is the duty of the seller of the goods to avail the bill of lading to the Applicant yet the person responsible is not before the court. The Applicant has emphasised the address of the Defendant/Respondent which is Plot No 78 – 80, 5th Street industrial Area P.O. Box 2867 Kampala. 5th street is the same street where process server served Damco Logistics Uganda Ltd with court process. The affidavit of service however mentions both Fifth Street and plot 14 Kololo.

A bailee or carrier of goods is under an obligation to deliver goods within a reasonable time and the phrase “reasonable time” which term depends on the circumstances of each case. Its meaning is affected by the nature of the goods in determining whether they were delivered within a reasonable time.

A bailee has a further duty to exercise reasonable care according to the holding in British Road Services v Crutchley and Company Ltd (Factory guards Ltd and Third Parties) [1968] 1 ALL E.R. 811 at page 820 that it is an implied term of the contract of bailment that the Defendants would themselves or though their servants or agents, take proper care of the goods bailed. The care extends to the buyer of the goods in an FOB contract. For instance a bailee has a general duty to dispose of perishable goods with notification to the person entitled to possession thereof under the doctrine of agent of necessity. In the case of Sachs v Miklos and Others [1948] 1 ALL E.R. 67 Lord Goddard held that agents of necessity until modern times were confined to two classes of persons. These were those who accepted bills of lading in exchange for the honour of payment and masters of ships who found themselves in foreign parts and unable to get immediate instructions from their owners when in need of money for unlooked for expenses. In such a case they may deal with the cargo as agents of necessity. When it becomes impossible or extraordinarily difficult for a carrier to communicate with the owner of the goods, he may dispose of the same in the like manner line a master of a ship. The doctrine of agent of necessity has been applied to carriers of land.

In this case the evidence is indeterminate. The Applicant’s case is that it is likely to suffer irreparable loss and it has more right to the goods having paid for them. The Applicant does not want to indemnify the Respondent against adverse claims if the Respondent releases the goods on the reasoning that no adverse claim is likely.

The principles for the grant of a mandatory injunction are the same as that of a temporary restrain injunction and is an exercise of the court’s discretion. The usual aim is to the status quo until arguable questions of fact or law which are disclosed in the suit are tried. The principles applied by court are set out in the case of Kiyimba Kaggwa vs. Katende [1985] HCB at page 43. The Applicant must show a prima facie case with a probability of success or an arguable case. Following the decision in American Cyanamid Co. Ltd v Ethicon [1975] 1 ALL E.R. 504 Lord Diplock held at page 510 that all that the Plaintiff needs to show by his action is that there are serious questions to be tried and that the action is not frivolous or vexatious. At this stage affidavit evidence is inconclusive and contested and the court ought to reserve controversies of fact or law for full trial with right of cross examination and full address on matters of law. Even if an arguable case has been disclosed an injunction would not be granted unless it can be shown that the Applicant would otherwise suffer irreparable loss which cannot be atoned for by an award of damages.  The case of the Despina Pontikos [1975] EA 38 further advances the ground that a mandatory injunction ought not to be granted unless the Respondent obviously has no defence to the action even if the order grants the final remedy sought. According to Philip H. Pettit in Equity and the Law of Trusts 4th edition Butterworth’s at page 401, the court should not order the Defendant to do something in a mandatory injunction which is unlawful.

The Applicant has a prima facie and arguable case on the ground of being the consignee for goods which were shipped from China.

Secondly the Applicant may suffer loss. This is because the Respondent verbally threatened to ship the goods back to China. The Applicant is likely to suffer damages because it needs the materials to wire a hotel with electricity using specialised cables and under a time bond contract. It is likely to suffer penalties if it does not procure the cables in time. The question is whether the likely damages cannot be atoned for by an award of damages. It is not easy to determine the likely result of the nature of the damage likely to be suffered by the Applicant as to whether it cannot be atoned for by an award of damages.

In the circumstances the application should be considered on the balance of convenience. The balance of convenience in this matter tips in favour of the Applicant who wants to use electric cables to wire its hotel. The likely breach by the Defendant of a contract with the seller who consigned the goods can be remedies by making provision for indemnification of the Respondent against adverse third party claims ever made against it for release of the goods to the consignee/Applicant without an original bill of lading. 

In the circumstances a conditional order shall be made as follows.

  1. The Applicant shall undertake to and obtain an indemnity for the Respondent against adverse third party claims on the ground of release of the goods without presentation of the original bill of lading.
  2. The Respondent shall release the goods the subject matter of the application situated at Plot No 78 – 80 5th Street Industrial area to the Applicant within a period of one week pursuant to an indemnity executed to the satisfaction of the Registrar of the Commercial Court Division in favour of the Respondent.
  3. The Applicant shall pay the Respondent’s charges for carriage and storage of goods as undertaken in this application.
  4. The application thus far was not defended and the costs of the application shall abide the outcome of the main suit.

Ruling read in open court on the 2nd of Feb 2015

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Frederick Sentomero assisted by Godfrey Himbaza for the Applicant.

Angeret Diana Company Secretary of the Applicant in court

Charles Okuni: Court Clerk

 

Christopher Madrama Izama

Judge

2/Feb/2015