A Dispute Concerning Importation of Face Masks into Port Klang in Carpet Prima Sdn Bhd v Top Logistics Solution Sdn Bhd [2022] MLJU 1605 (High Court, Klang) per Azmi Abdullah J

The Plaintiff (Importer) purchased 1500 cartons of ‘3 ply disposable face masks’ from Golden-Agri International Co (GAI) (Seller / Exporter) in China. The documentation designated the Plaintiff as the consignee / importer for the goods, ie the party to receive the cargo of face masks at Klang Port. Delivery of the cargo in 2 forty feet containers was handled by Faster International Transportation Co Ltd (FIT). FIT appointed the Defendant as its agent at Klang Port.

A House Bills of Lading (HBL) was issued by FIT. It provided that the Plaintiff in its capacity as importer and consignee, was the party entitled under the document to collect the cargo at the port of destination. The HBL provided for ‘Freight Collect’, meaning that the Plaintiff had to pay the freight owed to FIT at the port of discharge, ie Klang Port. Upon receiving payment from the Plaintiff, the Defendant was then under a duty to manage the release of the 2 containers for delivery to the Defendant who is named as Consignee in the HBL. However, the Defendant was unable to secure the release of the 2 containers from FIT. FIT alleged that arrears were outstanding in the payment of the carriage fee, ie there were outstanding freight charges. Due to this delay, storage charges and demurrage were incurred.

FIT then initiated a Settlement Agreement (SA) to resolve the issue concerning the outstanding charges still being owed. There were three parties to the SA, ie GAI (seller/shipper/exporter), FIT (freight forwarder / carrier issuing the HBL) and the Plaintiff (buyer / importer / consignee). It is important to noted that the Defendant (agent of FIT), was not a party to this SA. The cargo was finally released under the terms of the SA when the Plaintiff paid a sum of USD10,000 (RM42,000).

The Plaintiff alleged that the wrongful non-release of the cargo by the Defendant caused the incurrence of demurrage and storage charges. The Plaintiff therefore claimed damages in compensation from the Defendant. The Defendant applied to have the case struck out as it was merely acting as a releasing agent of FIT. The payment under the SA was received by the Defendant from the Plaintiff, and merely passed it on to FIT. The Defendant was therefore a conduit and did not incur any personal liability.

Mr Justice Azmi Abdullah agreed with the decision of the Sessions Judge in allowing the striking out of the Plaintiff’s claim against the Defendant. There are several reasons for this decision. First, the Defendant is merely an agent of FIT. The Defendant acted within the scope of its agency for for FIT, its principal during the contract of carriage. Throughout the SA, the Defendant had merely acted as an agent for FIT, under both the contract of carriage under the HBL, and also the SA. It is FIT that is in a direct contractual relationship with the Plaintiff.

Second, the matter had been settled and therefore come to an end with the SA. There is a supersession clause which provides that the SA ‘supersedes all previous arrangement, agreements and/or understanding between the Parties with regard to the subject matter hereof’. The Plaintiff’s pursuit of the Defendant post-SA is a misdirected step. If the Plaintiff had any grievances, it should have been pursued under the terms of the SA directly against FIT. The Plaintiff’s action against the Defendant could not have arisen independently after the SA came into effect.

Mr Justice Azmi Abdullah held that the SA was a compromise that put an end to the proceedings which were therefore spent and exhausted. Thus parties were precluded from taking any further action, other than to enforce the terms of the SA. In reaching this conclusion, His Lordship cited The Singapore Court of Appeal in Indian Overseas Bank v. Motorcycle Industries [1973] Pte Ltd and others [1992] 3 SLR (R) 841, which is turn was citing Halsbury’s Laws of England, Vol.37 (4th Ed.) at para 391. Note that the Indian Overseas Bank case has been applied subsequently by the Singapore Court of Appeal in Turf Club Auto Emporium Pte Ltd and others v. Yeo Boong Hua and others and another appeal and other matters [2017] 2 SLR 12.

In a twist of events, during the hearing, the Plaintiff had alleged that the SA was only entered into because of coercion or commercial pressure. This was however, not pleaded by the Plaintiff in the Statement of Claim. Mr Justice Azmi Abdullah was not persuaded by this argument as the Plaintiff had legal representation at that time. The learned judge opined that even if the Defendant was in breach of the initial contract of sale and purchase between the Plaintiff and GAI, the terms of the SA had superseded this and bound all the parties concerned.

On the facts of this case, there were only two contracts which the Plaintiff was privy to. The first contract is for the sale and purchase of the face masks between the Plaintiff (buyer) and GAI (seller). The second contract was a contract of carriage for the face masks as evidenced by the HBL between FIT (the Carrier) and the Plaintiff (the Consignee). The Defendant was an agent of FIT for the performance of the second contract as clearing agent at Klang Port. No legal action based on contract could be tenable between the Plaintiff and the Defendant due to an obvious lack of privity of contract. Mr Justice Azmi Abdullah cited MMC Oil and Gas Engineering Sdn Bhd v Tan Bock Swee and Sons Sdn Bhd [2015] MLJU 1282 where the Court of Appeal said, ‘It is trite (law) that only the parties to a contract are entitled to sue on the terms of the contract and to be liable for the obligations contained therein’.

In conclusion, as the Plaintiff continued to pursue the Defendant was neither liable under the purchase contract, contract of carriage or SA, this was tantamount to an abuse of the process of the court. The Plaintiff’s action was unsustainable as it was misdirected and misconceived. The Mr Justice Azmi Abdullah agreed with the Learned Sessions Judge that the Plaintiff’s suit be struck out.

Thank you for reading IMSML Website Article 12/2022.

Stay tuned for the next IMSML Website Article 13/2022:

Breach of Warranty in a Marine Insurance Policy by Failing to Have the Vessel Properly Surveyed to Maintain Classification in Seapower Shipping Sdn Bhd v QBE Insurance (Malaysia) Bhd [2022] MLJU 1796

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Head of the Centre for Advocacy and Dispute Resolution

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

21 October 2022

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my