IMSML Website Article 2/2024: Sarmiina Sdn Bhd v Gerry Ho & Ors [2023] 2 MLJ 395, Seizure of Containers by Customs

The case was argued before the Court of Appeal. The judges hearing this appeal were Hanipiah Farikullah, Azizah Nawawi and Ninth Balan JJCA.

17 containers containing imported liquor were seized by Customs officers at the Free Zone at West Port, Port Klang. The Appellant, Sarmiina Sdn Bhd claimed to be the buyer / consignee of the goods. Sarmiina’s request to release the goods fell on deaf ears. The name on the bill of lading was not Sarmiina, but rather ‘No Signboard Too Enterprise’ (NSTE).

Sarmiina explained that it used NTSE’s import permit as it did not have one of its own. Sarmiina also informed Customs that the foreign consignors / shippers had appointed it to secure the release of the detained containers.

NTSE lodged a police report that it had nothing to do with the 17 containers. NTSE said that it did indeed have a permit to import liquor, but the brands which were on that permit, were not the brands in the 17 containers.

Sarmiina filed an action in the High Court against Customs, seeking a declaration that the seizure of the containers were unlawful. In addition, it Sarmiina also sought special damages of RM2,889,035.30, plus damages comprising of the value of the goods, detention, demurrage and port charges.

At the trial, the High Court found that Sarmiina, the Appellant, had no locus standi to seek the declaration and therefore not also entitled to seek the various heads of damages. The High Court found that the position Sarmiina was adopting was inconsistent. On the one hand, Sarmiina claimed to be the owner of the goods inside the 17 containers. On the other hand, Sarmiina also claimed that it was appointed as agent by the Consignors to facilitate the clearance of the goods in the 17 containers. More importantly, the High Court found that the letter used by Sarmiina to assert that it was the agent for the various consignors, was indeed fake.

The Court of Appeal agreed with the findings of the High Court. The Customs Department dealt directly / corresponded with the named consignee in the bill of lading, ie NTSE, and the consignors. As the appointment letter was found to be fake, there was no way that Sarmiina could prove that it was the agent of the consignors. In particular, the letters of reply from the consignors were found to be fake, see Para [94].

Further, it could not show that it was the owner of the goods as it was not the named consignee in the bill of lading. Hence, Sarmiina was neither an ‘agent’ nor ‘owner’ of the goods for the purposes of the Customs Act 1967. As Sarmiina did not satisfy either of these statutory requirements, the Court of Appeal agreed with the High Court that Sarmiina did not have the locus standi to seek any remedy against the Customs Department for the detention of the 17 containers, see Para [94].

The Court of Appeal upheld the High Court’s findings that the seizure of the 17 containers by Customs was indeed reasonable. This was based on the fact that NTSE denied that they were the real consignees of the goods although they were named in the bill of lading. NTSE also disowned the authenticity of the ‘No Objection Letter’. The seizure by Customs was therefore based on probable cause and neither flippant nor reckless, see Para [95].

Several further observations were made by the Court of Appeal. First, Sarmiina was quite ‘incognito’ and surfaced only after the seizure was carried out. This looks very nefarious and sinister to say the least and has all the makings and trappings of an illicit practice within the shipping industry, see Para [99]. Second, an import permit cannot be used ex-post facto to bring in the said goods, see Para [101]. Third, Sarmiina’s assertion that the said goods were brought into the Free Zone, West Port, Port Klang and were meant to be exported to foreign destinations, this was incorrect as the inward manifest showed that the consignment was meant for import into Malaysia and not merely in-transit for re-export, see Para [102].

Several comments can be made about this case. First, it is very difficult for a party that is not named as the consignee in the bill fo lading to establish that it is the owner of the goods. This is not surprising as the second well known function of a bill of lading is that it is a document of title. It is trite law that the holder of the bill of lading is able to demand possession of goods covered by that bill of lading.

Second, even if a person is not named as a consignee in the bill of lading, at the very least, if that person is named as the ‘notify party’ that may help establish that the person concerned is an ‘agent’ of the consignee. The ‘notify party’ is the person to be contacted when the goods arrive at the port of discharge. In practice, this is usually the person that is tasked by the consignee to facilitate the Customs clearance process.

Third, there is a possibility that even the bill of lading in this case is fake as NTSE denied that they were the real consignees, even though they were the named consignees in the bill of lading. NTSE was sufficiently concerned about this fact that they even filed a police report about it.

Fourth, as there was no evidence that the trial judge in the High Court had done anything wrong, there was no grounds for the Court of Appeal to intervene and overturn the decision of the lower court. There was nothing plainly wrong with the approach of the High Court judge, see Para [106]. The records show that the High Court judge had carefully considered the document, the testimony of the witnesses and gave due regard to the submissions of counsel.

Thank you for reading IMSML Website Article 2/2024

Stay tuned for the next IMSML Website Article 3/2024: Chew Chin Ping & Ors v APL-NOL (Malaysia) Sdn Bhd & Ors [2022] MLJU 1754

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); 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

Friday, 5 January 2024

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