Munywevu and Another v Maersk Agency Uganda Limited (Civil Suit 528 of 2021) [2022] UGCommC 151 (10 November 2022)

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA**

### **(COMMERCIAL DIVISION)**

#### **CIVIL SUIT No. 0528 OF 2021**

#### 5 **1. DERRICK MUNYWEVU } 2. LUTON ELECTRICAL DEALERS LIMIED} ……………… PLAINTIFFS**

#### **VERSUS**

## 10 **MAERSK AGENCY UGANDA LIMITED …………………………… DEFENDANT Before: Hon Justice Stephen Mubiru.**

#### **JUDGMENT**

- a. The plaintiffs' claim; - 15 The plaintiffs jointly and severally sued the defendant seeking recovery of goods detained by the defendant, special damages of shs. 121,840,000/= general damages for detinue, interest and costs. The plaintiffs' claim is that sometime during the month of November, 2020 through the defendant's agent in London, M/s Jen Export Limited, the 1st plaintiff contracted the defendant to handle the clearance and transportation of an assorted consignment of items of mainly electrical 20 personal property, from London to Kampala. Among the items to be cleared and transported was a used motor vehicle Model Sorento KIA belonging to P. W.2 Denise Kavuma. The goods were packed into a shipping container, the 1st plaintiff paid the agreed clearing and transport charges in full in advance, and was issued with a bill of lading naming the 1st plaintiff as consignor and the 2 nd plaintiff as consignee. - 25

When the consignment arrived at Mombasa on or about 7 th January, 2021 it could not be immediately cleared for onward transportation to Kampala due to discrepancies in the shipping documents, which the plaintiffs attribute to the defendant. Instead of 124 (one hundred and twenty four) LOTS, the documents indicated 3 (three) LOTS. The defendant undertook to rectify the error 30 within not more than a fortnight but was unable to do so. The defendant was able to do so four months later, but has since then to-date withheld the goods in its custody claiming further payment from the plaintiffs, of costs incurred in demurrage and storage charges. The plaintiffs dispute that claim, hence then suit.

#### b. The defence to the claim;

In its written statement of defence, the defendant admits having entered into a contract of carriage with the plaintiffs. It however contends that it has since detained the goods in custody in exercise

- 5 of its transporter's lien over the goods by reason of outstanding unpaid charges. It is the defendant's case that the delay in clearing and transporting the goods from Mombasa to Kampala was occasioned by the plaintiff's under-declaration of the contents of the shipping container; instead of thirty (30) packages the plaintiffs declared three (3) packages. Upon discovery of the anomaly, the defendant sought the plaintiffs' authorisation of the necessary amendment of the cargo manifest, but the plaintiffs were unresponsive for over a month and a half from 29th 10 - November, 2020 until 18th January, 2021. By the time the defendant received the amended manifest in April, 2021 the consignment had incurred demurrage, port storage charges and customs warehouse rent which the plaintiffs have not paid to-date, hence the defendant's right to detain the cargo in exercise of its lien over the property and the counterclaim for US \$ 9,599.95 in demurrage - charges and shs. 26,201,900/= in warehouse charges as at 31st 15 August, 2022. Storage charges continue to accrue at the rate of shs.44,000/= per day.

#### c. The issues to be decided;

- 20 At the scheduling conference, the parties agreed on following issues for determination by court, namely; - 1. Whether the defendant breached the contract. - 2. Whether the plaintiff / counter defendant is liable to pay the demurrage charges. - 3. What remedies are available to the parties? - 25 - d. The submissions of counsel for the plaintiffs;

M/s Kampala Tax Advisory Centre- Legal Department, counsel for the plaintiffs, submitted that the plaintiffs packing list and the corresponding bill of lading listed fully all items packed into the 30 container. The error in the cargo manifest, which indicated 3 LOTS instead of 137 LOTS that ultimately occasioned the delay in clearing the cargo, was exclusively caused by the defendant's

agents. The defendant undertook correction of that error without resort to the plaintiffs. The plaintiffs gave the defendant's agent, M/s JEN Export Limited, a packing list against which the bill of lading was issued on 20th January, 2021. All items in the container were listed in full in both documents. It was the defendant's obligation to prepare a cargo manifest, but when prepared, it

- 5 turned out to be materially inconsistent with the other two documents, thereby occasioning customs quarries that required a rectification of the bill of lading. The defendant received its shipping instructions from its agent, M/s Denholm Global Logistics but failed in its duty to crosscheck the specifications of the cargo before issuing the bill of lading. Required by standard shipping practice to specify the number of packages in the container, it is the defendant that - 10 described the cargo as constituting three LOTS. Correction of the error took over 33 days from the date of arrival at Mombasa Port on 7 th January, 2021 while the goods were at the Mombasa Port. The goods were finally delivered in Kampala on 13th April, 2021. The plaintiffs cannot be charged for the resultant extra storage and demurrage charges for an error that is not of their making. The plaintiffs adduced documentary evidence to support his claim for special damages. - 15 The plaintiffs are entitled to an award of general damages for the financial loss occasioned by the wrongful detainer of the goods.

#### e. The submissions of counsel for the defendant.

20 M/s ENSafrica Advocates, counsel for the defendant, submitted that the plaintiffs made gross errors by under declaring the number of packages in the shipping container. The plaintiffs were contacted and asked to provide the correct information but delayed in doing so, leading to the accumulation of further charges and costs. The plaintiffs' consignment has since 16th December, 2020 been stored b the defendants in Kampala. Both M/s JEN Export Limited and M/s Denholm 25 Global Logistics as agents of the plaintiff are responsible for the mis-description of the cargo. The defendant had no arrangement with either company and therefore are not its agents. The defendant cannot be held responsible for the mis-description of the cargo by either company engaged by the plaintiff. The defendant cannot be held liable for loses occasioned to the plaintiffs by the delay caused by a mis-description of the cargo by their own agents. The plaintiffs never pleaded special 30 damages and therefore are not entitled to any. The defendant adduced documentary evidence supporting the amount counterclaimed.

#### f. The decision;

Under a contract of carriage of cargo, the carrier undertakes to deliver the cargo entrusted to him by the consignor to the point of destination to the person entitled to receive the goods, and the 5 consignor undertakes to pay for the carriage of cargo the established fee. The suit raises questions as to whether a common carrier is liable for delays occasioned by a mis-description of the cargo contained in the shipping documents, which raises customs queries. According to Order 15 rule 3 of *The Civil Procedure Rules*, the court may frame issues from all or any of the following materials; - (a) allegations made on oath by the parties, or by any persons present on their behalf, or made by 10 the advocates of the parties; (b) allegations made in the pleadings or in answers to interrogatories delivered in the suit; and (c) the contents of documents produced by either party.

The court may at any time before passing a decree amend the issues or frame additional issues on such terms as it thinks fit, and all such amendments or additional issues as may be necessary for 15 determining the matters in controversy between the parties shall be so made or framed (see Order 15 rule 5 of *The Civil Procedure Rules*). It is on that account that for reasons of analytical convenience, the broad issues raised at the scheduling conference will now be broken down into sub-issues where found necessary.

#### **1 st** 20 **issue**; whether the defendant breached the contract.

A common carrier has been defined as "one who undertakes, for hire or reward, to transport the goods, of such as choose to employ him, from place to place" (see *Dwight v. Brewster, 1 Pick. 50 11 An. Dec. 133*). Every person who holds himself out as ready to engage in the transportation of

- 25 goods for hire as a business, and not as a casual occupation, and who undertakes, for hire, to carry the goods of all persons indifferently, is deemed a common carrier. The carrier's prime obligation is to deliver the goods at the contractual destination in the same good order and condition as when shipped. The common carrier is treated as an insurer of goods intrusted to him, liable for their loss or damage while in his custody (see *Coggs v. Bernard [1703] 92 ER 107* and *Dian GF* - 30 *International Ltd v. Damco Logistics Ltd & Trantrack, H. C. Civil Suit No. 161 of 2010*). A common carrier is absolutely liable without proof of negligence for all loss, damage, or injury to - 4

goods transported by him unless the carrier can affirmatively show that the damage was occasioned by one of the exceptions to common law liability, such as an act of God, acts of enemies of the crown, fault of the shipper, inherent vices of the goods, and fraud of the shipper. However, as regards loss occasioned by delay, it all depends on whether or not the fault is attributable to the 5 carrier or his agents. It so happens that the plaintiffs never dealt with the defendant directly, but rather through two intermediaries. It is therefore necessary to determine first whether any of the

intermediaries was an agent of the defendant.

### 10

#### i. Whether or not M/s JEN Export Limited was an agent of the defendant.

From information available at its website, M/s JEN Export Limited is a private limited liability freight forwarding and haulage company based in the United Kingdom. It operates in the freight forwarding and haulage transport by road sector. It offers both full container and part-load shipping to destinations worldwide, onsite loading and heavy lifting, container loading and customs clearance services. From the testimony of the 1st 15 plaintiff and the available documentary evidence in this trial, this company offered the plaintiff only transport and forwarding services in relation to the cargo now in dispute.

A freight forwarder, or forwarding agent, also known as a non-vessel operating common carrier, 20 is a person or company that organises shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution. Forwarders contract with a carrier or often multiple carriers to move the goods. A forwarder does not move the goods but acts as an expert in the logistics network. These carriers can use a variety of shipping modes, including ships, airplanes, trucks, and railroads, and often multiple modes for a single 25 shipment. For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck, flown to the destination city, and then moved from the airport to a customer's building by another truck. International freight forwarders have additional expertise in preparing and processing customs and other documentation and performing activities pertaining to international shipments. Information typically reviewed by a freight forwarder includes the 30 commercial invoice, shipper's export declaration, bill of lading and other documents required by

the carrier or country of export, import, and/or transhipment. A freight forwarder is clearly the shipper's agent, hence on the facts of this case, the 1st plaintiff's agent.

In contrast, a cargo broker is a maritime operator whose job it is to procure cargo for ships and, 5 conversely, ships for cargo. That is to say, brokers may be cargo brokers or ship brokers. Ship brokers specialise in arranging the chartering of a ship owner's vessels to another party. Such a party would be seeking tonnage to operate a shipping service on a long or short basis, respectively, time charter and voyage charter, against payment of a hire, thus avoiding the heavy investment that ownership involves. On the other hand, cargo brokers specialise instead in providing ship-10 owners with cargo and are closely connected with various manufacturers or traders. Cargo brokers only help to get the carrier and the shipper to meet. They not agents of either party to the contract of carriage. The broker only establishes a direct contractual relationship between the shipper and

the carrier.

- 15 The freight forwarder on the other hand deals with the cargo and not with the ship or carrier. The forwarder's responsibility begins when the cargo is taken out and ends when it is delivered to the predetermined place. A freight forwarder dispatches cargo via a common carrier and books or otherwise arranges space for those shipments on behalf of shippers. A freight forwarder therefore acts as an agent when he performs functions on behalf of, and under the instructions of, the 20 principal, the shipper. The evidence before court, exhibit P. Ex.1, shows that the packing list was prepared by M/s JEN Export Limited. The information contained therein is therefore attributable to the plaintiffs as the principals on whose behalf it was prepared. That information shows that the 1 st plaintiff, through his agent M/s JEN Export Limited, handed over cargo and a corresponding itemised detailed packing list that did not specify the number of packages or LOTS. - 25

#### ii. Whether or not M/s Denholm Global Logistics was an agent of the defendant.

From information available at its website, M/s Denholm Global Logistics is a private limited liability company offering a wide range of transportation support activities including; sea freight, 30 air freight, road freight, UK export services, supply chain management, project forwarding, industrial removals, customs and duty, and warehousing and distribution. It markets itself as

"collaborating with Maersk customs clearance agents" to offer "Maersk Customs Services," for simplification of "imports and exports anywhere in the world" thereby ensuring a "close working relationship with one customs service provider throughout your cargo journey." It states further that Maersk can help expedite this process at both origin and destination and that its core services

5 include: import declarations, export declarations and in-transit declarations. From the testimony of the 1st plaintiff and the available documentary evidence in this trial, this company handled the shipping aspects of the cargo now in dispute.

In all ports of call served directly or indirectly by carriers, they must be in a position to rely on an 10 efficient and properly organised agency network in order to offer and operate their services successfully and profitably. A carrier will always have an agent attached to the containers that are shipped around the world. Also, when the containers are on a ship operated by another shipping line, so that they can ensure the smooth operation and the arrival of the containers at the end destination. Agents are selected according to their reputation in the market and on the basis of the

15 experience, efficiency, and organisation that they are able to provide. A general agent is, as a rule, appointed by a carrier in whatever country that carrier has dealings with. He officially represents the carrier in all main ports and, most economically speaking, key areas inland in his country of residence. He is expected to work with the support of reliable sub-agents. Appointed agents are obviously compelled by their contract not to undertake to look after the interests of other carriers

20 whose operating services may be in competition with those of the carriers they represent.

The agent's main task is to secure for the carrier the maximum amount of export and import cargo. He is also expected to do everything in his power to help the carrier with whatever concerns the commercial, technical, legal, financial, or administrative side of the carrier's operation. The 25 shipping agent is also bound to provide full assistance to the carrier from when the ship arrives till it sails, especially in dealing satisfactorily with all the necessary bureaucratic formalities required by the Port Authority. The agent is also in charge of the canvassing of cargo, discharging and loading operations, collecting sea freight, paying port charges, and supervising land transport agreements with truckers, etc. The agent always acts, in every respect, for and on behalf of the 30 carrier. Any documents signed by the agent, particularly bills of lading, should bear this wording before the signature.

An agency relationship is created when one person or entity (the principal) assigns another (the agent), to deal with third parties on his behalf. The bilateral relationship between the agent and principal must begin with an agreement. The majority of appointments are by means of a written contract or letter of intent, are based on a specified period of time and address the appointed area

- 5 of work. Most liner agency agreements cover port and or inland territory work, which includes marketing of the principal's services, handling cargo, handling vessels including those owned by the principal, chartered vessels or in the case of slot space charter agreement with other carriers. The agent's commercial functions include the duty to: - market his principal's services while maintaining contact with shippers, forwarders, unimodal carriers and other related authorities; - 10 quote and negotiate freight rates, as well as announce tariff announcements in accordance with the principal's laid down tariffs; canvass and book cargo in accordance with space allotments; arrange for public relations work including advertising, the announcement of sailing schedules and press releases; provide regular sales market information such as cargo projections; and to prepare the necessary shipping documentation on behalf of the carrier. These include bills of lading, booking

15 notes, delivery orders, certificates, and cargo manifests among others.

There are hundreds of independent multi shipping liner agents operating from many countries where sea transport takes place. Being an independent agent requires having to start one's own business, which entails all of the aspects of setting up shop, as well as having to find carriers to 20 work with. A captive agent on the other hand has these aspects taken care of for them by the carrier and does not have to put up a significant amount of capital to start working. A ship agent's duties are the same whether they are carried out by an independent ship agent or by agency department within the liner operator's company; to find cargo for the shipping liner and to "facilitate" the business of the shipping liner. Their "product" is transport and agents market the facilities offered 25 by the shipping line they represent, in a competitive business. They are selling reliability and efficiency as an economic commodity, and, moreover, ensure that the expectations of the shipper of the goods are fulfilled. Most major carriers have a network of liner agents in the key locations served by their services, and their primary function is to secure bookings of shipping space from local shippers. Liner agencies are therefore responsible for the sales and marketing of the shipping 30 line and provide additional services such as vessel operations, container tracking, haulage,

documentation and crew transfers. One of the duties of the principal (the carrier) is to provide the documents and stationary the agent specifically requires for use by the agent. These normally include custom designed bills of lading, delivery orders etc. The shipping agent then becomes a broker who operates on behalf of the ship owner and works as a principal communicator between shipping company and third parties. 5 Although as independent shipping agents they can represent several different carriers, they work for the ship owner while managing or operating in ports during the ground process of shipping, delivery and receipt of the cargo. This means they are experts at documentation that will identify the ownership of the goods, their precise description and weight, accurate details of their destination to ensure that all legal obligations are fulfilled. With security a major issue, the liner 10 agent has to redouble its checks on the nature of the cargo, the bona fides of the shipper and the cargo details.

While the shipping agent's contractor is, more often than not, the carrier, looking to defend his or her interests, on the other hand, the freight forwarder is always appointed by the shipper, who owns 15 the cargo. An agency agreement may be written, oral or implied. Implied authority is the implied ability of an individual to make a legally binding contract on behalf of the principal. Implied authority also includes the apparent authority which exists where the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent was authorised to act, even if the principal and the purported agent had never discussed such a relationship. This 20 is sometimes termed "agency by estoppel."

In the instant case, it was the 1st plaintiff's testimony that the bill of lading dated 20th January, 2021 (exhibit D. Ex.3), was issued to him by M/s Denholm Global Logistics. By overseeing the booking of the container in a vessel slot, and making sure the bill of lading was issued, the services 25 rendered by M/s Denholm Global Logistics were as an accompaniment to the services of the defendant as a carrier and were in the furtherance of the contract of carriage. A shipping liner agents is clearly the carrier's agent. By authorising M/s Denholm Global Logistics to issue the bill of lading on its behalf, the defendant created a situation of implied or apparent authority by conduct which would lead a reasonable person in the 1st plaintiff's position to believe that the agent was 30 authorised to act, even if the principal and the agent had never discussed such a relationship. Hence on the facts of this case, M/s Denholm Global Logistics was the defendant's agent.

## iii. Whether the defendant is responsible for the mis-description of the cargo in the bill of lading and the cargo manifest.

In a contract of carriage, the shipper has fewer obligations (mostly implicit), namely: (i) to pay 5 freight; (ii) to pack the goods sufficiently for the journey; (iii) to describe the goods honestly and accurately; (iv) not to ship dangerous cargoes (unless agreed by both parties); and (v) to have the goods ready for carriage as agreed. In the first place, the description of the goods will be given by the shipper, in documents which will include a statement as to the apparent order and condition of the goods. It is the shipper or his agent who is delivering the cargo and so it is the shipper who has 10 actual or imputed knowledge as to its condition. In the case of a containerised shipment, the carrier is not privy to the packing of the containers or the nature of the cargo that is inside the containers. The carrier relies on the information provided by the shipper in terms of the cargo, number of packages, weight and measurement.

15 The shipper will or ought to know whether there is any discrepancy between the description of the cargo in the packing list and the cargo which is actually to be loaded on board the carrier. It is up to the shipper to determine how the goods are described in the Mate's receipts (a temporary receipt issued and signed by the officer of a vessel, to acknowledge the goods ready to be loaded on a vessel) and bills of lading. Where the English common law applies, the carrier is under no 20 obligation to make statements as to the quality or quantity of goods shipped, and carriers frequently include clauses in their bills denying all knowledge of the truth of the statements of quality or quantity. In the instant case, Clause 14 of the defendant's terms of carriage provides as follows;

14.3 The Shipper warrants to the Carrier that the particulars relating to the Goods 25 as set out on the reverse hereof have been checked by the Shipper on receipt of this bill of lading and that such particulars, and any other particulars furnished by or on behalf of the Shipper, are adequate and correct. The Shipper also warrants that the Goods are lawful goods, and contain no contraband, drugs or other illegal substances or stowaways, and that the 30 Goods will not cause loss, damage or expense to the Carrier, or to any other cargo.

A bill of lading is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried. One of the two defining functions of a bill of lading is that of receipt. The receipt function of the bill of lading is an important one for carriers, shippers, consignees or indorsees and banks, as it is one of the main means of providing a description of a

- 5 cargo, now at sea and not available for inspection. The bill of lading is regarded as being evidence of receipt of goods for carriage. In particular, it is evidence of the nature, quantity and condition of the goods, and of the leading marks attached or stamped to the goods. This information may be used to facilitate the sale of the goods while at sea: the purchase price may be fixed by the date of the bill of lading; a bank may look at the information to check whether the terms of the letter of - 10 credit have been complied with; customs authorities may use the bill of lading to determine liability for duties; the sale contract may require shipment before a certain date, as evidenced by statements in the bill of lading.

This document must accompany the shipped goods and must be signed by an authorised 15 representative from the carrier, shipper, and receiver. Among other pieces of information, it contains the item's specifications, such as the number of units being shipped, the product's weight and dimensions, and the nature of the cargo being transported. Under *The Hague-Visby Rules*, the carrier is obliged to record accurately the quantity and condition of the cargo on loading in the bill of lading. Exactly what needs to be recorded in the bill of lading is set out in Article III, Rule 3 of

- 20 *The Hague-Visby Rules*. If all the bill of lading is meant to be, or is a receipt for cargo, then the carrier will not be concerned with the actual description of the condition of the goods as received. Clause 11 of the defendant's terms of carriage provides that; "if a container has not bene packed by the carrier, this bill of lading shall be a receipt only for such Container." However, these conditions incorporated *The Hague Rules of 1924* (formally the "*International Convention for the* - 25 *Unification of Certain Rules of Law relating to Bills of Lading, and Protocol of Signature*"), into this contract of carriage.

Under Article III Rule 3 of *The Hague Visby Rules* (as they are currently called), the carrier or the master is under the obligation to insert the figures, as to the packages or pieces, or the quantity, or 30 weight, as the case may be, in the bill of lading as provided by the shipper. The rule provides that "After receiving the goods into his charge the carrier or the master or agent of the carrier shall, on

demand of the shipper, issue to the shipper a bill of lading showing among other things:... b) the number of packages or pieces, or quantity, or weight... as furnished in writing by the shipper ...." What is clear from the Rules is that the figures inserted in the bill of lading are the shipper's figures. However in the instant case whereas the defendant inserted the following word in the bill of lading

- 5 (exhibit D. Ex.1); "Container said to contain 3 LOTS" that fact is not reflected in the packing list (exhibit P. Ex.1) provided to the defendant by the 1st plaintiff's agent. There is no direct or circumstantial evidence therefore to show that the specification of the number of LOTS as inserted in the bill of lading came from the 1st plaintiff as alleged by the defendant. - 10 The obligation of the carrier to insert the figures is however not absolute. Article III Rule 3 continues on to state that the master "shall not be bound to state in the bill of lading any marks, numbers, quantity or weight which he has reasonable grounds for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking". As a result the carrier should: (i) only enter the shipper's figures if he reasonably believes that they - 15 are accurate; and (ii) mark the bill of lading as "weight, measure, quantity unknown" if he cannot verify the accuracy of the statement. In the instant case, whatever the source of information that led to the defendant's specification of the number of LOTS as inserted in the bill of lading, the fact that the defendant had no reasonable grounds for suspecting that specification not accurately to represent the goods actually received, is not in doubt. Commercial documents must not be 20 considered in a vacuum, divorced from the context in which they are intended to be used. Since the nature and value of the goods inside the container was specifically declared in the packing list, it was for the carrier to verify the extent of its liability. There is no evidence to show that the defendant had no reasonable means of checking the cargo. - 25 Even if *The Hague-Visby Rules* were to be inapplicable to this transaction, considering that at common law carriers incur a measure of liability for the safety of the goods, it is the duty of the carrier to ensure the accuracy of the bill of lading. The bill of lading is, in the first place, an acknowledgment by a carrier that he has received the goods for carriage. Secondly, the bill of lading is either a contract of carriage or evidence of a contract of carriage. Thirdly, if the bill of 30 lading is negotiable, as usually happens in carriage by sea, it controls possession of the goods and is one of the indispensable documents in financing the movement of commodities and merchandise - 12

throughout the world. the carrier is entitled and obliged to reject cargo presented for transportation if the cargo so presented, is described in the wording of the bill of lading (as ultimately proposed by the shipper) in a way that would require the statement of the apparent order and condition of the cargo so described to be qualified, so that the bill of lading as signed by the carrier would be 5 accurate.

The contract in the bill of lading is interpreted as being one to deliver the goods actually shipped and not one to deliver the goods stated to have been shipped in the bill (see *Compania Naviera Vascongada v. Churchill [1906] 1 KB 237*). The bills constitute *prima facie* evidence that the 10 goods detailed by the shipper have been shipped. It usually is the shipper who "will prepare drafts of both Mate's receipts and bills of ladings for signature by, respectively, the ship's mate (or his agent) and the master, or his agent." The bill of lading contains an acknowledgement by the carrier that he has received the goods in question as described by the shipper. The parties may by agreement contemplate that there will be room for negotiation as to the description of the cargo in 15 the bills of lading before the goods are loaded. If the shipper continues to insist on their description and the carriers concludes that in his view, (which must be reasonably held) the cargo would be described in the bill of lading in a way which is inconsistent with a statement as to the cargo's apparent order and condition, that he has the right and the duty to reject the cargo.

- 20 The carrier has the right to reject cargo as first described in a draft bill of lading, until the condition of the goods is accurately described. Whereas the statements contained in the bill of lading are usually inserted based on information supplied by the shipper, however, that information is understood to be ratified by the carrier upon issuance of the bill of lading. Once the document is signed the carrier makes the representations within the shipping document as its own (see *Sea* - 25 *Success Maritime Inc v. African Maritime Carriers Ltd;* "*The Sea Success" [2005] 2 All ER (Comm) 441 p 177; [2005] 2 Lloyd's Rep. 692.*). The bill of lading is *prima facie* evidence for the shipper of the statements incorporated in it (see *Owners of Cargo Lately Laden Aboard the River Gurara v. Nigerian National Shipping Line; The River Gurara" [1998] 1 Lloyd's Rep. 225* and *"The David Agshamenebeli,"Owners of the Cargo v. Owners of the Ship [2003] 1 Lloyd's Rep 92*; 30 *[2002] 2 All ER (Comm) 806*).

Therefore, before a carrier can issue bills of lading, he has to take a reasonable, non-expert view of the cargo that is about to be loaded, as he sees it. He must decide whether the cargo to be loaded is accurately described in the bills of lading. The Court would not require the carrier to exercise a skill equivalent to that of an expert surveyor or have any greater knowledge or experience of the

- 5 cargo than any other reasonably careful carrier. All that has to be done is to make an independent check using the best means available. Where the carrier has no reasonable means of checking the marks, number, quantity or weight of the goods being shipped in a container, or where there may be some reason for doubt or uncertainty as to the contents of the container, it would be prudent for the bill of lading to be claused "weight, number and quantity unknown." This shifts to the shipper - 10 the burden of proving by extrinsic evidence the carriage of any goods which he claims are lost or damaged, both for the purpose of the claim and for the calculation of the limit of liability. However, it was explained in *"The David Agshamenebeli,"Owners of the Cargo v. Owners of the Ship [2003] 1 Lloyd's Rep 92*) that; - 15 The general effect of the authorities is that the [carrier] should make up his own mind whether, in all the circumstances, the cargo appears to satisfy the description of its apparent order and condition in the bills of lading tendered for signature. He is unlikely to be criticised for failing to ask for expert advice, and the law does not require him to be an expert surveyor or have any greater knowledge or experience of the cargo in 20 question than any other reasonably careful [carrier]. If he honestly takes the view that the goods are not in apparent good order and condition, and that is a view that could properly be held by a reasonably observant [carrier], he is entitled to clause the bill of lading - even if not all [carriers] would necessarily agree with him….. There was no basis on which to suggest a duty of care in tort. It is the shipper or the shipper's agent 25 who tenders the bill to the carrier or the carrier's agent (usually the [carrier]) for signature. The shipper can therefore be taken to know the actual apparent condition of his own cargo. The real purpose of the requirement is to enable the shipper to transmit that information to subsequent holders of the bill, so that they can use it as a document of title to the goods and as a mode of assignment of the contract of carriage. Subsequent 30 holders can rely on the statement to reflect the reasonable judgment of a reasonably competent and observant [carrier] in all the circumstances. This is an internationally recognised regime and there is no reason to add on to it any further obligation of a duty of care. - 35 Although a carrier under a bill of lading may be liable at common law for damages arising from false statements in the bill of lading about the goods (see *Standard Chartered Bank v. National*

*Shipping Corp of Pakistan [2003] 1 Lloyd's Rep 227*), the duty not to make any false representations in the bill of lading is generally considered to be a duty towards the transferees of bills of lading. In such cases, the carrier will be liable to those who have been induced into accepting the bill of lading and thereby suffered a loss. In the shipper's hands, the bill will,

- 5 therefore, constitute only *prima facie* evidence of the quantity and quality of goods shipped, throwing the burden of rebutting that presumption on to the carrier who must adduce either direct or indirect evidence to the contrary. Furthermore, in order to be even *prima facie* evidence, the bill must purport to be a receipt. Where the bill records in one part that the goods were received in apparent good order and condition and in another that their "quality and condition" are unknown, - 10 it will not amount to even *prima facie* evidence (see *New Chinese Antimony Company v. Ocean Steamship Company [1917] 2 KB 664*). In the instant case, the defendant did not insert any information in the bill of lading concerning the quality of the goods shipped, but as regards quantity stated that; "Container said to contain 3 LOTS" - 15 The word "lot" seems to have a specialised or technical meaning, in the manner of a term of art. According to D. W.1 Mr. Sam Sekasi, a "lot" is a package or collection of a similar tax category items. Otherwise the plain ordinary meaning of a "lot" connotes a bundle of things packed, whether in a box or other receptacle, or merely compactly tied up in customary freight units. Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages - 20 or units enumerated in the bill of lading as packed in such article of transport may be deemed the number of "LOTS" as far as those packages or units are concerned. Being a word of art, the shipper's characterisation of the items packaged is immaterial: an article will not become a "lot" merely because the shipper has chosen to call it one. Where "LOTS" are to be counted in relation to parcels of cargo loaded into containers, it is the parcels and not the containers which constitute - 25 the relevant LOTS. Whereas Article III Rule 3 of *The Hague Visby Rules* requires a carrier to insert figures in the bill of lading as to the packages or pieces, or the quantity, or weight, of the cargo shipped as the case may be, "as furnished in writing by the shipper," the defendant did not adduce any evidence in writing to show that the said statement is attributable to the 1st plaintiff or his agent.

Even though the extent to which and the terms in which the carrier considers it appropriate to qualify the bills of lading statement as to the order and condition of the cargo, as well as the number of packages or pieces, or the quantity, or weight, of the cargo shipped, is a matter for his judgment, a carrier may not use an accurate description to convey an inaccurate impression, or to use general

- 5 words which, whilst technically accurate, create a materially misleading impression. The carrier has a duty to use the words or expressions which have a range of meaning which reflects reasonably closely the apparent quantity, order and condition of the cargo. Much as there is no contractual guarantee of absolute accuracy as to the order and condition of the cargo or its apparent order and condition, the carrier has the duty to issue a bill of lading which records the apparent - 10 order and condition of the goods according to the reasonable assessment of the carrier. There was no reasonable basis to believe that a huge container stuffed with that many items as are listed in both the packing list and the bill of lading would contain only three LOTS or packages. To have transmitted that error onto the cargo manifest (exhibit D. Ex.7). therefore was an act of negligence. - 15 Furthermore, the carrier is the custodian of the cargo until it is accepted for release by customs. The charge to attend to all documentation matters on behalf of the principal (the shipper) rests with the carrier, and includes the issuance of bills of lading, delivery orders, and the preparation and lodging of cargo manifests. Sound shipping practice requires that the carrier issues a correct bill of lading indicating the correct cargo quantities and circumstances of the shipment, including the - 20 actual date of loading. Therefore every shipping line, agent, broker, freight forwarder and common carrier operating in a country must adhere to the rules and regulations of that country. Every carrier handling imported cargo has a responsibility to Customs to ensure that none of the goods are released to the customer without getting the authorised release from customs. The bill of lading is the key document used by the carrier to declare the nature of the cargo that is carried under its 25 contract of carriage. The carrier therefore has the duty to check and verify that the cargo description - and other information shown on the import declaration to Customs is the same as that shown on the bill of lading and the cargo manifest.

Carriers, though their agents, are obliged to manifest the quantity of packages in their smallest 30 external packaging units; i.e., the manifest description should be the equivalent of that on any pertinent bills of lading or packing lists. The sheer number of items as are listed in both the packing list and the bill of lading and its variety was sufficient to put the defendant on notice that it could not be described as constituting only three packages or LOTS. When discrepancies are discovered by Customs, the carrier is usually warned and permitted to rectify this with the shipper. If the carrier continues to make errors or inadequately describe merchandise on the manifest after 5 instruction from Customs, a penalty could be imposed (exhibit D. Ex.11). The added risk of a penalty for mis-description heighten the defendant's level of care when inserting figures in the bill of lading as to the packages or pieces, or the quantity, or weight, of the cargo shipped.

By an email dated 27th January, 2021 (exhibit P. Ex.3 (aa), a one Mr. Afia Asamoah of M/s JEN Export Limited, who this court has already found to have been the 1st 10 plaintiff's agent, wrote stating "we listed all the packing list on the bill but for some reason Maersk line put 3 LOTS. Please this needs to be sorted out urgently so the customer doesn't incur charges." On the other hand, the defendant's documentation shows that the description of the cargo in the container as constituting three (3) LOTS was transmitted on 26th November, 2020 from a one Mr. Andy Watson of M/s 15 Denholm Global Logistics (document D. ID.1), who this court has already found to have been the defendant's agent. Since the defendant has failed to adduce evidence to show that its insertion of, "Container said to contain 3 LOTS" in the bill of lading (exhibit D. Ex.3) and the cargo manifest (exhibit D. Ex.7), was based on information "as furnished in writing by the shipper" (the 1st

plaintiff) or his agent, I find that the defendant is responsible for the mis-description of the cargo 20 in the bill of lading and the cargo manifest when it failed to ensure that the cargo to be loaded was accurately described in the bill of lading and the cargo manifest.

#### iv. Whether the defendant is liable for the resultant delay.

- The cargo was loaded in London on 3rd December, 2020 and discharged at Mombasa on 6th 25 January, 2021. By an email dated 21st January, 2021 the defendant informed the 1st plaintiff that the shipment had to undergo a Customs C11 rectification for the cargo manifest to be expanded to 124 items, a process that was estimated to take not more than fourteen days. By July, 2021 the defendant had still not been able to correct the error. The bill of lading was rectified and re-issued on 5th 30 August, 2021 (exhibit P. Ex.2). It was the testimony of D. W.1 Mr. Sam Sekasi that it took

the defendant about three months from 20th January, 2021 to get the cargo from UK to Kampala,

where it arrived 27th April, 2021 yet the normal range is 40 – 45 days. To-date the plaintiffs have not received their cargo.

I find that there was a delay of over there months between the port of Mombasa and arrival of the goods in Kampala. Thereafter, it was not until 5th 5 August, 2021 that the bill of lading was rectified and re-issued. Overall, the delay is attributable to the defendant's fault occasioned its misdescription of the cargo in the bill of lading and the cargo manifest, and the slow pace by which it went about the rectification of the error. In conclusion therefore I find that the defendant breached the contract of carriage when it failed to deliver the cargo to the consignee within the normal range 10 of 40 – 45 days after loading.

**2 nd issue**; whether the plaintiff / counter defendant is liable to pay the demurrage charges.

There is an indemnity in *The Hague Visby Rules*, because the owners' obligation to insert the 15 shipper's figures under Art III Rule 3. Article III Rule 5 of *The Hague Visby Rules* (Article 17 Hamburg rules) states: "The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of the shipment of the marks, number, quantity and weight, as furnished by him and the shipper shall indemnify the carrier against all loss, damages and expenses arising, or resulting from, inaccuracies in such particulars." Had the plaintiffs breached this duty, they would have been 20 liable for the demurrage charges and storage costs claimed by the defendant.

However, having found that these charges have accrued as a result of a delay is attributable to the defendant's fault occasioned its mis-description of the cargo in the bill of lading and the cargo manifest, and the slow pace by which it went about the rectification of the error, the plaintiffs 25 cannot be required to meet them. It was erroneous of the defendant to have invoked their contractual and common law remedy that grants a common carrier a lien under which he is entitled to retain possession of the goods until earned freight is paid to him. It is for that reason that the counterclaim is misconceived and is hereby dismissed with costs to the plaintiffs.

30 To the contrary, in all legal systems, carriers incur liability for delay in delivering the goods to the consignee. The contract of carriage though may fix the period of transportation with reference to

the applicable means of carriage and determine the consequences of the delay. Under the law of contracts, failure of the carrier to deliver the goods within the prescribed period of time will be treated as a breach of contract for which the carried is liable to pay damages. Accordingly this issue is answered in the negative. The plaintiff / counter defendant is not liable to pay the 5 demurrage charges. Instead the defendant is under an obligation to release the cargo to the plaintiffs forthwith, and it is so ordered.

#### **3 rd issue**; what are the remedies available to the parties.

- 10 A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract, and this includes circumstances where an obligation that is stated in the contract is not completed on time. It is a failure, without legal excuse, to perform any promise that forms all or part of the contract. Under section 64 (1) of *The Contracts Act, 2010* where a party to a contract, is in breach, the other party may obtain an order of court requiring the party in breach to specifically - 15 perform his or her promise under the contract. For that reason the plaintiff is entitled to recover the amount outstanding.

### i. General damages for breach of contract.

- 20 Damages are said to be "at large," that is to say the Court, taking all the relevant circumstances into account, will reach an intuitive assessment of the loss which it considers the plaintiff has sustained. The award of general damages is in the discretion of court in respect of what the law presumes to be the natural and probable consequence of the defendant's act or omission (see James *Fredrick Nsubuga v. Attorney General, H. C. Civil Suit No. 13 of 1993* and *Erukana Kuwe v. Isaac* - 25 *Patrick Matovu and another, H. C. Civil Suit No. 177 of 2003*). A plaintiff who suffers damage due to the wrongful act of the defendant must be put in the position he or she would have been if she or he had not suffered the wrong (See *Hadley v. Baxendale (1894) 9 Exch 341*; *Charles Acire v. M. Engola, H. C. Civil Suit No. 143 of 1993* and *Kibimba Rice Ltd v. Umar Salim, S. C. Civil Appeal No. 17 of 1992*).

General damages are the direct natural or probable consequence of the wrongful act complained of and include damages for pain, suffering, inconvenience and anticipated future loss (see *Storms v. Hutchinson [1905] AC 515; Kabona Brothers Agencies v. Uganda Metal Products & Enamelling Co Ltd [1981-1982] HCB 74* and *Kiwanuka Godfrey T/a Tasumi Auto Spares and*

- 5 *Class mart v. Arua District Local Government H. C. Civil Suit No. 186 of 2006*). As a general rule, a person who has suffered loss as a result of another's breach of contract is entitled to be restored to the position that the person would have occupied had the breach not occurred. In special circumstances where the loss did not arise from the ordinary course of things, general damages are awarded only for such losses of which the defendant had actual knowledge (see *Hungerfords v.* 10 *Walker (1989) 171 CLR 125*). - The 1st plaintiff testified that when the container came to Uganda P. W.2 cleared all taxes and obtained a release. As she was exiting the gate, the defendant impounded the vehicle. She was unable to take it out of the bond. He too has suffered loss. He lives in the UK, and has had to cancel 15 more than eight flights because of this case. Their Landlord at the business premises locked their stock inside for default on rent. The goods were impounded and they could not be sold to raise money to pay rent. At one point the witness broke down with emotion as he testified. Considering that for over one year the plaintiffs have been denied possession of their property on account of a misconceived exercise of a carrier's lien, I consider a sum of shs. 30,000,000/= as sufficient 20 compensation in general damages, and it is accordingly awarded.

# ii. Special damages.

The law is that not only must special damages be specifically pleaded but they must also be strictly 25 proved (see *Borham-Carter v. Hyde Park Hotel [1948] 64 TLR*; *Masaka Municipal Council v. Semogerere [1998-2000] HCB 23* and *Musoke David v. Departed Asians Property Custodian Board [1990-1994] E. A. 219*). Special damages compensate the plaintiff for quantifiable monetary losses such as; past expenses, lost earnings, out-of-pocket costs incurred directly as the result of the breach. Unlike general damages, calculating special damages is much more straightforward 30 because it is based on actual expenses. It is trite law though that strict proof does not necessarily always require documentary evidence (see *Kyambadde v. Mpigi District Administration, [1983]*

*HCB 44; Haji Asuman Mutekanga v. Equator Growers (U) Ltd, S. C. Civil Appeal No.7 of 1995* and *Gapco (U) Ltd v. A. S. Transporters (U) Ltd C. A. Civil Appeal No. 18 of 2004*).

The plaintiff claimed a sum of shs. 121,000,000/= as special damaged comprising; the value of the 5 goods, freight charges, accommodation, airfares, hire of premises and vehicle hire. Out of these, I find the claim for the value of the goods and freight charges misplaced since they have only been temporarily deprived of possession and not title. As regards the rest of the claims, the plaintiff has not adduced documentary evidence of expenditure on vehicle hire, yet documentary evidence is reasonably expected for such expenditure. That claim is accordingly disallowed. It is only in respect of air fares, cancelled flights, hire of premises and accommodation, that the 1st 10 plaintiff adduced documentary evidence. That evidence was not undermined or discredited by crossexamination and neither did the defendant adduce evidence to controvert it. Accordingly the 1st plaintiff is wared shs. 27,840,000/= as special damages.

## 15 iii. Interest on the award.

Under section 26 (1) of *The Civil Procedure Act* where interest was not agreed upon by the parties, Court should award interest that is just and reasonable. The plaintiffs have succeeded in their claim for general and special damages. Both monetary awards are to carry interest at the rate of 21% per 20 annum from the date of judgment until payment in full.

iv. The costs of the suit.

Under Section 27 of *The Civil Procedure Act*, costs are awarded at the discretion of court. In sub-25 section (2) thereof, costs follow the event, unless for some reasons court directs otherwise (see *Jennifer Rwanyindo Aurelia and another v. School Outfitters (U) Ltd., C. A. Civil Appeal No.53 of 1999*; *National Pharmacy Ltd. v. Kampala City Council [1979] HCB 25*). It was also held in *Uganda Development Bank v. Muganga Constructions [1981] HCB 35,* that a successful party can only be denied costs if it proved that but for his or her conduct, the litigation could have been 30 avoided, and that costs follow the event only where the party succeeds in the main suit. I have not found any special reasons that justify a departure from the rule.

In conclusion, judgment is entered for the plaintiff against the defendant, as follows;

- a) An order that the defendant releases the cargo to the plaintiffs forthwith. - b) General damages in the sum of shs. 30,000,000/= - c) Special damages in the sum of shs. 27,840,000/= - 5 d) Interest thereon at the rate of 21% per annum in (b) and (c) above from the date of judgment until payment in full. - e) The costs of the suit and of the counterclaim.

| 10 | Delivered electronically this 10th day of November, 2022 | ……Stephen Mubiru…………<br>Stephen Mubiru<br>Judge,<br>10th November, 2022. | |----|----------------------------------------------------------|--------------------------------------------------------------------------| | 15 | | |