Most Read Contributor in Australia, September 2016
In a recent decision in the Federal Circuit Court of
Australia,1 the notify party to a bill of lading who
obtained delivery of goods from an ocean carrier by
misrepresentation was ordered to indemnify the ocean carrier for
its losses in defending and settling the claims of the rightful
owner of the cargo.
Mitsui OSK Lines (Thailand) Co Ltd (MOL)
carried two containers of bagged jasmine rice from Bangkok,
Thailand to Sydney, Australia. The bill of lading was consigned
'to order' and named Jack Fair Pty Ltd (Jack
Fair) as notify party. MOL delivered the cargo to Jack
Fair on production of a colour copy of a non-negotiable bill of
lading which was 'endorsed' on the reverse side with the
corporate seal of Jack Fair and signed by a director of Jack Fair.
MOL mistakenly assumed the 'endorsed' colour copy to be an
original bill of lading and issued a delivery order for the release
of the goods. In fact, Jack Fair did not hold the original bill of
lading, had not paid for the goods and had no entitlement to
MOL was sued by the rightful owner of the goods for misdelivery,
which claim it settled. MOL sought an indemnity from Jack Fair for
The Court found that Jack Fair engaged in misleading and
deceptive conduct. The misrepresentation committed by Jack Fair
involved Jack Fair printing a colour copy of the bill of lading
marked non-negotiable and 'copy', which contained blue
print on its face as well as MOL's logo, stamping the reverse
side of the bill of lading with a corporate seal of Jack Fair,
having the bill of lading signed by a director of Jack Fair and
presenting the copy bill of lading in order to obtain delivery
orders in relation to the cargo that Jack Fair had not paid
The Court also found that MOL exercised reasonable care and had
implemented a "sound system" which involved carefully
inspecting documents to ensure that only original, correctly
endorsed bills of lading were accepted prior to releasing goods.
The Court concluded that MOL made the mistake as to the true nature
of the copy bill of lading only as a result of the
misrepresentation by Jack Fair.
The Court ordered Jack Fair to indemnify MOL for the settlement
that MOL had to pay to the rightful owner of the cargo for
wrongfully misdelivering its goods and also ordered Jack Fair to
pay MOL's legal costs on an indemnity basis.
The decision suggests that carriers will be entitled to an
indemnity for losses arising from such a misrepresentation and
possibly similar misrepresentations, providing that they have not
negligently contributed to the loss and have reasonably settled
and/or mitigated any claims.
1Mitsui OSK Lines (Thailand) Co Ltd v
Jack Fair Pty Ltd  FCCA 558.
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