Hong Kong: Watch It! Warsaw Limits Broken in Hong Kong Watch Cargo Judgment

Facts

In March 1995, a consignment of watches with a retail value of approximately HK$11 million, consigned to Duty Free Shoppers Trading (HK) Limited ("DFS") arrived in Hong Kong on a Swissair flight. The consignment was transferred to the air cargo terminal operated by Hong Kong Air Cargo Terminals Limited ("HACTL"). Jacky Maeder (HK) Limited ("Jacky Maeder"), now known as Geis Cargo JM Hong Kong Limited, acting as agents on behalf of DFS, collected a shipment release form ("SRF") from Cathay Pacific who were acting as ground handling agents for Swissair and placed the SRF in an unlocked drawer in their office. The SRF is a "bearer" document and therefore entitles the person holding it to collect the cargo covered by it from HACTL. An unknown person entered the office, stole the SRF and gave it to an innocent truck driver who collected the consignment and passed it to thieves at a carpark at Market Street in Yau Ma Tei. Despite extensive Police investigations, no one was charged with the theft.

Clyde & Co., acting for DFS’s cargo underwriters, commenced Court proceedings in Hong Kong against Jacky Maeder. Following the trial on 24th May 2001, the Court held that DFS was entitled to recover the full retail value of the watches plus interest and costs from Jacky Maeder. Jacky Maeder did not deny the theft of the watches but argued that they could limit their liability under Article 22 of the Amended Warsaw Convention to only HK$101,668 representing the limitation figure of HK$135 per kilo. Valuable cargoes such as watches are low weight high value commodities. In this case, there was a huge difference between the limitation figure and the actual value of the watches.

The Court found that the Jacky Maeder security system was reckless, that Jacky Maeder had knowledge of the importance of the SRF and that on the balance of probabilities, this was an insider theft perpetrated with the involvement of one of a limited class of employees of Jacky Maeder. They awarded the Claimants the full value of their claim plus interest and legal costs.

This case involved trying to break Art. 25 Warsaw limits by showing that Jacky Maeder intended to cause damage or acted recklessly with knowledge that damage would probably result. In order to have a reasonable prospect of breaking the limit, it is important to carry out a thorough investigation of the accident as soon as possible. In this case a quick and thorough investigation was carried out and the Court held that Jacky Maeder had to pay £16.000, being the survey fees incurred by cargo underwriters in addition to HK$11 million representing the value of the stolen watches – a clear indication that the Court recognised the value and importance of the investigations, which were crucial to the success of this case.