Does an unidentified signature amount to an endorsement “in blank” of a bill of lading?
A “to order” bill of lading can be endorsed to a named party, to that party’s order, or “in blank”. In Hilditch Pty Ltd v
The plaintiff cargo receivers (“H”) purchased a cargo of Yubase 6 (a lubricant for motor engines) from SK Corporation of
H opened an irrevocable letter of credit with the National Australia Bank in favour of SK, a requirement of which was a full set of shipped on board bills of lading made out to the order of SK and endorsed in blank. A set of three bills of lading was issued by the shipowner’s agent on 18 June 2006 made out to the order of SK, with H as the notify party. The bills contained a clause paramount, incorporating the amended Hague Rules as contained in Australian legislation.
H received one of the original three bills of lading from the National Australia Bank, in early July 2006. This bill carried two signatures on the reverse side. The first did not identify the name of its author, nor on whose behalf he or she had signed. The second signature purported to be an authorised signature of the Export-Import Bank of
The oil as initially discharged appeared cloudy and obviously contaminated. It was thought by H’s surveyors that all that was needed was for the lines and pumps to be slopped clear of any residue left from the previous cargo (of molasses). However, after slopping, the oil remained cloudy. Discharge continued nonetheless. After discharge, the whole cargo was found off specification and to be commercially unusable. Subsequent testing identified that the oil was contaminated with caustic soda.
H claimed damages of AUD560,013.56 from the shipowner, on the basis that the latter had breached its duty properly and carefully to discharge the oil, within the meaning of article 3 rule 2 of the amended Hague Rules.
The shipowner denied that H had title to sue, arguing (1) that all three bills in the set had to be endorsed, and (2) that the bill presented by H had not been endorsed by SK, because the signature on the reverse of the bill was not identified, while the signature for the Export-Import Bank of Korea was irrelevant – being a mere administrative measure in its capacity as a correspondent bank to record its satisfactory examination of the relevant documents stipulated in the letter of credit.
The shipowner further denied that it was in breach of article 3 rule 2. It claimed that, if wrong on its arguments about title to sue, it could rely upon the article 4 rule 2 (i) exception in that the omission of H to stop discharge once the contamination was known was an “omission of the… owner of the goods, his agent or representative”.
The Australian
The Australian Court also rejected the shipowner’s argument (1) that all three bills of lading in a set needed to be endorsed. The bills of lading contained the time honoured clause confirming that the master had signed three original bills of lading “… of this tenor and date, one of which being accomplished, the others will be void”. H was entitled to delivery of the cargo as it was the holder of the bill of lading. On presentation of the bill by H to the shipowner, the bill of lading was, as it said, “accomplished”. The other two originals became void.
The Court further rejected the shipowner’s argument that part of the loss was caused by acts or omissions by H, in permitting discharge to continue when it knew the oil was in good condition in the ship’s tanks but was discharging at the manifold in a contaminated state. The Court concluded that the damage arose from the shipowner’s breach of article 3 rule 2 properly and carefully to discharge the cargo, including its failure to stop the discharge. No loss would have occurred if the shipowner had had a sound system for preventing contamination taking place during discharging. The shipowner’s failures were the commonsense cause of the loss.