QCR Spring 2019: Remedies for delivery without production of bill of lading –Company director personally liable for procuring a breach of an agency agreement

QCR Spring 2019: Remedies for delivery without production of bill of lading –Company director personally liable for procuring a breach of an agency agreement

Michael Fielding Wolff v Trinity Logistics [2018] EWCA CIV 2765 (12th December 2018)

Facts

Mr Wolff was a director of The Fielding Group Ltd (TFG). TFG was a company engaged in importing clothing from Bangladesh into the UK.

These goods were shipped to the UK via Trinity Logistics USA Inc. (TUSA), freight forwarders under ‘house’ bills of lading (or airway bills) issued by TUSA.

Trinity Logistics (Bangladesh) Ltd operated as the agent of TUSA in Bangladesh and Trinity Europe Logistics Limited (Trinity Europe) operated as agents of TUSA in the UK.

In breach of the agency agreement between TUSA and the agents, the goods were released by the agents to TFG without TFG providing bills of lading or airway bill endorsed by TFG’s bank evidencing payment by TFG for the goods. This exposed TUSA to claims from suppliers for ‘wrongful delivery’.

Once TUSA became aware of this breach, they brought proceedings in tort against Mr Wolff for inducing a breach of contract, as TFG had become insolvent.

Judgment

At the Commercial Court, Mr Wolff was found liable to TUSA for inducing a breach of contract. 

The Commercial Court held that Mr Wolff committed a sufficient act of inducement and that Mr Wolff had the “requisite knowledge of… the contract between Trinity Europe and Trinity Bangladesh with TUSA and… the fact that it prohibited release of the goods without the correct documents.”

Mr Wolff appealed the decision but his appeal was rejected.

The Court of Appeal introduced the case with the following reminder: It has long been a cardinal principle of the English law of carriage by sea that the carrier should only deliver the goods to a person who presents an original bill of lading. If he delivers to anyone else he is liable for misdelivery. The reason for this cardinal principle is that the bill of lading is a document of title by indorsement and delivery of which the property in the goods can be transferred in return for the price payable to the supplier. The consignee or receiver of the goods can expect that in return for payment he will obtain an original bill of lading which can be presented to the carrier, ….”

Comments

This decision highlights once again the dangers attached to delivery of goods other than against presentation of duly endorsed bills of lading. 

The decision also makes it very clear that directors who possess the requisite knowledge can be held personally liable for inducing the company’s breach of contract. The court relied on Mr Wolff’s emails to establish that he had the requisite knowledge for the tort of inducing a breach of contract.  

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