Incorporation – exclusive proof clause in charterparty not incorporated into bills of lading
The facts
Sugar was shipped from Port Louis, Mauritius to Manchester. A clause in the charterparty provided that certain liner bills of lading were to be signed by the Master which were to be deemed to be conclusive proof of the cargo shipped. The same clause provided that “their conditions” i.e. those of the bills of lading, were to form part of the charterparty.
Bills of lading were duly signed incorporating, in turn, the “conditions and exceptions” of the charterparty. The bills contained a further clause reading as follows: “weight, measure, quality, contents and value unknown”.
On outturn at Manchester, fewer bags were discharged than appeared on the bills of lading.
The indorsees attempted to rely on the conclusive proof clause in order to found a claim for the value of the apparent short delivery. They contended that it was not open to the ship’s owners to prove the actual volume of sugar taken on at the port of loading in order to prove that there was no short delivery.
Findings
The arbitrator appointed by the parties found that the conclusive proof clause did not form part of the bills of lading and that it was therefore open to the ship owners to prove full delivery. His award was stated in the form of a special case. In the King’s Bench Division, Lush J, held that the conclusive proof clause was operative as to the number of bags or receptacles but not as to weight or volume. In the result he awarded a nominal amount to the indorsees for the bare value of the bags.
In the Court of Appeal (Swinfen Eady, Scrutton, & Bray LJJ) it was held that the bills of lading did not incorporate the conclusive proof clause and the indorsees’ appeal against the court’s decision was dismissed. There was no cross appeal with regard to the nominal amount awarded for the bags.
In interpreting the bills of lading, the Court of Appeal referred to Serraino & Sons v Campbell which held that all clauses in the charterparty inconsistent with those in the bill of lading had to be excluded as of no force and effect. Insofar as the “weight, measure, quality, contents and value unknown” clause was inconsistent with the conclusive proof clause, the former had to prevail.
Commentary
Notable quote by Scrutton LJ:
“[Commercial men have the] apparently incurable habit of of using two printed forms referring to each other without any clear thinking as to how much of each form they intend to be their bargain, especially when those forms contain phrases which have been the subject of settled judicial construction in the courts for many years”.
This judgment is unsatisfactory for a number of reasons.
1. There is no reference to Kyle decided a year earlier which came to an opposite conclusion on identical facts. Swinfen Eady LJ was on both panels.
2. No consideration is given to the fact that the conclusive evidence clause is contained in the charterparty and is intended to refer to the bill of lading as a whole. It is an intention of the parties to the charterparty – not the bill of lading. It is not an intention of the parties to bills of lading which can be inferred by mere reference to the charterparty.
3. Obiter dicta are by Swinfen Eady and Scrutton LJJ suggest that the earlier line of cases, the first being Russell v Niemann, turned on a distinction between “conditions” and “exceptions” which is incorrect.
4. It is not clear whether the receivers were also the charterers. See the judgment of Scrutton LJ.
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