QUEEN’S BENCH DIVISION

(COMMERCIAL COURT)
 
June 29, 2000
 
____________________

 
ALIMPORT
v.
SOUBERT SHIPPING CO. LTD.
 
Before Mr. Justice TIMOTHY WALKER
 
Bill of lading - Antedated - Owner’s bills - Loading completed on Aug. 8, 1998 but bills of lading dated Aug.
5, 1998 - Whether shipowners bound by bill as issued.
 
The bill of lading was an owners’ bill. It was on its face signed on behalf of the master by the time charterers’
agents Penavico. It recorded shipment of 273,000 bags of rice at Ningbo in China for carriage to Cuba. However
it was dated Aug. 5, 1998 and on the assumed facts loading was not completed until Aug. 8, 1998.
 
The issue for decision was whether the innocent holder for value of the bill of lading was precluded from suing
on the contract of carriage evidenced by that bill because the shipowners’ agents, authorized generally to sign
bills of lading on their behalf, had backdated the bill.
 
It was accepted in the assumed facts that Penavico had no actual or implied authority to insert a date other than
Aug. 8, 1998 in the bill of lading.
 
-Held, by Q.B. (Com. Ct.) (TIMOTHY WALKER, J.), that (1) the agents had ostensible authority to issue bills of
lading and the shipowners were bound by the bill of lading as issued (see p. 448, col. 2);
 
(2) on the assumed facts the shipowners continued with the voyage with full knowledge of the incorrect dating,
and it was only when they realized that they were not going to get any more time charter hire that they took the
point that the bill of lading was not binding on them; if those were the facts then the shipowners were taking an
unmeritorious position on ratification (see p. 449, col. 2; p. 450, col. 1);
 
(3) the defendant was party to a contract of carriage on the terms of the bill of lading from the time that it was
issued; the claimant had the right to sue in respect of any breach of such contract; and the facts set out in par. 12
of the points of defence were not capable as a matter of law of affording any defence to claims for breach of any
such contract of carriage (see p. 450, col. 2).
 
-The Starsin, [2000] 1 Lloyd’s Rep. 85 followed.
 
-The Hector, [1998] 2 Lloyd’s Rep. 287 not followed.
The following cases were referred to in the judgment:
 
Grant v. Norway, (1851) 10 C.B. 665;
 
Hector, The [1998] 2 Lloyd’s Rep. 287;
 
Nea Tyhi, The [1982] 1 Lloyd’s Rep. 607;
 
Saudi Crown, The [1986] 1 Lloyd’s Rep. 261;
 
Starsin, The [2000] 1 Lloyd’s Rep. 85.
 
 ____________________

 
This was the trial of preliminary issues ordered by Mr. Justice Morison on Feb. 4, 2000 in the action between
the claimant Alimport and the defendant Soubert Shipping Co. Ltd., the remaining issue for decision being
whether the defendant shipowner was party to a contract of carriage with the claimant bill of lading holder.
 
Mr. Richard Lord (instructed by Messrs. Richards Butler) for the claimant; Mr. Christopher Smith (instructed by
Messrs. Bentley Stokes & Lowless) for the defendants.
 
The further facts are stated in the judgment.
 
JUDGMENT
 
Mr. Justice TIMOTHY WALKER: 1. This is the trial of preliminary issues ordered by Mr. Justice Morison on
Feb. 4, 2000. The only remaining live issue is whether the defendant shipowners were party to a contract of
carriage with the claimant bill of lading holder. It is now conceded by the defendant that:
 
(1) if it was a party, this was on the terms of the bill of lading and from the time it was issued;
 
(2) on the assumed facts, the claimant has title to sue;
 
(3) the various facts and matters pleaded on its behalf in answer to a claim in contract are not capable in law of
affording such a defence.
 
2. The bill of lading in question is an owners’ bill. It was on its face signed on behalf of the master by the time
charterers’ agents Penavico. It records shipment of 273,000 bags of rice at Ningbo in China for carriage to Cuba.
However, it is dated Aug. 5, 1998, and on the assumed facts loading was not completed until Aug. 8, 1998.
 
3. On this basis the stark question of principle I have to decide is whether the innocent holder for value of a bill of
lading is precluded from suing on the contract of carriage evidenced by that bill because the shipowners’ agents
(authorized generally to sign bills of lading on their behalf) have backdated the bill. It was accepted in the
assumed facts that Penavico had no actual or implied authority to insert a date other than Aug. 8, 1998 in the bill
of lading. That dealt with the question of authority as between the shipowner and its agent, but left entirely open
the question of apparent or ostensible authority i.e. the agents’ authority as it appeared to be to third parties.

 
4. I have mentioned more than once that these preliminary issues were to be tried on assumed facts. This gave
rise to a significant difficulty. The assumed facts were identified in the order dated Feb. 4, 2000. They were
apparently ordered on the basis that they were agreed or likely easily to be agreed. Nothing at all is said about
the shippers’ state of knowledge of the backdating. Further, the defence served on Oct. 4, 1999, while denying
that the bill of lading was issued with the authority of the shipowners (and thus raising the very question which it
was the purpose of the preliminary issue to resolve) was entirely silent on the topic of the shippers’ state of mind.
No allegations of misconduct or dishonesty were made against the shippers, although the points of claim clearly
pleaded that the bill of lading evidenced a contract of carriage between the shippers and the defendant as carrier.
There was then a claim made by the claimant under that contract, as subsequent lawful holder.
 
5. Despite all this, in the defendant’s skeleton argument, Counsel on its behalf made the allegation that "in the
present case the evidence suggests that the shipper was, in fact, party to the ante-dating". This allegation was
made by reference to one single document. A glance at the fax details on the copy of it reveals that this
document had been in the possession of the defendant’s solicitors since as long ago as Aug. 17, 1998. The other
and more recent document to which Mr. Smith referred me at the conclusion of the argument yesterday is not of
sufficient import to begin to provide an explanation for the course taken on behalf of the defendant.
 
6. It is apparent to me that it would be quite wrong for this Court to make a finding of this kind on such a tenuous
and procedurally irregular basis, at the hearing of preliminary issues on assumed facts. Quite apart from any
other consideration, this is a point on which the claimant might well wish to adduce evidence from the shippers,
the substantial Chinese national trading entity COFCO. Recognizing that the Court would not be prepared to
entertain such an approach, Counsel in his oral submissions modified his stance, and sought to persuade me
that the shippers should be treated as having known of the backdating because of the commercial context in
which the contract took place. Again this involves a finding of misconduct on the part of the shippers, and again
this does not form any part of the assumed facts. I decline to proceed on this basis. Nor can I blithely assume for
the purposes of an academic debate that the ship-pers did know. This would be altogether to alter the basis on
which the preliminary issues were originally ordered.

 
7. Turning to questions of principle, conceptually the starting point of the shipowners’ case was that it was not
sufficient for the bill of lading holder to rely on the general authority of Penavico to sign bills of lading where the
bill that was actually signed was unauthorized (because backdated). Reliance was placed, by analogy, on the
rule in Grant v. Norway, (1851) 10 C.B. 665. This was a bad start. The now notorious rule in Grant v. Norway,
authority for the proposition that even the master of the vessel has no ostensible authority to sign a bill of lading
for goods not on board, has been consistently criticized and distinguished, and was finally given the quietus by s.
4 of the Carriage of Goods by Sea Act, 1992. This abolishes it in accordance with the Law Commission’s
recommendation.
 
8. As to the suggestion by the shipowners that where both the consignee and the owner are innocent of
backdating there is no reason of practice or principle which requires the Court to prefer the interests of the
consignee, the simple answer is in my judgment that it was the shipowners who put their trust in the time
charterers’ agents by giving them the authority in the first place. It is they therefore who should be the loser.
 
9. Finally, the submission by the shipowners’ Counsel that an indorsee of a bill of lading who accepts bills
signed by an agent "takes upon himself the risk that the agent does not have the authority he claims to have" is
directly contrary to the basic approach under which international trade depends upon the accuracy of bills of
lading as negotiable instruments (see the judgment of Mr. Justice Colman in The Starsin, [2000] 1 Lloyd’s Rep.
85 at p. 97, col. 2).
 
10. In my judgment the simple and straightforward answer to all this is that the agents had ostensible authority
to issue bills of lading, and the shipowners are bound by the bill of lading as issued. The weight of the authorities
fully supports that conclusion. In view of the careful and exhaustive treatment of the point at issue by Mr. Justice
Colman in The Starsin to which I have just referred (and which chronologically comes last) I will take the
authorities fairly quickly.
 
11. In The Nea Tyhi, [1982] 1 Lloyd’s Rep. 607, the bill of lading stated that the cargo was loaded under deck
when in fact it was loaded on deck. Since the cargo was plywood, the point was somewhat crucial. Predictably
the plywood was damaged by rain water. Mr. Justice Sheen found that the charterers’ agents did not have actual
authority from the shipowners to issue such bill of lading, but that the charterers’ agents had ostensible authority
to sign the bills of lading on behalf of the master; accordingly that signature bound the shipowners as principals to
the contract contained in the bills of lading (see [1982] 1 Lloyd’s Rep. at p. 610, col. 1 to p. 611, col. 2). Although I
have to declare an historical interest in relation to that case (as does Mr. Justice Colman who appeared on the
other side for the shipowners) I have to say that I agree with it, and in particular with Mr. Justice Sheen’s
reluctance to extend the protection given to shipowners by Grant v. Norway.

 
12. In The Saudi Crown, [1986] 1 Lloyd’s Rep. 261 the same Judge was concerned with a bill of lading
backdated by 11 days from July 26 to July 15. As a result the plaintiff buyers could not meet the timing of their
own mid-August contractual commitments. Mr. Justice Sheen, consistent with, but without any reference to, his
own decision in The Nea Tyhi, held that the shipowner principal was bound by the apparent authority of the agent
who inserted the wrong date (see [1986] 1 Lloyd’s Rep. at p. 264, col. 1 to p. 265, col. 2). He expressed the
opinion, in relation to erroneous dates whether inserted negligently or fraudulently, that he could see no ground
for extending Grant v. Norway to protect shipowners from liability for errors of their duly appointed agents.
 
13. In The Hector, [1998] 2 Lloyd’s Rep. 287 Mr. Justice Rix (as he then was) dealt within a space of two weeks
from start to finish with a dispute as to whether shipowners were obliged to complete a voyage to Guatemala at
the behest of the bill of lading holders. The vessel was still in the Black Sea at the time of the hearing. The bill of
lading had not been negotiated down the chain. The date on the bill was three days prior to the completion of
loading. Mr. Justice Rix held that the bill was a charterers’ bill and not an owners’ bill. This was sufficient to
dispose of the case. However, he went on to express the obiter view that "it cannot in any event be said that a
time charterer has his owners’ usual or ostensible authority to sign a bill of lading not in conformity with mate’s
receipts or to sign a pre-dated bill of lading" (see [1998] 2 Lloyd’s Rep. at p. 298, col. 2).
 
14. As Mr. Justice Colman said in The Starsin, Mr. Justice Rix gave no explanation for his conclusion. I would
myself add that it is not apparent from the report of the case that Mr. Justice Rix was referred to either of the two
relevant decisions of Mr. Justice Sheen. No doubt this was due to the commendable speed with which the
litigation was conducted. Nor was Mr. Justice Rix considering the case of an indorsee for value of an apparently
regular bill of lading, as I am here.

 
15. Finally, in The Starsin, [2000] 1 Lloyd’s Rep. 85, Mr. Justice Colman was also faced with ante-dated bills of
lading. He also held that those bills were charterers’ bills. Thus they were contracts not binding on the
shipowners. His conclusion therefore was also obiter. He, however, grappled directly with the point, both in
principle and on the authorities, on the factual basis that the bills had been negligently completed by the local
agents (see [2000] 1 Lloyd’s Rep. at p. 94, col. 1 right through to p. 98, col. 1). He dealt expressly with the
opinion given by Mr. Justice Rix to which I have referred above. Mr. Justice Colman said that on the principles he
set out in his own judgment and on the weight of the authorities, he was unable to agree with Mr. Justice Rix.
 
16. It will be clear from what I have said so far that I agree with Mr. Justice Colman. It is pointless to read out all
over again his comprehensive reasoning, with which I entirely agree. I would just add one reason of my own. Mr.
Justice Colman’s conclusion was that the antedating of a bill of lading does not prevent it from being binding on
the shipowners, because the local agents have "ostensible authority to issue bills of lading to the shippers of
goods loaded onto the vessel" (see [2000] 1 Lloyd’s Rep. at p. 98, col. 1). Not only does such a conclusion reflect
the overwhelming commercial merits, but it is also entirely consistent as a matter of principle with the basis on
which the Carriage of Goods by Sea Act, 1992 abolishes the rule in Grant v. Norway. Section 4(b) expressly
enacts that the signature of a person -
 
. . .who was not the master but had the express, implied or apparent authority of the carrier to sign bills of lading
(emphasis added) . . .
 
is conclusive evidence of the shipment of the goods in favour of a lawful holder of the bill.
 
17. I would conclude by reading onto the transcript just a few sentences from Mr. Justice Colman’s judgment to
which I referred earlier without citing (at [2000] 1 Lloyd’s Rep. at p. 97, col. 2):
 
Not only does this conclusion give effect to the conceptual basis of ostensible authority but it also reflects a
further important policy consideration. That is that if an innocent shipper, indorsee or consignee could not rely on
statements on the face of a bill of lading as to such matters as the date of shipment and the absence of clausing
and was obliged to verify the accuracy of the date and the apparent good order and condition of the goods each
time he took a bill of lading, that would represent a most serious impediment to international trade which depends
so heavily on the accuracy of bills of lading as negotiable instruments.

 
I agree.
 
18. In the light of my own conclusion on the question of principle, it is unnecessary to consider the alternative
case on ratification, waiver and affirmation. On the assumed facts the shipowners continued with the voyage with
full knowledge of the incorrect dating, and it was only when they realized that they were not going to get any
more time charter hire that they took the point that the bill of lading was not binding on them. If those are the
facts, then the shipowners are taking as unmeritorious a position on ratification as they did on the point of
principle which I have just resolved against them.

 
19. I therefore answer the preliminary issues as follows:
 
(1) the defendant was party to a contract of carriage on the terms of the bill of lading from the time it was
issued;
 
(2) the claimant has the right to sue in respect of any breach of such contract;
 
(3) the facts set out in par. 12 of the points of defence are not capable as a matter of law of affording any
defence to claims for breach of any such contract of carriage.