Conversion claims based on unauthorised creation of lien on cargo

Where a bill of lading holder fails to take delivery within a reasonable time, the carrier may be entitled to land and store the goods at the cost of the bill of lading holder. This common-sense position accords perfectly with the Bill of Lading Act 1856, from which several Nigerian court decisions on cargo claims have derived inspiration.

Bill of Lading Act

The Bill of Lading Act provides that consignees or endorsees of bills of lading to whom the ownership of the goods mentioned therein will pass, on or by reason of such consignment or endorsement, will also have all rights of suit transferred to and vested in them. In addition, they will be subject to the same liabilities in respect of such goods as if they had contracted on the bill. Thus, an endorsee of a bill of lading may become liable to the carrier for the cost of warehousing the goods while it is in breach of the duty to take delivery of the goods from the carrier.

Tort of conversion

The tort of conversion connotes deliberate dealing with chattel in a manner inconsistent with another party’s right, whereby the other party is deprived of the use and possession thereof. As Justice Males pointed out in the English case Sang Stone Hamoon Jonoub Co Ltd v Baoyue Shipping Co Ltd, a shipowner – as a bailee of the cargo with an attendant duty not to convert it – may be liable for conversion if it creates a lien on the cargo without the owner’s authority. However, where an owner has authorised a bailee to deliver goods into storage, it must be taken to have also authorised the creation of a lien where reasonable and foreseeable under the storage contract.

Although Sang Stone Hamoon Jonoub Co Ltd is only persuasive in Nigeria, it is an important reminder to cargo owners that conversion claims based on the creation of unauthorised liens on cargo are maintainable against carriers, but only in specific circumstances. For instance, where a carrier lands the cargo at a place other than the agreed discharge port, any liens on the cargo exercisable by port authorities or terminal operators should give rise to a cause of action in the tort of conversion. This is in addition to the obvious breach of contract claim available to the cargo owner.
Source: Akabogu & Associates

Keerthika

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