IN THE HIGH COURT OF FIJI
(AT SUVA)
Civil Jurisdiction

CIVIL ACTION NO. 276 OF 1991

BETWEEN:

DANZAS PTY LIMITED
Plaintiff

- and -

WILLIAMS & GOSLING LIMITED
Defendant

- and -

ATLAS TRADING COMPANY LIMITED
Third Party

P.I. Knight for the Plaintiff
H. Lateef for the Defendant
G.P. Lala with G.P. Shankar for the Third Party

JUDGMENT

The Plaintiff and the Defendant are both companies carrying on the business of freight forwarding. The former has its head office in Melbourne Australia while the latter is based in Suva.

The Third Party is a trading company which the Defendant alleges ordered a quantity of leather which was sent from Italy to Fiji via Australia. The Plaintiff having taken delivery of the leather in Australia then shipped it to Fiji together with another quantity of Italian leather ordered by Island Furniture (Fiji) Limited. The Defendant had previously acted as the Plaintiff's agent and the two shipments of leather were consigned to them under cover of an air waybill N0.086-7183-7640.

Accompanying the two shipments of leather were two further air waybills numbered AWB75475 and AWB75476. These were issued by the Plaintiff and named the Italian Suppliers of the leather as the shippers and Island Furniture and the Third Party as the respective consignees. 

The two air waybills (Documents 6 and 7 in the agreed bundle) bore the following endorsements. First they each bore two large rubber stampings "C.O.D" and second in the box marked "Special Instructions" the following words had been typed:

"Special Instructions. ATTENTION C.O.D.
PLS RELEASE GOODS AND DOCS TO CNEE ONLY
AGAINST IRREVOCABLE PAYMENT OF CNOR'S INVOICE
WHOSE AMOUNT MUST BE SENT US BY BANK GUARANTEED
CHEQUE AT CNOR'S ORDER. CHARGES-COMMIS. FOR
CNEE'S ACCOUNT. AMOUNT TO REMIT USD. 33,800.88
(For 3rd Party) USD 19,152.00 (for Island Furniture)".

Unfortunately these instructions were not followed. The Defendants allowed the leather to be delivered out of their hands both consignments eventually ending up with Island Furniture where they were made up into furniture which was exported to Australia before Island Furniture went into Receivership.

The Plaintiff issued proceedings against the Defendant seeking damages for alleged breach of contract and negligence. The Defendant denying both claims in turn proceeded against the Third Party seeking indemnity in case it should be found liable to the Plaintiff. The basis for the indemnity sought was that the leather consigned under cover of air waybill N0. AWB75475 had been consigned to the Third Party.

The action came on for hearing before me on 18 May. Counsel for the Third Party immediately made a preliminary application for the Third Party to be dismissed from the suit on the ground that the pleadings did not disclose that the Defendant had any cause of action against the Third Party. I rejected the Application on two grounds. First, I was of the view that such an Application should not be made on the day of the trial (see Cross v. Earl Howe (1893) 62 L.J. Ch. 342; Fletcher v. Betham (1893) 68 L.T. 438) and secondly, I was not immediately satisfied that the Defendant did not have a cause of action against the Third Party. Having dismissed the Application I heard the evidence.

At the conclusion of the evidence I had expected Counsel to address me in the usual manner but Counsel for the Third Party in particular urged me to allow Counsel to make written submissions instead. Counsel for the Defendant supported the Application and Counsel for the Plaintiff acquiesced. With some hesitation I agreed to receive written submissions.

Although there is much to be said in favour of written submissions when the only question before the Court is one of law I have not before come across an Application to make written submissions at the close of a trial. My agreement to the course proposed should not be seen as a general endorsement of this practice.

Eventually written submissions were filed by all Counsel. They were helpful and comprehensive and forming as they do part of the record they enable me to deal with the issues before me rather more generally then would otherwise have been the case.

The Plaintiff's action against the Defendant is, as has been seen, in both contract and tort. The defence to the claim for breach of contract is to deny any contractual relationship, the defences to the action in tort are the doctrine of voluntary assumption of risk and contributory negligence. There was also a further defence based on estoppel.

In my view the evidence clearly indicated that the Plaintiff and the Defendant were contractually bound by an agency relationship. While there was no written Agreement between them there was no dispute that the Defendant, Fiji's largest freight forwarding company, had acted as agent for the Plaintiff since the late 1980s. By performing as agent for the Plaintiff upon acceptance of their written instructions contained in the air waybills received by them they accepted the Plaintiff's offers by conduct (see generally Chitty on Contracts 24 Edn para. 53 and also Bowstead on Agency 15 Edn pages 42 et seq).

In my view it is equally clear both from the evidence and from the contractual relationship between them that the Defendant owed the Plaintiff both a tortious and a contractual duty of care and that the Defendant is prima facie liable to the Plaintiff for breach of both duties (see Midland Rubber Co. Ltd v. R. Park & Co. [1922] 11 LlL.Rep. 260 and Bowstead page 144 et seq).

It follows that whether one looks at the matters complained of by the Plaintiff either as breach of contract or breach of tortious duty of care, damages are recoverable and contributory negligence may amount to a partial defence (see Law Reform (Contributory Negligence and Tortfeasors) Act (Cap.30) and Basildon District Council v. J.E Lesser (Properties Limited) [1984] 3 WLR 812).

The central question therefore as between the Plaintiff and the Defendant is whether the Plaintiff has proved that the Defendant acted negligently. 

Much was made by the witnesses of the meaning of the stamp or term "C.O.D.". On behalf of the Defendant it was said that such shipments were so rare as to be almost unknown, that C.O.D. bore a different meaning in Fiji from that used overseas, that the Defendant should have been forewarned by the Plaintiff that a C.O.D. delivery was on its way and that in any event the air waybills received by the Defendant were poor copies, were hard to read and decipher.

All this was rejected by the Plaintiff. Their principal witness Mr. D'Aprile while admitting that he could not recall ever sending a consignment to Fiji C.O.D. before said such transactions were fairly common. As to the meaning of C.O.D. the special instruction clearly typed on to the air waybill only had to be read and followed. He denied that C.O.D. had any other meaning apart from that meaning which was internationally accepted in other words that all charges specified in the air waybill were to be collected by the forwarding agent before the goods were released. He saw no reason to forewarn the Defendant that a C.O.D. shipment was on the way. If an agent refused to accept the goods on that basis then it was free to do so.

In my view there were some force in both these arguments. On the one hand I am satisfied from the evidence that we have a somewhat exceptional method of consignment, C.O.D, arriving without forewarning. Such forewarning is recommended by the TT Club a very large London-based mutual transport insurance company (see Document 36) and is obviously a sensible and prudent step to take. But on the other hand the air waybills contain clear and specific instructions which, had they been followed would have prevented what occurred from happening. Had the Defendant been in any doubt about the meaning of the term "C.O.D." or the meaning of the Special Instructions then it only had to contact the Plaintiff to discuss the matter.

In his evidence Mr. Aidney, one of the Defendant's directors, admitted that the copies of the air waybills received by the Defendant and retrieved by him from his files and exhibited together as Exhibit 3 were quite legible. He admitted that his staff had made a mistake in not following the instructions contained in the air waybill. He said "we are dealing with Fiji - our employees are not always as good as we would wish".

As I see it both the Plaintiff and the Defendant must share some blame for what occurred. While there is clearly no contractual duty to forewarn a C.O.D. delivery such a delivery may present the consignee with very real difficulties. In the words of Document 36:

"The risks run by undertaking to collect the value of the consignment is out of all proportion to the profit made by the transaction ...... the best advice may be not to undertake such collections".

In a small country such as Fiji where C.O.D. deliveries are very rare and where the staff handling such deliveries are not as skilled or sophisticated as one might wish the risks are even greater.

In my view the Plaintiff should have forewarned the Defendant for reasons of pure prudence that the shipment was arriving C.O.D. Such a forewarning is hardly a difficult exercise: all that is required is a telephone call or a facsimile message.

In the face however of Mr. Aidney's admission that the Defendant had made a mistake liability by the Defendant really cannot be avoided.

On all the evidence before me I conclude that the Defendant was 75% responsible for what occurred and the Plaintiff 25%. As between them the only remaining question is whether the Plaintiff is estopped from making its claim as a result of an offer made by Island Furniture and accepted by the suppliers of the leather to pay for the goods in instalments. Of course no payments were made. 

I think this defence can be shortly taken. In my view the penultimate paragraph of the Plaintiff's written submissions adequately, comprehensively and correctly deal with the points raised. I accept the Plaintiff's submissions and reject those of the Defendant.

I turn finally to the Defendant's claim for indemnity made against the Third Party. The Third Party notice is very brief. Following the explanatory first paragraph the second and last paragraph of the notice reads as follows:

"2. - The Defendant's claim against the Third Party is based on the ground that goods to the value of US$32,544.00 (Thirty two Thousand Five Hundred Forty four dollars United States) was consigned to the Third Party by the Plaintiff".

From the documents placed before me and in particular documents 1, 3, 4, 7 and 22 it is perfectly clear that the goods consigned to the Third Party were originally ordered by it. In Document 22 and in evidence the Third Party's managing director sought to draw a distinction between ordering the goods on a Letter of Credit and receiving them C.O.D. I found that argument as unimpressive as his general demeanour in the witness box. The problem however, as I see it, is assuming I were satisfied that the Third Party had in fact ordered the goods consigned to it how would that make the Third Party liable to indemnify the Defendant? 

The general principles giving rise to a right to indemnity are set out in paragraph 16/1/4 of the 1988 White Book. From the evidence before me and from Document 22 it is clear that when the goods arrived in Fiji the Third Party signed a document (a copy of which I was not shown) with the endorsement "goods sold to Island Furniture Limited". Following that signature the goods were released by the Defendant to clearing agents who delivered them to Island Furniture. For Solicitors for the Third Party to state in their letter of 28 February 1992 (Document 30) that "our clients were not consulted" is plainly incorrect and misleading. For the Third Party in document 22 to state "the goods were not shipped against our L/C (Letter of Credit) and we had no further interest" is in my view equally misleading. If the Third Party did not consider that it had any interest in the goods at all then why take the action of describing them on the invoice as having been sold to Island Furniture?

As the hearing proceeded it became clear that the basis of the Defendant's claim was not merely that the goods had been consigned to the Third Party but that in addition, having received the goods or been placed in a position to receive them they were then assigned by the Third Party to Island Furniture. The matter being complained of is not the ordering of the goods but their assignment. Confirmation of this is to be found in pages 12 and 13 of the Defendant's written submissions.

Unfortunately for the Defendant none of this was pleaded. Had it been pleaded then prima facie the Defendant would have been entitled to be indemnified (see for example Birmingham & District Land Co. v. L & N.W. RLY [1886] (34 Ch. 261, 273 - 275). In the absence of relevant pleadings I do not however see how the Defendant can recover. The Rules of pleadings are strict: "Such facts should be stated in a Statement of Claim as if admitted would constitute the whole of the Plaintiff's case". (The Hardwick [1883] 9 PD 32).

In this case whether the fact that the goods were ordered by the Third Party is admitted or proved appears to me to make no difference. The mere fact of ordering the goods cannot in law give rise to a right to indemnity. If I were to find for the Defendant on the basis of facts which were proved at the trial but which were not pleaded then I would simply be reversed on appeal (see Pawding v. London Brick Co. [1971] 4 KIR 207 and Lloyde v. W. Midlands Gas Board [1971] 1 WLR 749). In my opinion the Defendant's claim against the Third Party must fail.

In summary there will be Judgment for the Plaintiff for 75% of the sum claimed. The Defendant's claim against the Third Party is dismissed.

M.D. SCOTT
JUDGE

7 September, 1994
HBC0276.91S