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Maharaj v Burns Philp (SS) Company Ltd [1994] FJHC 56; Hbc0178j.89s (3 June 1994)

IN THE HIGH COURT OF FIJI
At Suva
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0178 OF 1989

Between:

IST DEO MAHARAJ
Plaintiff

-and-

BURNS PHILIP (S.S.) COMPANY LIMITED
Defendant

Mr. S. Sharma for the Plaintiff
Mr. S. Parshotam for the Defendant

JUDGMENT

This case concerns what has been described in the evidence as a rather "special" red Mazda 929 sedan registration number BP020 owned by the plaintiff and which was shipped from Suva to Sydney by the defendant company. Upon arrival at Sydney it was discovered that the plaintiff's car was extensively damaged during the sea voyage and was in effect a "complete write-off."

The plaintiff now sues the defendant company by its amended Statement of Claim for damages under 2 alternative causes of action in contract and tort. More particularly the plaintiff pleaded the terms of a written contract and claims:

"5. In breach of the said contract the defendant by its servants and agent by their wilful neglect and/or default caused the vehicle to be stowed in a manner such that when it arrived at Sydney aboard the Fua Kavenga it did so in a condition of substantial destruction and damage.

PARTICULARS OF DEFAULT AND/OR NEGLECT

(a) Failure to pack in a container for transportation;

(b) Failure to arrange for and ensure that packing materials were put around the vehicle during its voyage;

(c) Placing and/or failing to ensure that the vehicle was placed in safe area in particular failing to ensure that there was no likelihood of cargo falling onto the vehicle in the event of encountering heavy weather;

(d) Putting the vehicle near or in the vicinity and jumbo packs of dressed sawn timber which collapsed across the vehicle causing extensive damage;

(e) Failing to take such precaution as were reasonable in the circumstances to prevent the car being damaged by cargo collapse such that occurred in transit when the vessel encountered heavy weather."

The plaintiff's alternative claim in tort was pleaded in negligence as follows:

"6. In the alternative the plaintiff charges and the fact is that the defendant company its servant and agents owed a duty of care to the plaintiff to ensure the vehicle properly, securely safely packed prior to storage and shipment.

7. The Defendant in breach of its duty of care failed to ensure that the vehicle was properly, securely and safely packed prior to storage and shipment.
   

PARTICULARS

(i) The Plaintiff relies upon the particulars pleaded aforesaid;

(ii) Further and in the alternative the plaintiff relies upon the doctrine of res ipsa locquitor"

It is sufficiently clear from the above that 'insurance' has been left out of the plaintiff's particulars of breach albeit that it is averred as a term of the contract between the parties. The significance of this omission will become more obvious later when I come to deal with the evidence.

The defendant company for its part in its amended Statement of Defence pleads:

"2(a) At all material times, it was engaged in the business of freight forwarders and not carriers;

(b) Such business on the part of the defendant only covers the following work:

* Removal of goods to its depot.

* Supply of all necessary packing materials and packaging of goods.

* Arranging shipment.

* Delivery to Wharf.

* Payment of freight and outward charges and documentation.

and does not cover actual shipment."

As for the 'written contract' pleaded by the plaintiff the defendant company says:

"3(a) The purported contract referred to by the plaintiff is dated 8th August 1988 when the material time was in May 88;

(b) The purported contract referred to by the Plaintiff bearing No. Q160 was not a contract but a form of quotation used by the defendant in its business."

The pleadings then sets out the facts and terms of an oral contract which allegedly formed the basis of the dealings between the parties. Needless to say the defendant company denied any breach of contract maintaining that the plaintiff "knew or ought to have known that (it) was not a carrier."

As for the alternative claim in tort, the defendant company denies owing any 'duty of care' to the plaintiff "as alleged or at all" and in any event any 'duty of care' it owed to the plaintiff "extended only to delivering the said vehicle to the shippers in the same condition as it was when the defendant first received it from the plaintiff." So much then for the pleadings in this case.

At the outset I should say that I am not at all sure that the plaintiff has a claim against the defendant company in tort as pleaded. The distinction although a fine one was clearly stated by Greer L.J in his judgment in Jarvis v. Moy, Davies Smith, Vandervell & Co (1936) 1KB 399 when his lordship said at p 405:

"The distinction in the modern view for this purpose, between contract and tort may be put thus: where the breach of duty alleged arises out of a liability independently of the personal obligation undertaken by the contract, it is tort, and it may be tort even though there may happen to be a contract between the parties, if the duty in fact arises independently of the contract. Breach of contract occurs where that which is complained of is a breach of duty arising out of the obligations undertaken by the contract."

In this case the plaintiff has pleaded and relies upon, identical particulars of breach in both 'causes of action' in contract and tort under obligations which in my view are properly referable to and founded in contract rather than on any status obligation (not clearly pleaded) which the defendant company might have as a bailee for reward.

Furthermore it seems to me that the relationship which created the duty of exercising reasonable care and skill by the defendant company in its handling of the plaintiff's car arose out of contract and not otherwise. The plaintiff's complaint in essence is of a failure by the defendant company to do the very thing which it contracted to do. That was a contractual relationship, a contractual duty, and any action brought for failure to comply with that duty is, in my view, an action which is properly founded on contract.

This issue however was not seriously canvassed before me and I propose to say no more on it.

It is convenient at this stage to deal with the issue of 'res ipsa locquitur' which is relied upon by the plaintiff. No particulars have been pleaded but it is common enough ground that the plaintiff's vehicle was delivered to the defendant company at it's Walu Bay depot undamaged and was received in Sydney in an extensively damaged state.

In Russell v. London and South Western Railway (1908) 24 T.L.R 548 Kennedy LJ, explained the meaning of the evidential rule 'res ipsa locquitur' when he said at p 551:

"The meaning, as I understand, of that phrase is this, that there is, in the circumstances of the particular case, some evidence which, viewed not as a matter of conjecture, but of reasonable argument, makes it probable that there was some negligence, upon the fact as shown and undisputed, than that the occurrence took place without negligence. The res speaks because the facts stand unexplained, and therefore the natural and reasonable ... inference from the facts shows that what has happened is reasonably to be attributed to some act of negligence on the part of somebody; that is, some want of reasonable care under the circumstances. Res ipsa locquitur does not mean as I understand it, that merely because at the end of a journey a horse is found hurt, or somebody is hurt in the street, the mere fact that he is hurt implies negligence. That is absurd."

In Bolton v. Stone [1951] UKHL 2; (1951) AC 850 where a passerby was struck on the head by a cricket ball whilst standing on a road abutting a cricket ground and in which the plaintiff unsuccessfully sued the members of the cricket club. Lord Porter in rejecting the plaintiff's reliance upon the doctrine of 'res ipsa locquitur' in that case said at p 859:

"Where the circumstances giving rise to the cause of the accident are unknown that doctrine may be of great assistance, but where, all the facts are known, it cannot have any application. It is known exactly how the accident happened and it is unnecessary to ask whether the accident would have happened had there been negligence; the only question is, do the facts or omissions which are known and which led to the injury amount to negligence."

In this case the cause of the damage to the plaintiff's car is neither "unknown" or "unexplained". Indeed if I may say so the Cargo Survey Report (Ex 5) fully explains in my opinion the cause of the damage to the plaintiff's vehicle. In the circumstances bearing in mind the defendant company's plea of "perils of the sea" and the fact that the plaintiff's vehicle was undoubtedly in the actual possession of the carrier at the time that it was damaged, I am firmly of the view that the doctrine of 'res ipsa locquitur' has no application to the particular circumstances of this case.

It is common ground that although the plaintiff is the registered owner of the damaged vehicle he had no personal dealings with the defendant company in arranging the shipment of his car ostensibly because at the relevant time he was staying in Sydney. The arrangements were in fact made by the plaintiff's son Arvind Maharaj in Fiji. It is also not seriously disputed that the plaintiff's car was stowed undamaged on board the Pacific Forum Line vessel the 'Fua Kavenga' and during the course of the voyage from Suva to Sydney the vehicle was extensively damaged whilst on the vessel. The question that arises is: "Who is responsible to pay for the damage sustained by the plaintiff's vehicle?"

To answer that question it is necessary to consider more closely the 'contractual relationship' between the parties bearing in mind the defendant company's assertion that it contracted as a 'freight forwarder' and not as a carrier of the plaintiff's motor vehicle.

I am content to adopt the clear analysis of the nature of the duties and liabilities of a 'freight forwarder' as set-out in the judgment of Beattie J. (as he then was) in Emi (NZ) Ltd v. Holyman (1976) 2 NZLR 566 at 572, 573 where the learned judge said at p 572:

"What is the nature of the contract? Undoubtedly it is one for carriage of goods, but the crucial issue, in my opinion, is whether it is a contract by the defendants to effect carriage or merely to arrange carriage ... The defendant in this case does not fit precisely into the classification of a "forwarding agent" in quite the same sense that that term used to convey of being a person who carries on the business of arranging for the carriage of goods for other people. But while there may be a distinction between a forwarding agent and a carrier, the same person may carry on both activities at once. In other words it may be hybrid who not only carries but arranges for the onward transmission of goods. That is what the defendant says it was in this case. The plaintiff claims that the defendant did not merely act as a forwarding agent for the shipper but as a principal undertaking to effect carriage over the whole journey, depot to depot."

Then after citing 2 passages from para. 422 of 5 Halsbury's Laws of England (4th ed) the learned judge continued at p 573:

"If I find that the defendant's responsibility for the sea leg of the journey across the Tasman Sea was purely that of an 'arranger' then it appears it is not liable for the failing of persons with whom it makes contracts on behalf of its principal, unless it knew of those failings and ought to have taken action either to remedy them or at least to inform its principal so that damage might be avoided or mitigated: see Marston Excelsior Ltd v. Arbuckle Smith & Co. Ltd (1971) Lloyds Rep 306, 311 per Lord Denning MR. Phillimore LJ. observes that a forwarding agent is under no duty to supervise the actions of carriers whom he reasonably and properly expect to perform their normal obligations competently (ibid. 312). So, if the defendant was purely acting on the sea leg as a forwarding agent and can satisfy the court that all its activities up to the handing over of the seafreighter to the shipowner was without negligence, it should be absolved in the circumstances."

Finally in dealing with the 'duty of care' owed by the defendant in the case the learned judge said at p 575:

"A custodian for reward must exercise due and reasonable care for the safety of the articles entrusted to him. The standard of care and diligence imposed on him is that demanded by the circumstances of the particular case."

So much then for the law. I turn next to consider the evidence in the case which was both written and oral.

In this latter regard the plaintiff's son Arvind Maharaj testified that sometime in early April 1988 his father (the plaintiff) phoned him from Sydney and asked him to contact one Rajend Maharaj of the defendant company and arrange the shipment of the plaintiff's car to Sydney. Thereafter the witness testified to having 3 telephone conversations with Rajend Maharaj - the first about mid-April'88 then in early May'88 and finally, towards the middle to end of June'88. He also had two meetings with him in his Walu Bay office at the end of May'88 and in early June'88.

In particular Arvind Maharaj said in his examination in chief:

"I contacted Rajend Maharaj by phone about mid-April'88 and asked him on the phone I wanted to send the car to Sydney and asked him for a 'good quotation' and the documentation required. He said not to worry about sending car over because he knew the family and I asked him what documents would be required. He asked for a valuation of the car for insurance purposes and to check with TCB for clearance for export of car overseas.

I told him I would get the documents and contact him again. I went to Niranjans Autoport and obtained a valuation from them at $20,000.

Ex 8 (shown) This is the valuation received at end of April car was about 5 years old. Bought new for about $20,000 from Niranjans. I had especially ordered the car for my father. It wasn't a standard Mazda 929. It took 3 - 4 months to arrive. Price was negotiated by my father with Mr. Niranjan. Price offered was a 'very special price', dealers cost price because my eldest brother married Mr. Niranjan's daughter and so we are very close.

I obtained TCB clearance for export of car. In early May contacted Rajend Maharaj and told him I had the documents he requested. I asked him for a quotation. He gave us a 'special quotation' on the phone $1,930.00 $930 local charges included pick up of car, appropriate packaging and shipping documents and $1,000.00 was Sydney charges. Insurance was inclusive in the price.

I visited R. Maharaj at end of May'88 in his Walu Bay office. Gave him all the documents - valuation and asked him to prepare an official quotation. He told me to come back in a week's time. I met him again in early June in his Walu Bay office. He gave me the quotation and told me his office would call me in the near future. I received a copy of the quotation.

Ex 7 (shown) That's the document I received and given to me by Rajend Maharaj in his office. We discussed the document. Mr. Maharaj explained details of the quotation what it covered. It was signed by Mr. R. Maharaj in my presence.

date: "8/8/88"

I am certain I received this document at our meeting. I can't explain the date on the document.

Reverse side of document shows details of quotation we discussed.

Mid to end of June 1988 Rajend Maharaj called me to take the car to his office and I did that the next morning at Walu Bay office. I gave the car keys to Munesh in Mr. Rajend Maharaj's absence. He said: "Leave the keys with me I know what to do with it." After that I left it to Mr. Rajend Maharaj to deal with the matter."

The witness ended his examination in chief by saying:

"There was no company order given in respect of the shipment. Mr. Rajend Maharaj knew us very well and he didn't require an order. Formalities were kept to a minimum."

If I may say so this was the first occasion in the plaintiff's case that the matter of insurance was raised as part of the defendant company's alleged breach of contract. The pleadings however remained unchanged.

In cross-examination on this aspect the witness reaffirmed that he had obtained the valuation of the vehicle (Ex 8) at the request of Rajend Maharaj specifically for insurance purposes. He however did not complete any insurance forms in respect of the car nor did he expect to do so. He was certain that the 'special quotation' given him orally by Rajend Maharaj was 'inclusive of insurance' and in his own words:

"Rajend Maharaj was to take care of insurance. How he did it I don't know."

He acknowledged however that the written quotation (Ex 7) did not include a clear figure for insurance other than the rate, nor was "insurance" mentioned anywhere in the 'BREAKDOWN OF CHARGES' sheet attached to it and which they had apparently "discussed".

Finally in cross examination the witness denied not asking for insurance or declining an invitation to take it up.

In cross-examination about when? he received the quotation (Ex7) the witness although unable to account for the date "8/8/88" was adamant that he had received it prior to the car being shipped and furthermore he had entered into a contract with the defendant company on the basis of the quotation (Ex 7). Rajendra Maharaj the supervisor of the defendant company at the time (June'88) and a distant relative of the plaintiff, acknowledged that he spoke with Arvind Maharaj regarding the shipment of a car to Sydney and had given him some costs. He was very busy at the time and couldn't recall the precise number and details of their phone conversations or meetings or the exact costings he gave him other than the freight and origin charges. He also recalled giving him the marine insurance premium rates of: "4.5% of the value declared." He had not taken delivery of the plaintiff's car nor had he prepared any of the actual documentation for the shipment other than the quotation (Ex7).

In this latter regard the witness said in chief:

"Ex 7 (shown): I drew that up. It is the quotation in regards to shipment of plaintiff's vehicle. It was given to support our invoice to support our payment claim. It was given much later after shipment. The document was not given before the shipment to Arvind Maharaj.

Q: How come after shipment?

A: It was required from me. Just an enquiry to me and on that basis car was shipped and later when I was looking for our payment Arvind wanted a quotation to support his invoice.

Q: When was quotation given?

A: Quotation given on 8.8.88."

In cross-examination the witness agreed that the quotation (Ex7) recorded as best as he could then recall the terms of his telephone discussions with Arvind Maharaj. He frankly admitted that they had not complied with items 2 and 3 of the quotation which referred inter alia to packing materials and loading into containers, but he explained:

"Because of the cost factor the car was not required to go in a container."

He later learnt that the plaintiff's vehicle was sent on 'roll on/roll off' basis i.e. It was driven into the ship and stowed in an enclosed deck. Finally under cross-examination the witness denied supplying the quotation (Ex7) prior to shipment and reaffirmed that the quotation was raised because Arvind had asked for it when he (Rajend) had sought payment of the defendant company's account long after the car had been shipped.

The next and final witness called by the defendant company was Munesh Chandra the assistant supervisor at the material time and the officer who personally prepared the actual documentation for the shipment of the plaintiff's car namely, the Export Licence form (Ex1); the defendant company's Invoice (Ex2); the carrier's Bill of Lading (Ex3) and finally the Shipping Advice (Ex4).

It was he who had personally dealt with Arvind Maharaj 'over the counter' so-to-speak and it was he who had obtained the necessary RBF and Customs Department approvals and finally, he who had driven the plaintiff's vehicle from the defendant company's Walu Bay depot to the wharf where he handed the car over with the necessary documentation to the carrier's representative and obtained a 'clean' Bill of Lading (Ex3).

Asked about 'insurance', the witness said:

"I gave Arvind an Insurance Proposal form with the Export Licence form. Ex 26 (given). Yes a form similar to this. Arvind didn't want to have the vehicle insured because he didn't want to pay the extra premium. I retained the form.

I told him the figure quoted was a very special figure and covered shipment by LCL and not FCL. LCL means loose container load which means vehicle going on deck not in a container and he appeared satisfied."

In cross-examination the witness frankly admitted that he was not aware of the full details of the earlier discussions between Arvind and Rajend or what had been agreed. He didn't see any official quotation but he had discussed the freight rate with Rajend prior to Arvind's arrival because Rajend knew he wasn't going to be in when Arvind arrived with the plaintiff's car. So much then for the evidence in the case.

In so far as it is necessary to decide credibility in this case, having carefully considered the evidence and mindful of the demeanour of the witnesses I have no hesitation in preferring the evidence of the defendant company's witnesses to that of the plaintiff's. I was not only impressed by their frank admissions and concessions but their evidence had a 'ring of truth' and was independently supported by the documentary exhibits produced in the case and in my view more probably represented the truth as to the dealings between the parties.

In this latter regard despite the efforts of learned counsel for the plaintiff, I am satisfied that the defendant company's Quotation Register (Ex 27) is a normal company record properly maintained by the defendant company and accurately and reliably records the information contained in it. Needless to say I found the "possibilities" implicit in counsel's cross-examination on this aspect wholly unrealistic and palpably improbable.

I find that the contract between the parties was a wholly oral one and that the quotation (Ex 7) was not only raised but also supplied to the plaintiff's son sometime after the vehicle was shipped. Equally I am satisfied that although insurance was discussed between Arvind and Rajend no firm commitment was entered into by either of them.

I was unimpressed by the evidence of Arvind Maharaj as to when and the circumstances in which he obtained the quotation (Ex 7) or his denial that he had declined insurance when asked about it by Munesh.

Needless to say Arvind's request for a quotation prior to shipment sits uncomfortably in my view with the "arrangement" that clearly existed between the parties whereby "formalities were kept to a minimum". Furthermore although there was no question of the plaintiff's ability to pay for insurance I am equally convinced in my mind that Arvind had sought to ship the plaintiff's vehicle to Sydney as cheaply as possible even to the extent of declining insurance which would have almost doubled the 'Fiji charges' of shipping the plaintiff's car to Sydney, and I so find.

Even if I should accept that the contract between the parties had been reduced into writing in the quotation (Ex7) (which I do not), nevertheless, I would still have disallowed the plaintiff's claim.

To begin with the quotation (Ex 7) has not been formally accepted in the space provided at the bottom of the form nor do I accept that items 1 to 6 as pleaded necessarily formed the basis of the written contract between the parties having regard to the use of the conditional phrase: "... unless otherwise specified" and the attachment to the quotation (Ex 7) of a "BREAKDOWN OF CHARGES" sheet. Furthermore the supply of packing material and complete packing under items 2 and 3 are qualified by the words "necessary" and "as required" respectively.

As to the question of insurance the quotation (Ex 7) clearly indicates on its face that it:

"does/does not include

4. Insurance on goods moved."

and although the marine all risk insurance rate is included in the quotation and the word 'excluding' has been deleted in the phrase: "including/excluding insurance $........", no figure has been entered for a quotation which included such insurance. Unquestionably the BREAKDOWN OF CHARGES sheet did not mention or include insurance as an item.

Furthermore the STANDARD TRADING CONDITIONS printed on the reverse of the quotation (Ex 7) and subject to which all work was undertaken by the defendant company expressly provides:

"2. The Company is not a Common Carrier. Whenever the Company is instructed to undertake or arrange transport, storage or any other service, it shall be authorised to entrust the goods or arrangements to third parties subject to the latter's contractual conditions.

and

10. No insurance will be affected except upon express instructions given in writing by the customer and all insurances effected by the Company are subject to the usual exceptions and conditions of the policy of the insurance company or underwriter taking the risk."
    

In regard to Clause 2 (above) I note that the defendant company is described in its correspondence as "Burns Philip International Forwarding." It owns no ships and by Clause 11 (ibid) it limited its liability for "loss of or damage to goods" which:

"occurs whilst the goods are in the actual custody of the Company and under its actual control and unless such loss or damage is due to the wilful neglect or default of the Company or its own servants."

(my underlining)

In W. L. R. Traders (London) Ltd v. B & N Shipping Agency and Another (1955) 1 Lloyds Reps 555, Pilcher J. in dismissing the plaintiff's claim against the first defendant forwarding agent for failing to insure the plaintiff's goods during transit said at p 558:

"This is simply the ordinary case of a forwarding agent dealing, in the course of his business, with commercial goods, and I am quite satisfied on the facts of this case that it would be wrong to hold that there was any obligation at all upon the first defendant's either to insure or to make inquiries, or to jog the plaintiff's memory in regard to matters of insurance."

In the present case however I find from the evidence that the defendant company's representatives did make enquiries of the plaintiff's son "in regard to matters of insurance" but that was declined.

I also find that the defendant company's responsibility for the sea leg of the journey was purely that of an "arranger" and as such it is not liable for the failings of the carrier of the plaintiff's vehicle with whom it contracted on behalf of the plaintiff as the "consignee" and "shipper" of the car (See: Exs 3 and 4).

In all the circumstances I am not satisfied that the defendant company did contract to insure the plaintiff company's vehicle on the sea-leg of its journey from Suva to Sydney or that it was in any breach in its performance of the contract entered into with the plaintiff's son nor has it been established to my satisfaction that the defendant company was independently in breach of any relevant 'duty of care' in that regard.

Undoubtedly the manner and place in which the plaintiff's vehicle was stowed on board the 'Fua Kavenga' left much to be desired but that was something over which the defendant company neither contracted with the plaintiff to undertake or supervise nor in my view could it reasonably have insisted on a particular form of stowage in the carrier's vessel when that function was the sole responsibility of the sea carrier.

The claim is accordingly dismissed with costs to the defendant company to be taxed if not agreed.

(D. V. Fatiaki)
JUDGE

At Suva
3rd June, 1994

HBC0178J.89S