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Stinson Pearce Ltd v Airro Shipping Agency Ltd [2010] FJMC 159; Civil Case 07.2010 (6 August 2010)

IN THE RESIDENT MAGISTRATE'S COURT AT SUVA

Civil Case No: 07 of 2010

Between

STINSON PEARCE LTD a duly incorporated company of Suva, Fiji
First Plaintiff

And

MOTIBHAI & COMPANY LTD a duly incorporated company of Suva
Second Plaintiff

And

AIRRO SHIPPING AGENCY LTD a duly incorporated company having its registered office situated at 3rd Floor, JBE Complex, Edinburgh Drive, Suva.
Defendant

For Plaintiff: Mr. Prasad N.
For Defendant: Mr. Prasad D.
Date of Hearing: 06th August 2010

JUDGMENT

1. Plaintiffs had filed their claim against the defendant seeking refund of the sum of $5203.83 being the money paid to Fiji Inland Revenue and Customs Authority (FIRCA) due to the incorrect entries made by the defendant.
   
2. According to the Plaintiffs, due to the sole negligence of the Defendant plaintiffs had to pay the above mentioned sum to FIRCA, and since the defendant did not apply for re-fund of the excess Customs duty within one year from the date of the payment as per the requirements of sec. 96(1) and (2) of the Customs Act 1986, plaintiffs are further statute barred from claiming refund.
   

Plaintiffs' case

3. Summary of the evidence as follows:
   
   1. Both Plaintiffs are retailers of duty free and consumer goods.
      
   2. Defendant is the clearing agent for the plaintiffs.
      
   3. Plaintiffs at all time relied on the defendant's expertise on preparing necessary documents.
      
   4. Due to the wrong entries made by the defendants, plaintiffs had to pay duty on some items which are supposed to be duty free.
      
   5. Sometimes after payment of duty, plaintiffs had come to know about the wrong entries and had requested the defendant to make it correct.
      
   6. Defendant had agreed that the error had been made and had revised the wrong entries on plaintiffs' behalf. (Wrong entries are on Single Administrative Documents (SAD) in documents 9 / 10 and 11 – Corrected entries on SAD in documents 12 and 13 of the agreed bundle of documents)
      
   7. On 01st July 2008, one Anesh from defendant's company through e-mail confirmed that they are aware of the error made and admitted that the defendant is liable to apply for refund. (Content of the e-mail not disputed by the defendant's counsel – see document 1 of the agreed bundle)
      
   8. Documents 2 to 8 of the agreed bundle confirmed the follow-up procedure with the defendant.
      
   9. On 03rd July 2009, Mr. Batnagar from defendant's company requested for cart note (document issued by Customs for goods) through an e-mail (document 7 of the bundle).
      
   10. First e-mail from Anesh was on 01st July 2008 and e-mail requesting for the cart note was on 03rd July 2009. Between this period no action had been taken by the defendant as agreed by the first e-mail.
       
   11. Documents 17 to 20 of the bundle confirm the follow-up done by the plaintiffs.
       
   12. According to the document 26 of the bundle, cart note is a document which acknowledges the transfer of goods under Customs control and supervision and it is at all times retained by the Customs. Therefore, defendant's request for the cart note to be given to the Customs does not make any sense.
       
   13. According to Yasmin at Customs, even on 22nd July 2009, defendant had not lodged any claim to Customs and the claim had been time barred.
       

Defendant's case

4. Summary of evidence as follows:
   
   1. Defendant is the agent for Freight Services Ltd. and on their behalf had prepared SAD for plaintiffs.
      
   2. After preparing SAD, sent to plaintiffs for verifications.
      
   3. Not been instructed as to which goods were for the duty free shop and which were for the retail shop.
      
   4. Admitted preparing SAD for duty paid goods and plaintiffs had prepared the check and paid directly to the Customs.
      
   5. Revise entry had made on 27th March upon the request of the plaintiff.
      
   6. As Customs authority agents, defendant is bound to make any wrong entries correct.
      
   7. Refund approved subjected to 03 conditions. (1. Goods have to be 100% examined / 2. Goods have to be delivered under Custom's supervision / 3. Issuance of cart note as evidence)
      
   8. It is plaintiffs' responsibility to meet the conditions.
      
   9. Cart Note is a partial requirement. Defendant did not deliver goods.
      
   10. Check for payment prepared by the plaintiffs, include the duty plaintiffs had to pay to the Customs. Therefore, if defendant had made a mistake, plaintiffs' should have seen it whilst preparing the check.
       
   11. When preparing the check plaintiffs knew that they are paying for something they should not have paid.
       
   12. Defendant did not know which portion of goods for duty free and there was no correspondence between parties to that effect.
       
   13. Plaintiffs had never paid defendant for their service and never had any contract with the plaintiffs.
       

Issue to be resolved

5. Should the defendant held responsible for the loss sustained by the plaintiffs?
   
6. Defendant did not dispute the entry made in SAD and e-mail correspondence between parties regarding the refund.
   
7. Defendant categorically mentioned that their service had never been hired by the plaintiffs and they have never admitted any negligence on their part.
   
8. Plaintiffs' witness was not aware of the fact that they hired defendant's service through another Freight agent and did not challenge the defendant's version in this regard.
   
9. Following facts had been proved by the evidence.
   
   1. Defendant prepared SAD on behalf of the plaintiffs.
      
   2. However, the plaintiffs and the defendant did not have any service contract.
      
   3. After preparing SAD, it has been sent to plaintiffs for their approval and plaintiffs had not sought to deny this position.
      
   4. Plaintiffs are engaged in duty free and retail business.
      
   5. No evidence to show that the plaintiffs gave clear instructions to the defendant regarding the duty free goods.
      
   6. After receiving the SAD, plaintiffs prepared the check and paid directly to the Customs.
      
   7. Check dated 11th March 2008 (Document 22 of the agreed bundle) had been prepared clearly indicate separate entries for fiscal duty/ vat / service fee and Oakley duty claim.
      
   8. When preparing the check, plaintiffs were aware that they are paying duty to the items.
      
   9. Until 30th June 2008, there is no correspondence to show that the plaintiffs had raised the issue of paying of duty for goods which are duty free with the defendants. (Document 1 of the agreed bundle)
      
   10. Document 2 of the agreed bundle comprise of two e-mails dated respectively 11th July 2008 and 21st July 2008 sent by one Sanjeev Kumar on behalf of the plaintiffs with a copy to the defendant. Both those e-mails were sent to 05 other people.
       
   11. Thereafter until 14th May 2009, there is no evidence to show, either that Sanjeev Kumar or any of the other 05 employees of the plaintiffs had made any attempt to follow up with the defendant about the refund on SAD.
       

CONCLUSION

10. According to the evidence before this Court, it is clear that the Plaintiffs and Defendant did not have any direct contract between parties. However, after preparing the documents on behalf of the plaintiffs, defendant had forwarded those documents for their perusal. There is no evidence to show that the plaintiffs had found any errors in those documents.
    
11. Since the plaintiffs are engaged in both duty free and retail sales, it is up to the plaintiffs to show that they have specifically advised the defendant on the consignment as to which part of the good are to be duty free. There is no evidence to show that the defendant had been advised in this regard.
    
12. It is established that the plaintiffs themselves had prepared the check to the Customs and error had not been discovered until 30th June 2008.
    
13. After the first e-mail dated 01st July 2008, there is no evidence to show that the plaintiffs or their agent had made any attempt to follow up with the defendant regarding the process until 14th May 2009.
    
14. Even though the receiver of the first e-mail Sanjeev Kumar, said to have left the plaintiffs, two e-mails in document two of the agreed bundle shows that he had informed 05 people regarding the request for refund.
    
15. Therefore, it is evident that the plaintiffs had failed to show due diligence not only in one occasion but in few occasions until they realized that the claim is time barred with Customs.
    
16. I conclude that it is not the negligence on the part of the defendant but the sole negligence on the plaintiffs made them to part with the sum claimed in this action. If the plaintiffs were vigilant and careful of their dealings, this claim could not have been there in the first place.
    
17. Plaintiffs' claim dismissed accordingly.
    
18. Plaintiffs are to pay the cost of this action which I summarily fix for $ 500 to the defendant within 21 days.
    
19. 28 days to appeal.
    

On this Tuesday the 28th day of September 2010

Kaweendra Nanayakkara
Resident Magistrate