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DN Patel & Company v Burns Philp Shipping Agencies (Fiji) Ltd [1999] FJHC 167; HBA0009.1998 (12 November 1999)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL APPEAL NO: 0009 OF 1998

BETWEEN:

D.N. PATEL & COMPANY
Appellant

AND:

BURNS PHILP SHIPPING AGENCIES
(FIJI) LIMITED
Respondent

COUNSEL: Mr. M. Raza for Appellant
: Mr. S. Parshotam for Respondent

Hearing: 7th October 1999

Decision: 12th November 1999

JUDGMENT

This is an appeal from the decision of the Suva Magistrates Court to dismiss the appellant’s claim for $13,267.83 against the respondent, for unpaid storage costs for motor vehicles.

The grounds of appeal are as follows:

1. That the Learned Trial Magistrate erred in law and in fact in dismissing the Plaintiff’s claim in all the circumstances;
   
2. That the Learned Trial Magistrate erred in law and in fact in holding that the Defendant in all the circumstances contracted with the Plaintiff not of its own account but as agent for its disclosed principal C.F. International;
   
3. That the Learned Trial Magistrate erred in law and in fact in making several findings of fact at pages 2-3 of the judgment without any or any cogent evidence;
   
4. That the Learned Trial Magistrate erred in law and in fact in making findings as to “normal business practice” in Customs in the absence of any evidence;
   
5. That the Learned Trial Magistrate erred in law and in fact in failing to hold that in view of the evidence adduced the Defendant had assumed liability as Principal and not as agent.
   

The facts of the case are simple. The appellant was and is a company involved in business as customs shipping and forwarding agents. The respondent was and is a company involved in the same business as the appellant. The appellant owned a bonded warehouse for the holding of goods pending customs clearance.

On 16th June 1994 the respondent arranged to have 8 vehicles kept at the appellant’s bonded warehouse pending customs clearance. An import warehousing entry (Exhibit 1) was given to the appellant by an employee of the defendant. That document records the owner of the vehicles as C.F. International. On the third page of Exhibit 1, a note reads as follows: “O.K. to Bond in Bond No. 26, Bond Rent and Ins to be paid by Agent.”

On 28th June 1994, 4 of the 8 vehicles were cleared by Customs, the custom dues were paid, and the vehicles were released. The respondent paid the defendant $259.51 as bond rent and insurance on 27th July 1994. The remaining 4 vehicles were not cleared and remained in the custody of the appellants. The appellants demanded payment for bond rent, insurance and incidental charges totalling $13,267.83 by 23rd September 1996.

At the hearing of the appeal, Mr. M. Raza for the appellant submitted that the debt was owed by the respondent to the appellant. He said that the respondent was obliged to do twothings (whether as principal or as an agent) before the goods could be released; pay the appellant’s storage charges and get customs clearance. He said the issue of “bonding” was a contractual matter between the Customs Department and the warehouse owner, and was separate from the respondent’s contract to warehouse goods, with the appellant.

He submitted that the respondent could be sued for non-payment of warehouse dues even though it was an agent, and said that the respondent could always sue the owners of the goods to recoup its losses. He submitted that the Learned Trial Magistrate had failed to give weight to the fact that the respondent had a contractual duty to pay warehouse rent whether or not the Customs Department cleared the goods.

Mr. S. Parshotam for the respondent submitted that the appellant should have sued the owner of the goods, C.F. International. He said that the owners of the goods had been disclosed to the appellant by the respondent on 16th June 1994 before the vehicles were taken into the warehouse. He further submitted that there was ample evidence of disclosure, and of normal trade practice involving bonding and warehousing for the learned trial magistrate to conclude as she did, that the appellant had failed to make out its claim against the respondent. He further submitted that on the matter of the credibility of the witnesses, an appeal court should not overrule the findings of the trial magistrate who had heard the evidence.

The first question arising from the trial, and from the appeal, is; who is liable for the unpaid warehouse rent for the 4 vehicles? The second question depends on the answer to the first. If the respondent is liable, is it bound to pay the warehouse dues irrespective of customs clearance?

The learned trial magistrate found that the respondent was not liable. She held at page 3 of her judgment that the appellant dealt with the respondent with the knowledge that the principal was C.F. International. She accepted the evidence of Ravindra Chand (DW1) and Satendra Deo (DW2) as to the normal trade practice of customs agents. She accepted DW1's evidence that a customs clearance agent (such as the respondent company) can only act on the instructions of its principal, and that the importer is liable for payment of all charges including storage charges that result from delayed clearance. The learned trial magistrate accepted DW1's evidence that the respondent company was acting as an agent, and acting on the specific authority and instructions of the principal.

DW2's evidence supported the evidence of DW1. He said that there was no agreement between the appellant and the respondent to pay the bond rent and that the appellant knew that liability for bond rent was the owner’s and not the agent’s.

The learned trial magistrate was entitled to rely upon this evidence, and to reject the evidence of Suresh Patel (PW1), who gave a different version of normal trade practice. The record shows inconsistencies in PW1's evidence. In any event, PW1 agreed in cross-examination that the appellant knew that C.F. International was the owner of the goods.

The learned trial magistrate, rejected PW1's evidence when he said that the storage payment on 28th June 1994 was merely a payment on a bond rent account. She was entitled to reject that evidence, having heard the witnesses, and having drawn her own conclusions as to their credibility.

Having perused the court record I am satisfied that there was ample evidence, from the evidence, that the respondent company acted as agent to C.F. International, the owner of the goods and that the principal was disclosed to the appellant before the goods were warehoused.

The agent is therefore not liable for dues payable by the principal.

In Wakefield -v- Duckworth & Co (1915) 1 KB 218 a photographer who debited a firm of solicitors with the price of photographs, claimed that the solicitors were liable although the solicitors had disclosed the principal. It was held by the Court of Appeal that it was clear that the photographers knew that the solicitors were acting for a client. As such the photographers had recourse to the principal and not to the agent.

The rule that the agent is not liable personally for his principal’s debts may not be applicable where for instance the parties have agreed that the agent should be personally liable, or where custom is proved that the agent should be liable.

The evidence of the custom in warehousing and bonding was led by both the plaintiff and the defendant. Suresh Chandra for the plaintiff said that as a matter of custom, the bond charge and insurance was to be paid by the agent. He said at page 54 of the court record -

“It is a trade practice that upon payment of customs dues, customs clearance is then given and then bond, rent and insurance paid.”

At page 55 of the record, under cross-examination, Suresh Chandra said:

“Understanding of Customs Department was that dues to be paid first before clearance. What is then left isbond, rent and insurance. Bond rent paid then I give key to B.P. to remove cargo. That is the usual practice. If bond rent is long, then we charge our clients on interim basis, over time not in one lump sum. No discussion of bond rent took place in discussion with Satendra and Sashi Kant.”

The evidence of Ravindra Chand (DW1) was that bond rent and insurance charges were payable only after the goods had been cleared by customs. The evidence of Satendra Deo (DW2) was that Bond rent was payable once the cargo was removed. He said that there had been no agreement for advance rent.

At page 69 of the record, the learned trial magistrate said she preferred the defendant’s account of normal trade practice of customs agents. In the circumstances, there were no exceptional circumstances to suggest that the normal principle of the non-liability of agents who have disclosed their principles, should not apply. She accepted the evidence of Satendra Deo (DW2) that there had been no agreement for payment of Bond Rent by the agent. She correctly directed herself on the burden and standard of proof, and said she preferred the defendant’s account of the agreement and of normal trade practice.

On Ground 2 therefore, there was ample evidence to show that the appellant contracted with the respondent as agent. There is ample evidence from Suresh Patel himself that the appellants knew who the principal was, and knew that the respondents were acting as agents. Ground 2 is dismissed.

Similarly, the learned trial magistrate was entitled to accept the evidence, of the defendants witnesses in making her findings of fact. Grounds 3 and 4 are also dismissed.

In respect of Ground 4, the evidence was clear that the appellant knew that the respondents were agents. In the face of Satendra Deo’s denial that it was his signature underneath the phrase “Bond Rent and Ins to be paid by Agent”, which denial was accepted by the learned trial magistrate, there is no evidence that the parties had agreed to the contractual liability of the agents.

For these reasons, I find that the learned trial magistrate erred in neither fact nor law. The appeal is accordingly dismissed. The appellant is to pay the respondent’s costs to be taxed if not agreed.

Nazhat Shameem (Ms)
JUDGE

At Suva
28th October 1999