In the High Court of Kiribati
Civil Jurisdiction
Held at Betio
Republic of Kiribati

High Court Civil Case No. 33 of 2004

Between:

David Pine T/A Lightly Damp Shipping
Plaintiff

And:

Khans Shipping Co. Limited
Defendant

For the Plaintiff:	Mr Banuera Berina
For the Defendant:	Ms Jennifer Troup

Date of Hearing:	23 June 2005

JUDGMENT

On 5 September 2003 Khans Shipping Co. Ltd, a company registered in Fiji, entered into what was headed “- Lease with option to Purchase” with Lightly Damp Shipping of Abarao South Tarawa. The plaintiff, David Pine, trades under the name “Lightly Damp Shipping”.

It was agreed that Lightly Damp Shipping (the charterer) would hire the vessel “South Sea Mana” for five years from 5 September 2003, the charter sum “to be AUD$15,000 per month minimum”. Clauses 3 and 4:-

3.	A deposit of AUD$25,000.00 to be paid after the vessel reaches Kiribati and thereafter the Charterer to pay the owners the Charter sum as agreed before the 30th of each calendar month. In default of payment the owners to have the right of withdrawing the Vessel from the service of the Charterers without noting any protest and without interference by any court or any other authority or formality whatsoever. In addition to the above remedy the owners may charge interest at the rate of AUD$100.00 per day on all overdue Charter payments.

4.	The Charter it to have the vessel fully insured while the vessel is under Charter with the interest of the owners noted.

There were several provisions putting responsibility on the charterer to maintain the ship in a seaworthy condition etc.

At the beginning of the hearing I suggested to counsel they should hand up immediately the documents relevant to claim and counterclaim. Mr Berina tendered the agreement. I noticed on the front page:-

This Charter Party agreement shall be governed and constructed exclusively by the Laws of Fiji and the parties hereto agree that only the Courts in Fiji shall have jurisdiction to entertain any action in respect of this agreement and on matters flowing this agreement.

Lord Atkin expressed the rule regarding the proper law of the contract in this way:

The legal principles which are to guide an English Court on the question of the proper law of a contract are now well settled. It is the law which the parties intended to apply. Their intention will be ascertained by the intention expressed in the contract if any, which will be conclusive. (Rex v International Trustee for the Protection of Bondholders Aktiengesell-schaft [(1937) AC 500@ 529].

The rule is quite definite although its effect has been softened since by courts as they have distinguished individual cases: courts have arrogated to themselves a discretion as to the proper law of the contract.

Fortunately I did not have to worry about that. I raised the matter with counsel and each agreed that her and his client wanted the case disposed of in Kiribati applying the law of this country.

Counsel agreed to this note which I made:-

Both parties through their counsel, Mr Berina and Ms Troup, waive the stipulation on the face of the document headed “This lease with option to Purchase AGREEMENT made this 5th day of September 2003”.

Counsel agree in asking that I ignore it and come to a decision applying the law of Kiribati and assuming that the High Court of Kiribati has jurisdiction to entertain the action in respect of the agreement and on matters flowing from it.

The charterer, David Pine, took proceedings claiming that when the vessel was seized (as it was on 19th May 2004) a number of his items were on board and he had not been able to recover them. He claimed $20,042.94 with interest.

The defendant denied the claim and counterclaimed $101,616.80 interest and the return of its items claimed to be missing from the vessel.

This brought forth a further claim from the plaintiff for “loss of income - $120,000”.

The plaintiff admitted that he had not been able to keep up his payments due under the lease. He even went as far, in cross-examination, as to admit that the defendant had been “entitled to take back the vessel”. This is a matter for the court but as the plaintiff was correct I mention it.

There were two witnesses, the plaintiff and Sultan Mohammed (“Bob”) Khan, a director of the defendant company. I was not much impressed with either gentleman and do not accept, even on the balance of probabilities, any assertion from either unless it is supported by an admission, by the agreement itself or by the correspondence between the parties. Each went too far in trying to justify his actions.

What is quite clear – the plaintiff admitted it and it is clear on the face of the correspondence – is that the plaintiff was far behind with his payments. Just how far I cannot be sure but hopelessly far, more than far enough to justify the defendant in taking back the vessel under clause 3 of the agreement. Even more the plaintiff had not insured the ship as he was bound to do under clause 4.

The plaintiff pleaded estoppel: that a fresh arrangement was made in April 2004 to give him three months’ grace. That was only on condition that he made the agreed reduced payment of $10,000 per month (instead of $15,000). The plaintiff did not make the payment and the plea of estoppel fails.

The plaintiff says he was about (on 20 May) to embark on a profitable arrangement with Solar Energy for the use of “South Sea Mana”. The loss of the vessel the day before frustrated him. Had he been allowed to go ahead all would have been well: he would have been able to make his payments. The implication was that the defendant was very mean and nasty to have seized the ship at that time but more than that the plaintiff complained that he had paid Bob Khan’s fare to come up from Fiji and half his living expenses. All that may be so but under the terms of the agreement the defendant had ample justification to seize the vessel.

Given that by the 19th May the parties were at arms length it is less surprising than unfortunate that there was no attempt at a take over/hand over of the vessel: no account was taken of what was whose on board and what had been removed which should have been left.

With two exceptions it is impossible on the state of the evidence for me to assess damages item by item. What was taken and what was left, what had been taken away and should have been brought back, is impossible to determine, let alone to value. Putting a list of things and their alleged value in a Statement of Claim does not prove anything: the loss of each item must be proved separately and an assessment, desirably on expert evidence, made of its value.

Bob Khan did admit that “four carton fabric/clothing wear, three bags F/chips” may have been on board. The plaintiff claimed they were his and were for sale on outer islands. He claimed $8,657.00 for them. While not strictly proved the defendant did not dispute the value and I think I am justified in allowing that item in favour of the plaintiff.

The other exception favours the defendant. Exhibited as D3 and D4 respectively:-

Payments received to date

02/01/04		AU$2,400.00 (FJ$3,000.00)
07/01/04		AU$3,000.00
23/01/04		AU$3,500.00

17/02/04		AU$5,000.00
19/02/04		AU$3,000.00
23/02/04		AU$3,000.00

1/03/04		AU$4,000.00
22/3/04		AU$8,000.00

Statement of Accounts

Balance of Charter Deposit			FJ$13,500.00
Balance fur fuel and equipment		FJ$8.521.00
Total Balance FJD				FJ$22,021.00
Exchange rate @.80				AU$17,617.00

Charter payments from Dec 03 to
April 04 @ AU$15,000.00 per month
					TOTAL	AU$75,000.00
Total Balance						AU$92,617.00
Payments received to date				AU$31,900.00

GRAND TOTAL BALANCE AS @ 30/4/04	AU$67,717.00

These were prepared by the defendant and sent to the plaintiff who did not challenge them. Mr Berina wrung an admission out of Bob Khan that David Pine had paid another $5,500 in May but that is all.

What am I to do? On the balance of probabilities I find for the plaintiff in the sum of $8,657 on the claim: on the counterclaim for the defendant in the sum of $62.217.

The defendant did not prematurely seize the vessel as claimed in paragraph 6 of the Defence to Counterclaim and Amended Claim. The additional claim for “loss of income, $120,000” fails altogether.

In summary the plaintiff succeeds to the extent of $8,657 and the defendant to the extent of $62,217.

I shall hear the parties as to the orders I should make.

Dated the …………………….. day of July 2005

THE HON ROBIN MILLHOUSE QC
Chief Justice