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International Watersport Management Ltd v Pearl Creations Company Ltd [2002] TongaLawRp 32; [2002] Tonga LR 214 (23 July 2002)

IN THE COURT OF APPEAL OF TONGA
Court of Appeal, Nuku'alofa

C 10/2002

International Watersport Management Ltd

v

Pearl Creations Company Ltd

Burchett, Tompkins, Beaumont JJ
18 July 2002; 23 July 2002

Contract – authority to agree terms of charter – master of vessel has authority

A vessel named Deep Blue, owned by the appellant, was chartered to carry a cargo of oysters from Nuku'alofa to Vava'u on the evening of 20 October 1999. The respondent and the master of the vessel agreed to a term of the charter that the voyage would be completed overnight in a time of approximately eight to ten hours. In fact, departure was two hours late, the voyage took at least 22 hours, and even so the vessel, having arrived at low tide, was forced to divert to Neiafu, some distance by road from Lisa's Beach, where the cargo was to have been discharged. The very long period at sea, throughout the day as well as the night, proved extremely deleterious to the oysters, which were intended for use in the cultured pearl industry in Vava'u. The sole question in the appeal related to the authority of the master of the vessel to agree on a term of the oral charter of Deep Blue.

Held:

1. When the appellant's managing director declared that Deep Blue was available for charter to carry oysters to Vava'u and set a price for the charter, without settling all the necessary terms, the captain had authority to conclude the contract, and to agree to a term setting the time for the voyage and establishing what was required in respect of pilotage.

2. The appeal was dismissed.

Cases considered:

Fanny, The; The Mathilda (1883) 48 LT 771

McLean & Hope v Fleming [1871] 2 HL Sc App 128

Manchester Trust v Furness [1895] 2 QB 539

Mercantile and Exchange Bank v Gladstone [1868] LR 3 Ex 233

Sandeman v Scurr [1866] 2 QB 86

Counsel for appellant: Mr Garrett
Counsel for respondent: Mr Niu

Judgment

[1] This appeal arises out of the spoiling of almost half of a cargo of oysters carried by a vessel named Deep Blue, owned by the Appellant, from Nuku'alofa to Vava'u. The sole question in the appeal relates to the authority of the master of the vessel to agree on a term of the oral charter of Deep Blue by the Respondent for the transport of the oysters, that term being that the voyage, which commenced on the evening of 20 October 1999, would be completed overnight in a time of approximately eight to ten hours. In fact, departure was two hours late, the voyage took at least 22 hours, and even so the vessel, having arrived at low tide, was forced to divert to Neiafu, some distance by road from Lisa's Beach, where the cargo was to have been discharged. The very long period at sea, throughout the day as well as the night, proved extremely deleterious to the oysters, which were intended for use in the cultured pearl industry in Vava'u.

[2] Before the charter was entered into, Mr Choe, the Respondent's manager, had obtained advice from his company's Japanese technical expert about the requirements for the successful transport of live oysters. Of these, the most important was the time the voyage would take, which could not be much longer than ten hours. Another was the temperature to which the oysters would be exposed, a critical factor that demanded a night passage. The Chief Justice, from whose decision awarding damages for the loss of a large proportion of the oysters the appeal comes, found that Mr Choe had these matters in mind at the time he made the contract.

[3] One of Mr Choe's employees knew the master of the Deep Blue, which operated out of Nuku'alofa harbour, primarily taking divers out to diving sites, although, according to the managing director of the company that owned her, the Appellant, she was "also available for chartering for island hopping". Through his employee, Mr Choe was introduced to the master, Tevita Laasi, and he asked him whether the vessel could do the voyage in eight to ten hours. The master said, his Honour found, that in good conditions it would take eight hours, but if it was a bit rough, ten hours. Asked about the cost, the master said he would need to speak to the "owner".

[4] Mr Choe actually saw the managing director of the owner, Mr Keller, himself on the next day. There was a conflict of evidence at the hearing as to whether Mr Keller then confirmed a voyage time of ten hours, as Mr Choe asserted and Mr Keller denied. According to Mr Choe's evidence, departure date and time, the travel time of ten hours and the price of $T2000 were all agreed. According to Mr Keller, there were actually two meetings, at the first of which there was no mention of travel time, but the "question was whether we are able to charter to Vava'u to deliver oysters and I agreed and said: 'Yes, we are able, only we have to make appointment for David [the master] because he might be occupied with diving trips' ... I told him I have to calculate the price". The next day, Mr Keller claimed he "gave [Mr Choe] a price of ... T$2150", which he accepted. In response to a specific question, Mr Keller denied confirming a voyage time of eight to ten hours at this second meeting, and alleged that he then stated a voyage time of twenty to twenty-two hours.

[5] Faced with this conflict, his Honour decided that on the probabilities the voyage time was not mentioned at all between Mr Choe and Mr Keller, but it was a term of the oral contract which was agreed with the master, and was not contradicted by Mr Keller.

[6] There was ample evidence to justify the Chief Justice's conclusion on the facts. Mr Choe's version of his conversation with the master, as well as of the agreed and actual departure times, was supported by a Mr Kavaliku, whose evidence was accepted. The master himself conceded representing the vessel's speed at 18 knots, claiming he had done so as a joke. His Honour accepted the admission, but rejected the explanation, as he was entitled to do, particularly since Mr Kavaliku did not take the statement to be joking. It seems to us it was open to his Honour to regard Mr Keller's (disbelieved) evidence that he did stipulate a voyage time as indicating an awareness of the need for a term about the time to be taken in the transporting of the oysters. Such a term would be required to enable arrangements to be made at the other end for the piloting in of the vessel and the reception of the oysters (in fact arrangements were made, his Honour found, on the basis they would arrive in ten hours), and would be particularly important as Mr Keller knew the oysters were live and were being transported at the end of October in Tonga on a voyage that was to commence at 7 pm. Although only an expert could have been expected to know the precise limits on the endurance of the oysters, it would have been obvious that some limits existed, and that account had to be taken of them. Mr Keller's evidence, once his allegation about his having stipulated a lengthy voyage time was rejected, amounted effectively to no more than that he confirmed the availability of the vessel to depart on the voyage for which it was required and the charter price. Implicit in so limited an involvement of Mr Keller was the master's authority to conclude the other necessary terms, such as the duration of the voyage, the approximate time of arrival in Vava'u, and the arrangements in respect of pilotage and the precise terminus of the voyage where the oysters were to be discharged.

[7] So, when it was found that the duration of the voyage, and therefore the approximate time of arrival, were not determined by Mr Keller, or even mentioned, in his conversations with Mr Choe, it followed it was open to the Chief Justice to infer, as a fact, that Mr Keller left it to the master to settle an appropriate term with Mr Choe. It would be necessary to do that for the reasons we have given and because the master was unfamiliar with the sea approach to Lisa's Beach, so arrangements had to be made (as both the master and Mr Keller gave evidence they were) for a launch to come out and pilot the vessel in on her arrival. Although Mr Keller said this had been arranged, he did not suggest it was a term he himself negotiated with Mr Choe. Accordingly, the master would have had actual authority, express or implied, to accept the oysters on board and to agree on the time when pilotage would be available for them to be discharged at Lisa's Beach; and the owner could not claim the freight (as it did) and at the same time repudiate the terms on which the cargo had been received. In Mercantile and Exchange Bank v Gladstone [1868] LR 3 Ex 233 at 240 – 241, Bramwell B. said:

"[T]hey [the owners] cannot recognize the act of the captain in receiving goods on board, and at the same time say that they will not be bound by the terms on which he received them."

[8] There is another way of looking at the question of the captain's authority to contract in this case, which is to consider his ostensible authority as master. The ostensible authority of a master varies according to the circumstances: Halsbury, 4th ed. (reissue), vol. 43(1) para. 466. In this case, it was submitted for the Appellant that the usual employment of the vessel was limited to taking out divers and whale watching. That was not quite correct, having regard to Mr Keller's evidence of her being "also available for chartering for island hopping". However, on the evidence, one matter not in dispute was Mr Keller's clear statement to Mr Choe, at what he said was their first meeting, that Deep Blue was available for charter to Vava'u to deliver oysters. Once that was said, this became part of the business of the vessel.

[9] Many decisions confirm that the master has authority to contract for the carriage of goods in the course of the business of the vessel. In Sandeman v Scurr [1866] 2 QB 86 at 95 – 97, Cockburn CJ referred to the master's "ordinary authority" to sign bills of lading on behalf of his owner. In McLean & Hope v Fleming [1871] 2 HL Sc App 128 at 130, Lord Chelmsford said:

"The master is the agent of the shipowner in every contract made in the usual course of the employment of the ship."

In Manchester Trust v Furness [1895] 2 QB 539 at 543, Lindley LJ referred to "the general rule of law that prima facie at all events a bill of lading signed by the master is signed by the master as the servant or agent of the shipowner." He added: "Of course, in the ordinary course of business that is so ..." In the same case (at 547), Lopes LJ, holding the owner liable for non-delivery on the basis of the bill of lading signed by the master, said the holders "would naturally believe and imagine that the master when he signed the bill of lading was exercising the ordinary authority which attaches to him in his capacity of master."

[10] On the basis of these and other authorities, Bowstead on Agency, 12 ed. (1959), Art. 40 states:

"The master of a British ship has implied authority ... [to] contract for the conveyance of merchandise according to the usual employment of the ship."

And Halsbury, 4th ed. (reissue), vol. 43 (1), para. 470 states:

"The master of a ship has implied authority to contract to carry goods on board."

[11] Despite the broad terms in which the rule is stated in these authorities and texts, the Appellant argued for a restrictive view of the master's authority on the basis of what was said by Brett LJ (with whom Cotton and Bowen L. JJ. agreed) in The Fanny; The Mathilda (1883) 48 LT 771 at 775:

"The authority of the captain to bind his owners by charter – party only arises when he is in a foreign port and his owners are not there, and there is difficulty in communicating with them."

But the point of this case was that the captain wrote ahead, well before his ship had arrived at the port of charter, purporting to authorize the charter of his ship when she should have arrived. That was held to be beyond his authority, as the owner might, in the meantime, have been making his own arrangements. Later, it was alleged, on arrival the master ratified the charter; however, the Court held the evidence insufficient in fact to establish ratification. It would be wrong to make a universal rule of the language Brett LJ used in this unusual case, in which he did not purport to set aside the principle laid down in the earlier decisions that we have cited. Twelve years later, the Court of Appeal which decided Manchester Trust v Furness plainly saw their authority as unimpaired.

[12] In our opinion, when Mr Keller declared that Deep Blue was available for charter to carry oysters to Vava'u and set a price for the charter, without settling all the necessary terms, the captain had authority to conclude the contract, and to agree to a term setting the time for the voyage and establishing what was required in respect of pilotage into Lisa's Beach.

[13] For these reasons, the appeal should be dismissed with costs.