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Veikoso v Dateline Shipping [2004] TongaLawRp 11; [2004] Tonga LR 56 (10 May 2004)

IN THE SUPREME COURT OF TONGA

Veikoso

v

Dateline Shipping anors

Supreme Court, Nuku'alofa
Ford J
CV 173A/2003

12, 13, 26, and 27 February, 11 and 25 March 2004; 10 May 2004

Contract law – breach of contract – contract proved and claim allowed

The plaintiff was a grower of taro and yams on his tax allotment. In or about May 2001 the respondent decided to ship a reefer container (a container with refrigeration) load of taro and yams to San Francisco for selling on the US market. The plaintiff entered into a contract with Dateline for the supply of a container for that purpose. The loading of the container commenced on Tuesday 22 May 2001. 26 bags of yams and 41 bags of taros were loaded into the container. On each day from then until Friday 25 May further bags of yams and taro were loaded into the container. By the end of the week the container held 151 bags of yams and 47 bags of taro. It was a little over half full. No further loading was carried out over the weekend. On Monday 28 May 2001 the person whose truck the respondent was using to transport the produce to the wharf went to the wharf sometime between 10 am and 11am. When he opened the door to the container, he noticed that the temperature was no longer cold. It was found that the produce had thawed and was no longer fit for export. Some was fed to pigs. The rest was taken to the dump. The plaintiff alleged that Dateline Shipping had contracted to provide a continuous power supply to the container on the wharf up until the time when the ship sailed and, in breach of that contract, the power supply to the container failed, resulting in the loss of the produce. The plaintiff sought damages totalling US $16,190 for the loss and a further T$3,379 for expenses associated with the preparation and loading of the produce and other specified items. The defendant denied having had a contract with the plaintiff and contended that the plaintiff's contract was with the shipping company that entered into an agreement with the plaintiff to transport his container of frozen produce to the States.

For the Court of Appeal decision, see Dateline Shipping Travel Ltd v Veikoso [2004] Tonga LR 72.

Held:

1. The Court found that no instructions were given to the plaintiff by any Dateline Shipping staff about packing produce into reefer containers and that the procedure followed by the plaintiff for loading his produce into the reefer container was the normal practice for loading refrigerated containers at Queen Salote wharf. Therefore the Court found that the problem lay, not with the method of packing but, with the refrigeration unit in the container. Exactly what caused the problem was never revealed.

2. Although the breach of contract identified in the statement of claim was directed at the failure of the electric power supply, the Court was satisfied that the evidence was broad-based enough to encompass any failure in the proper functioning of the container and that would include a compressor failure. The defendant was fully aware of the case it had to meet and that the real issue was whether or not the container was functioning properly. There was no prejudice, therefore, if the cause of the problem was a malfunctioning of the compressor as distinct from a failure of the power supply.

3. The invoices produced satisfied the Court on the balance of probabilities that the plaintiff had a contract with Dateline Shipping. The dates shown for the supply of power in the replacement invoice show clearly that Dateline Shipping was responsible for the supply of power to the container from the very day that the container was made available to the plaintiff, namely 22 May. Pursuant to that contract, the plaintiff was entitled to seek the relief sought in his pleadings.

4. The plaintiff proved that the entire load inside the container was ruined and that the load equated to 151 bags of yams and 47 bags of taros. The Court accepted the figures per bin claimed by the plaintiff but the damages award would be in Tongan currency and not US currency.

5. There was a claim for expenses of $1,379 incurred in respect of the harvesting and processing of the ruined produce. This claim was established and was not challenged in cross-examination. It was allowed in full. The claim for loss of reputation and distress was not proven, either in terms of amount or entitlement, and was, therefore, disallowed.

6. The plaintiff succeeded in his claim and judgment was entered in his favour in the sum of $17,569 together with interest at 10% from 30 June 2001 down to the date of payment. The plaintiff was also entitled to costs but, given the unsatisfactory nature of the pleadings, failing agreement, the award was fixed at three quarters only of the amount allowed upon taxation.

Counsel for plaintiff: Mr Kengike
Counsel for defendants: Mr Edwards

Judgment

1. The Claim

The plaintiff, Luki Veikoso, is a licensed, law practitioner who frequently appears in this jurisdiction. He is also a retired police officer and, as this case illustrates, a grower of taros and yams on his tax allotment at Vaini.

This proceeding arises out of the plaintiff's first attempt to ship a containerload of frozen taros and yams to the United States. The vessel was due to leave Nukualofa on 8 June 2001. Loading of the container at Queen Salote wharf commenced on Tuesday 22 May. By the end of that first week the container was over half full of frozen produce. When the container was next inspected, however, on Monday 28 May, the produce was no longer in a frozen state. It was discoloured and soft and, according to the plaintiff's evidence, no longer fit for export. Some of the load was fed to pigs. The rest was taken to the local garbage dump.

The plaintiff brings this claim against Dateline Shipping & Travel Ltd ("Dateline Shipping"). It is alleged that Dateline Shipping had contracted to provide a continuous power supply to the container on the wharf up until the time when the ship sailed and, in breach of that contract, the power supply to the container failed, resulting in the loss of the produce. The plaintiff seeks damages totalling US $16,190.00 for the loss and a further T$3,379.00 for expenses associated with the preparation and loading of the produce and other specified items.

For its part, Dateline Shipping denies ever having had a contract with the plaintiff. Dateline Shipping's defence, basically, is that the plaintiff's contract was with S.F. Enterprises Ltd, the shipping company that entered into an agreement with the plaintiff to transport his container of frozen produce to the States.

2. The Proceedings

The proceeding has been fraught with procedural problems from the outset and these continued up until the final days of the hearing. They reflect badly on both the plaintiff and his counsel.

The plaintiff relies on one cause of action only, namely, breach of contract. He makes no allegations of negligence. But, instead of focusing upon the company he alleges he had the contract with and proceeding against that company as sole defendant, he adopted what can only be described as a "scattergun" approach and issued his writ against both companies and all the individuals he had any dealings with in connection with the transaction, claiming that he had a contract with them all. Not surprisingly his approach resulted in strike out applications by the defendants and at one point the plaintiff, effectively, discontinued his original claim, without giving proper notice, and began again by issuing a new writ.

The original statement of claim named seven defendants – Dateline Shipping, S. F. Enterprises Ltd and five individuals. The latest statement of claim (effectively the fifth amended statement of claim) could properly be described in the words of former Chief Justice Williams in Latu v Fonua "patchwork, piecemeal pleading". The defendants are Dateline Shipping and three named individuals but Mr Edwards made it clear from the outset that Dateline Shipping does not dispute that the named individuals are its employees and that, at all material times, they were acting in the course of their employment with the full authority of their employer.

Effectively, therefore, the case has proceeded as one against Dateline Shipping only and I propose to deal with it on that basis. I will need to return to the procedural problems later in this judgment, but, in general, the approach I have taken to the inadequate pleadings and other procedural defects identified in the present case is that adopted by this court in the past namely, that in spite of the defects, if an issue is raised and understood by the opposing party then it should be dealt with on its merits. I am satisfied that Dateline Shipping was fully aware of the issues involved in this case.

3. Introduction to Dateline Shipping

The plaintiff, Luki Veikoso, now aged 73, told the court that he has two sons who are residents in the United States and in 2001 he wanted to ship a container load of taros and yams to San Francisco for selling on the US market. He had never exported produce before and he was unsure as to how he should go about it. He first approached S. F. Enterprises Ltd, a shipping company he had heard about that ran a regular shipping service to the USA. On 18 May at 2 p.m. he attended the office of S. F. Enterprises Ltd at Queen Salote wharf.

Mr Veikoso described how he had a meeting with Susana Mariner and Mr Tevita Afeaki of S. F. Enterprises Ltd (Ms Mariner actually filed an affidavit stating that she, in fact, works for Port and Services Ltd., but she did not give evidence). Mr Veikoso said that he told them both what he wanted to do and they indicated that S. F. Enterprises was willing and able to ship his container of produce but it would-be up to him to first pack the container so that it was ready for shipment. He was told that S. F. Enterprises Ltd would not come into the picture until the container was loaded onto the ship. The next vessel to the States was due to depart from Nuku'alofa on 8 June 2001.

Mr Veikoso said that Susana Mariner then told him that she would ring Dateline Shipping to arrange a container for him. She telephoned Mr Tevita Afeaki Jr (the son of Mr Tevita Afeaki who works for S. F. Enterprises) and Mr Veikoso was told to go and see him to organise a container.

Even though Mr Veikoso was given leave to refer to relevant diary entries, some of his evidence was at times confusing. I accept, however, that he had a meeting with Mr Afeaki Jr on the wharf and he was told by him that he would have to go to the office of Dateline Shipping. He did so on that same day, 18 May 2001, and he then met up with a Mr Fine Tohi, the company's Operations Manager.

Before dealing with the meeting with Mr Tohi, however, it is necessary to say something further about the meeting on the wharf with Mr Afeaki Jr. It was not covered in Mr Veikoso's evidence in chief but, in answer to questions from Mr Edwards in cross-examination, Mr Veikoso agreed that he had been given certain instructions by Mr Afeaki Jr. Elaborating on this statement, the plaintiff said that he had explained to Mr Afeaki Jr that he wanted his produce frozen. He also told him that he would be bringing his produce to the wharf from his allotment in Vaini in stages because the crops would be picked in the mornings and packed every afternoon. Mr Veikoso said that Mr Afeaki Jr told him that there would be no problem. He also confirmed that the reefer container would be plugged into the electricity supply at the wharf and that the company had an engineer (electrician) who would look after the container at all times to make sure that the powersupply did not fail. Mr Veikoso strongly denied the further proposition put to him in cross-examination that Mr Afeaki Jr had given him express instructions about loading the container and had warned him that he needed to be careful about packing unfrozen produce into the container with frozen items. I will need to return to this point because it is a crucial part of the defendants' case.

Returning now to the meeting Mr Veikoso had that same afternoon with Mr Tohi, the witness said that after he explained to Mr Tohi what he was planning to do, the latter confirmed that Dateline Shipping was able to provide him with a reefer container but it would first need to be checked out by their electrician and Mr Veikoso would be told when the container was ready to accept produce. Mr Tohi also warned Mr Veikoso that he would be responsible for electricity charges and some other expenses relating to the container up until the time when the ship sailed.

4. The Loading of the Container

Mr Veikoso said that the next development came on 21 May 2001, which was a Monday. He received a telephone call from Susana Mariner to say that Fine Tohi had called her to confirm that the container was ready.

On Tuesday 22 May at approximately 5 p.m., Mr Veikoso made the first delivery of produce from his allotment at Vaini to the wharf. He said that Fine Tohi pointed out the container he was to use. It had the number LPIU5719940. He told the court that on that occasion he packed 26 bags of yams and 41 bags of taros. Each bag weighed approximately 50-80 kg. He likened the bags to onion bags with the tops stitched together.

Mr Veikoso explained the various steps that had to be undertaken before trucking the produce to the wharf. The picking was carried out in the fields during the morning hours by six women pickers. The produce was then taken to the packing shed in Vaini where it was prepared for export. First, the taros and yams were washed and put out to dry. Next, they were peeled and washed again.

A Ministry of Agriculture Inspector, Sione 'Ofa Vaka'uta, was at the Vaini site. He ensured that all the yams and taros were properly cleaned before being packed into the bags. He also checked the cleanliness of the truck taking the loads to the wharf. The evidence was that the Inspector would then accompany each load down to the wharf and he personally supervised the loading of the bags into the container ensuring that they were not dropped or otherwise damaged during the loading operation. The Inspector estimated that each truckload taken to the wharf took between six and ten minutes to pack into the container. He said that five men were involved in the loading exercise and they worked as fast as they could so as to ensure that they did not lose too much cool air from the container.

Mr Veikoso said that when they opened the container on that first occasion its temperature was very cold. After packing the first load he then handed the container key to Susana Mariner at her office. She was closing up for the day and he told her that he would be returning the next day with more produce.

On Wednesday 23 May the procedure just outlined was repeated. On that occasion, commencing at approximately 5:30 p.m., 77 bags of yams and six bags of taros were loaded into the container. The produce that had been loaded on 22 May was already frozen.

Mr Veikoso said that on Thursday 24 May they packed a further 37 bags of yams and again he confirmed that the produce loaded on 22 and 23 May was completely frozen.

On Friday 25 May at approximately 3 p.m. another 11 bags of yams were taken to the wharf and loaded into the container. Mr Veikoso said that all the produce loaded earlier was still completely frozen.

Thus, by the end of the first week, the container held 151 bags of yams and 47 bags of taros. It was a little over half full. No further loading was carried out over the weekend. The next development came on Monday 28 May 2001.

Apart from the crucial issue of what, if any, instructions were given to Mr Veikoso by Mr Afeaki Jr or Mr Tohi about the loading of the container, which I will need to come back to, the facts as I have just summarised them were proved to my satisfaction although the evidence relating to the key or keys to the container was confusing and I cannot be sure whether Mr Veikoso held the only key to the container nor can I be sure, on the evidence, whether he handed his key to someone on the wharf each night after the first loading or retained it in his possession. In all events, in the end I do not consider this issue to be critical to my conclusions.

5. Discovery of the Problem

One of the witnesses called by the plaintiff was 62-year-old Sitaleki Tokotaha, a planter from Ha'ateiho. It was his truck that Mr Veikoso used to transport his produce from Vaini down to the wharf each day. Sitaleki said that he was the one who discovered the problem with the container and he thought that this discovery was made on the Friday. I am satisfied, however, that his recollection was mistaken and that his discovery was made on Monday 28 May. In the end, I did not understand Mr Edwards to contend otherwise.

Mr Tokotaha told the court that he had gone down to the wharf sometime between 10 and 11 a. m.. He still had the key to the container with him from the loading on Friday. When he opened the door to the container, he immediately noticed that the temperature was no longer cold. In cross-examination the witness said that the power to the container was still working but when he was asked by the Court how he knew that, he conceded that he could not be sure whether the power was on or off. He did say, however, that the temperature inside the container "was warm" and that some of the produce had turned brown.

Mr Tokotaha was asked by the Court why he had inspected the container that particular morning. He explained that some 30 of the bags of taros were his own and he had given Mr Veikoso money for them to be included in his shipment. The witness was not asked any questions by counsel about the arrangement he had entered into with Mr Veikoso.

Mr Tokotaha went on to explain that he had heard stories about how containers at the wharf sometimes had problems and so he had decided to inspect the container in question for himself just to make sure that they were no problems. His prescience on this occasion turned out to be well founded.

Mr Edwards cross-examined the witness quite vigorously over his failure to take immediate steps to notify someone in authority of the problem. He asked Mr Tokotaha why he had not mentioned the matter to someone at the wharf. Mr Tokotaha replied that it wasn't his responsibility. He added that he had tried, without success, to find Luki (Mr Veikoso) and he had not seen Mr Afeaki Jr at the wharf.

Mr Tokotaha was, however, able to make contact with Mr Veikoso later that afternoon. He also told how, at approximately 8 p.m. that evening, Luki (Mr Veikoso) and 'Ofa (the Ministry of Agriculture Inspector) met at his home and they all then drove down to the wharf to inspect the container. Mr Veikoso had by then made contact with Dateline Shipping and someone from the company (it turned out to be Christopher 'Ali, the Assistant Operations Manager) also turned up. Mr Tokotaha said that when Mr 'Ali inspected the container he commented that there was some problem with it and it did not have the right temperature - it was not cold any more. The witness was not challenged on this particular part of his evidence.

In his evidence, Mr Veikoso said that he and 'Ofa had gone down to inspect the container at 5 p.m. on Monday 28 May. He said that he noticed immediately that the temperature inside the container was "not cold" and that the yams had turned black and the' taros brown. The produce, he said, had turned soft "like overripe bananas".

Mr Veikoso then tried to make contact with Mr Roger Cocker, General Manager of Dateline Shipping. He drove to his home at Sopu but his children said that he was out at a meeting. Mr Veikoso called him on his mobile phone and implored him to personally come down to the wharf and inspect the container. Mr Cocker told him to go to the Dateline Shipping office and see Christopher'Ali about the problem. He did so and they had the meeting at the container which I have already referred to in the context of Mr Tokotaha's evidence.

Mr Veikoso said that Christopher walked around the back of the container, looked at some device and then came back and confirmed that the container was not working. He asked Christopher to touch the produce. Christopher said that he could see that the yams had turned black and the taros brown but he did touch one of the bags of taros. He agreed that it was soft and, according to Mr Veikoso, he made the comment, "it's true, its turned bad." Mr Veikoso said that Christopher apologised and told them that he would need to go and see the electrician and get him to try and fix it.

'Ofa Vakauta, the Ministry of Agriculture Inspector, confirmed in evidence that after Christopher 'Ali had carried out his inspection around the back of the container he made the comment that the container was not functioning properly.

'Ofa said that, as part of his normal duties, he was very familiar with the criteria for exporting frozen produce and he was in no doubt, that the produce in the container was no longer fit for export. He said that the air inside the container was not cold any more, the produce was soft, it had shrunk and changed colour.

Quarantine Inspectors carried out separate inspections of the produce on 30 May and 1 June and confirmed that the consignment was not fit for export.

The defence challenged much of this evidence. It was put to the plaintiff's witnesses that, although the bags that were clearly visible at the front of the container may have deteriorated, they could not be sure that the entire load had been affected unless they had taken out all of the bags and inspected them individually.

When he gave his evidence on behalf of the defence, all that Christopher 'Ali would admit to was, "we could tell that some stuff had started to go brownish" and that the temperature inside the container "had fallen from normal." In cross-examination Mr 'Ali said that "just the top part had gone soft". He was asked how much of the load was like that. He replied that it was the bags he could see from the vehicle lights shining into the container.

I say at once that I accept the evidence of the plaintiff and his witnesses that the temperature inside the container was no longer cold and that none of the produce was fit for export. The Ministry of Agriculture Inspector described how the load had "shrunk" in size. Defence counsel crossexamined the Inspector over his association with Mr Veikoso and questioned his impartiality. Counsel pointed out that he was also a resident of Vaini and his association with Mr Veikoso went back some 10 years. I, nevertheless, found Mr Vaka'uta to be an honest and totally credible witness. His evidence on the condition of the produce in the container when he carried out his inspection on the evening of 28 May was quite compelling. It clearly established to my satisfaction that it was more than just the visible bags that had deteriorated. I noticed that, perhaps unconsciously, as he talked about the load having shrunk in size, he demonstrated with his hands how the height of the entire load in the container had reduced. The question that then arises is how did this situation come about? What was it that caused the drop-off in air temperature inside the container?

6. Dateline Shipping's Response to the Problem

For the defence, it is contended that the problem had nothing to do with the functioning of the container itself but with the way in which the produce had been packed. The thrust of the defence evidence was that the fresh produce should never have been packed ' into the container that already held the frozen bags because the fresh produce immediately causes the container temperature to drop to unacceptable levels. Witnesses told the court that before fresh produce is packed into a container holding frozen produce, the fresh produce should also be frozen as well.

Mr Afeaki Jr has been working on the wharf for Dateline Shipping for some six years. Referring to his meeting with Mr Veikoso on 18 May 2001, he told the court that he expressly explained to Mr Veikoso how the goods had to be packed. His instructions were that the fresh produce had to be frozen before it was packed into the container or else he would need to allow "a day or so" between packing each load. The witness was in no doubt that the cause of the problem was Mr Veikoso's system of packing produce day by day instead of allowing time for the temperature to fall to its proper level.

Mr Afeaki Jr said that it was part of his job to check the container in question each day during the week to make sure that the electricity was functioning properly but his inspections were not carried out during weekends because he is not authorised to go onto the wharf at weekends.

As it happened, the hearing had to be adjourned partway through Mr Afeaki Jr's evidence. When he resumed his evidence 13 days later he repeated the explanation he said that he gave to Mr Veikoso and others about packing refrigerated containers. He told the court that what he says to them all is:

"The first thing I have to tell them is that if they want to load stuff it should be frozen before it is packed. If foodstuffs can't be frozen then pack it fresh but you have to leave it for two days so that the produce in the container can freeze."

In his first account the witness had said that the packer should allow "a day or so" between loads.

Christopher 'Ali, Dateline Shipping's Assistant Operations Manager, was not asked, nor did he volunteer, in his evidence any information about the packing procedure.

Mark Hojelsen from Fleming Electrical is the electrician retained by Dateline Shipping and other shipping agencies to repair and test refrigerated containers. He told the court that he would come across two or three cases a year where damage had been caused to container cargo and invariably the damage had resulted from what he described as "container overloading". The witness explained that refrigerated containers are set at -20^o and if too much fresh produce is packed in with frozen produce it reduces the temperature to such a level that the container is not able to maintain all the produce in a frozen state.