IN THE HIGH COURT OF MALAWI
MAPETO DWSM LIMITED……………………………………………………………………………PLAINTIFF
FRACHT AFRICA LIMITED……………………………………………………………………….DEFENDANT
CORAM: HON. MR JUSTICE F.E. KAPANDA
Nyirenda of Counsel for the Plaintiff
Majamanda of Counsel for the Defendant
Place and Date of Judgment: Blantyre, 28th day of April 2008
The Plaintiff has brought this action against the Defendant claiming the following:-
An order for the delivery of the chemicals that have not perished.
Damages for the perished chemicals
Alternatively damages in lieu of delivery of all the chemicals
Damages for lost profits.
Interest on the said damages.
Damages for breach of contract
Damages for breach of its duties as an agent
Costs of the action
Further, it is prayed that the costs of, and incidental to, this action be for the Plaintiff.
The Defendant denies the Plaintiff’s claim. Further, the Defendant counterclaims from the Plaintiff. Indeed, the Defendant counterclaims:
Payment of the sum of K1,266,905.69.
Interest on the above stated amount at the rate of 5% above base lending rate calculated from October 1, 2005 to the date of actual payment.
A total sum of SAR111,712.24 less SAR44,272.20 also claimed in (i) above being storage charges while goods were in South Africa and road freight charges for moving the goods from South Africa to Malawi.
Disbursement fee of 12% of the above total sum of SAR67,450.04 as per Tariff from the Clearing and Forwarding Agents’ Association in Malawi.
Defendant’s charges on 256 cartons to the tune of MK2,217,575.32.
Defendant’s charges on 50 cases to the tune of MK536,056.46.
Costs of this action.
The Plaintiff replied to the Counterclaim. For lack of brevity, and indeed of clarity, I will reproduce the pleadings contained in the Re-Amended Reply and Defence to Counterclaim. The said Re-Amended Reply and Defence to Counterclaim was as follows:-
“RE AMENDED REPLY
1. The Plaintiff joins issue with the Defendant on its re-amended defence.
RE- AMENDED DEFENCE TO COUNTERCLAIM
The Plaintiff denies that it ordered 250 cartons from India to be shipped to Durban as pleaded.
When shipping documents for the 50 cartons of assorted chemicals were delivered to the Plaintiff, through the Bank, the Plaintiff wanted to know the whereabouts of the 50 cartons.
In the course of tracing the 50 cartons, the Plaintiff learnt that there were 250 cartons of cones lying at the port.
The Plaintiff then asked the Defendant to arrange the movement of the 250 cartons but did not instruct the Defendant to pay any charges on its behalf.
Subsequently, the Defendant claimed it had paid port and other charges but failed to provide evidence of payment of port charges and has to date not provided the evidence in spite of repeated requests.
The Plaintiff therefore denies that the Defendant paid storage charges on its behalf as claimed.
If the Defendant paid storage charges as the Defendant alleges, the Defendant rendered it impossible for the Plaintiff to negotiate reasonable charges before deciding to receive the goods.
The Plaintiff had in the meantime informed the supplier that it would only receive the goods if the port charges were negotiated to reasonable levels.
Further, if the Defendant did pay storage charges, the Plaintiff states that the charges are unreasonable and unconscionable.
The Plaintiff denies that the Defendant exercised any lien on the goods and could not have exercised a lien because the goods were not in its possession and were in any case the subject of a third party lien.
The Plaintiff further states that the real reason the Defendant could not transport the consignment to Blantyre is because the Defendant’s agent in South Africa exercised a lien on the consignment for charges other than the alleged storage charges.
The Defendant in breach of its duty of utmost good faith failed to disclose the fact to the Plaintiff.
The Plaintiff denies that the standard conditions referred to in paragraph 4 of the re-amended defence and counterclaim were part of the contract.
If they were, which is denied, the Defendant did not detain the goods pursuant to the said conditions.
If the goods were detained pursuant to the standard conditions, which is denied, it was not reasonable for the Defendant to detain the goods in South Africa when the contract was that the goods be moved from South Africa to Malawi.
In the further alternative, the Plaintiff states that the Defendant having opted to detain the goods is not entitled to storage charges for the period of detention.
The Defendant did not disburse any sum to entitle it to disbursement fee.
If the Defendant did disburse any sum, which is denied, the agreement providing for uniform charges and the scale used are unreasonable and anti-competitive in that they contravene sections 32, 33 and 34 of the Competition and Fair Trading Act and are therefore unenforceable.
There was no agreement as to interest and having detained and caused losses to the Plaintiff; the Defendant is not entitled to any interest.
The Plaintiff denies each and every allegation contained in the counterclaim as if the same were set out herein seriatim and specifically traversed.”
As it were, the Plaintiff commenced this action against the Defendant. The Plaintiff’s claim is to the effect that the Defendant wrongfully detained its goods and therefore claims that it be compensated.
The Defendant on the other hand contends that the detention cannot be wrongful as it was an exercise of a right to a general lien pursuant to standard conditions of business. The Defendant therefore counterclaims from the Plaintiff. There is so much I have put in the introduction to this judgment. I will now proceed to deal with the facts of this case.
The facts of this case are lengthy. They will have to be summarized. The said facts are to be discerned from the evidence on record. As far as this court was able to gather from the said record, an outline of the facts obtaining in this matter is as follows:-
Order of goods from India
The Plaintiff owns a textile manufacturing company at Blantyre. In its business, chemicals and cones are necessary ingredients.
It is not in dispute that in March 2005 the Plaintiff ordered 256 cartons of cones from Enercon Industries Limited of India. The goods were dispatched on 29th June 2005 and arrived at Durban port in South Africa on 21st July 2005. Furthermore, in June 2005 the Plaintiff ordered 50 cartons of assorted chemicals from Embee Corporation of India valued at US$8171 CIF Blantyre. As it were, the cost insurance and freight were included in the price.
Instructions to Defendant
There is no denying of the fact that on 29th August 2005 the Plaintiff instructed the Defendant to move the two consignments from Durban to Blantyre. It is said that on 30th of August 2005 the Defendant sent documents to its agent in South Africa viz. BP Freight so that they could arrange the haulage of the goods to Blantyre. Further, it is understood that the Defendant’s said agent confirmed receipt of the documents on 1st September 2005. On the following day, 2nd September 2005, the Defendant informed the Plaintiff that its agent had paid port charges the previous day.
Dispute about Port and Storage Charges
It is gathered that the Plaintiff was of the view that port charges claimed were very high. The Plaintiff then allegedly expressed its disagreement but the Defendant insisted that its agent had paid port charges. However, the evidence of payment was not made available to the Plaintiff. A dispute then arose between the Plaintiff and the Defendant as regards evidence the said payment. The Plaintiff further asserts that at some point it demanded evidence of payment of the storage charges to the port authority but it has not been produced.
Detention of Consignment in South Africa
The Plaintiff continues to suggest that because of the dispute the Defendant’s agent detained the consignment for 50 cartons of assorted chemicals. It is said that the two consignments were kept in RSA until August 2006 or May 2007. Further, the Plaintiff claims that the Defendant did not however inform the former of the fact of detention of the consignment.
As mentioned above, the Plaintiff avers that at some point it demanded evidence of payment of the so called storage charges to the port authority. The said evidence of payment has not been produced.
Claim of lien
There is no dispute of the fact that Defendant relies on the Standard Conditions of Business promulgated by an Association of Freight Forwarders and Clearing Agents in Malawi for authority to exercise a general lien on the consignments. As I understand it, the Plaintiff denies that the conditions were part of the contract.
The court observes that the Plaintiff believed that the Defendant did not have a right to exercise a general lien on the consignment of 50 cartons. It then commenced these proceedings. The Defendant then filed a counterclaim against the Plaintiff.
It is contended by the Plaintiff that as the case progressed the Defendant did not make full disclosure as to why the Plaintiff’s shipment was kept in South Africa for over a year.
The Defendant’s account of what transpired in this matter is substantially different from what the Plaintiff said in this court. It is contended by the Defendant as follows viz.
The Defendant’s business
The Defendant is a Freight Forwarder. The Defendant, being in the forwarding business, operates its business in accordance with the standard conditions of business as spelt out in the Clearing and Forwarding Agents’ Association of Malawi standard conditions of business.
The transaction with the Plaintiff
It has also been put in evidence by the Defendant that, as such freight forwarder, it transacted with the Plaintiff in early August 2005 when they handled a shipment of 9 pallets of textile dyes. The further says that the consignments were for 256 cartons of paper cones and 50 cases of various chemicals.
In point of fact, the Defendant accepts that on 29th August 2005 the Plaintiff instructed it to move two shipments from Durban in South Africa to Malawi. It is further averred that on 30th August 2005 the Defendant sent by courier sets of documents to their agents in South Africa by the name of BP Freight so that they could get the goods from the port and transport them to Malawi.
The holding up of consignments by Port Agents
The Defendant moreover says that the consignments were being held in Durban by two different Port Agents, namely Thrutainers International and Globe Link. It is alleged that the consignment of 50 cases was being held by Globe Link and was prepaid up to Blantyre while the 256 cartons were with Thrutainers International.
The Defendant went on to suggest that on 1st September 2005 its agent confirmed receipt of the two sets of documents and immediately cleared the 256 cartons out of the port. It is furthermore alleged by the Defendant that this shipment had arrived in Durban on 21st July 2005.
Again, the Defendant alleges that on 2nd September 2005 its said agent, BP Freight, forwarded to it port and storage charges invoice for the 256 cartons. Accordingly, so the Defendant says, it prepared an invoice to the Plaintiff dated 2nd September 2005 for the amount of K1,266,906.69 and demanded immediate payment so that it could remit part of the money to their said agent BP Freight.
Furthermore, it was put by the Defendant that the consolidation release agent on the 50 cases demanded to be paid fees to the tune of SAR 3,700.00 before releasing the goods to its agent, BP Freight. The Defendant further contends that it informed the Plaintiff to pay the SAR 3,700.00 which they paid and the money was forwarded to the consolidation release agent.
Question of lien
As regards the other consignment, so it is said by the Defendant, the Plaintiff merely promised to settle the invoice for the sum of MK1,266,905.69 but did not do so. This, the Defendant furthers says, prompted the Defendant to exercise a general lien on the 256 cartons and 50 cases pursuant to Standard conditions of Business of Clearing and Forwarding Agents’ Association of Malawi. The Defendant additionally suggests that goods were therefore being held by the Defendant at the Plaintiff’s risk and expense. Thus, the goods incurred further storage charges both in South Africa and Malawi.
I think I have said this above, that the Defendant opposes the action herein. For all intents and purposes it has been submitted on its behalf that the action by the Plaintiff be dismissed. As expected, the Plaintiff is of the view that it has made out its case against the Defendant. Short of terseness, I will summarize and replicate the arguments of the parties. The said arguments of the respective parties were put into categories as follows:-
The Defendant’s arguments
Standard conditions of business
It is submitted by the Defendant that the so called standard conditions of the business it is in should apply in the case at hand. The Defendant has called in aid the law that standard conditions of the business would apply if a party came to know them either prior to or at the time of entering into a contract between it and the other party1. As I understand it, the law further says that where a party to the contract has not signed a document which is claimed by the other party to be part of the contract, the general rule is that a person will be bound by the contents of the document if the person relying on it has done what may reasonably be considered sufficient to give notice of the contents of the document to the affected person. The question whether the party tendering the document has done all that was reasonably sufficient to give the other notice of the conditions is a question of fact in each case. And, reasonably sufficient notice can be established by a course of previous dealings2.
The Defendant has urged this court to make a note of the fact that the Plaintiff is a veteran in as far as importing goods through forwarders is concerned as it is said that Mr. Mpata conceded that they do a lot of importation of various goods. It surmises that in doing so, surely it uses clearing and forwarding agents like Combine Cargo, SDV, and K S Freight. Further, the Defendant says that in fact Mr. Pitcher, one of the Plaintiff’s witnesses told the court that he worked in various clearing and forwarding companies like Casalee Cargo, UTI where these companies used the Clearing and Forwarding Association of Malawi Standard Conditions of Business.
The Defendant further stated that the Plaintiff had ordered goods early in August 2005 when, through the said Mr. Mpata, standard conditions of Business of Clearing and Forwarding Agents’ Association of Malawi dated 2nd August 2005 were brought to its attention. The said Standard conditions of the Business of Clearing and Forwarding Agents’ Association of Malawi have the following words inscribed at the bottom:
“All business undertaken subject to standard condition of CAFAAM copy of which is available for inspection in our offices throughout the country.”
The Defendant further submits that this clause is moreover allegedly available on all documentation including e-mails that come from the Defendant’s offices. Accordingly, the Defendant argues, the Plaintiff had adequate notice of the standard conditions of business before entering into the contract of 29th August 2005.
Detention of the Plaintiff’s goods
The Defendant starts with an expose of the law on the right of lien at common law in an attempt to answer the above question. It was correctly submitted on its behalf that the law entitles a person in possession of goods or chattels to retain them until, in the case of a general lien, all his claims against the rightful owner are satisfied or in the case of a particular lien, until his proper charges relating to the particular goods or chattels have been paid.
Counsel for the Defendant further submits, and correctly so in my view, that at common law carriers of goods have only a particular lien for their charges in respect of goods carried though they may obtain a general lien by express or implied contract or by statute3. It is again argued that by express agreement, or by the usage of particular trades or professions, a lien may be created for the general balance of account between the parties. However, the Defendant recognizes that an express agreement for a general lien may be made not only between individuals but by public notice given by bodies of traders that they will only do work on terms of having a general lien; but such notice must have come to the knowledge of the persons against whom the lien is claimed. Further, the Defendant argues that although there is clear distinction between a forwarding agent and a carrier, the same person may carry on both activities at once, and contract sometimes as one and sometimes as the other.
The Defendant continues to contend that in the instant case the Plaintiff was constructively made aware that it only transacts business in accordance with Standard Conditions of Business. It then sought to rely on Clause 27 of its Standard Conditions of Business which provides as follows:
“All goods and documents relating to goods including Bills of Lading and import permits, as well as all refunds, repayment claims and all other recoveries shall be subject to a particular and general lien and pledge monies due to the company either in respect of such goods or for any particular or general balance or other monies due from the customer or senders, owners, consignees, importers or holder of the Bill of Lading on their agents, if any, to the company. If any monies due to the company are not paid within one calendar month after notice has been given to the person from whom the monies are due such goods or documents are being detained, they may be sold by auction or otherwise or in some other way disposed of for value at the sole discretion of the company and at the expense of such person and the net proceeds applied in or towards satisfaction of such indebtedness. If any claims are made against the company by Third Parties (including its own servants or agents) by reason of the exercise of its rights under this condition the customer will indemnify the company against the same and against all losses, cost and expenses incurred by the company in connection therewith”.
It is the opinion of the Defendant that this clause provides for its right to exercise a general lien for money due to it. The Defendant further suggests that it was allegedly shown in this court that there was money due to it at the time of exercising the general lien. Therefore, it continued to contend, the Defendant was entitled to exercise a general lien on both shipments in December 2005 due to non payment of storage fees on the 256 cartons.
The exercise of a lien when the goods were in the agent’s possession
In the words of the Defendant, a lien may be applied to a right subsisting in a person who has no possession of property concerned but who nevertheless has right against the owner analogous to a legal lien. In the Defendant’s further view any possession does not consist merely in physical possession. Possession may be acquired or retained over goods which are in actual detention of a third person. The Defendant moreover contends that it has been held that possession may be held for an agent by another. They further contended that it has not been disputed that BP Freight was merely handling the two consignments as an agent for the Defendant. In other words it is argued that the Defendant was in control of the consignments at all material times. As such, it is the Defendant’s submission; it exercised the general lien herein when the two consignments were in BP Freight’s warehouse from December 2005. Therefore, the argument further went, the Defendant had duly exercised the general lien when the goods were in their agent’s warehouse.
Responsibility for the wasting away of some of the chemicals in the 50 cases.
The Defendant submits that it was not to blame for the wasting away of some of the chemicals in the 50 cases. Indeed, the Defendant has urged this court to understand the chronological sequence of events relating to the 50 cases. In this regard it says that one the Defendant’s witnesses admitted that the 50 cases were ordered in June 2005. These goods were obviously manufactured in April or May 2005.
It is also alleged that at the time of giving instructions to the Defendant on 29th August 2005 the Plaintiff did not mention to it that these goods were perishable. The Defendant further says that it was only informed that the 50 cases contain perishable goods on 13th December 2005. The court has been asked not to place reliance on the Plaintiff’s document suggesting the shelf life of each product in the 50 cases as, in its view; it was only obtained in June 2006. This document mentions, inter alia, that item number 5 has storage life of 6 months. Further, the Defendant has requested the court to take recognizance of the fact that its agent, BP Freight, received 50 cases in early December 2005. Thus, in the judgment of the Defendant, this means that by the time the Plaintiff’s lawyers were writing the demand letter one of the items (RS 525 Retouch Lacquer) had already expired.
The Defendant continued to argue that it is merely a forwarder whose role was to arrange transportation of the goods from Durban to Malawi. Thus, if the Plaintiff were indeed serious that these goods were perishable it should have informed the Defendant on the 29th August 2005 or any time thereafter but before some of the goods had already expired. The Defendant further submits that the fact that Plaintiff knew that the 50 cases were perishable should have prompted it to settle the former’s interim invoice in order to avert incurring losses.
Furthermore, the Defendant contends that the document that mentions that item number 3 – RS 30 Endring Remover should be stored in a cool area should be ignored. The Defendant submits that if this information was indeed necessary the Plaintiff should have informed it at the time of entering into the contract in question on 29th August 2005.
Accordingly, the Defendant senses that it is not to blame for whatever loss may have been be incurred due to the wasting away of some of the goods in the 50 cases.
Damages for loss of profits
As stated earlier, the Defendant reckons that the Plaintiff’s failure to live by its promise to pay made it incur the loss. Thus, in its view it cannot be held responsible for the loss of profits.
It is further argued by the Defendant that even if it were responsible for such loss of profits, which is denied, the Plaintiff is not entitled to claim loss of profits because the same are not recoverable purportedly on grounds of public policy. The Defendant says that the loss of profit was not immediately consequential on the detention of the 50 cases. In the premises, so it is argued, the Plaintiff is not entitled to a claim for damages for loss of profits.
The Defendant further suggests that the position of the law is that where there is breach of contract, the aggrieved party is only entitled to recover such part of the damages actually resulting as was at the time of contract reasonably foreseeable to result from the breach4. It is further said that what was “reasonably foreseeable” depends on the knowledge possessed by the parties. Accordingly, so the argument continued, the loss of production which the Plaintiff is claiming cannot be reasonably foreseeable. It is the view of the Defendant that this is the case because the Defendant neither knew what the goods were to be used for, nor were they informed of the shelf life for the goods, at the time of accepting the Plaintiff’s instructions. Therefore the claim for the value of the goods in the 50 cases should not be entertained.
As earlier stated, the Defendant asserts that the perishing of the goods is as a result of the Plaintiff’s failure to honour its obligations. It is its argument that had the Plaintiff paid, the alleged loss would not have been suffered by the Plaintiff. As a result, the Defendant says that the Plaintiff failed to mitigate its loss and therefore cannot in terms of the law be entitled to the damages being claimed.
In the alternative the Defendant submits that in the event that it is found legally responsible then its liability is limited pursuant to Standard Conditions of Business. The Defendant relies on Clause 17 of the said Standard Conditions of Business which provides:
“In no case whatsoever shall any liability of the Company however arising exceed the value of the goods or the value declared by the customer for insurance, customs or carriage purposes or a sum at the rate of K100 per ton of 1,000 kgs of the goods lost or damaged, whichever shall be the smaller. In the case of furniture, plate, china, glass and household and personal effects of any kind the liability of the Company in respect of any one, article, suite of furniture, service set or complete contents of a package, shall be limited to K25”.
Furthermore, Clause 18 of the said Standard Conditions of Business was relied upon by the Defendant to limit its liability. The said Clause 18 state that:
“In the case of goods of a value exceeding K200 per package or unit or the equivalent of that sum in other currency the value will not be declared or inserted in the Bill of Lading for the purpose of extending the Shipowners liability under Article IV Rule 5 of the Sea Carriage of Goods Act, 1924, or any statutory modification thereof for the time being in force except upon instruction will be forwarded or dealt with at owner’s risk or other minimum charges unless express instructions in writing to the contrary are given by the customer.”
Therefore, it is claimed by the Defendant that arising from these two clauses the Plaintiff cannot be entitled to the damages being claimed herein.
Did the Defendant breach the contract?
The Defendant argues that it was contracted at a fee to move the two shipments from Durban in South Africa to Malawi. Thus, so it was further argued, the Plaintiff knew that they would part with some money for involving the Defendant. It is the further argument of the Defendant that it is trite that the 256 cartons had overstayed at the port and incurred heavy port storage charges.
The Defendant avers that the Plaintiff attempted to negotiate theses port storage charges but was not successful. The Defendant further submits that their agent, BP Freight acted reasonably by quickly paying for the port charges so that the goods could be kept in their warehouse waiting for their removal to Malawi. In the view of the Defendant that was acting in the Plaintiff’s best interest.
It is further put by the Defendant that the Plaintiff admitted that it had paid for storage charges for the 256 cartons to Thrutainers on its behalf as evidenced by the contents of an e-mail dated 14th October 2005.
Thus, it is said that pursuant to Clause 13 of the Standard Conditions of Business, inter alia, the Plaintiff was liable for any outlays of whatever nature levied by the authorities at any port or place for or in connection with the goods and the customer with whom the company has contracted shall indemnify the company against any payments incurred by the company.
The Defendant continued to argue that pursuant to the said clause 13 it issued an interim invoice of MK1,266,905.69, which was principally a demand for the storage charges that its agent, BP Freight settled on behalf of the Plaintiff. It is further argued that the Defendant wanted to be paid this money upfront before goods moved from South Africa to Malawi because it included fees to be paid to their said agent. The Plaintiff, so it is said, merely promised to pay in the months of September to December 2005 and the Defendant was waiting for such money to pay BP Freight.
The Defendant finally submits that the Plaintiff’s conduct made it impossible for it to perform its part of the contract. In the premises, the Defendant argues, it cannot be held to have breached the contract in any way.
Defendant’s counter claim
As stated earlier, the Defendant has filed a counter claim against the Plaintiff. It is the view of the Defendant that it has specifically pleaded special damages in its counterclaim and strictly proved the said special damages. The Defendant has urged this court to conclude that it proved that the Plaintiff refused to settle its interim invoice of MK1,266,905.69 even though it promised to settle the same on 14th October 2005. The Defendant therefore submits that the Plaintiff should be ordered to pay this sum of money.
Further, the Defendant argues that the Plaintiff has refused to settle its interim invoice since September 2005. Accordingly, as stipulated in the invoice “Invoices are payable immediately after receipt without deduction. Interest will be charged after 30 days of the date of the invoice at a rate of 5% above bank rate.” Indeed, it is the view of the Defendant that since the relationship between it and the Plaintiff was commercial in nature it should be paid interest from 2nd October 2005 to the date of actual payment on the MK1,266,905.69 at the rate of 5% above bank rate.
Payment for the storage charges incurred while the goods were in detention.
The Defendant argues that between September 2005 and December 2005 it delayed in shipping the goods to Malawi was as the Plaintiff was not living up to its promise to settle the Defendant’s interim invoice. Thus, the Defendant resorted to exercise a general lien in December 2005 when the Plaintiff sent a demand letter to the Defendant. This, the Defendant surmise, was around the time its agent received the 50 cases of assorted chemicals. Therefore, in its judgment, the storage fees from September 2005 to December 2005 being SAR11,595.65 were prior to the time the Defendant had exercised the lien through their agent, BP Freight.
However, it is further submitted, the Plaintiff’s goods had to be kept securely in BP Freight’s warehouse and the Defendant incurred storage expenses in so doing. A warehouse, so it is said, is by nature designed to keep goods as a means of earning income through storage fees and it is self-evident that the Plaintiff’s goods occupied space in the warehouse, which would have been put to commercial use. The Plaintiff should, it is further put, pay storage fees for the time the goods were held as lien. Accordingly, it is argued that the Defendant should be reimbursed for such storage expenses.
For the submissions given above, the Defendant has prayed for the dismissal of the Plaintiff’s claim. Further, the Defendant has asked this court to find that the exercise of the right of general lien on the Plaintiff’s goods was lawful. Moreover, the Defendant has urged this court to order that the moneys being claimed in the counterclaim should be paid by the Plaintiff. Finally, the Defendant also prays for costs of this action.
As it were, the Plaintiff’s arguments were essentially the following:-
The nature of the contract between the Plaintiff and the Defendant
The Plaintiff opines that it is trite that the contract between the parties was that the Defendant would facilitate the transportation of its two consignments to Malawi. The time frame for moving the goods to Malawi was not fixed. Further, the Plaintiff argues that given that this was a business transaction the expectation was that the goods would be moved to Blantyre Malawi within a reasonable time. The Plaintiff moreover submits that the contract was oral but evidenced through exchange of emails. As it was oral, so the argument further went, the question whether standard terms were part of the contract has arisen.
Standard conditions of business as part of the contract
The Plaintiff says that it delivered documents to the Defendant on the 29th August 2005 but apparently the terms of the contract were not discussed. The Plaintiff notes the Defendant’s allegations that it was understood that the terms upon which Freight Forwarders trade would apply. However, the Plaintiff contends that it only became aware of the terms referred to after the contract was entered into.
The Plaintiff further says that the terms referred to are printed and titled Clearing And Forwarding Agents Association of Malawi- Standard Conditions of Business but it is not known when they were promulgated and when the Defendant became a member.
It is the further submission of the Plaintiff that the burden of proving that the standard conditions of business were part of the contract rests on the Defendant. For it is he who asserts that must prove the assertion. In this regard the Plaintiff notes that the Defendant relies on DM1 as evidence that the Plaintiff was aware of the standard conditions of business. It is argued on behalf of the Plaintiff that the document is dated 1st August 2005 twenty-eight days before the documents for the consignments in issue were collected. Senior Counsel for the Plaintiff further observes that a cautious examination of the two documents relating to the same transaction reveals the following: Firstly, that the document bears the phrase ‘Temporary Store’. It is not clear whose store this is. It can only be assumed that it is the Defendant’s store. It also bears the phrase ‘Advice of Goods Received/ Delivery Note For Customs Clearance’. Secondly, the first page of DM1 is not signed and the name of the person who is supposed to have received the consignment is not stated. The document bears a customs stamp. Thirdly, the second page is signed but there is no name as required. The page does not bear a customs stamp. Lastly, at the bottom of each of the documents there is the statement ‘All business undertaken subject to standard conditions of CAFAAM copy of which is available for inspection in our offices throughout the country. The print is not large.
The argument of Senior Counsel is therefore that being a delivery note of some sort it could only have been generated after the contract was made. Thus, it is further argued, there is no evidence of what the terms of that contract were.
The Plaintiff, through Senior Counsel, further surmises that reading paragraphs 6.2 through to 6.4 of Mr. Makawa’s statement one gets the impression that he is trying to establish a course of dealing through this one transaction. In response, the Plaintiff states that it only became aware of the standard conditions of business well after the contracts for the two consignments had been entered into. The Plaintiff further points out that in all e-mails prior to November 1 2005 there was no reference to the said conditions as E-mails exhibited to Mr. Mpata’ s statement do not bear such a phrase. Similarly, so it is argued, DM6 to DM 13 do not bear the phrase in question.
I wish to express my earnest gratitude to both Counsel for their careful and cogent written submissions on the issues that arise for consideration in this matter. Any clarity in this judgment is really due to the said submissions.
Without much ado, I now proceed to reflect on the pertinent issues for consideration in this action. This is now an appropriate time for me to enumerate the issues that arise and fall to be decided by this court.
ISSUES FOR DETERMINATION
The questions that have been isolated herein below arise from my reading of the pleadings that were exchanged between the parties, and the arguments of Counsel. As I see it, the following are the issues that call for determination in this matter:-
(a)What was the nature of the contract between the Plaintiff and the Defendant and did the latter carryout the Plaintiff’s instructions?
(b)Whether the Standard Conditions of business of the Clearing and Forwarding Association in Malawi apply to the contract between the Plaintiff and the Defendant.
(c)Whether the Defendant was entitled to detain the Plaintiff’s goods in the circumstances or alternatively whether the Defendant and its agent were entitled to exercise a general lien on either the two consignments or on the 50 cartons of chemicals or on the 256 cartons of cones.
(d)Whether the Defendant could exercise lien when the goods were in the agent’s possession.
(e)Whether the Defendant is responsible for the wasting away of some of the chemicals in the 50 cases.
(f)Whether the Plaintiff is entitled to damages for loss of profits.
(g)Whether the Defendant breached the contract between it and the Plaintiff.
(h)Whether the Defendant is entitled to the counter claim herein.
(i)Whether the storage charges incurred while the goods were in detention are payable by the Plaintiff and; whether the Defendant and its agent are entitled to claim storage charges from the time the goods arrived in Johannesburg.
If there are other secondary questions I shall also allude to them later in this judgment. I will now, without much ado, proceed to deal with the matters that arise and fall to be resolved. I do not propose to deal with the said issues as they appear above.
LAW AND DISCUSSION
Do standard Conditions of business of the Clearing and Forwarding Association in Malawi apply to the contract between the Plaintiff and the Defendant?
It is well to point out that standard form contracts are not a novel thing. In point of fact they have been a challenge to the courts of many countries for a long time. Further, it is trite that standard form contracts are usually contained in a ticket, receipt or some other standard document. My understanding of them is that they are generally intended to either exclude liability or to benefit one of the parties more especially the originators of same. Moreover, as I understand the law, when parties sign a document containing standard terms they are bound by the terms in so far as the particular contract is concerned. Furthermore, I have always understood the law to be that where a document containing standard terms is handed over to the other party at the time of making the contract then issues of whether the party receiving the document was aware of the printed terms and agreed to them arise5. However, it is also settled law that if notice of the conditions is not brought to the receiving party before or at the time the contract is concluded they will be of no effect6.
Turning to the instant case this court observes that DM1 relates to a totally different contract. The document was prepared after the contract had been concluded so that the terms referred to in it did not form part of that contract. As rightly observed by the Plaintiff’s Counsel the Defendant seems to rely on a course of dealing rather than the fact that the terms were incorporated before or at the time of making the contracts in question. Perhaps an expose of the law on course of dealing will help us to appreciate whether the Defendant’s reliance on it assist it in defending the claim by the Plaintiff.
I will do no better than have recourse to Chitty on Contract. The law on course of dealing is instructively explained as follows:
‘Conditions will not necessarily be incorporated into a contract by reason of the fact that the parties have, on previous occasions, dealt with each other subject to those conditions. But they may be incorporated by a course of dealing between the parties where each party has led the other reasonably to believe that he intended that the rights and liabilities should be ascertained by reference to the terms of a document, which had been consistently used by them in previous transactions. Conditions usual in a particular trade may likewise be implied where both parties are in the trade and are aware that conditions are habitually imposed and of the substance of those conditions7’ [underlining and emphasis supplied by me]
As it were, in my reading of the above, for there to be a course of dealing the following facts must exist: Firstly, that the parties have dealt with each other on previous occasions (not one occasion) subject to those conditions. Secondly, they have led each other to believe that their rights and liabilities will be regulated by the said conditions consistently used by them in previous transactions. Lastly, where both parties are in the same trade; and are aware that such conditions are habitually imposed and are also aware of their substance; then the conditions may be implied.
Furthermore, it is important to observe that in chapter 5 the Learned Editor deals with carriage by land and in paragraph 3167 he says:
‘ He may perhaps also be bound if the previous course of dealing between him and the carrier justifies the inference that he must have known not only that goods are always accepted for carriage upon conditions, but also what those conditions are. But he will not be bound by any such course of dealing if he never read the conditions and did not know what they were.’
In the case at hand I find that there appears to have been a dealing but in that transaction the standard conditions were not part of the contract. There is actually no denying of the fact that they appear in small print at the bottom of the delivery note. However, there is no evidence to show that when the contracts under dispute were being concluded there was mention of the standard terms or conditions. Indeed, there is nothing on record to show that the Plaintiff did at any time give the inkling that it would be guided by those conditions neither that the Defendant wanted the conditions to be part of the contract.
Furthermore, I find and conclude that the Plaintiff was not aware of the existence of the conditions or their substance or that they are habitually imposed. The said conditions cannot therefore be implied into the contract now under consideration. It was up to the Defendant to prove that the Plaintiff was aware of the conditions at the time the contracts were concluded. The Defendant failed to do that. All they want is for this court to assume that the terms and or conditions must have been brought to the Plaintiff’s attention. That is a dangerous path to take in a court of law.
Finally, I wish to observe that in my judgment the Standard Conditions of business being relied upon by the Defendant are prohibited under Section 32 of the Competition and Fair Practices Act Cap 48:09. The relevant parts of the said Section 32 (1) reads:-
‘Any category of agreements, decisions and concerted practices which are likely to result in the prevention, restriction or distortion of competition to an appreciable extent in Malawi….are declared anti-competitive practices and are hereby prohibited’
The Competition and Fair Practices Act came into force in 2003. This was well before this transaction between the Plaintiff and the Defendant. As I understand it, the rationale for the prohibition of such type of agreements, decisions and concerted practices is that such type of conditions prevent, restrict or distort competition in Malawi. I reckon that if this court were to uphold the standard conditions it may encourage the infringement of the Act. This court shall have none of that. I shall again come back this section, and comment further, later in this judgment.
Did the Defendant carryout the Plaintiff’s instructions?
It is agreed that the contracts required the Defendant to arrange the movement of the Plaintiff’s two consignments from Durban to Blantyre. Further, there is no dispute that Cost, Insurance and Freight, for the 50 cartons of assorted chemicals were paid for in advance. Accordingly, all that the Defendant was obligated to do as; a freight forwarder was to identify a carrier to move the goods to Blantyre.
I have noted that in point of fact there is evidence to demonstrate that Globe Link, who had custody of the 50 cartons, was willing to arrange the transportation of the 50 cartons to Malawi. The emails that were exchanged between the Defendant and Globe Link are rather illuminating in this regard. On September 28 2005 Dickson Makawa wrote:-
‘Please refer to your fax dated 22/08/05 where you are demanding R3,179.00. Please note that this shipment is on TBL to Blantyre therefore no charges are to be paid to yourselves. You may therefore claim all including freight from the shipper in India. Meanwhile, please arrange to release the cargo to our agent BP Freight for on forwarding to Blantyre. Please confirm by return mail so that we can release the OBL.’
The date of 22nd August 2005 cannot be truthful as the Defendant had not by that time collected the bill of lading from the Claimant. In saying this I am mindful that Mr. Makawa put it in his testimony that he collected the bill of lading from the Claimant on 29th August 2005. In my judgment, and I so conclude, the fax must as a result have been sent on 22nd September 2005. This conclusion is premised on the fact that on September 28 2005 Globe Link responded as follows:-
‘Please note that the freight has been paid by shipper. The local landslide charges has to be collected from the consignee. We are not requesting any freight charges as it is our responsibility to transport cargo to Malawi.’
And, on 21st October 2005 at 3.15pm Globe Link wrote to the Defendant as follows:-
‘We are still waiting for payment and the original bill of lading for the said shipment. Please advise us urgently as we require to forward cargo to Malawi.’
The Defendant then at 4.29 pm replied as follows:-
‘Before we make payment to yourselves we want the following clarification
We wanted our agent BP Freight to move the consignment to us. Since you have no account with BP Freight, my agent would need cash payment upfront for the freight to Malawi before the consignment is collected from your warehouse.
Please confirm if above is in order so that arrangements on both payments can be made.’
It is well to note that Globe Link was based in Durban while BP Freight, as disclosed by Peter John Loram, is based in Johannesburg. Further, it is observed that Globe Link was more than willing to transport the goods to Malawi but the Defendant insisted on having the consignment handed over to BP Freight. As it were, Peter John Loram’s testimony in paragraph 6.6 is also enlightening. It is to the effect that the Defendant and BP Freight ‘agreed to keep the 256 cartons securely and safely in …warehouse for a period of 20 weeks from 2nd September 2005. The storage charges for the 20 weeks at SAR55 per 21.083 sq meters divided by 2 came to SAR11,595’
I must say that the agreement was inconsistent with the nature of the contract. It will be remembered that the contract was namely to arrange the transportation of the cargo to Malawi. Now, instead of making such arrangements the Defendant authorized a third party to warehouse the goods. This was obviously a breach of the terms of the contract. If the Defendant desired to exercise its lien it should have done so after the goods arrived in Malawi.
As if the above is not bad enough, the court noted that it is the evidence of Mr. Makawa that the goods were in point of fact only transported to Malawi in August 2006. This is more than a year after receiving instructions. Undoubtedly this was not in keeping with the law of agency. As I understand it, at law an agent’s duty is to obey or carry out the principal’s mandate and to act diligently and with utmost care in carrying out his mandate and when the agent fails to do so he is liable to pay damages.8 Where it is impossible to do so then it becomes his duty to inform his principal promptly.9 Furthermore, the position at law is that a forwarding agent is also liable for failing to make proper arrangements for the movement of goods.10
This court therefore finds and concludes that the Defendant failed to make proper arrangements for the transportation of the two consignments to Malawi within a reasonable time. Further, the Defendant breached the contract when it entered into an agreement with BP Freight to keep the goods for twenty weeks. By reason of the breach some chemicals expired. Accordingly, the Defendant is liable to pay the Plaintiff damages on account of failure to carryout the Plaintiff’s instructions.
Whether the defendant and its agent were entitled to exercise a general lien on the two consignments
As already noted above, the Plaintiff has argued that the answer to the above issue is in the negative. The Defendant has a contrary opinion. What position does this court take? I must say at the outset that I associate myself with the position taken by the Claimant. My understanding of the law, which is trite and therefore requiring no further citation of authority, is that an agent can exercise a general lien by agreement, custom or usage. Further, it is settled law that a general lien entitles an agent to retain possession of all goods in respect of any debts owing to him. But, in the absence of agreement, custom or usage an agent can only retain possession of goods in respect of debts concerning particular goods.11 Furthermore, as I understand it the law entitles a subagent to exercise a lien against the principal’s goods in respect of claims arising out of the transaction in which he was employed sub-agent. However, his general lien, if any, must be co-extensive with the rights of the agent and not wider12.
What should obtain in the case at hand if a lien is to be properly exercised? As I see it, in the present situation the rights of BP Freight and the Defendant have to be co–extensive. In the event that the Defendant does not have power to exercise a general lien BP Freight cannot exercise such power even if it has such a right. The finding of this court is that there is no evidence before it to prove that BP Freight had a right to a general lien. In saying this I am alive to the fact that even as it is correct that the Standard Conditions for Business said to be applicable to forwarding and clearing agents in Malawi entitle an agent to exercise a general lien, the evidence before the court does not support the Defendant’s contention that the said conditions were incorporated in the contract in issue. In any event, as already discussed, the agreement is against public policy and is prohibited by law. As explained above, there was no course of dealing established between the Plaintiff and the Defendant. The Defendant’s right to a lien was particular. Put differently, as I perceive it, the Defendant could have exercised a lien on the consignment of 50 cartons of chemicals if there was a debt owing on it or on the 256 cartons of cones if there was a debt owing on that consignment. Similarly, BP Freight could have exercised a particular lien on the consignment on which there was a debt. In view of the observations made above this court would answer the issue of whether the Defendant and its agent were entitled to exercise a general lien on the two consignments in the negative. I do so find.
Was the Defendant entitled to exercise a lien on 50 cartons of chemicals?
There is no denying of the fact that there was no debt on this consignment of 50 cartons of chemicals. It must be remembered that Mr. Makwa had instructed Globe Link as follows:-
‘Please refer to your fax dated 22/08/05 where you are demanding R3,179.00. Please note that this shipment is on TBL to Blantyre therefore no charges are to be paid to yourselves. You may therefore claim all including freight from the shipper in India. Meanwhile, please arrange to release the cargo to our agent BP Freight for on forwarding to Blantyre. Please confirm by return mail so that we can release the OBL.’
This shows that there was no debt on this consignment of 50 cartons. All charges were paid for up to Blantyre. The Defendant was therefore not justified in detaining the goods in South Africa or in Malawi for expenses unrelated to that consignment. For the avoidance of doubt I find and conclude that the Defendant was not entitled to exercise a lien on the said 50 cartons of chemicals.
Was there was a debt owing to the Defendant or any other person on the 256 cartons justify the exercising of a lien?
As I see it, there was no debt to entitle the Defendant to subject the Plaintiff’s consignment to a lien. Why do I say so? It is crucial to relate the events that transpired for one to appreciate the court’s observation in this regard.
It is common cause that the 256 cartons arrived at Durban on 21st July 2005. Unlike the 50 cartons the Plaintiff paid for freight up to Durban. Further, there is no denying of the fact that the agent at the destination was Thrutainers International (Durban).
Furthermore, it is well to point out that on 29th August 2005 Mr. Dickson Makawa collected documents for the two consignments from the Claimant so that the Defendant could use them to clear and arrange transportation of the cargo to Malawi. It is noted as well that Messrs Martin Mpata, Dickson Makawa and Rolf Ossman concur that the documents were collected on 29th August 2005. Moreover, it is in evidence that Mr. Dickson Makawa thereafter dispatched the documents to South Africa. A recital of some germane paragraphs of Mr. Makawa’s written statement will bear testimony to this. In paragraphs 6.5 and 6.8 of his statement he respectively states as follows:
‘’On 30th August, 2005 I couriered both sets of original documents to our agent BP Freight as per DHL waybill number 3570178430 dated 30th August 2005 for release of the goods from port and transit clearance to Malawi.’’
‘’On 1st September 2005 our agent BP Freight confirmed receipt of the documents and immediately cleared the 256 cartons out of the port and paid all port charges and removed the shipment out of the port to avoid extra costs. As it turned out the shipment had already arrived in Durban on the 21st July and had already accumulated storage charges.’’
Additionally, on 31st August 2005 Mr. Makawa advised the Plaintiff in writing as follows:-
‘Dear Mr. Likoloma,
As per telephone conversation of this morning, please note the following:
256 cartons on B/L wo2005071669- Documents still in customs, and we will advise total charges.
50 Cartons on B/L JA 05 BLA 80969- This shipment is on TBL and you are not suppose[d] to pay any additional port charges.
However Globe Link Shipping want you to pay ZAR3,700 being RSA local charges. Please [liaise] with your shipper in India to contact Globelink since this shipment is paid up to Blantyre. All any other additional charges at the port are for the account of the shipper.’
Now, it is the evidence of Peter Loram, called by the Defendant, that BP Freight is based in Johannesburg. Further, as we all came to know the cargo was at Durban. The Defendant’s Mr. Makawa sent the documents to BP Freight in Johannesburg on 30th August 2005. BP Freight confirmed receipt on 1st September 2005. Accordingly, BP Freight could only have sent the documents to Durban on the 1st September 2005. However, according to Makawa’s email documents were still with customs on 31st August 2005. The question that arises is when then were they lodged with customs and when were they prepared? Were they lodged without the Bills of Lading? The answer may be found in the documents that came with the goods to Malawi copies of which the Defendants presumably have but have not produced before this court.
It is trite that on 2nd September 2005 BP Freight informed the Plaintiff by e-mail that the consignment had been cleared, all charges paid for and the goods moved out of the port on 1st September 2005. Thus, this court doubts that BP Freight’s agent could have achieved all that in one day. In point of fact there is evidence which indicates that the process started days before BP Freight was instructed to clear the goods and for reasons that will become obvious later in this judgment it is concluded that in fact the goods were collected from Thrutainers before the 1st of September 2005. Is there any basis for this conclusion? As will be demonstrated shortly the answer is in the affirmative.
On 26th August 2005 Thrutainers International issued a tax invoice for R9,384.71 said to be release charges for the 256 cartons of cones. This invoice was issued three days before the Plaintiff instructed the Defendant to facilitate the transportation of the cargo to Malawi. It is well to point out that neither Mr. Dickson Makawa nor Mr. Rolf Ossman explained how BP Freight got involved before instructions were given to them. Further, the record will show that Peter Loram was shown the invoice but was not in a position to explain it. I guess it is because he did not handle the consignment. As it were, Christine Seller is the person who handled the consignment but was not called to testify. It can be safely assumed that she was not called because her evidence would have been adverse to the case for the Defendant.
It is noteworthy that although the consignment was intended for the Plaintiff the invoice was issued to BP Freight. It is besides worth noting that Thrutainers on 26th August 2005 did not invoice BP Freight in the sum of R50,470.31 for storage charges. Thrutainers appeared to be content with release fee. All I can observe is that it is astounding that Thrutainers opted not to include in its invoice the sum of R50,470.31 an amount that is five times more than the release fee. Furthermore, the invoice for R50,470.31 appears on a document whose logo is different from that of Thrutainers International. Thrutainers International does not appear to be the source of the invoice the subject matter of the observation herein. I must also point out that the Claimant challenged the authenticity of the said invoice. This notwithstanding the Defendant opted not to prove the authenticity of that document. As is apparent, the impugned document was issued by TGD on 1st September 2005 to GM Arcache Shipping and not to BPP Freight. This court expected an invoice generated by Thrutainers International to be addressed to BP Freight to whom the first invoice was addressed. It is correspondingly significant that the Defendant did not include release charges in its first invoice.
The Defendant was evasive about payment of storage charges and has not said much about payment of release fees. Mr. Dickson Makawa in his e-mail dated 2nd September 2005 numbered 1 and attached to Mpata’s statement attempted to salvage the situation. He said:-
‘ storage has already been paid on your behalf by my agent in Durban’
On 12th September 2005 he again in an email numbered 3 said ‘as explained my agent in RSA paid storage on your behalf’
Christine Seller of BP Freight on 22nd September 2005 wrote as follows:
‘I have sent a mail to Thrutainers, however I do not think that Mapeto are being fair to us. We have outlaid the storage money and are now out of pocket. I need them to pay so that you can pay me. My boss is putting pressure on me to get his money in.’
As I see it, Mr. Makawa echoed Christine’s story when on 23 September 2005 he said.
‘ our RSA agent paid storage on your behalf’ – email number 4’
Again on 1st November 2005, Mr. Makawa re-iterated that the Defendant’s agent had paid the money to Thrutainers. In all these e-mails the release charges are not mentioned. Actually, it is an undisputed fact that the Defendant did not have an agent in Durban. It is therefore idle talk for him to be talking of an agent who had been paid storage charges or release charges. Furthermore, the Defendant’s conduct in respect of this consignment created misgivings. The following observations are apt in this regard. On 1st September 2005 the Defendant sent an e-mail informing the Plaintiff that Globe Link were demanding R3,700 as landslide charges and sought instructions as to what action to take so that goods could be released. On the same day the same agent they had appointed allegedly paid R50,471 without seeking instructions from the Plaintiff. The next day the Defendant without verifying the alleged payment issued an invoice and according to Mr. Makawa demanded immediate payment. As I see it, the Defendant and its agents should have first sought instructions or to request the Plaintiff to pay R50,471 before clearing the goods.
The events enumerated above are in my judgment a clear indication that by the 29th of August, 2005 the Defendants and their agents had already collected the goods on payment of the release fees. Indeed, this also explains their refusal or inability to provide proof of payment of R50,471 as is demonstrated in Mr. Makawa’s e-mail of 1st September written at 12.09 am the relevant parts of which read:-
“Dear Mr. Likoloma,
Herewith charges from Globe Link, Durban 50 cartons.
‘Please advise what action I should take so that your shipment can be released’”
It should be noted that the Defendant is seeking a refund of money that it says it paid out on behalf of its principal but is unable or unwilling to prove that it paid. I agree with the Plaintiffs that the controversy could easily have been resolved if the Defendant or BP Freight, GM Arcache or Thrutainers had produced evidence of payment or receipt. The reasonable inference is that evidence of payment does not exist. If it exists, its production would reveal information that the does not support the Defendant’s or its agents’ any claim for fees.
As has been observed the Defendant and its agent failed to disclose the fact that the 256 cartons were collected from Thrutainer before instructions were given. As it were, the Defendant should have sought the Plaintiff’s ratification of the unlawful removal. Actually, the Defendant breached its duty to disclose all material information to its principal. As I understand the law, it is the duty of an agent to disclose to his principal every material fact, which is or ought to be known by the principal particularly if it will influence the principal’s judgment.13 Further, in Falcke v Scottish Imperial Insurance Co14 Lord Bowen instructively said that:-
‘ the general principle is beyond all questions that work and labour done or money expended by one man to preserve or benefit the property of another do not , according to English law, create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to re -pay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.’15
I can do no better than adopt the wise pronouncement of Lord Bowen. Similarly, the position at law is that a person who takes possession of another’s goods wrongfully and pays freight and other charges is not entitled to set up a lien pending payment.16
As a result this court finds and concludes that in the absence of evidence of the authenticity of the said invoice and of other primary evidence that Thrutainers International demanded and was paid storage charges neither the Defendant nor its agent was justified in exercising a lien on the goods. The debt has not been proved. It is further found and concluded that neither the Defendants nor its agents was entitled to exercise a lien on the goods in respect of the release fees. This is the case because the goods were wrongfully collected from Thrutainers before even instructions were given to the Defendant or its agents.
The long and short of it is that there was no debt owing to the Defendant or any other person on the 256 cartons to justify the exercise the right of lien of lien on the part of the Defendant or any other person on its behalf. It is so found.
Whether the Defendant and its agent are entitled to claim storage charges from the time the goods arrived in Johannesburg.
It is in evidence that the Defendant and its agent, in breach of the contract to arrange the transportation of the goods to Malawi, initially agreed to keep them in Johannesburg for at least 20 weeks. Why they set out to do this is not clearly spelt out. However, it can be assumed that the purpose was to enable BP Freight make some money. In my judgment, if that was the purpose then neither BP Freight nor the Defendant would be entitled to storage charges for that period.
On the other hand, if the purpose was to enforce a lien then they cannot claim storage charges in South Africa as well as in Malawi. As I understand it, the general rule is that a person who detains a chattel in order to enforce his lien is not entitled to the cost of keeping it.17 As stated above the contract required the Defendant to move the goods to Malawi. Accordingly, this court finds that the keeping the goods in South Africa was a clear breach of the contract albeit that the Defendant was entitled to a lien. Definitely they should have exercised their right in Malawi on arrival of the goods. Even then they would not have been entitled to storage charges. The bottom line is that the neither the Defendant nor its agent are entitled to claim storage charges from the time the goods arrived in Johannesburg.
Are the storage charges reasonable?
As will have been seen the Plaintiff is challenging the reasonableness of the storage charges. It is trite then that the burden of proving that the charges are reasonable rests on the Defendant.18 In the instant case the Defendant did not call the agents it engaged to prove the reasonableness of the charges. In view of the observations made above this court would answer the issue of whether the storage charges are reasonable in the negative. I do so find that the storage charges are unreasonable.
Did the Defendant acted diligently?
The position at law is that it is the duty of every agent to act with strict care and diligence. In the event that he fails to act diligently the agent becomes liable for any loss arising from want of care, skill or diligence.19 This court finds and concludes that the Defendant did not act with diligence and in fact acted negligently when one considers the following acts and/or omissions by the Defendant: firstly, when the Defendant turned down the proposal from Globe Link to identify a carrier to move the goods. Secondly, when it opted to use an agent in Johannesburg who did not have offices in Durban resulting in that agent appointing another agent a situation that could have been avoided by allowing Globe Link to move the goods. Thirdly, when it is in evidence that the Defendant failed to inform the Plaintiff that Globe link had offered to find a transporter of the goods and that it was therefore not necessary for it to pursue the transaction. Fourthly, when it is noted that the Defendant authorized the transfer of the 50 cartons to BP Freight even though it was aware that BP Freight would not release the consignment. The 50 cartons were moved to Johannesburg in December 2005. Fifthly, when there was failure on the part of the Defendant to inform the Plaintiff that it did not have an agent in Durban. Sixthly, where it is clear that the Defendant failed to procure evidence of the alleged payment of R50,471 and to pass on that evidence to the principal. Lastly, this court has noted that the Defendant failed to offer evidence of transport costs from Durban to Johannesburg and from Johannesburg to Blantyre instead relies on an invoice issued by BP Freight in 2005.
Considering the observations made above this court would answer the issue of whether or not the Defendant acted diligently in the negative. I do so find that the Defendant acted carelessly. The Defendant must therefore be liable for any resultant loss from such want of care, skill or diligence.
Did the Defendant owe the Plaintiff a duty to act in good faith and whether or not the Defendant breached that duty?
As I understand it, the law does not allow an agent to put his interest first before that of his principal. An agent is required to protect the interest of the principal first. Indeed, the duty of the agent must not conflict with his/her interest. The agent must not therefore enter into a transaction, which will result in a conflict of interest.20
Turning to the instant case the evidence before this court clearly shows that the Defendant did not act in good faith. There are five observations that make this court come to this conclusion. Firstly, it is noted that the Defendant informed the Plaintiff that it or its agent had paid port charges when in fact no payment had been made. Secondly, it is well to point out that the Defendant failed to inform the Plaintiff that its agent had exercised a lien on the goods. Thirdly, the Defendant failed to inform the Plaintiff that Globe link had offered to find a transporter of the goods and that it was therefore not necessary for it to pursue the transaction. Fourthly, I have noted that the evidence is clear that the Defendant failed to inform the Plaintiff that it did not have an agent in Durban. Lastly, it is common place that the Defendant failed to procure evidence of the alleged payment of R50,471 and to pass on that evidence to the principal.
As it were, the Defendant was more interested in securing payment for its agent than in ensuring that the interest of the Plaintiff was protected. Accordingly, this court finds and concludes that the Defendant owed the Plaintiff a duty to act in good faith and it breached that duty by doing or omitting the five acts mentioned above. For the avoidance of doubt the issue under consideration is answered in the affirmative. I so find that the Defendant owed the Plaintiff a duty to act in good faith and it breached that duty.
Has the Plaintiff suffered any damage?
It is commonplace that the Defendant’s failure to carry out the Plaintiff’s mandate and to act diligently and in good faith has resulted in some of the chemicals wasting away in consequence of which the Plaintiff will not be able to use them. Additionally, the Plaintiff demonstrated before this court that it has not has not been able to use the use the cones in its business.
The evidence on record shows that chemicals that have expired, and their values, are as follows:-
(a) RS photo emulsion valued US$ 1230;
(b) RS52S retouch lacquer valued US$ 320;
(c) RS31 NTS Stripper valued US$1776;
(d) Fluffix valued US$375;
The above figures give a total value; before packing charges, inland freight charges transport to Blantyre and insurance charges, of US$3,701. An invoice produced in evidence by the Plaintiff, which invoice has not been disputed, shows that packing charges are calculated at 5% of the value which in this case is translates to US$185. The value of the expired goods is approximately 74% of the total value before charges. The total is therefore US$4996. Transport costs at 74% of the transport costs as reflected in the invoice has come to US$1924. Similarly, insurance at 74% of US$ 40 comes to US$29.60. The value of the expired chemicals is consequently the sum of US$3701+ US$185+US$1924+US$29.60 which give s a grand total of US$5,839.60.
I agree with the Plaintiff that the full extent of the loss will only be determined when Malawi Revenue Authority and the Defendant release the goods. I therefore that the goods be and are by order of this court released to the Plaintiff. It is reckoned that damage may have occurred to the unexpired chemicals and to the cones due to conditions of storage in South Africa and Malawi. It is therefore ordered that damages be reserved for assessment by the Registrar of the Commercial Court. It is so ordered.
Is the defendant entitled to any fees?
The position at law, as I understand it, is that an agent who is guilty of willful misconduct or breach of faith is not entitled to any remuneration.21This court has found and concluded that the Defendant owed the Plaintiff a duty to act in good faith and it breached that duty by doing and/or omitting to act. These were firstly, when it is noted that the Defendant informed the Plaintiff that it or its agent had paid port charges when in fact no payment had been made. Secondly, it is well to point out that the Defendant failed to inform the Plaintiff that its agent had exercised a lien on the goods. Thirdly, the Defendant failed to inform the Plaintiff that Globe link had offered to find a transporter of the goods and that it was therefore not necessary for it to pursue the transaction. Fourthly, I have noted that the evidence is clear that the Defendant failed to inform the Plaintiff that it did not have an agent in Durban. Lastly, it is common place that the Defendant failed to procure evidence of the alleged payment of R50,471 and to pass on that evidence to the principal.
By reason of the above, and considering the law on the subject, the Defendant and its subagents are not entitled to any fees. This is the case because the Defendant and/or its agent neither acted diligently nor in good faith.
Assuming that I am wrong in coming to this conclusion I would proceed to hold that if any fees are payable then the rate to be used is not the one suggested by the Clearing & Freight Forwarders Association. In saying this I am aware of the fact that this court observed that the Standard Conditions of business being relied upon by the Defendant to justify these fees are prohibited under Section 32 of the Competition and Fair Practices Act Cap 48:09.
As observed earlier, the Act came into force in 2003 well before this transaction between the Plaintiff and the Defendant. Thus the provisions apply to the issue at hand. I stated, and it is reiterated here, that the underlying principle is that such type of conditions prevent, restrict or distort competition in Malawi. I reckon that if this court were to uphold the standard conditions it may encourage the infringement of the Act. This court shall have none of that.
I repeat that the purported agreement offends Sections 32 and 3422 of the Competition and Fair Trading Act. Since it is illegal and against public policy for trade associations to enter into an agreement like the one in issue the court will not award fees on the recommended scales. The best the court can do is to use the minimus rule and award a nominal percentage of 12% of the fees being claimed by the Defendant.
Has the Defendant proved its claims?
The court has observed that the Defendant claims K1,266,905.69 which comprises of R50,437.31 converted to K1,110,346.80 and K133,241.61 said to be disbursement fee. The sum of R50,437.31 includes VAT which the Defendant conceded that it is not payable. In point of fact, the entire sum has not been proved. The onus of proving the debt, and the payment thereof in order to qualify for a refund, rests on the Defendant.
The court has found and concluded that the Defendant has not proved that Thrutainers levied a storage charge and/or that BP Freight or GM Arcache paid such storage charge. Further, the Defendant in addition claimed the sum of SAR111,712.24 made up as follows:-
1. Storage, clearance and other charges……………………………………SAR 63,959.69
2. Storage in South Africa……………………………………………………………SAR24,930.65
3. Transport to Malawi…………………………………………………………………….SAR14,500.00
It is well to point out that towards the end of the trial the Defendant amended its claim by deducting SAR44,272.20 from SAR111,712.24 leaving a balance of SAR24,528.98. The said sum of SAR44,272.20 represents storage charges which have not been proved. As found earlier, the release fee and storage charges are not payable. Thus, in my judgment the only amounts payable, subject to the Plaintiff’s claim, should be freight on 256 cartons of cones from Durban to Blantyre. It is significant to further point out that SAR14,500 is a figure given in 2005. The actual cost can only be ascertained by looking at the transporters invoice a copy of which is with the Defendant and MRA.
CONCLUSION AND DISPOSITION
The Plaintiff has made out its case against the Defendant. In the circumstances, I see no reason why this court should deny it the remedies sought in these proceedings. Therefore, this court finds and concludes that:
The Defendant breached the contracts to make proper arrangements for the transportation of the two consignments to Blantyre.
In the case of the 50 cartons, the Defendant should not have appointed a Johannesburg agent when the goods were in Durban. The appointment of a Johannesburg agent resulted in delay and loss to the Plaintiff. Indeed, the Defendant’s failure to make proper arrangements is a reflection of want of care and skill on its part. The Defendant should have surely informed the plaintiff of the difficulty before appointing the agent.
By keeping the goods in the Republic of South Africa, the Defendant did not act in good faith. The Defendant’s right to a lien, if any, was particular and not general. Since there was no debt on the 50 cartons, the Defendant was not justified in detaining the consignment. The Defendant should be held liable for all losses incurred as a result of wrongful exercise of lien. With regard to the 256 cartons, the Defendant could only have properly exercised a particular lien on that consignment if there was debt.
The burden of proving the debt in respect of the 256 cartons lied squarely on the Defendant. The Defendant’s case is that it incurred and paid K50,437.61 in storage charges. But the Defendant has not proved firstly that there was such a debt and secondly that it paid the debt to warrant a refund.
The authenticity of the TGD documents was challenged and it has not been proved. Secondly, the reasonableness of the charges has been questioned.
If there was any debt payable to Thrutainers it could only have been the release charges. The Plaintiff has successfully shown that these were paid prior to instructions being given. As it were, the Defendant’s agent volunteered to pay these at no consideration. Accordingly, the Defendant’s agent was not entitled to recover them from the Defendant or the Plaintiff. Further, the Defendant and its agent having chosen to set up a lien to enforce payment of money that was not due to them are not entitled to storage charges. As found above, the only expenses that the Defendant is entitled to are transport expenses in respect of the 256 cartons from Durban to Blantyre.
There is no denying of the fact that the Plaintiff has suffered loss as some chemicals have since expired. Moreover, the condition of the 256 cartons is not known. However, as observed earlier, the full degree of the loss can only be assessed after the determination of the case. It is therefore ordered that damages awardable be, and are hereby, reserved for assessment after the goods are released to the Plaintiff. I therefore order that the goods be released immediately to the Plaintiff. Further, and to avoid any doubt, I hereby grant the Plaintiff the following remedies :-
(1)An order for the delivery of the chemicals that have not perished.
(2)Damages for the perished chemicals
(3)Damages for lost profits.
(4)Interest on the said damages.
(5)Damages for breach of contract and for breach of duty as an agent.
Further, the Defendant has to the extent indicated above partially succeeded in its counterclaim against the Plaintiff. That is to say the only amounts payable, subject to the Plaintiff’s claim, should be freight on 256 cartons of cones from Durban to Blantyre being the sum of SAR14,500. However, as indicated earlier this sum of SAR14,500 is a figure given in 2005. The actual cost can only be ascertained by looking at the transporters invoice a copy of which is with the Defendant and Malawi Revenue Authority.
It is trite law that costs of and incidental to all proceedings in the High Court shall be in the discretion of the High Court23. Additionally, it is commonplace that costs normally follow the event. An instructive authority is Order 62 of the Rules of Supreme Court.24 The Plaintiff has had to resort to litigation to get what is due to it. There is no denying of the fact that the Plaintiff has succeeded in its claim against the Defendant. The Defendant also partially succeeded in its counter claim. Therefore, the Plaintiff must be awarded ¾ of the taxed costs of this action. I so order.
Pronounced in Open Court this 28th day of April, 2008 at the Commercial Division of the High Court of Malawi, Blantyre Registry.
1 Thornton vs. Shoe Lane Parking Ltd (1971) 1 All ER 686
2 Ndasowanjira Art Studio vs. Casalee Cargo Ltd  14 MLR 367; Supurling Ltd vs. Bradshaw  1 WLR 461.
3 Wiltshire Iron Company vs. Great Western Railway (1871) L.R. 6 QB 776
4 Mchawa vs. National Bank of Malawi  14 MLR 266.
5 Chitty on Contracts 26th edition para. 777
6 Para. 779 of Chitty on Contracts; Olley vs. Marlborough Court Limited  1 KB 532
7 paragraph 780 of Chitty on Contract
8 Mercantile law of South Africa by Phillip Millin at page 350; Chitty on Contract 26th Edition para 2595 and 2596
9 Halsbury’s Laws of England 4th edn para 772.
10 Manica Freight Services vs. Chitunda 11 MLR 225
11Chitty on Contract 26th Edition para 2626; Commercial Law by GJ Borie 3rd Edition pages 23-24; Halsbury's Laws of England 4th Edition para 810
12 Halsbury’s Laws of England 4th Edition Vol. 1 para 814
13 Halsbury’s Laws of England Vol 1 4th edn. para 788.
14(1886) 34ChD 234
15 (1886) 34ChD 234 at page 248
16 Halsbury’s Laws of England 3rd edn para 266 at page 146
17 Halsburys Laws of England 3rd edition page 145
18 Practice note 18/12/10 RSC; Re Wells decd 1962} 1WLR 397
19 Halsbury’s Laws of England 4th edition para 776
20Halsbury’s Laws of England 4th edition Vol. 1 para787
21 Halsburys Laws of England 4th editionn Vol. 1 para. 806
22The said Section 34 states that:-
‘The following practices conducted by of a trade association are declared to be anti competitive trade practices and are prohibited ….
b) making of recommendations, directly or indirectly, by a trade association, to its members or to any class of its members which relate to-
i) the prices charged or to be charged by such members or any such class of members or to the margins included or to be included in the prices or to pricing formula used or to be used in the calculation of those prices.’
23 Section 30 of the Courts Act.
24 Chihana vs. Speaker of the National Assembly and Malawi Electoral Commission Misc. Civ. Cas. No. 2933 of 2005 (H.C) (Unrep.).