Imak International Pty Ltd v Feeders Seafoods Fiji Ltd [1999] FJHC 141; Hbc0368j.95s (9 July 1999)

IN THE HIGH COURT OF FIJI
At Suva
Civil Jurisdiction

CIVIL ACTION NO. 0368 OF 1995

Between:

IMAK INTERNATIONAL PTY. LTD.
Plaintiff

- and -

FEEDERS SEAFOODS FIJI LTD.
Defendant

Mr. H. Lateef for the Plaintiff
Mr. D. Sharma for the Defendant

JUDGMENT

This case concerns a dispute that arose between the plaintiff company an Australian based commodity broker specialising in the export and wholesale of meat and the defendant company a Fiji based importer and processor of meat and meat products.

The particular subject matter of the dispute between the parties concerns three (3) full container-loads of frozen mullet which the plaintiff claims the defendant had agreed to purchase and which the defendant denies.

The agreement the plaintiff pleads is '... evidenced by conduct, past dealings, trade and practice, oral discussions and correspondence having passed between them.' The defendant denies however having entered into any firm contract in so far as it had not signed and returned any 'Confirmation of Sale' slips in respect of the disputed container loads and in any event defence counsel writes the defendant had 'the right to cancel any future shipments of fish since its orders were based on market demand'.

Quite plainly there is a preliminary fundamental issue as to whether or not a contract for the supply of three (3) full container loads of frozen mullet had been concluded between the parties.

In this regard Mr. Macpherson the managing director of the plaintiff company testified that the plaintiff company was a licensed exporter of meat and other commodities and operated as a brokerage firm. It did not actually fish but dealt with suppliers from whom it was able to source the commodity to fulfil its customers' orders. Sometimes it took a 'calculated commercial decision to buy long or short'.

As to the particular manner in which the plaintiff did business with the defendant he testified that:

'The accepted normal way we do business is we speak on the phone (to our buyer) and discuss supply, price and other details and upon verbal confirmation from the buyer we fax a covering sheet where we repeat our verbal agreement.'

In this latter regard the witness identified two (2) computer-generated plaintiff company documents entitled: 'Confirmation of Sale' addressed to the buyer and an almost identical duplicate entitled 'Confirmation of Purchase' addressed to the supplier of the commodity (See for e.g.: Exhibits 3 & 4). Both documents bear the same contract number and reflects 'back-to-back' trading.

The plaintiff had initially done business with the defendant in 1990-1992 selling meat products and then in early April 1994 it began selling frozen mullets to the defendant. The first sale of three (3) Full container loads was confirmed by fax on 8th April 1994 (Ex.1) and were to be shipped in early May, June and July.

This particular sale is fully documented and is undisputed by the defendant, and, except for a successful deferment of one of the shipments, was accepted and paid for by the defendant and need not concern the Court any further other than to note that the defendant's undated deferment request (Exhibit 9) faxed on 19.5.94 ended with the statement: '... and a container every month thereafter' (whatever that may mean).

Mr. Chute the managing director of the defendant for his part, generally confirmed the evidence of Mr. Macpherson as to how orders were placed and dealt with by the companies with one important variation. He testified:

'After (telephone) discussions the order would be confirmed to us and we would sign that confirmation. They (the plaintiff) would send us a fax in most cases and before confirming an order we would send a signed Confirmation of Sale slip to indicate our acceptance (E.g. Exhibit 3). It was a confirmation of sale and if I wanted to buy I signed and not if I didn't.'

Having seen and heard both witnesses, I have no hesitation in preferring the evidence of Mr. Macpherson as to the manner in which contracts were entered into between the parties. In particular, I am satisfied that sale and purchase contracts were generally concluded orally and by faxes exchanged between the parties and later confirmed in writing. The Confirmation of Sale slips in my view were not merely 'offers to sell' as suggested by the defendant, but, as the title makes clear, were evidence of concluded sales.

Given the above finding I turn next to consider the particular circumstances surrounding the subject matter under dispute and I begin with the defendant's faxed document (Exhibit 13'A') dated the 25th of May 1994 which is addressed to the plaintiff and reads in its body:

'We require 1 FCL mullets every month from July onward.'

To this request the plaintiff replied by return fax (Exhibit 13'B') as follows:

'YR FAX 25/5 RE: MULLETS. THANKS. WE HEREBY CONFIRM OUR SALE - SUBJECT TO CATCH:

3 FCLS FROZEN HEADLESS GUTTED MULLETS

IN 10 KG NETT CARTONS AT 145 AC/KG/CIF

SHPMT (FOR ARRIVAL MID SEPT OUR C9754

1 FCL ( " " MID OCT " C9755

EACH ( " " MID NOV " C9756

(There is then a reference to the defendant’s earlier deferred purchases)

WHICH MEANS YOU WILL BE GETTING 1 FCL MONTHLY TO NOVEMBER 1994.'

On the same date the plaintiff generated and airmailed to the defendant company three (3) Confirmation of Sale slips (Exhibits 20, 22 & 24). Corresponding Confirmation of Purchase slips were also raised in the name of the supplier Rock Oysters Pty. Ltd., and have all been signed by M. Patis and dated 30.5.94.

It is noteworthy that although the Confirmation of Sale slips are all dated '25.5.94' the shipment periods indicated were for: 'During early Sept. 1994' (Ex.20); 'During early October 1994' (Ex.22) and; 'During early November 1994' (Ex.24).

The next document in sequence is the defendant's fax of 29.7.94 (Exhibit 16) confirming receipt of the 'shipping schedule of mullets' and requesting that the plaintiff 'hold containers until further notice because we have 2 container loads to sell'.

This was followed by the plaintiff's undated fax of about 19.8.94 in which the plaintiff advised the defendant that it had 3 mullet contracts left for Sep/Oct/Nov which were being delayed indefinitely and requested a shipping program '- as we would not cancel - especially if we want to get good service next year'.

By return fax (Exhibit 28 the defendant confirmed its earlier advice of 29.7.94 and for the same reason.

The plaintiff replied on the same day as follows:

'Mullet

We have firm contract with you + supplier. Both parties cannot simply delay without some sort of program.

The 3 FCL Mullet outstanding need to be shipped.

(Reference is thereafter made to the programmed shipments of the 3 containers)

Must tell supplier some idea of your program (new one).

Please Advise'

By its fax (Exhibit 30) the defendant confirmed its earlier holding advice and promised to advise a new shipping programme as soon as possible. There is not the slightest suggestion that it had no 'firm contract' for the supply of 3 FCLS of mullet or that the same had been earlier cancelled.

The defendant's fax was followed by a flurry of urgent faxes from the plaintiff each requesting a new shipping programme for the remaining 3 FCL of mullet and finally, by Fax dated 5th September 1984 (Exhibit 35), the plaintiff advised of its problems in disposing of its earlier container-loads of mullet in the flooded Fiji market and, for the first time, mention is made in writing of the earlier return of the Confirmation of Sale slips 'indicating the cancellation of the related shipments'. No shipping program as earlier promised was provided.

I digress to refer to Mr. Chute's evidence on this fax. In chief he accepted that he was not the author of the fax but he claims he 'had knowledge of it and knew it was sent to Imak'. He confirmed that 'it accurately sets out the (defendant) company's position'. Then in cross-examination, and in a complete about-face albeit consistent with a pleaded defence, he rejects the 'cancelled contracts' position on the basis that 'there were no contracts because Confirmation of Sale slips were never signed'. Unfortunately the author of the document and the person with whom the plaintiff mainly dealt with, was not called to speak to the fax, but, in any event, Mr. Chute's evidence appears to be contradicted by his own fax of 4.11.94 (Exhibit 6) where-in he states:

'It appears that all contracts were cancelled by Adrian and he notified Scott.'

Be that as it may, this latest fax of the defendant provoked a further three (3) faxes from the plaintiff denying that it was the source of supplies to the defendant's competitors in Fiji and advising that it was 'not in a position to cancel with (its) supplier.'

The defendant replied (Exhibit 39) that its cashflow position was heavily stretched and it was 'not able to handle any further shipments of mullet'. Not to be put off the plaintiff sought a review of the defendant's decision and faxed (Exhibit 40) that it would be holding the defendant '... fully responsible for any losses and consequences'.

A month passed without any communication and the plaintiff eventually faxed (Exhibit 41) advising of its intention 'to start legal proceedings about the mullet order'. In spite of this fax and despite being redirected to another officer of the defendant company, the plaintiff continued to seek a shipping schedule for the outstanding 3 FCL of mullet.

Finally by Fax dated 8.11.94 (Exhibit 49) the managing director of the defendant company Mr. Ian Chute advised:

'We mailed all cancelled contracts during this week. Copy is faxed to you again.

We understand that our faxes has given you enough notice to cancel our shipment for September, October and November.'

To this last fax, the plaintiff replied by fax dated 9.11.94 (Exhibit 50) stating inter alia that: 'T0 CANCEL ALL PARTIES NEED TO AGREE. THE FACT REMAINS THAT WE DID NOT AGREE/ACCEPT ANY CANCELLATION ... WE ARE COMMITTED TO THE FISH FACTORY AND HAVE NO ALTERNATIVE BUT IN TURN TO HOLD YOU TO YOUR COMMITMENT.'

In this case having carefully considered all the evidence relating to the particular subject-matter under dispute, including the correspondence exchanged between the parties, the Confirmation of Sale slips, and the oral testimony of the managing directors of the two companies, I am satisfied that there existed in respect of the three (3) disputed container loads of frozen mullet, concluded contracts (partly oral and mainly written) on or about the 25th of May 1994.

Furthermore I am satisfied from its various faxes in particular, Exhibits. 35, 39, 46 & 52, and from its 'evasive’ conduct from late July 1994 onwards to early November 1994, that the defendant company evinced a clear intention of repudiating its obligations under the above contracts.

Needless to say I entirely reject the defendant's claim that it was unilaterally entitled 'to stop or halt any orders for fish', a claim which I might add sits rather incongruously with its assertion that no contract existed at all.

Equally I am satisfied that despite being legally entitled to do so, the plaintiff did not immediately treat the contracts as being at an end, but instead, elected to treat them as continuing until the three (3) FCL of frozen mullet were 'consigned to Foods Pacific' at the end of 1994.

I turn next to consider in greater detail two further matters pleaded in the Statement of Defence, and which may be conveniently described as the 'exclusivity' plea and the 'quality' plea.

As to both matters it is common ground that neither is recorded anywhere in the faxes exchanged between the parties until the defendant's fax of 5th September 1994 (Ex.35).

The Statement of Defence pleads the 'exclusivity' plea in the following terms:

'... (the defendant) says that the goods exported by the plaintiff for the defendant were not exclusively supplied to the Defendant and that the Plaintiff had in breach of its earlier agreement with the defendant sold or had caused to send the same goods to other importers in Fiji and/or falsely misrepresented to the defendant that the plaintiff was the only supplier of the the type of goods sold to the defendant, whereby the market in Fiji became saturated with the same goods rendering any profit on the sale of these goods by the defendant impossible.'

In the first place the pleading nowhere provides any particulars as to when? where? and by whom? the representation was made or recorded, although Mr. Chute testified that:

'The understanding I had with Mr. Macpherson was that he could arrange the shipment or exclusive agency with mullet packers in Australia and supply Feeders exclusively. This assurance of exclusivity was important because it would:

(1) guarantee supply; and

(2) reduce price undercutting in the small local market.'

He also claims to have found out that the majority of the defendant's competitors had obtained their mullet supplies from Australia and, in one case from the plaintiff's own Australian supplier. In this latter regard, although he had seen the offending carton he had not seen fit to send it to the plaintiff 'because (they) were getting out of Mullet'.

In cross-examination he agreed that he had not obtained or reduced this important 'assurance of exclusivity’ into writing nor had he asked the plaintiff if it in turn, had an exclusive licence from Australian Eastern border suppliers of mullet which would have numbered 'less than 100'.

Mr. Macpherson for his part whilst confirming their agreement in 1994 that the plaintiff 'would not supply the whole Fiji market other than feeders' which, he was adamant the plaintiff had honoured, nevertheless, testified that:

'As for tying up the mullet market out of Australia that is not correct and could not possibly happen in any market, let alone Australia, and especially with a single container load. We gave no such inducement to Feeders.'

In the absence of clear physical evidence to the contrary and given the sworn categorical denials by Mr. Macpherson that: 'During business dealings with Feeders we never sold mullet to any other company in Fiji’ as earlier recorded in his fax of 7.9.94 (Ex.36), I prefer and accept the evidence of Mr. Macpherson that the exclusivity assurance he gave only extended to the plaintiff company’s mullet trade in Fiji and did not and could not possibly have extended to all Australian eastern border mullet suppliers. I am also satisfied that he gave no assurances that he had an exclusive licence or purchaser arrangement with the eastern border suppliers of mullet.

Needless to say I do not accept Mr. Chute’s contrary testimony which was unsupported by any physical evidence or documentation and had an air of commercial artificiality about it on this aspect.

As for the 'quality’ plea, Mr. Chute testified, again in equally vague terms, that there was 'an understanding’ that the mullet supplied was for human consumption and needed to be in the 10”-24” size category just as, sizes '13’ & '14’ are the preferred consumer sizes for whole chickens.

In this regard it is noteworthy that nowhere in the documentation that passed between the parties prior to the defendant’s fax of 5.9.1994 (Ex.35) is any specification provided, let alone a complaint made, regarding the size of the mullet required by the defendant.

But in any event Mr. Macpherson testified and I accept his evidence, that 'size is a buyers concern’ and if it was important as Mr. Chute claims, then it was incumbent on him to expressly specify his requirements. Mr. Macpherson also observed that the plaintiff 'didn’t sell on sizes because mullet is a natural product and size can vary depending on when during the season the catch is taken’. Furthermore the product had been passed by Australian regulatory authorities and was therefore fit for human consumption.

A further difficulty with this plea however, is that whilst it might have been meaningfully raised in a counter-claim based on the three (3) original FCLs of mullet which were actually accepted and paid for by the defendant company and which it claims it had difficulty disposing of, in so far as it is sought to be raised as a 'defence’ to the three (3) container-loads the subject of this dispute, it can have no bearing whatsoever, since the containers were never actually shipped to the defendant who must be assumed to be ignorant of the actual size of mullet packed in the three (3) disputed containers.

I reject the defendant’s 'quality’ plea as fanciful and advanced in hindsight.

In light of the foregoing I hold that the defendant in repudiating its contractual obligations is in breach of contract and is liable to pay damages therefor which I am satisfied is correctly reflected and calculated in the plaintiffs debit note dated 20.2.95 (Ex.57) read with and corroborated by Foods Pacific Ltd’s fax of 20.5.95 (Ex.58).

Damages are therefor assessed at a total of Aust$29,055 calculated in Fijian currency at the exchange rate prevailing on the date of payment together with interest of 10% p.a. calculated from the 10^th of August 1995 until the date of this judgment.

As for the claim for $1000 for storage charges in the absence of any clear documentary evidence of the charge having been incurred and/or paid I am not satisfied that the plaintiffs faxes Exs.31, 33 & 36 which state that the suppliers had agreed to hold the product in store 'at their expense’ and 'at no extra charge’ does not represent the correct position. This claim is accordingly disallowed.

The plaintiff having succeeded in its claim is also awarded costs fixed in the sum of $1,500 together with all reasonable disbursements in relation to the trial of this case including the return airfares and accommodation expenses of Mr. Macpherson for 3 days in Fiji.

Finally the defendant’s counterclaim is ordered dismissed.

(D.V. Fatiaki)
JUDGE

At Suva,
9th July, 1999.

HBC0368J.95S