Suva Container Park Ltd v Island Container Sales & Leasing Ltd [2007] FJHC 27; HBC444.2005 (25 September 2007)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO.: HBC 444 OF 2005

BETWEEN:

SUVA CONTAINER PARK LIMITED
Plaintiff

AND:

ISLAND CONTAINER SALES & LEASING LIMITED
Defendant

Mr. A. Tikaram Counsel for the Plaintiff
Mr. S. Valenitabua Counsel for the Defendant

Date of Hearing: 30th and 31st July 2007
Plaintiff’s Submission: 21st August 2007
Defendant’s Submission: 31st August 2007
Date of Judgment: 25th September 2007

JUDGMENT

BACKGROUND PLEADINGS:

The plaintiff as its name suggests operates a container park at Walu Bay, Suva. Shipping companies and others who deal in containers use the park for storage of containers at a fee. There is provision for storage for both dry and refrigerated containers. The defendant company was one of its clients using plaintiff’s storage facilities. The plaintiff has sued the defendant for balance unpaid storage fees.

But that is not the end of the matter. The defendant while admitting using the facilities and liability to a certain extent has put up a counterclaim. It says its containers went missing from the plaintiff’s yard. It is therefore suing the plaintiff for missing containers and also for containers which have been held by the plaintiff and which it is refusing to release because the plaintiff has not been paid the storage fee.

In response to defendant’s counterclaim the plaintiff says that any storage was done pursuant to an agreement dated 30th July 2003. It also states that there were certain dealings done between the plaintiff’s depot manager and one Bula Waqanivavalagi of the defendant company outside of the agreement. The plaintiff therefore is not liable for containers which went missing from the yard which were stored under this purely personal arrangement.

Plaintiff’s claim:

The defendant admits receiving invoices. It disputes only a few of the invoices. Bula Waqanivavalagi complained that he was not familiar with Invoice 2694 (first page of Exhibit 2) for the sum of $370.59. It appears that this invoice which relates to the defendant was charged to somebody else. The error was discovered and then the defendant billed for it.

The next disputed invoice is Invoice Number 3371 being for $990.00. According to the defendant containers included in Invoice 3371 did not belong to him. The defendant explained that these containers belonged to Kooltainers a New Zealand company from whom the plaintiff rented containers. Metuisela Galuvakadua PW3 I believe gave the correct reason why the defendant was charged $990.00. According to him there were times when the defendant had client or clients who required refrigerated containers. The defendant did not have such containers in stock so the defendant would hire containers from the plaintiff. Bula Waqanivavalagi testified that his company charged $45.00 per day for hire of reefer containers so even after he hired from plaintiff and then subleased, he would still make $15.00 per day profit. I hold that the defendant was correctly charged for this $990.00.

The defendant is further claiming that he has not been given credit for $1,400.63 being amount shown in plaintiff’s receipt 11151 dated 7th January 2005. Waqanivavalagi stated that the sum represented total amount he considered owing under invoices 3583 and 3627. He had amended the figure in invoice 3583 from $600.19 to $524.25 because he believed the defendant had been charged for containers which had left the yard. Again he reduced this sum from $1,152.28 to $876.13 in invoice 3627 for same reason. Mr. Tikaram in his final submissions asked that his claim be reduced by the amount represented in the two invoices and he sought judgment for $8,869.84 only. With this concession by the plaintiff, these two invoices are no longer an issue in these proceedings.

Accordingly except for concessions made by the plaintiff, the rest of the invoices have been proven. Therefore I enter judgment for the plaintiff in the sum of $8,869.84.

Now to the counterclaim. The counterclaim raises a number of issues.

A) Did the acts of Metuisela Galuvakadua bind the plaintiff?

Galuvakadua was the depot manager for the plaintiff. Bula Waqanivavalagi is the managing director and the brain behind the formation of and operations for the defendant company. Bula had at one time worked as the manager for Suva Shipping Services Limited which held and still holds 49 percent shares in the plaintiff company. It is alleged that as a Manager Bula had acquired some knowledge about the system at the plaintiff company and also became familiar with Metuisela the depot manager of plaintiff company. The plaintiff in its defence says that it is not bound by any private arrangement between Bula and Metuisela.

Bula Waqanivavalagi was asked to resign from Suva Shipping when he set up a container business as it conflicted with the business of Suva Shipping Services Limited. This would be in July 2002. Bula then incorporated the defendant company on 13th July 2003. The company was formed for hiring and selling of containers. It bought containers from overseas and stored them at plaintiff’s yard from where they were leased out or sold.

The dealings between the plaintiff and the defendant can be conveniently dealt with as pre 1st August 2003 and post 1st August 2003. A Rates agreement was executed between the parties on 30th July 2003 and it came into force as from 1st August 2003. This agreement put the dealings on a commercial footing.

The plaintiff’s witness PW1 Harry John Chand stated that an audit conducted by the plaintiff in 2002 found that the defendant company was storing containers without any agreement and no fees being collected. This statement cannot be correct as in 2002 the defendant company had not been incorporated. He is confusing Bula with the defendant company. Metuisela stated that Bula and his company were not charged any fees because his boss in New Zealand had sanctioned non payment because of the volume of business Bula brought to the plaintiff. I believe this gratuitous offer was only open up to the time when Bula worked for Suva Shipping and ceased once he was forced to resign and Rates agreement entered into.

Whatever the arrangement may have been, it is noteworthy that within 17 days of incorporation of the defendant company a Rates agreement had been signed putting the relationship on a commercial footing. The agreement provides for list of charges for different services provided by the plaintiff. The evidence as it stands shows that in three or four instances the officers of the plaintiff company assisted the defendant in selling its containers. The arrangement was that if someone came to plaintiff’s yard and was interested in leasing or buying one of defendant’s containers they would contact Bula on telephone and he would come down to deal with the potential customer. However, if Bula was not in Suva, then he would still be contacted by phone. Bula would then authorize the sale. Metuisela or one of the other staff of the plaintiff would collect a cheque and Bula on return to Suva would pick the cheque from them.

This was small assistance which they rendered to the defendant company. Bula in turn would take the person for lunch or provide tea as a token of appreciation. Harry Chand stated that if Metuisela acted outside his job description then the plaintiff should not be held responsible. The only time Metuisela could be said to act outside his job description is when he assisted the defendant to sell containers. A little assistance like this can easily be given to maintain a good client relationship. In any event, the defendant’s counterclaim is not regarding the sold containers but the missing containers and those containers which are held by the plaintiff at its yard.

Missing containers:

The first complaint of missing containers was made by the defendant on 8th September 2003 in writing. It complained of three missing containers. One was given to Celltrox, one to one Kalil and one could not be located. None of these containers were given out with defendant’s consent or knowledge. The defendant alleges that eight of its containers went missing – see invoice 18682 at page 12 of the agreed bundle. These are all twenty feet dry containers. The defendant is claiming $2,500.00 per container plus vat. It also claims $14,062.50 being for five general purpose missing containers – see document 14 of agreed bundle.

Every container has an identification number. In its invoices the defendant has provided identification numbers of the thirteen containers. When one goes through the invoices sent to the defendant by the plaintiff for storage charges, one sees that the ten of these thirteen containers are billed for storage. So at one time or another, these ten containers were in the plaintiff’s yard. Otherwise they would not have appeared on plaintiff’s records.

The alleged missing containers appear in defendant’s invoices 18682 dated 17th February 2004, and 91 dated 19th March 2005. Invoice 18682 shows eight missing containers while invoice 91 shows five missing containers that is a total of thirteen. Of these thirteen, ten containers appear in plaintiff’s invoices. These are as follows:

1. Container TAHU 2107400 which appears in defendant’s invoice 18682 also appear in plaintiff’s invoices 3627, 3729 and 3775;

2. TAHU 3130820 which appears in defendant’s invoice 18682 also appears in plaintiff’s invoice 3627, 3729 and 3775.

3. SKYU 3254565 which appears in defendant’s invoice 18682 also appears in plaintiff’s invoice 3679.

4. NLLU 6788755 which appears on defendant’s invoice 18682 also appears in plaintiff’s invoice 3446, 3583 and 3679.

5. CSLL 1161347 which appears in defendant’s invoice 18682 also appears on plaintiff’s invoices 3484, 3504 and 3520.

6. TEXU 3225895 which appears in defendant’s invoice 18682 also appears in plaintiff’s invoices 3484 and 3520.

7. MRLU 2215971 which appears in defendant’s invoice 91 also appears in plaintiff’s invoice 4005 and 4058.

8.CNCU 2520652 which appears in defendant’s invoice 91 also appears in plaintiff’s invoice 4005.

9. MRLU 22220941 which appears in defendant’s invoice 91 also appears in plaintiff’s invoice 4058.

10. MRLU 2222055 which appears in defendant’s invoice 91 also appears in plaintiff’s invoice 4005.

PW2 Teddy Matailevu is an investigator. He had been engaged by the plaintiff to conduct an investigation into the missing containers. There had been complaints not only by the defendant but some other companies as well that their containers had gone missing. The fact that containers went missing does not appear to be an unusual occurrence at the plaintiff’s yard. Matailevu compiled a report which has been exhibited. Page 23 of the report confirms losses by some other firms as well.

Metuisela explained that some of the containers which entered the yard may not have been recorded as having arrived because the container controller was not sure who the owner was. The defendant’s containers may have suffered a similar fate and were never recorded. The plaintiff cannot on the one hand charge the defendant storage fee and then say it was a purely private arrangement between Bula and Metuisela. The two assertions are contradictory.

In invoice number 91 being document 21 of the agreed bundle, the defendant is claiming $14,062.50 being for three containers – being one by twenty foot container and two by forty feet dry containers. One of these containers appears in plaintiff’s invoice for storage fee being invoice 4058.

These are empty containers. The plaintiff submits that it is not to be held responsible for loss of empty containers. It relies on the terms of its Rate and Condition Agreement. That agreement states "full units are stored on all care, no responsibility basis". It is silent on empty containers. The defendant sought clarification on this by E-mail. The response from plaintiff was "we do take responsibility for empty units stored in our yard that you are paying storage for". That responsibility would obviously include responsibility to ensure that the containers were not removed without owner’s authority. Mr. Tikaram suggested that I should read the word "not" after "do". What Mr. Tikaram suggests would exclude liability. I believe the E-mail emphasizes that the company takes its responsibility seriously.

In respect of the ten containers listed above I am satisfied on balance of probability that these containers were at the plaintiff’s yard and they went missing. Harry John Chand stated that the plaintiff was not in the business of selling containers. He appeared to be an intelligent person and being able to see the consequences if he admitted that the company also sold containers. The plaintiff’s own witness Metuisela Galuvakadua and George Chung confirmed that the company also sold and rented containers. Metuisela also confirmed that defendant’s containers did go missing. The plaintiff dealt with a large number of containers. According to Metuisela two hundred to four hundred containers per week moved in and out of the yard. This coupled with the fact that movement of some containers was not recorded could easily have resulted in some of defendant’s containers either being sold by the plaintiff or taken out by someone else other than the defendant.

Accordingly I find the plaintiff liable for loss of ten containers of the defendant.

The defendant has not produced any invoices or sales records of his previous sales. However, he has fixed a sale price for these containers at $2,500.00 for a twenty foot container and $5,000.00 for a forty feet container.

B) Containers withheld:

The defendant is claiming $81,000.00 being $72,000.00 price of containers and $9,000.00 value added tax for eight reefer containers held by the plaintiff at its yard. The plaintiff is holding onto the containers for non-payment of storage fees. All the plaintiff has said in its testimony is that a charge of $9,000.00 per unit is not a realistic charge.

On the one had the plaintiff has sued for the storage fees and on the other hand it continued to hold onto the containers as some form of lien. The letting agreement does not state that the plaintiff could hold onto to the containers.

When one looks at page 2 of Exhibit 2 it shows that the plaintiff itself had rented out a refrigerated container for $33.00 per day or $990.00 per month. Hence these refrigerated containers must be expensive items to generate this type of rental income. The defendant is claiming $9,000.00 per unit inclusive of value added tax. I believe this is not an unreasonable price and if the plaintiff believes it is unreasonable it should have returned the containers. It could perhaps, even now return these containers to the defendant if the defendant is willing to accept them.

As far as dry containers are concerned I allow the defendant a sum of $2,000.00 per container VAT inclusive making a total of $20,000.00 for ten containers.

C) Loss of business:

As far as loss of business is concerned all I have is defendant’s words unsupported by any evidence. He could have easily brought his past financial records of how much he made per month on average per container. Further, the defendant could easily have had its containers released if it had paid for storage a sum which was not seriously disputed except as to a few invoices. It was also defendant’s duty to mitigate the loss. I am not minded to allow the defendant‘s claim for loss of business.

Accordingly I allow the defendant a sum of $20,000.00 for ten missing containers and $72,000.00 for eight containers held by the plaintiff that is a total of $92,000.00.

ORDER:

I enter judgment for the plaintiff against the defendant in the sum of $8,869.84 and on counterclaim I enter judgment for the defendant against the plaintiff in the sum of $92,000.00. Since both parties have substantially succeeded in their respective claims, I make no order as to costs.

[ Jiten Singh ]
JUDGE

At Suva
25th September 2007