Kiribati Port Authority v Mikaere [2011] KICA 1; Civil Appeal 01 of 2011 (31 August 2011)

IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION

HELD AT BETIO
REPUBLIC OF KIRIBATI

Civil Appeal No. 1 of 2011

BETWEEN

KIRIBATI PORT AUTHORITY
APPELLANT

AND

TEKAAI MIKAERE T/A SHIPPING AGENCIES OF KIRIBATI
RESPONDENT

Before: Paterson JA
Williams JA
Barker JA

Counsel: Monoo Mweretaka for appellant
Banuera Berina for respondent

Date of Hearing: 25 August 2011
Date of Judgment: 31 August 2011

JUDGMENT OF THE COURT

INTRODUCTION

1. The appellant (the Authority) appeals against judgments given by the Chief Justice on 24 June 2010 and 7 July 2010. In the first judgment he determined liability against the Authority, and in the latter judgment, which was a consent order, he gave judgment to the respondent (the Agency) for $120,000 including interest and costs.
   
2. The Agency is a shipping agent for a number of shipping companies outside Kiribati. The Authority, is a statutory body established under the Kiribati Port Authority Act 1990 (the Act) and provides port services in the ports of Kiribati.
   
3. In its statement of claim the agency, as plaintiff, alleged:
   
   3. As agent the Plaintiff has a duty to protect the interest of his principals in Kiribati including ensuring that their containers are shipped back on the due dates to avoid causing a shortage of containers for the use of its principals.
      
   4. On or about 25th October, 2009 the Plaintiff notified the defendant to ship back all the outstanding containers in its yard on "Tropical Islander" which was expected to arrive in Tarawa on 27th November, 2009 and at the same time notified the Defendant that fees would be charged for containers that were not shipped back.
      
   5. Despite the letter from the Plaintiff the Defendant, unlawfully and without lawful justification held on to some containers without shipping them back on the vessel "Tropical Islander".
      
4. The sum of $120,000 was awarded as damages for containers which were not returned in accordance with the Agency's request referred to above.
   

THE LIABILITY JUDGMENT

5. The Chief Justice in the first judgment noted it was an action in detinue and the claim arose out of the detention of a number of cargo containers. He noted that the defence was that some of the containers were sealed and others still had cargo in them which the consignees had not collected. The Authority's position was that it could not do anything as it had no authority from Customs or the Agency to open the containers.
   
6. An important consideration in the judgment was section 24 of the Act which reads:
   

Powers to sell or dispose of goods

24(1) Subject to the provisions of this section, if any goods which have been placed in or on premises of the Authority are not removed therefrom within a period of twenty-one days from the time when they were so placed, the Authority may, at the expiration of that period, sell by public auction or dispose of all or any of such goods as it may think fit:

Provided that .....

(b) if the goods are of a perishable nature the Authority may direct their removal within such shorter period, not being less than twenty-one hours after the discharge thereof as it may think fit, and if not so removed, the Authority may sell all or any of such goods by public auction or dispose of them as it may think fit .....

(3) Before effecting a sale under this section, the Authority shall give at least three days' notice thereof by advertisement at public places or on the radio .....

(4) The proceeds of any sale under this section shall be applied by the Authority in the following order:

(a) First, in payment of any duty owing to the Government;

(b) Secondly, in payment of the expenses of the sale;

(c) Thirdly, in payment of all charges and expenses due to the Authority under the provisions of this Act in respect of the goods; and

(d) Fourthly, in payment of freight or other claims or liens of which notice has been given under the provisions of any written law......

7. In its letter of 25 October 2009 the Agency provided a list of containers which had been in the Authority's yard for a long period of time and asked that the containers be returned on the "Tropical Islander" departing Tarawa on 27 November 2009. It referred to the Authority's power to auction the unclaimed goods which would allow for the early return of the containers. The letter advised that the Agency's principals would charge a fee if the containers were not returned on the "Tropical Islander".
   
8. The Authority did not reply to the letter, nor did it auction the goods. It claimed in Court that it had no authority to break the seals on the sealed containers and no authority from the Agency as shipping agent.
   
9. The Chief Justice determined that the Authority, before exercising its powers under S.24 of the Act, only needed to request Customs to come and break the seals. In respect of the second reason he held that the letter of 25 October 2009 gave the Authority implied power to auction the containers.
   
10. The liability finding of the Chief Justice was expressed in the following terms:
    

As a matter of common sense I reject the reasons advanced by the defendant to justify its lack of action. The defendant could have exercised its power under s.24 so as to allow the return of the containers as requested by the plaintiff in the letter of 25 October. No good reason why not. Had it exercised its powers the containers would have been in a condition to be "loaded per Tropical Islander V05 ETA Tarawa 27 Oct, 09". That it did not makes it liable to the defendant.

11. The liability finding is not explicit. There is no suggesting of a contractual obligation between the Authority and the agency. The finding must be interpreted as the Authority having a statutory duty to return the containers under section 24 of the Act, or alternatively a tortuous duty arising from the request in the letter of 25 October 2009.
    

APPELLANT'S SUBMISSIONS

12. The amended grounds of appeal upon which the Authority relies are:
    
    • (a) That the Learned Chief Justice erred in law in finding that the Appellant is liable when based on the evidence no reasonable trial of fact would have found that the Appellant has failed to auction out goods from the overstayed containers that are still under seal.
      
    • (b) That His Honourable the Chief Justice erred in law and in fact in finding that the Respondent has the authority to charge charges provided for under the Appellant's Port Dues, Fees and Tariff 2010.
      
13. The relevance of the second ground of appeal is difficult to ascertain. The notes of evidence do not disclose any reference to the 2010 Tariff. The damages awarded were agreed between the parties after the liability judgment issues. The claim was based on $50 per container per day. If the Authority is liable, it would in this Court's view, be required to pay the amount it consented to at the time of the judgment of 7 July 2010.
    
14. The Authority says it is not liable because:
    
    • (a) Under the Customs Act 2005 it would be an offence to open the containers and sell the goods in them;
      
    • (b) The powers under S.24(1) of the Act are discretionary. The Authority was not required to sell the goods by auction.
      
    • (c) It would have been unreasonable and realistic to return containers with cargo still inside.
      

AGENCY'S SUBMISSIONS

15. The Agency case is based on its letter of 25 October 2009 requesting the return of the containers and advising a fee would be charged if they were not returned. Its position is that the letter created a duty on the Authority to sell by auction the goods in the containers, after the seals had been broken by Customs, and then return the containers. If it did not do so, and it did not, it was required to pay fees to the Agency.
    
16. By electing not to exercise its powers under S24 of the Act, and failing to return the containers, the Authority had made itself liable to the Agency.
    

DISCUSSION

17. The judgment of the High Court proceeds on the basis that the Authority had a duty to return the containers. The lack of action by the Authority in failing to return the containers does not in itself amount to a cause of action unless it had an obligation or duty to do so. It is not sufficient to conclude that loss by a party gives rise to an obligation by the other party to compensate for that loss unless a breach of duty can be established.
    
18. The starting point, in the Court's view, is whether the Authority has a duty under s24 of the Act. One of its functions under s7 of the Act is "to provide and maintain adequate and efficient port services and facilities". This Court does not see that s24 of the Act imposes a mandatory obligation or duty on the Authority to exercise its powers under s24. The overall function in s7 of the Act cannot turn a discretionary right into a mandatory duty.
    
19. It follows therefore that if the Authority had a duty in this case it arises from the Agency's letter of 25 October 2009 and the Authority's lack of action on receipt of that letter. The pleading is that the Authority "unlawfully and without lawful justification" held on to the containers.
    
20. The Chief Justice stated this was an action in detinue. However, merely being in possession of another's goods without his authority is not a tort. If lawfully acquired, detention alone does not become a wrong in the absence of some manifestation of intent to keep them adversely or in defiance of the owner's rights: see The Law of Torts: J G Fleming1 page 53.
    
21. For there to be a tort there must be a categorical refusal to comply with a request to return the goods. The refusal must imply or assert dominion inconsistent with the owner's rights.
    
22. The Authority can be criticised for not replying to the letter of 25 October 2009. However, a mere omission to reply to a letter of demand cannot of itself be construed as a refusal: Nelson v Nelson [1923] Q.S.R. 37.
    
23. Section 15(1) Customs Act 2005 is said by the Authority to be a reason for not being able to exercise the rights under s24 of the Act. S15(1) reads:
    

Goods imported into Kiribati are under customs control from the time they were imported, until they are –

1, 7th Edition

(a) Released for use into Kiribati; or
(b) Released for temporary use into Kiribati; or
(c) Destroyed; or
(d) Exported.

24. In addition s107 of the Customs Act provides for certain offences. One is to touch goods or baggage under customs control unless authorized under section 41 or section 51; or reasonable excuse.
    
25. There was evidence before the Chief Justice that the Controller of Customs advised the Authority that it was most improper for a person other than a customs officer to break a customs seal. This letter was dated 3 November 2009 but is illustrative of the predicament the Authority found itself in.
    
26. This Court therefore respectfully disagrees with the Chief Justice. The Authority in this case by not replying to the letter of 25 October 2009 did not categorically refuse to comply with a request to return the containers. It did not assert dominion over the containers inconsistent with the rights of the Agency.
    
27. The Authority would be well advised to institute procedures to deal with a similar position in the future. However, it is not liable to the Agency in this matter.
    

DECISION

28. The appeal is allowed. The judgments of 24 June 2010 and 7 July 2010 are set aside. The Agency will be required to refund to the Authority the moneys paid under the judgment of 7 July 2010.
    
29. The appellant is entitled to costs which are fixed at $500 plus disbursements to be fixed by the Registrar if the parties are unable to agree.
    

Paterson JA

Williams JA

Barker JA