O'Regan v Hui Brothers Transport Pty Ltd [1968] PGSC 30 (6 December 1968)

IN THE SUPREME COURT OF THE
TERRITORY OF PAPUA AND NEW GUINEA

CORAM: FROST, J.

Friday,
6th December, 1968.

BETWEEN

ROBIN STANLEY O'REGAN
Appellant

AND

HUI BROTHERS TRANSPORT PTY. LTD.
Respondent

JUDGMENT.

This is an appeal against an order of the District Court at Port Moresby dismissing a complaint laid by the appellant against the respondent that the respondent was indebted to him in the sum of $1652.94 for damages for negligence in the carriage and storage of five cases, one large and four small, of personal effects of the appellant.

The facts are that in December 1966 the appellant, who was then in Rabaul, arranged with a Company called New Britain Carriers Pty. Ltd., to ship his personal effects to Port Moresby (where he was to take up an appointment) and for the goods to be delivered and stored by the Company's agents at Port Moresby pending the appellant's return to Port Moresby from leave.

The appellant arranged for the goods to be packed in cases which were then covered by tarred paper, and crated. On the 7th December 1966 they were delivered to New Britain Carriers Pty. Ltd. That Company then, by letter dated 15th December 1966, wrote to the respondent, a Shipping Agent in Port Moresby. The letter was in these terms:-

"We are shipping per "YUNAN" personal effects and a VW 1200 Sedan of Mr. R. O'Regan, Solicitor, who is moving over to Port Moresby to be with the University. Could you arrange for these goods to be cleared and stored away till mid January, as Mr. O'Regan is not due back from leave till then.

Would you please let us know by return mail if you can store them."

A further letter was sent, dated 22nd December, 1966, by New Britain Carriers Pty. Ltd. to the respondent in these terms:-

"Attached hereto is Bill of Lading and also Certificate from D.A.S.F.

Have written to Mr. O'RPaan to contact you on his arrival in Moresby."

The respondent replied by letter dated 17th December, 1966, the material part being as follows:-

"We acknowledge receipt of your letter dated the 15^th December and are pleased to advise that we are in a position to cater for Mr. R. O'Regan's personal effects and vehicle.

It is noted that the above goods will be dispatched per "Yunnan" and that Mr. O'Regan is due in Port Moresby mid January. You will no doubt instruct Mr. O'Regan to contact us on his arrival in Moresby so that we can render him our services at this end."

Now the "YUNNAN" arrived at Port Moresby on 31^st December, 1966, commencing to unload on that day, and sailed on 6^th January, 1967. On 19^th January 1967, Mr. Hui, the Managing Director of the respondent, called at the wharf at Port Moresby and finally located the large crate out in the open. He noticed that there were two pools of water on the top of the case. He said at this time that there was about fifty per centum of all cargo left out in the open. It was then arranged that the delivery docket should be endorsed, "washed by rain". He arranged for Mr. Anton Lee, who is also a Shipping Agent, and who was with him, to deliver the case to Lee's garage premises at Boroko. The remaining four cases were picked up on the 23^rd January, 1967. These cases were also out in the open, but seemed dry. However, when Mr. Lee as unloading them at Boroko he noticed water coming out of the cases, so he hastened back to the wharf to have the delivery dockets endorsed. He was unable to arrange to have the shipping agent's copy endorsed, but endorsed his own copy "washed by rain".

Evidence was given by Mr. Hui, a Mr. Lee and a builder named Chow, as to the manner in which the cases were placed and protected from the weather at Anton Lee's garage. There was a shed at the premises, and an attempt was made to drive the fork-lift truck with the large crate into the shed, but it was unable to get through a pool of water, of which there were several, this being of course the wet season in Port Moresby, so the case was stored in the open. A spot was selected outside the garage where there was no water. Timber was laid on the ground upon which the large crate was lowered by the fork-lift truck. The crate was covered by tarpaulin, and then corrugated iron was placed on top of the tarpaulin to form a roof with large blocks of timber to hold it down. On 23^rd January, 1967, when the four smaller cases were picked up by Lee at the wharf, these cases were also driven to Boroko and placed on top of the big case, as the respondent's evidence was. The tarpaulin cover and corrugated iron to serve as a roof were also replaced, the iron held down by timber. Two of the respondent's witnesses said that corrugated iron was also stood against the side, but it will be necessary for me to return to concisder the evidence in more detail as to this aspect of the case.

Although the respondent had been informed that the appellant was due back from leave in mid January, and that he would contact the respondent on his arrival at Port Moresby, in fact the appellant did not return to Port Moresby until the 1^st February 1967. On the following day he called at Lee's garage and took delivery of the crates. When the crates were unpacked he found the contents damaged by water. The learned Stipendiary Magistrate, in his reasons for judgment in dismissing the complaint, said that the evidence on the point was undisputed, and he found that the goods were damaged and the appellant had thereby suffered monetary loss. He went on to find, however, that the respondent had shown that he was in breach of his obligations as a shipping agent, or as a bailee for reward. He was satisfied on the evidence that the appellant's goods were damaged by water before delivery was taken of the goods by the respondent. The complaint was accordingly dismissed.

Mr. Munro for the appellant first submitted that there was a contractual relationship between the appellant and the respondent. He replied on the law as stated in Bowstead on Agency, Twelfth Edition, Article 42, and in particular the following passage:-

"Provided, that the relation of principal and agent may be established by an agent between his principal and a third person, if the agent be expressly or impliedly authorised to constitute such relation, and it is the intention of the agent and of such third person that such relation should be constituted."

The appellant was not known to the respondent. The respondent and New Britain Carriers Pty. Ltd. were both shipping agents presumably known to each other. Clearance and store charges would become payable. Mr. Munro strongly relied on the subsequent delivery of the account, direct to the appellant by the respondent, but this seems to me to be equivocal in view of the protracted personal negotiations which were then taking place between Mr. Hui and the appellant in relation to attempts to obtain settlement of the loss. On the whole, I am not satisfied that it was the respondent's intention that a direct contractual relationship should be established with the appellant, so that in my opinion, no contract was in this case constituted between them.

Mr. Wood, for the respondent, did not contend that the goods were in the possession of Mr. Anton Lee or that, if either was responsible, it was Mr. Lee rather than the respondent. There was no evidence as to the terms of the arrangement between the respondent and Mr. Lee. Indeed it appears from Mr. Hui's evidence that it may well have been one of informal mutual assistance between friends, for which Mr. Hui alone was assuming the legal responsibility. Mr. Hui was asked in cross-examination –

"Q. ................ You felt yourself responsible until Mr. O'Regan returned?

A. That is correct.

....................

Q. But you took delivery of the goods on behalf of the Consignee?

A. That is correct. On the understanding that Mr. O'Regan would be in Port Moresby any day, as advised by a letter from New Britain Carriers."

Accordingly the crates were in the respondent's possession, and it is necessary to consider whether any duty was accordingly owed by the respondent to the appellant. Mr. Wood, properly in my opinion, conceded that there was some duty owing by the respondent to the appellant, but that it was a duty to take reasonable care, that the onus of proof both of breach of duty and damage arising from that breach was on the appellant, and that no such breach of duty or damage arising from any such breach had been proved. He relied upon a decision of Mr. Justice Marshall in Lee Cooper Ltd. v. C. H. Jeakins & Sons Ltd.^[1]. However, in a judgment which was delivered only a few weeks later, the Court of Appeal had occasion to consider the matter See Morris v. C. W. Martin & Sons Ltd. ^[2]. The following passage is taken from the judgment of Lord Denning:-

"At one time the owner of goods who bailed them to another could not sue a third person who had wrongfully lost or damaged or detained the goods. He could only sue the bailee; and the bailee could sue the third person. See the history of the matter fully discussed in Holmes: The Common Law (1881), pp. 164-180. But now an action does lie by the owner direct against the wrongdoer if he has the right to immediate possession: see Kahler v. Midland Bank Ltd. ^[3]. Even if he has no right to immediate possession, he can sue for any permanent injury to, or loss of, the goods by a wrongful act of the defendant: see Mears v. London & South Western Railway Co. ^[4]. But what is a wrongful act as between the owner and the sub-bailee? What is the duty of the sub-bailee to the owner? Is the Sub-bailee liable for misappropriation by his servant? There is very little authority on this point. Pollock and Wright on Possession (1888), p. 169, say: 'If the bailee of a thing sub-bails it by authority ....... and there is no direct privity of contract between the third person and the owner ..... it would seem that both the owner and the first bailee have concurrently the rights of a bailor against the third person according to the nature of the sub-bailment.' By which I take it that if the sub-bailment is for reward, the sub-bailee owes to the owner all the duties of a bailee for reward: and the owner can sue the sub-bailee direct for loss of or damage to the goods; and the sub-bailee (unless he is protected by any exempting conditions) is liable unless he can prove that the loss or damage occurred without his fault or that of his servants."

That case was referred to by the High Court in Thomas National Transport (Melbourne) Pty. Ltd. v. May & Baker (Australia) Pty. Ltd. ^[5], in which the liability of a person in the position of a bailee of goods was stated as follows, and I read from the joint judgment of their Honours, McTiernan, Taylor and Owen JJ:-

"The onus of disproving negligence, it may be observed, was accepted by him (the sub-bailee) on the pleadings and, again, expressly, both in the Supreme Court and in this Court. No doubt this was done on the strength of the decision in Morris v. C. W. Martin R Sons Ltd..^[6]. The learned trial judge found against Pay on this issue because in his view no satisfactory evidence was given of any precise precaution taken by him 'to protect the goods against the risk of fire'. The difficulty inherent in the proof of a negative is not made any the less by the fact that in this case the evidence is such that the cause of the fire remains unknown and, therefore, it is impossible to say what precaution, or precautions, if any, would have been sufficient to prevent its occurrence (cf. Gosse Millard v. Canadian Government Merchant Marine ^[7] and Pendle & Rivet Ltd. v. Ellerman Lines Ltd. ^[8].) 3ut it is not essential, in order to discharge the onus of proof, for a person in the position of a bailee of goods which have been damaged or destroyed whilst in his custody, to establish, first of all, the precise cause of the loss, and, thereafter, to establish that the cause arose or operated without negligence on his part (Bullen v. The Swan Electric Engraving Co. ^[9]; The City of Baroda ^[10]; and Makower, McBeath and co. Pty. Ltd. v. Dalgety and Co. Ltd. ^[11] ................ It is sufficient if the bailee is able to establish that he took such care of the goods as was reasonable in the circumstances."

I agree with Mr. Wood's submission that the High Court was leaving open the question whether the law as stated in Morris v. C. W. Martin & Sons Ltd. ^[12] was sound. Mr. Wood also referred me to the judgment of Mr. Justice Windeyer (it is immaterial that, on this point, it was a dissenting judgment) who said:-

"It was conceded that the onus was on Pay to prove that he took proper care of the goods. Even assuming this concession was correct, there was I think no evidence that he was careless". So that it may well be that the High Court is reserving for future consideration, the decision of the Court of Appeal in Morris v. C. W. Martin & Sons Ltd. (supra). However, in my opinion, upon the present state of the law, it seems to me that I should follow the Court of Appeal.

This onus arises, however, only if the appellant proves that there was a difference in the condition of the goods between the time that the bailee or the person in the position of a bailee received them, and the time he delivered them to the bailor, and this follows from the case cited by both Counsel, Fankhauser v. Mark Dykes Pty. Ltd. ^[13], a decision of the Full Court of the Supreme Court of Victoria.

I thus start with the conclusion of fact that the respondent, having the possession of the appellant's goods, was in the position of a bailee for reward. I also accept Mr. Munro's submission that there was proved upon the evidence of Hui and and the respondent's witnesses, which was accepted by the Magistrate, that there was a difference in the condition of the goods between the time that they were received by the respondent and the time when they were delivered to the bailor, and this difference in condition is shown by two things. First, although the cases were sound when they were taken delivery of by the respondent and his agents, by the time Mr. O'Regan took possession of them the cases had been apparently broken open. "You could see" (to use Mr. Lee's words) "the leg of the furniture". Secondly, Mr. O'Regan's evidence of the damage was accepted, and there were several items, sheets and towels, which were found to be missin again indicating that the security of the cases had been broken. The evidence as to the condition of the goods given by Mr. O'Regan that the goods were water-logged and also by Mr. Hui, which was accepted by the Magistrate, if it does not amount to proof of this inference, is consistent with it. Thus the evidence goes further than that the goods had deteriorated at some time after delivery to New Britain Carriers Pty. Ltd. and before delivery to the appellant.

Turning now to the evidence of the respondent's witnesses whose evidence the learned Magistrate accepted, it seems to me that there is much force in Mr. Munro's submission that the evidence did improve as it went along. Mr. Hui, the first witness, said that the big crate was supported on a single layer of chocks on the ground and was covered with tarpaulin with roofing irons on the top held down by timber. He made no mention whatever of iron stacked at the side. Mr. Lee added that further protection was given by a corrugated iron sheet being placed along each side standing on the ground. The next witness, Mr. Chow, also stated that corrugated iron sheets were stood against the sides of the pile, but he added a further layer of timber beneath the crates, taking them above the pools of water which were lying about. He stated that the tarpaulin came to about 2 feet from the bottom, but Mr. Hui and Mr. Lee said that it was about a foot.

In his reasons for judgment, the learned Magistrate found that the respondent was entitled to and did assume that the bailment was of a temporary nature having regard to the written information that Mr. O'Regan was coming in mid January, and that the appellant was expected to claim the goods any time thereafter, but the basic fact to be considered was that this storage took place during the Port Moresby wet season with its frequent storms of driving and torrential rain. Falls of rain of several inches in a night in January are a commonplace. It is not disputed that January in that year was a month of the usually heavy falls of rain. The respondent's witnesses gave evidence that water was lying in pools on the ground in the vicinity of the cases, although Mr. Lee and Mr. Chow said that the latter were not close to the pools. Chow said that in Lee's yard there was a lot of water around. That the respondent regarded the method of storage adopted as being of a temporary nature is shown by the following evidence of Mr. Lee:-

"Q. Do you usually store crates containing personal effects out in the yard?

A. No, but the reason we only store them there temporarily, and I made them 100% proof protected from rain until Mr. O'Regan came to get them."

"Q. It was too muddy the whole three weeks?

A. It was not that, but the day we put it in it was too muddy and we didn't put it in, and it wasn't raining every day, and I reckon myself that it is 100% because I checked it every day."

Most revealing evidence, however, of the standard of care taken appears from Chow's evidence. In cross -examination, Mr. Munro said –

"Q. You wouldn't stow your personal effects that way, would you?

A. It is not my job to do this, but I am just helping my friends to set it up for these cases.

Q. We know it's not your job, you wouldn't store your personal effects that way, would you?

A. Sometimes if I had to. If I had to. I was in the war, and I slept in the bush for so many years."

Even if the learned Magistrate preferred the evidence of Lee and Chow to that of Hui, and he did not say that he did, the evidence comes to this, that cases of personal effects were placed in the open yard under tarpaulin, with corrugated iron leaning at the side and similar sheets placed on top with timber to keep the iron roofing down. Considering the weather conditions of Port Moresby these measures were quite insufficient to discharge the onus on the defendant to show that he took due care of the goods. That the protection afforded was not sufficient against the driving torrential rain which must have penetrated through the inevitable gaps between the iron on the top and between any iron standing against the sides, is shown by Lee's statement to which I have referred that you could see the leg of the furniture through the case; also by the fact that one of the securing cases had been broken, so that items had been missing, and this had developed during the time after they had been delivered. Accordingly in my judgment the evidence, because of its conflicting nature, was quite insufficient for the Magistrate to be so satisfied that proper care had been taken, and even if he had concluded that he would prefer Chow and Lee to Hui, and thus that there was corrugated iron along the sides, the whole of the evidence was not sufficient to discharge the onus of proof. Hui knew that it was necessary to store the cases under a roof, as is shown by the attempt to put the crate in the shed, and the fact that the fork life could not proceed through the mud cannot excuse his failure. Not even for the purposes of temporary storage, having regard to the weather conditions in Port Moresby, even assuming that the appellant was expected any day, was this method of storage a fulfilment of the respondent's obligation to take reasonable care.

It follows from the judgment of Denning L.J. to which I have referred in Morris v. C. W. Martin & Sons Ltd. ^[14], that the bailee's obligation to prove that his negligence was not a cause of the subsequent damage, is also one of the obligations of a sub-bailee who finds himself in possession of the goods, British Road Services Ltd. v. Arthur V. Crutchley & Co. Ltd. (Factory Guards Ltd., Third Parties) ^[15].

If contrary to the view of the law which I have taken, the onus was on the appellant to prove lack of reasonable care on the part of the respondent in the storage of the cases, I should be prepared to hold that the only reasonable conclusion on the facts was that, on the balance of probability, the appellant discharged that onus, and further has shown that the cases and contents suffered damage as a consequence of that breach.

This brings me to the question of damage. Mr. Wood submitted that there was no admissible evidence of damage. He was referring to the list' compiled by the appellant as to the goods shipped and damaged, the prices paid and the depreciated value. Of course, there was some evidence of the amount of damage because the respondent led evidence of an admission by the appellant that his damage was only $800.00. But the list was based on information which was within the knowledge of the appellant, or upon expenditure by his household moneys under his supervision. This evidence seems to me to have been properly admitted by the Magistrate. The appellant was giving in effect testimony as to the prices paid for these articles, and explained the circumstances taken into account for the reduction of the prices to arrive at the value. Except for the books, the articles concerned were of a usual character for the value of which no specialized knowledge was required. See Cross on Evidence, Second Ed.,p.3.

Accordingly I am satisfied that the appellant did prove that he had suffered substantial damage, so that the appeal must succeed.

Mr. :Wood at first submitted that if I allowed the appeal, I should send the case back to the Magistrate for the assessment of damages, but when I referred to the mounting costs of the litigation in this case, Mr. Wood very properly said he would take no exception to this Court assessing damages. As to the total loss sustained by the plaintiff, Mr. Wood, in my opinion, made two sound submissions. First that I could not act on the valuation of the books insofar as the appellant claimed monetary compensation for their sentimental value, and secondly the whole list was somewhat over-valued, having regard to the fact that the appellant permitted a claim to go forward for $800.00. Upon this part of the case, the plaintiff carries the onus of proof and he has to satisfy the Court as to the amount of loss which is suffered, and doing the best I can with the evidence before the Court, and having regard to this onus of proof, I have arrived at the sum of $1100.00 as the plaintiff's loss.

Mr. Munro submitted that I should award the appellant the whole o this sum, but I am satisfied on the evidence that part of the damage arose by reason of the cases having been left in the open on the wharf and exposed to the weather before the respondent picked up the cases. Mr Munro argued that the respondent was responsible for this damage on the ground that it failed to have the contents of the crates surveyed when Hui observed that they were washed by rain and thus caused the appellant to lose all practicable chances of success against the shipping company from which he could reasonably have expected to recover the whole of any loss. But in my opinion, Mr. Wood's argument on this point again is sound, that in view of the absence of the appellant, the personal nature of the goods and the fact that the respondent was not furnished with a list of contents, there was no duty by the respondent as bailee to have a survey made. I have already held that there was no contractual relationship.

Accordingly the damages must be apportioned. The law upon this matter is stated in the decision of the High Court of Australia in Middleton v. The Melbourne Tramway and Omnibus Company Limited ^[16] and read from the judgment of Isaacs J. at p.590:-

"It is true that the respondents are not to be held responsible except for their actionable negligence, on the rules laid down in Nitro-Phosphate Case ^[17] and Workman v. Great Northern Railway Co.^[18]

But, where the evidence for the plaintiff, if believed is sufficient not only to establish liability, but also to enable a jury with reasonable certainty, if they so conclude, to attribute to the defendant's wrongful conduct as an effective and proximate cause the injuries complained of, the plaintiff has so far discharged his burden of proof otherwise he might be left without redress against an admitted wrong-doer. The onus then is on the defendant - unless he can succeed in satisfying the jury upon the plaintiff's evidence - to negative the inference of his total responsibility, or to distribute the damage arising by showing, if he can, that the damage accrued, or must in any case have accrued, wholly or partly from some other cause."

See also Bank View Mill Ltd. v. Nelson Coron. and Fryer & Co.(Nelson) Ltd. ^[19] in which Stable J. expressed the view, referring to cases of tort, "In the absence of any evidence to apportion the matter, the law would have apportioned the damage equally."

On the whole, I have reached the conclusion in this matter that the damage should be equally apportioned, and accordingly that the appellant should recover the sum of $550.00. The appeal will be allowed with costs t be taxed, the order of the Court below set aside. In lieu thereof there shall be substituted an order that the defendant pay the complainant $550.0 together with the plaintiff's costs.

_______________________

Solicitor for the Respondent: J. Andrews, Esq.
Solicitor for the Appellant: P. Munro, Esq.

---

^[1] (1967) 2 QB at p.1.
^[2] (1966) 1 QB 716, at pp. 728-729.
^[3] (1950) AC 24, 33, 56.
^[4] (1862) 11 CBNS 850.
^[5] [1966] HCA 46; 115 CLR 353 at pp. 366-367.
^[6] (1965) 3 WLR 276.
^[7] (1927) 2 KB 432, at p. 43.
^[8] (1927) 33 Com. Case. 70, at p. 78
^[9] (1906) 22 TLR 275; (1907) 23 TLR 258.
^[10] (1926) 25 L1.LR. 437, 441, 442.
^[11] [1921] VicLawRp 45; (1921) VLR 365, at pp. 377, 378.
^[12] (1965) 3 WLR 276.
^[13] (1960) VR 377.
^[14] (1965) 3 WLR 276.
^[15] (1968) 1 All ER 811.
^[16] [1913] HCA 45; 16 CLR 572 at p. 590.
^[17] [1878] UKLawRpCh 259; 9 Ch. D., 503 at p. 519.
^[18] 32 LJQB 279.
^[19] (1942) 2 All ER 477, at p. 483.