Y Sato (Roviana) & Company Ltd v G Camp Enterprises Ltd [2000] SBHC 17; HC-CC 201 of 1998 (3 May 2000)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 201 of 1998

Y SATO (ROVIANA) & COMPANY LIMITED

V

G. CAMP ENTERPRISES LIMITED

High Court of Solomon Islands
(F. O. KABUI), J)

Hearing: 28th April 2000
Judgment: 3rd May 2000

A. Radclyffe for the Plaintiff
T. Kama for the Defendant

JUDGMENT

(Kabui, J): The Plaintiff in this case is Y Sato (Roviana) & Company Limited. The Plaintiff carries on business in Solomon Islands as exporter of marine products. The Plaintiff filed a Writ of Summons against the Defendant on 20^th October 1998 claiming the sum of $121,742.40 being monies due to the Plaintiff from the Defendant for the export of the Plaintiff’s stock of trochus shell by the Defendant. The Defendant is G. Camp Enterprises Limited, a company also doing business as an exporter of marine products in Solomon Islands. The Plaintiff also claims interest and costs. The Defendant denies that it owes the Plaintiff the sum of $121,742.40 and instead counter-claims against the Plaintiff for the sum of $9,738.17 being freight and wharf charges paid by the Defendant in the course of exporting 101 bags of trochus shell as mentioned above. The Defendant also claims interest and cost.

The Evidence

Mr. Y Sato, the Managing Director of the Plaintiff gave evidence on behalf of the Plaintiff. Mr. George Taylor, the Managing Director of the Defendant and Mr. David Auga, a former employee of the Defendant also gave evidence on behalf of the Defendant. There is no dispute that some time in August 1998, Mr. Sato on behalf of the Plaintiff and Mr. Auga on behalf of the Defendant verbally agreed that the Plaintiff’s stock of trochus shell be exported by the Defendant. They also verbally agreed that the Defendant should receive 13% commission on the gross value of the product exported. The Plaintiff’s stock of trochus shell weighed 5.05 metric tonnes. The product was sold in Japan at the price of US$5,400 per metric tonne. The total proceeds of the sale were US$27,270.00. Converted into local currency at the rate of 0.2040 as on 6^th October 1998, it became SI$133,673.47. On or about 7^th October 1998, Mr. Auga on behalf of the Defendant gave to Mr. Sato on behalf of the Plaintiff a cheque for the sum of $106,560.36 after deducting 13% commission of SI$17,377.94, SI$8,728.17 freight and SI$1,010.00 wharf charges. Mr. Sato, for the Plaintiff, refused to accept it. According to Mr. Sato, the amount in the cheque was less than what he expected. Mr. Sato specifically rejected any suggestion that the Plaintiff should pay freight and other charges. In fact, he said it was never agreed that the Plaintiff should meet the cost of freight and other costs as the export arrangement by the Defendant was on c.i.f. terms. Mr. Auga who presented the cheque for SI$106,560.36 took back that cheque and never returned. The Plaintiff therefore still awaits payment from the Defendant for its stock of trochus shell exported by the Defendant in August 1998.

The Nature of the Plaintiff’s Claim

The Writ of Summons filed by the Plaintiff was indorsed for the sum of $121,742.40. It is a claim for a liquidated sum of money with interest and costs. In its defence filed on 30^th October 1998, the Defendant denied that it owed the Plaintiff the sum of $121,742.40. The Plaintiff’s claim for this sum must have been based upon Mr. Sato’s belief that the correct overseas price per metric tonne of trochus shell was US$6,000. The Plaintiff now accepts that its 101 bags of trochus shell was sold at US$5,400 per metric tonne in Japan and now claims the sum of $116,298.53 as being the correct claim. This sum includes freight and wharf charges being together is $9,738.17.

The Defendant’s Liability to Pay the Plaintiff $116,298.53

There is no dispute that the cargo of 101 bags of trochus shell was the property of the Plaintiff in the first place. The Defendant, was however, the commission agent for the buyer in Japan. This means that the Plaintiff in effect sold its stock of trochus shell to the Defendant who in turn sold it to its principal, the buyer in Japan. As a matter of fact, the Defendant does not in my view dispute liability from the outset. Mr. Auga presented a cheque for payment but that payment was refused by Mr. Sato. What the Defendant denied in the pleadings was that it was not liable to the Plaintiff for the sum of $121,742.40 obviously on the basis that the Defendant did not sell at US$6,000 per metric tonne in Japan. This was not an unreasonable stance taken by the Defendant. After all, Mr. Sato has realized this fact and has now reduced the Plaintiff’s claim to $116,298.53. However, the Defendant has so far maintained that its liability is only to the extent that it should pay the Plaintiff the sum of $106,560.36. So the dispute on the part of the Defendant is really about its extent of liability towards the Plaintiff and not the denial of total liability at all. That is to say, the dispute is about what amount of money the Defendant should pay to the Plaintiff which the Plaintiff is willing to accept. The correct amount had not been agreed between the parties and thus this case. I heard in evidence the reasons for the dispute over the correct amount of money but such reasons are not relevant to the question of liability to pay the correct amount. They are however relevant in assessing the conduct of each party in the case in terms of awarding costs.

The Defendant’s Counter-Claim

The real dispute is over the Defendant’s counter-claim for the sum of $9,738.17. This counter-claim is made up of freight being $8,728.17 and wharf charges being $1,010.00. The Plaintiff’s case, on the one hand, is that these costs should not be paid by the Plaintiff as the Defendant’s export arrangement was on c.i.f. terms, which meant cost, insurance and freight were the concerns of the Defendant. The Defendants’ case, on the other hand, is that freight and wharf charges should be paid by the Plaintiff. Counsel for the Defendant, Mr. Kama, pointed out that it was not unfair for the Plaintiff to meet the cost of freight and wharf charges because the Plaintiff had enjoyed 50% duty reduction. As I have said, in the evidence in Court, both Messrs. Sato and Auga confirmed that nothing was said about which party was to meet the cost of freight and wharf charges. Each party assumed that each side knew what to do. That is, Mr. Sato assumed on the one hand, that c.i.f. terms would suggest that the Plaintiff would not be responsible for the reimbursement of freight and wharf charges whilst Mr. Auga assumed, on the other hand, that the Defendant would recover freight and wharf charges from the Plaintiff. On that basis the cheque produced to Mr. Sato by Mr. Auga for the sum of $106,560.36 was not in accordance with Mr. Sato’s understanding of what he expected. On the other had, the sum was correct according to the understanding of Messrs. Auga and Taylor.

Mr. Taylor in support of Mr. Auga’s evidence emphasised that it was the Defendant’s standard practice to recover freight and other charges from clients. Whilst this may so, such practice was not accepted by Mr. Sato who was very conversant with contracts of sale on c.i.f. terms. Mr. Radclyffe pointed out correctly in his submission that the Plaintiff was not a party to the c.i.f. contract between the Defendant and the buyer in Japan and therefore was not bound by the terms of the said c.i.f. contract of sale. This is the answer to Mr. Kama’s point about the Plaintiff having enjoyed 50% duty reduction and therefore must bear the cost of freight and wharf charges in return for that benefit. Though convenient an argument it is, it does not alter the normal character of a contract on c.i.f. terms in the absence of specific terms to the contrary in the c.i.f. contract. In addition, there is no evidence of any contract between the parties that the Plaintiff was to reimburse freight and other charges in respect of the shipment of the cargo of 101 bags of trochus shell.

Finding

I therefore find that there is no basis in law for the Plaintiff to meet freight and wharf charges as items to be deducted from the price of the product sold by the Defendant. I reject the Defendant’s counter-claim accordingly. In the result, I enter judgment accordingly for the Plaintiff for the sum of $116,298.53. I would award interest at the rate of 5% as from today until the judgment sum is paid by the Defendant. I would also order that each party meet its own cost.

F. O. Kabui
Judge