Transol Shipping Company Ltd v Laore [2013] SBHC 182; HCSI-CC No. 173 of 2012 (27 November 2013)

IN THE HIGH COURT OF SOLOMON ISLANDS
Civil Jurisdiction

BETWEEN:

TRANSOL SHIPPING COMPANY LIMITED
Claimant

AND:

CHRIS LAORE
Defendant

Mr. A. Radclyffe for the Claimant.
Mr. W. Rano for the Defendant.
Date of hearing: 16th October and 20th November 2013.
Date of Judgment: 27th November 2013.

JUDGMENT

Apaniai, PJ:

1. The Claimant, Transol Shipping Company Ltd, claims against the Defendant, Chris Laore, the sum of $76,710.00, which the Claimant alleges, is owed to it by the Defendant by way of charter fees and sea fare charges. The amount is said to have been incurred by the Defendant on various dates in 2011. It is agreed that the actual amount is now $51,710.00, not $76,710.00.
   
2. The Defendant denies the claim saying that the charter of the Claimant's vessel was made by the Solomon Island Government ("SIG") through the Marine Division and SIMSA and not by him. He says, however, that if the court finds that he was the one who chartered the vessel then the Claimant should pay him all the money, which was collected by the Claimant by way of fare and freight during those voyages, which he estimates to be $200,000.00. He counterclaims for that $200,000.00.
   
3. The main issue in this case is whether there was a charter agreement between the Claimant and the Defendant. If there was no charter agreement between the Claimant and the Defendant then this claim must fail entirely. If there was a charter agreement then the Court will have to determine, not only whether the Defendant owed the Claimant the $51,710.00, but also the Defendant's counter claim against the Claimant.
   
4. The facts can be stated briefly as follows.
   
5. In 2011, the Defendant was a candidate in a bye-election held in Shortland Islands. The Defendant wanted to transport his supporters to Shortlands for the election.
   
6. He approached the Managing Director of the Claimant, Mr. MJ Bae ("Bae"), and told him that he wanted to charter the Claimant's vessel, MV Kosco, from Honiara to Shortlands to transport his voters to take part in the bye-election. A discussion was then held between Bae, Lionel Kiara ("Kiara") and the Defendant in regards to the Defendant's intentions. Kiara was the Claimant's Operations Manager at that time.
   
7. According to Kiara, the Defendant did not have sufficient funds to meet the charter so he, the Defendant, asked if MV Kosco's normal schedule to Gizo, Western Province, could be extended to the Shortlands. It appears that Bae was not very receptive to the idea and that if there had to be a diversion from the normal route from Honiara to Gizo, it had to be by way of charter.
   
8. Kiara's evidence is that the Claimant did not have sufficient funds to meet the charter fees so he was advised during their discussions to consult with the Marine Division/SIMSA to subsidize a charter from Gizo to the Shortlands.
   
9. The Defendant went and saw the Marine Division. Later Mr. Kiara, the Defendant and Michael, who is said to be the Defendant's campaign manager, went together to discuss with the Marine Division. Kiara said the Marine Division agreed to the arrangement. A charter agreement ("Agreement") was then drafted. There seems to be no dispute that it was the Marine Division, which drafted the Agreement. The Agreement is marked as exhibit "D1". The parties to the Agreement were the Claimant and the SIG/SIMSA. It is not disputed that the Defendant's name did not appear on the Agreement.
   
10. The Agreement was signed on the 17 March 2011. Mr. Kiara signed on behalf of the Claimant while Mr. Virivolomo signed on behalf of the SIG. The Defendant was not a signatory to the Agreement. There is no evidence that he was present at the time of signing.
    
11. The Schedule to the Agreement states that the duration of the charter was 1 day and the charter rate per day was $65,000.00. Under clause 7, the duration of the charter commenced at the completion of loading of goods and passengers at the port of embarkation and ends when the ship returned to the port of embarkation at the completion of the voyage. Clause 5 provides that the Claimant would be responsible for any loss incurred as a result of mechanical failure. Furthermore, under clause 6, the SIG would not be liable for any loss incurred as a result of delays caused by mechanical failure, rough weather and delays caused by the ship's crew. That means the Claimant would be responsible for those losses. Under clause 8, the Claimant was liable for any loss or damage caused by the negligent acts of the Claimant, its servants and agents and for loss due to delays caused by factors outside the control of the SIG.
    
12. Mr. Rano for the Defendant submits that the charter agreement covers the journey from Honiara to the Shortlands. He referred to the Schedule to the agreement, which referred to the port of embarkation as Honiara. I do not agree. It is clear from the evidence that the charter was from Gizo to Shortlands and back to Gizo. The journey from Honiara to Gizo was a normal schedule run.
    
13. The MV Kosco left for Gizo on 27 March 2011. Also on board were a number of passengers who were supporters of the Defendant. Their destination was the Shortlands. The Defendant did not travel on the ship but paid the sum of $40,000.00 to the Claimant as fare for his supporters and voters who were to board the ship. They were on their way bound for the Shortlands.
    
14. On Monday 28 March 2011, the ship left Gizo for the Shortlands at around midnight. On its return journey from the Shortlands, it arrived back at Gizo at 10am Wednesday morning 30 March 2011. It was a 1 and ½ days trip.
    
15. The Claimant claims that the ½ day delay was the result of ferrying passengers from the ship at the ports of call in the Shortlands. The Claimant further claims that the Defendant is liable to meet the costs of that delay. The Claimant also says that the basis for this claim is that the charter was made for the benefit of the Defendant in the sense that the trip was to enable the Defendant's voters go to the Shortlands to vote for him and therefore he must meet the extra charge.
    
16. In his defence, the Defendant denies being a party to the charter agreement from Gizo to Shortlands. His evidence is that the week before the bye-election, he and his sister went and saw the Managing Director of the Claimant, Mr. MJ Bae. He wanted to charter the MV Kosco but the Managing Director would not agree because the Defendant did not have sufficient funds for the charter. He said that the Claimant had a contract with the Marine Division of the Ministry of Infrastructure so they advised him to see the Marine Division.
    
17. The Defendant went and saw Mr. Ahikau of the Marine Division who agreed to the proposal for the Marine Division / SIMSA to charter the trip from Gizo to the Shortlands. The Defendant says the SIG had a 6 months franchise with the Claimant.
    
18. Having secured the agreement of the Marine Division to engage the Claimant's vessel for the Gizo / Shortland route, the Defendant left and then later went to Shortlands for registration. He says he did nothing further in relation to the charter agreement and that all he knew was that the SIG would charter the MV Kosco for the Gizo / Shortland route.
    
19. He says the MV Kosco arrived at Shortlands 2 days after he arrived. He says the vessel came to his village. He says he also knew that the vessel had also called in at Maleai and Mono, however, he says he had no knowledge of any other villages where the ship had called in. He also says he had no idea if the ship had been delayed anywhere else.
    
20. He agrees that he had received invoices from the Claimant totalling $76,710.00 but refused to pay them because the charter arrangement was between the Marine/SIMSA and the Claimant. He says he took the invoices to Margaret who worked for the Claimant and explained that the invoices should be forwarded to the SIG and not him. That was his evidence.
    
21. So, the question is whether or not there was a contract between the Claimant and the Defendant in relation to the charter of the MV Kosco from Gizo to Shortlands.
    
22. In Modern Law of Contract[1], the learned author said at p. 25:-
    

"The classical theory of contract relied on a number of specific elements, which were regarded as both necessary and sufficient to identify an agreement which is intended to be legally binding. These were:

• offer;
  
• acceptance; and
  
• consideration.
  

These three factors, together with an overarching requirement that the court is satisfied that there was an intention to create legal relations, formed the classical basis for the identification of contracts in English law."

23. To succeed in this claim, therefore, the Claimant must demonstrate that there was an offer and acceptance and that consideration flowed therefrom. The offer must be unequivocal and its terms must be fixed or capable of being fixed at the time of the offer[2]. Acceptance must also be clear and unequivocal. Where the words are not so clear, the conduct of the parties may be taken into account when determining whether or not there was a contract.
    
24. In the present case, the Defendant had wanted to charter the MV Kosco. However, his discussions with Bae and Kiara were, in my view, nothing more than initial discussions exploring the possibility of entering into a charter arrangement. I find that no agreement was entered into between the Claimant and the Defendant for a charter of the MV Kosco from Gizo to the Shortlands during those discussions.
    
25. It is not disputed that the trip by MV Kosco from Gizo to the Shortlands was a charter. It is also not disputed that there was a charter agreement signed by the Claimant and the SIG, which resulted in the MV Kosco taking the trip from Gizo to the Shortlands. I do not think any of the parties would dispute that the trip from Gizo to the Shortlands would not have taken place had it not been for the charter agreement between the Claimant and the SIG. It is also not disputed that the $51,710.00 now being claimed against the Defendant was incurred in connection with the trip from Gizo to the Shortlands. Is the Defendant liable to pay the $51,710.00?
    
26. It is clear that the Defendant was not a signatory to the Agreement. Those who were privies to the Agreement were the SIG and the Claimant. The essence of the doctrine of privity of contract is the idea that only those who are parties to the contract can have the rights or liabilities under it, including the right to enforce it or to be sued under it.
    
27. In the present case, there is no dispute that the Agreement was indeed an agreement which would benefit the Defendant in the sense that his voters would be able to travel to the Shortlands and vote for him. Does that mean that the Defendant was a party to the Agreement? Is there any evidence from which an inference could be drawn that the SIG was acting as agent for the Defendant when it signed the Agreement with the Claimant?
    
28. Unfortunately, I cannot answer the above questions affirmatively. There was no charter agreement between the Claimant and the Defendant and I am unable to find any evidence to suggest that the Defendant was, in any way, a privy to the Agreement between the Claimant and the SIG dated 17 March 2011. Hence, this claim must fail entirely.
    
29. The claim is dismissed. The Claimant shall pay the costs of the Defendant to be taxed if not agreed. Orders accordingly.
    

THE COURT

James Apaniai
Puisne Judge

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^[1] Richard Stone, Modern Law of Contract, 6^th Edition, p.25.
^[2] Ibid, p. 26.