Maui Fisheries Company Ltd v Air Pacific Airlines Ltd [2002] TOLawRp 14; [2002] Tonga LR 85 (9 April 2002)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

C 860/2000

Maui Fisheries Company Ltd

v

Air Pacific Airlines Ltd

Ford J
25 March 2002; 9 April 2002

Contract law – breach of contract – lack of performance of implied condition precedent

The plaintiff pleaded that it entered into a contract with the defendant airline to ship some 1234 kilos of fresh, chilled fish from Tonga to Los Angeles through Nadi on the night of Tuesday 5 September 2000. The cargo was not shipped but returned from the airport to the plaintiff's premises. The plaintiff brought an action based on breach of contract and claimed special damages totalling $13,530.59 for loss of the potential sale of the fish in the USA and general damages of $5000. The defendant raised three defences. First, that no contract had been entered into; secondly, that, if the court found that there was a contract, then it was never breached by the defendant; third, as a further alternative, the defendant alleged that if there was a breach then, on the evidence before the court, it was impossible to quantify any loss suffered by the plaintiff.

Held:

1. The court considered that in signing the Air Waybill, the parties entered into a binding contract which set out the terms upon which the consignment would be carried but the contract was subject to an implied condition precedent to its performance. The implied condition precedent was that the contract of carriage covered by the signed Air Waybill would materialise only if the consignment could be loaded and carried on the flight that evening.

2. The cargo did not make the flight and so the condition precedent failed to materialise without any default on the part of the defendant or its representatives.

3. The plaintiff failed in its action.

Counsel for plaintiff: Mr Foliaki
Counsel for defendant: Mr Garrett

Judgment

In his opening remarks, counsel for the plaintiff rather boldly described this proceeding as, "quite a simple contract case."

The plaintiff pleaded that it entered into a contract with the defendant airline to ship some 1234 kilos of fresh, chilled fish from Tonga to Los Angeles through Nadi on the night of Tuesday 5 September 2000. The cargo was not shipped but returned from the airport to the plaintiff's premises. The plaintiff brings this action based on breach of contract claiming special damages totalling $13,530.59 for loss of the potential sale of the fish in the USA and general damages of $5000.

The defendant has raised three defences. First, it is alleged that no contract had been entered into. Secondly, it is alleged that, if the court finds that there was a contract, then it was never breached by the defendant and, as a further alternative, the defendant alleges that if there was a breach then, on the evidence before the court, it is impossible to quantify any loss suffered by the plaintiff.

The case for the defendant centres around two, what were called, "positive defences". First, it was alleged that the cargo and the supporting documentation had not been delivered by the plaintiff to the airport on time and, secondly, it was alleged that when the plaintiff was asked to pay the freight costs it tended a post dated cheque and that method of payment was unacceptable.

Only one witness was called for the plaintiff, the company office manager, Naitilima Tupou. Ms Tupou told the court that on the morning of 5 September 2000 she went to the office of Air Pacific and asked the manager, Mr Kitione Mokofisi, if he could confirm space for 1.5 tons of fresh chilled fish on the flight that evening from Tonga to Nadi and then LA. She said that sometime after she had arrived back at her office, Mr Mokofisi telephoned her confirming that there was space available on the flight.

Ms Tupou said in evidence that after she received confirmation of the booking she went ahead and arranged for the fish to be packed and then she prepared what she referred to in her evidence as a "packing slip" from which the airline officials at the airport would be able to prepare the Air Waybill. The document is actually made out as an invoice and is headed up as an invoice addressed to the customer in the USA.

Ms Tupou then explained how she had arrived late at the airport that evening with the documentation for the consignment. She did not tell the court why she was late and, rather surprisingly, she could not say what time she had arrived at the airport but she said that she was told by the Air Pacific representative that it was about 15 minutes after the flight had arrived from Apia.

The witness said that the first thing she did after arriving at the airport was to check to make sure that the cargo had been loaded on to an airline pallet. She said that it had been loaded and the pallet had been taken out onto the tarmac. She said that she then went to the desk of the airline cargo representative, Laini Hiliau, to complete the necessary documentation. Mr Hiliau is an employee of E M Jones Ltd and that company acts as the Tonga agent for the defendant airline.

Ms Tupou said that she gave Mr Hiliau the packing slip and he proceeded to make up the Air Waybill. She said that later when she went to pay the freight costs of $3213.02 she wrongly wrote on the written part of the cheque the words "three thousand two hundred and thirty dollars two cents". As the cheque had been pre-signed by the company manager Chin Choe, Ms Tupou was not able to alter the amount herself and so she agreed with Mr Hiliau to reissue a cheque for the correct amount the following day. She denied that the cheque had been post dated.

Ms Tupou then told the court how before she left the airport she, "ran into Mr Mokofisi and he confirmed that the cargo was leaving". She explained that she did this because: "In my experience, you can make a confirmed booking but because of passenger numbers which is the airlines' priority, you can still have something come off and so I wanted confirmation."

Ms Tupou said that later she found that the cargo in question had not left on the flight that night but it had been returned to the plaintiff's factory and put back into refrigeration. She said that the fish was subsequently sold on the local market at a reduced price. The president of the plaintiff company, Mr Choe, wrote a letter of complaint to the defendant three days later explaining that further business would be taken elsewhere. The court proceedings were issued the following month.

The defendant called several witnesses. The first witness was Laini Hiliau. He told the court that he recalled his boss (Mr Mokofisi) telling him on the morning of 5 September to ring Maui Fisheries to confirm the booking for the shipment of fish. He said that he did so and he spoke to Ms Tupou. He said that he told her that the booking had been confirmed and that she should be at the airport two hours before the flight arrived and she should have a cheque for payment. Mr Hiliau explained that this particular shipment was the first that his company had handled directly for the plaintiff although he had dealt with Ms Tupou previously when the plaintiff company had packed its export consignments of fish through another fishing company, Alatinis.

Mr Hiliau told the court that he had arrived at the airport on the evening in question at about 5:45pm and his main job was to look after the cargo. The witness said that when he arrived at the airport a representative from Alatinis was present with that firms consignment of fish for export together with the required documentation and so he proceeded to process the necessary documentation.

Mr Hiliau said that the plaintiff's cargo of fish did not arrive at the airport until 6:30 pm but he was unable to complete the Air Waybill because Ms Tupou had not arrived with the required documentation. Mr Hiliau said that Ms Tupou eventually arrived at about 7:30 pm which was after the plane had arrived from Apia. He said that he asked her why she was late and she responded that she had been preparing the invoice.

In all events, the witness then proceeded to complete the Air Waybill documentation which, he said, usually took him about 10 minutes. He said that he recalled giving Ms Tupou the Air Waybill at approximately 7:45 pm which she then had to sign and take to Customs to obtain a Customs' clearance. Mr Hiliau said that Ms Tupou arrived back at his desk at 8:05 pm and he then asked her for the cheque. When the cheque was handed over in payment of the freight he said that he noticed that it was incorrectly dated 13 September and so he said that the shipment would be taken but he told her to come back the following day with another cheque. He said that he had not noticed anything else wrong with the cheque apart from the incorrect date.

Mr Hiliau told the court that the plane was running late on the night and it did not leave until 8:30 pm He found out at approximately 8:15 pm that the plaintiff's consignment was not able to be taken but by then Ms Tupou had left the airport.

The second witness called by the defendant was Maria Matoto, the manager for Jones' Travel and the Load Officer for Air Pacific. Ms Matoto recalled clearly the flight in question. She told the court that it arrived on time at 7:10 pm and was supposed to leave at 8:15 pm but it did not depart until 8:33 pm.

Ms Matoto explained that the reason for the hold-up was the delay in receiving a document from Apia known as the "load message" and the fact that they had to off-load about one ton of passenger baggage. The witness said that normally the load message would be faxed through from Apia giving her passenger numbers together with baggage and freight details. On this particular night, however, the load message was not faxed through and so she had to await the arrival of the plane and obtain the captain's copy. Although the witness was not asked any details about its contents, it seems clear that the load message showed a heavy loading of passengers and freight from Apia.

Ms Matoto was aware from the outset that they had two shipments of fish to take out of Tonga. She said that when she had arrived at the airport earlier in the evening she had spoken to Mr Hiliau and he was then working on the paperwork for the Alatini shipment.

Ms Matoto said that after the flight had arrived from Apia the baggage boys off-loaded and she began her usual routine to ascertain final passenger numbers and the weight content of baggage and cargo to be loaded. She said that in the meantime the cargo workers had loaded Alatini's fish consignment and they were working on loading passenger baggage. At some point in time just prior to 8 pm Ms Matoto realised that they had a weight problem and so she consulted with her company manager, Mr Mokofisi, and told him that one ton of baggage would have to be off-loaded in order to bring the weight down to the authorised limit.

It was explained to the court that the company policy in off-loading situations which does not appear to be a rare event at Fua'amotu airport, is that priority for shipment is given to perishable freight, perishable baggage (passenger baggage containing food) and ordinary passenger baggage, in that order. In other words, passenger baggage is always the first part of the cargo to be off-loaded. Ms Matoto said that Mr Mokofisi's primary concern when she approached him was to try and get the plane out on time and so he told her to go ahead and off-load a ton of passenger baggage which equated to approximately 60 pieces of passenger luggage.

Ms Matoto immediately proceeded to act on those instructions. She said that it was not until sometime after they had finished the off-loading that she became aware that the plaintiff's consignment had not been loaded but the pallet was still sitting on the tarmac. She said that the weight of the plaintiff's consignment had never been part of her calculations because she had not received any documentation relating to the shipment. Ms Matoto was adamant, however, that had the cargo and the paperwork been at the airport on time then it would have been loaded and it would have gone on the flight that night. She told the court that Alitinis's shipment, which had been at the airport on time with the necessary documentation, had been loaded ahead of any passenger baggage and it had flown out to the States without any problem.

The final witness for the defendant was Mr Mokofisi. He confirmed Ms Matoto's evidence. He said that he recalled her approaching him about the load problem and he gave instructions to off-load the passenger baggage. His main concern was to try and get the plane out on time. When asked about his earlier contacts with the plaintiff over the consignment, Mr Mokofisi said that he had received a telephone call on 4 September from Ms Tupou wanting to know whether a booking she had previously made inquiries about for 2 ton of chilled fish from Tonga to Nadi and L.A. on the night of 5 September had been confirmed. He said that he then checked his telex machine and confirmed the booking. He said that he had no dealings with Ms Tupou on 5 September and he could not recall her coming into his office.

Likewise, the witness said that he did not have any conversation with Ms Tupou at the airport on the night of 5 September. He said that he had seen her standing at Mr Hiliau's desk at one stage but he did not speak to her. He denied giving her any assurance that the plaintiff's shipment would be leaving on the flight.

Mr Mokofisi said that, initially after he became aware that the plaintiff's shipment was not on the flight, he had assumed the reason was because there must have been too much other cargo but after he made inquiries the following morning he became aware that the real reason was because the documentation had not been delivered to the airport on time.

As with any civil action, the onus is on the plaintiff to prove its case on the balance of probabilities.

The defendant submitted that no contract had ever been formed, "because of the plaintiff's failure to comply with at least two of the defendants terms of contract." The two "crucial terms" were said to be:

"That the shipment, together with a representative of the shipper, had to be at the airport no later than two hours prior to the flight time that evening, and;

Payment for the shipment was to be made at that time."

The defendant did not expand on how the two so-called "crucial terms" could properly be described as terms of the contract unless a contractual relationship, in fact, existed between the parties. The defendant may have intended the court to view them as conditions precedent to the formation of a contract.

For his part, counsel for the plaintiff submitted that there was a valid contract between the parties and the only real issue for the court to determine was whether the defendant was justified in not fulfilling its responsibilities because, as he put it, "of the plaintiff's negligence in being late with the required papers". Mr Foliaki submitted that the problem with the cheque, whether it was the wrong date or the wrong amount, was not an issue because the parties had agreed that it would be replaced the following day.

I agree with Mr Foliaki's submissions regarding the cheque. I also agree with Mr Garrett's submission, however, when he criticised the plaintiff for not discovering the cheque for the purposes of this proceeding. The defendant had made an issue of the cheque right from the outset and had pleaded in its statement of defence that the cheque was not accepted because it was postdated. It was, thus, a relevant document and it should have been produced. When cross-examined about its present whereabouts, Ms Tupou said that the cheque was back at her office. That is not good enough. It should have been part of the documentation produced at the hearing by the plaintiff.

I should also say at this point that, in terms of credibility, I did not find Ms Tupou to be a particularly convincing witness. On the other hand, I found Ms Matoto and Mr Mokofisi to be completely credible witnesses for the defendant. Likewise, I considered that Mr Hiliau did his best to try and give the court an accurate account of the events as he saw them but at times I found his evidence, about flight times in particular, innocently muddled. Nevertheless, as I have said, the plaintiff has the onus of proof and counsel's task is not made any easier when the one witness called for the plaintiff fails to match the credibility of the defendant's witnesses.

I accept that Mr Hiliau had the telephone conversation he described with Ms Tupou on the morning of 5 September, notwithstanding the earlier telephone conversation Mr Mokofisi had had the previous day. It was part of Mr Hiliau's duties to liaise with the shippers. I also accept Mr Hiliau's evidence that he had told Ms Tupou to be at the airport 2 hours before the flight arrived. At one point he mentioned 3 hours but, although it was company policy to try and have cargo delivered to the airport 3 hours before the flight arrival, in practice the staff operated on a 2 hour deadline and I find that 2 hours was the instructions he gave to Ms Tupou. In any event, I accept that Ms Tupou did not arrive until about 7:30 pm which was well after the stipulated time and some 20 minutes after the flight from Apia had landed.

I do not accept Mr Hiliau's evidence that the plane was due to leave again at 8 pm I believe that this was one of the areas where he was genuinely confused. Ms Matoto made it very clear that the scheduled departure time was 8:15 pm. I accept that it was not until 8:05 pm that Ms Tupou arrived back at Mr Hiliau's desk with the customs clearance for the shipment and then she proceeded to pay Mr Hiliau with the unacceptable cheque.

I have no difficulty concluding that Ms Tupou's delay in taking the required documentation to the airport was the real reason why the plaintiff's consignment was not carried on the defendant's aircraft that evening.

I have not been persuaded that either Mr Hiliau or Mr Mokofisi gave Ms Tupou any assurance at the airport that the cargo would be on the flight. On the contrary, I accept Mr Mokofisi's evidence that he did not have any conversation with Ms Tupou at the airport that evening. I am also satisfied that when the incorrect cheque was presented and Mr Hiliau made the comment that "the shipment would be taken", he was simply referring to "taken" for the purpose of processing the documentation. He did not intend the comment to amount to any sort of assurance that the consignment would be able to leave on the flight that night and I am satisfied that Ms Tupou understood exactly the meaning of his remark.

Although the defendant argued forcefully that no contractual relationship ever came into existence between the parties because of the plaintiff's delays in delivering the necessary documentation and the incorrect cheque, the reality is that the parties did end up signing the Air Waybill. I consider that in signing the Air Waybill, the parties did, in fact, enter into a binding contract which set out the terms upon which the consignment would be carried but the contract was subject to an implied condition precedent to its performance.

The implied condition precedent arose because of what I find to be the plaintiff's excessive delay in having the required documentation delivered to the airport. The implied condition, which both parties understood and agreed to without the need to have it spelt out, was that the contract of carriage covered by the signed Air Waybill would materialise only if the consignment could be loaded and carried on the flight that evening.

Mr Hiliau, for his part, used his best endeavours to have the documentation processed and completed as quickly as possible but the damage had already been done by the late delivery of the plaintiff's documents to the airport. It is clear from the passage quoted earlier from Ms Tupou's evidence that she was well aware that at Fua'amotu airport the signing of an Air Waybill provides no assurance that the cargo will end up making the flight -- all the more when the documents had been delivered to the airline representative as late as the presentation of the documentation in the present case.

The cargo did not make the flight and so the condition precedent failed to materialise without, I find, any default on the part of the defendant or its representatives.

The plaintiff, therefore, fails in its action. The defendant is entitled to costs to be agreed or taxed.