Pearl Creations Company Ltd v International Watersport Management Ltd [2001] TOSC 30; C 1140 1999 (3 August 2001)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

C1140/99

BETWEEN:

PEARL CREATIONS COMPANY LTD.
Plaintiff

AND:

INTERNATIONAL WATERSPORT MANAGEMENT LTD.
Defendant

BEFORE THE HON. CHIEF JUSTICE WARD

COUNSEL: Mr. L Foliaki for Plaintiff
Mr. D Garrett for Defendant

Date of Hearing: 30 and 31 July 2001
Date of Judgment: 3 August 2001

JUDGMENT

This is a claim in contract. There is no dispute that an oral contract was entered into whereby the defendant company would transport live oysters from Nuku'alofa to Vava'u. The contract was performed on 20 October 1999 and the oysters delivered but the length of time the voyage took resulted in many of the oysters arriving dead.

As so often happens when there is a purely oral contract, the exact terms are in dispute. The issue in this case is whether there was a clause in the agreement that the oysters had to be delivered within a stated time considerably shorter than the time actually taken.

The principal witness for the plaintiff was Chin Choe, a United States citizen but Korean by race, who told the court that he was the manager and a shareholder in the plaintiff company and that he also manages a number of fishing boats including one of his own, one owned by a Canadian company and three by a Tongan company, all operating out of Tonga.

The plaintiff company has established an oyster farm in Vava'u at Lisa's Beach with the purpose of producing pearls. It appears that the particular oysters used are far more common naturally in the waters around Tongatapu than Vava'u and so the company buys them from local divers in Tongatapu to send to Vava'u. At the time of this case, the company had accumulated a considerable number of oysters and they were kept in net bags hanging in the water from the side of a fishing boat moored alongside in Nuku'alofa harbour. They were to form the first consignment from Tongatapu.

The defendant company operates, as its name suggests, a watersports company and the various activities that are associated with that. It owns a motor vessel the Deep Blue, which is used primarily to take divers out to dive sites. The vessel is kept in Nuku'alofa harbour and habitually moors not far from the place where Mr Choe's fishing boats are kept. The skipper of Mr Choe's boat knew the skipper of Deep Blue, Tevita Laasi, and Mr Choe explained that it was through him that he approached Mr Laasi.

Mr Choe is not an expert on oysters but he told the court that his Japanese technical expert had advised him of a number of conditions that were necessary if the oysters were to survive the journey. The principal one was the time of the journey. The oysters would not survive if it took much more than 10 hours. In the pleading, this was stated to be 16 to 17 hours but I accept the evidence of Mr Choe that the true time would be the figure he gave.

Mr Choe also pointed out that temperature was of critical importance and, for this reason, they were to be transported at night. Thus the arrangement would need to be for the oysters to be loaded in the evening and the departure set just afterwards. That would ensure the oysters arrived before daybreak the following day.

I accept that Mr Choe had those conditions in mind when he was trying to arrange transport for the oysters.

He told the court that, when he approached Mr Laasi he asked him if the boat could take the oysters and whether it could do the journey in 8 to 10 hours. He was told that, in good conditions, it would be 8 hours and if it was a bit rough it would be 10 hours. When Mr Choe asked the cost, Mr Laasi said he would need to speak to the "owner".

That was Herbert Keller, a director and major shareholder of the defendant company. Mr Choe approached him the next day and told the court that he asked the same questions of him and received the same answers. He was also told Deep Blue was available for the charter on 20 October, the next day, and the cost of the delivery was $2,000.00. Mr Keller's evidence was that he had two meetings with Mr Choe. At the first Mr Choe said he had spoken to the skipper of Deep Blue. He confirmed that he could carry the oysters but it would need to be on a date when the boat was not booked for any other sports activity. On the subject of price, he said he needed to calculate it and so they met again the next day. He then quoted a price of $2,150.00, which was accepted.

He told the court that there was no discussion of the time the journey would take at the first meeting but, at the second, he was asked and said the average speed of the boat was 8 to 10 knots which would give a journey time of 20 to 23 hours. No one else was present at these two meetings.

Mr Keller pointed out in his evidence that Deep Blue is an old boat with a deep displacement hull. As such it could not make more than the speed he said to Mr Choe. Even with a much more powerful engine such a hull could not achieve a speed in excess of 15 knots but he doubted that Deep Blue could ever be pushed to such a speed even with a bigger engine.

The boat was loaded and departed at 9.0pm in the evening of 20^th. The arrangement was that, when it approached Vava'u waters, it should radio Lisa's Beach and the farm would send out a boat to rendezvous off Hunga and guide them in from there.

The boat arrived off Hunga at about 7.0pm on the 21^st. The skipper had tried to make radio contact since about 5.0pm but had not been successful. Eventually he raised a nearby resort who relayed the message and, some time later, the skipper received a radio call from Lisa's Beach.

Mr Laasi told the court the radio message was that, as it was low tide, the boat could not get out and that he should anchor there. He did not consider that possible and so it was agreed they should proceed to Neiafu. Once there they were to hang the nets of oysters over the side until they could be collected.

There is dispute about that radio contact and the terms of the instructions to proceed to Neiafu. What is clear is that the staff from Lisa Beach arrived by car later that same night and took the oysters to the farm by road. Mr Laasi suggested this was at 4.0 am but he also put it at about half an hour after they arrived and that would have made it about the time the plaintiff's witness suggested; after 11.0pm. Once at the farm, they were carried down steps to the sea.

According to the witness from the farm, Mr Io, it was clear some were dead. He spoke of the fact that they did not respond when the shells were touched and many smelled very bad. On arrival at Lisa's Beach, they were sorted and those that were still alive were placed in the sea.

It is agreed that an expert from the fisheries department went a few days later and confirmed that there were 2,900 dead oysters.

The question for the court is whether there was an agreement to deliver the oysters in 8 to 10 hours. If there was, it is clear the defendant failed properly to perform the contract. If there was not, the plaintiff's claim fails. The plaintiff, as the party asserting, bears the burden of proving the inclusion of such a term to the civil standard.

I am satisfied that the need for delivery within the time stated by My Choe in his evidence has been clearly proved. Equally the fact that a journey time of 22 hours was far too long is borne out by the death of such a substantial number of oysters. It is also clear that he was concerned enough about it to discuss the time the trip would take at the very outset of his enquiries. He told how he asked Mr Laasi and was assured that the boat could do the journey in the time required.

That was confirmed not just by Mr Choe's assistant, Mr Kavaliku, who was present at the time but by the skipper of the boat about which he was enquiring. Mr Laasi said that he was asked if the boat could do the trip in 8 to 10 hours and he said "yes". He said his answer was more a joke and that anyone could see from the state of the boat that it could not make such a speed. I appreciate that it is not unusual for Tongans to joke between themselves but I do not accept this was done in such a way for two reasons. First the conversation was between a Tongan and a Korean both speaking a language other than their mother tongue and a joke in such circumstances is, I accept, extremely unlikely but second and more clearly, there was another Tongan present, Mr Kavaliku, and he took it as a genuine statement.

When Mr Garrett was questioning Mr Choe he asked him about his knowledge of boats in relation to their hull shape and their ability to travel a high speed. Mr Choe explained that he was a businessman and that, although his work inevitably meant he was involved with boats, he knew nothing about their capabilities. He stated he was neither a fishermen nor a sailor. Mr Laasi told the court that Mr Choe had originally arrived in Tonga on a fishing vessel as the engineer. That was never put to Mr Choe and I place no weight on it.

I accept the evidence that a boat with a displacement hull cannot achieve the speed that a planing hull, such as appears to be the design of the boat the plaintiff has since used to transport its oysters, might achieve.

I accept Mr Choe's evidence that he does not have any technical knowledge of boats. I accept he did ask Mr Laasi specifically if the boat could make the journey in 8 to 10 hours and was assured it could and would. I also accept his evidence and that of his witness Mr Kavaliku that he pressed the matter to make sure it was the case. Despite Mr Laasi's claim of a joke, I am satisfied it was not given jokingly nor was it taken as such by either Mr Choe or Mr Kavaliku and they believed Mr Laasi. As people with no specialist knowledge of boats, they were entitled to and, I find, did accept the statements of Mr Laasi as those of an expert in relation to the capabilities of his own boat.

As I have stated, I accept that it has been amply proved that the time of this trip was vital. The evidence of the other arrangements made by Mr Choe also points to his acceptance of the accuracy of Mr Laasi's statements. He arranged specifically for the boat to be loaded in the late afternoon so it could leave at 9.0pm. I accept the evidence of Mr Io that, at the other end, he arranged for his staff to be available early the next morning to receive and deal with the oysters. I have no doubt, given those facts, that had Mr Choe any idea that the journey was inevitably to take so much longer, he would at the very least have considered the suggestion of Mr Laasi that they might be transported in bins of sea water.

Mr Keller's evidence was that at the second meeting, he mentioned the speed of Deep Blue and the expected journey time of 20 to 23 hours. I must assess that evidence in the light of the evidence as a whole. He said that there was no mention of the time of 8 to 10 hours. I accept that may be the case. Had it been mentioned I would have expected him to refute it immediately. I would equally have expected Mr Choe immediately to withdraw from the transaction if Mr Keller had mentioned 20 to 23 hours.

On balance I am satisfied that the time of the journey was not mentioned in the presence of Mr Keller. I realise that to reach that conclusion I cannot accept the accuracy of the evidence of either Mr Keller or Mr Choe on that point but that is the way the evidence has left me.

As I have stated the burden is on the plaintiff to prove the existence of a time clause and, on the evidence as a whole, I find that has been proved. I am satisfied on a balance of probabilities that the statements of the skipper of Deep Blue established a condition in the agreement that was binding on the defendant and that it was never contradicted subsequently at the meetings with Mr Kehler.

In reaching such a conclusion the court has borne in mind the importance of the condition and of its inclusion, the short time between the statements by Mr Laasi and the actual concluded agreement and the fact that this was always an oral agreement.

The damages claimed were for the loss of 2978 oysters at a price of $3.00 each to give an amount of $8,934.00. The same sum was claimed again for their replacement but Mr Foliaki for the plaintiff agrees that is a double claim and should not have been pleaded. The evidence has only established a loss of 2,900 oysters which would give a figure of $8,700,00.

Against that must be set the cost of the charter which was $2,150.00. The plaintiff does not dispute it is liable for that and, indeed, there has been judgment in default for that sum on the defendant's counter claim. However, I include it now to give the final figure.

Thus the damages are $8,700.00 less $2,150.00 leaving a final figure of $6550.00. No interest has been claimed and so none is awarded.

The plaintiff must have his costs but I note that the original claim was, as a result of the poor pleadings, for a sum of nearly twice as much as the plaintiff could ever have proved. Had the correct figure been pleaded, the case may have been settled without the need for a trial. In those circumstances, I limit the award to the plaintiff to half its costs to be taxed if not agreed.

NUKU'ALOFA: 3^rd August, 2001

CHIEF JUSTICE