Lotus Tours Ltd v. China Marine Investiment Co Ltd

DCCJ002500/1970

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 2500 OF 1970

Coram: D. Cons, District Judge

Date of Judgment: 20 November 1970

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JUDGMENT

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1. The business of the plaintiff company appears to be more extensive than its name would on the face of it suggest. Amongst other things it is concerned with the shipment of goods by air, for which purpose it maintains an air-freight division presided over by the manager, Mr. Mak Chi Kin, the plaintiff's only witness at the trial.

2. On the 26th of March this year Mr. Mak was requested by a member of the defendant company's staff to ship by United Burma Airways certain marine spare-parts to one of the company's vessels then lying in need thereof at Chittagong. Ex. 1 contains such of that request as was reduced to writing and signed on behalf of the defendant company. The following morning the plaintiff company despatched a lorry and staff to pick up the spare-parts, intending to deliver them to Cathay Pacific Airways for onward transmission to their destination. Cathay Pacific Airways are, I understand, the handling agents for United Burma Airways at Kai Tak. Unfortunately the lorry despatched by the plaintiff company was too small for its intended purpose, forcing the defendant company to engage and pay other transporters. The aircraft onto which the goods were ultimately loaded took off from Kai Tak at 3.35 p.m. the same afternoon.

3. On the 1st April a Marine Engineer of the defendant company flew from Hong Kong to Chittagong, presumably to supervise the installation of the same spare-parts. He found, no doubt to his surprise, that they had not yet arrived. Indeed they did not arrive until some sixteen days later, making for them a total of nineteen days for a journey which even by sea can be accomplished in about ten to twelve days. It was an expensive delay for the defendant company which incurred demurrage charges of just over $12,000. In consequence the defendant company has since refused to pay the bill submitted by the plaintiff company, a bill mainly comprised of the air-freight charges which that company settled with the United Burma Airways.

4. It is not disputed by the plaintiff company that it was at all times the agent of the United Burma Airways and that as such it has no capacity to sue alone for freight charges raised by its principal. But it bases its present claim upon two other grounds, namely, that it was at all times also the agent of the defendant company, in other words, that it was a mutual agent of both that company and the airline, and secondly that the charges in question were money paid by the plaintiff company under compulsion and for the use of the defendant company. The authority to which I have been referred in the latter respect is Atkins' Court Forms and Precedents, Vol. 11, page 317; but the general position is I think more attractively and fully set out in Chapter 12 of "The Law of Restitution" By Goff and Jones (commencing from page 207). There seems from the evidence of Mr. Mak to be some sort of pressure exerted by the International Air Transport Association upon agents of the plaintiff company's nature to pay freight charges to the airline concerned whether or not those charges have first been settled by the actual customer. This may well be so, although no rules of the International Air Transport Association have been shown to me and I am not inclined to accept Mr. Mak as very knowledgeable in this field. But on the meagre evidence and argument that has been placed before me I am not satisfied that it is pressureo of a kind sufficient to be called "compulsion by law" in the sense that has been given to that phrase by the courts in the cases quoted in the text to which I have just referred.

5. I return therefore to the question of agency. In this respect a few matters of evidence must be considered. The first is that the defendant company was introduced to the plaintiff company for the purposes of this transaction by the carriers themselves. It is said that this shows that the defendant company in no way appointed the plaintiff company as its agent but dealt with it merely in order to please the carriers. I do not accept that this necessarily follows. The argument might perhaps have carried more weight had the defendant gone on to prove the suggestion that was put to Mr. Mak in cross-examination, namely that the carrier actually refused to have any dealings direct with the defendant company or to carry the goods at all unless they were placed through the plaintiff company, but I would put it no higher. Merely, because, in order to save his costs, I recommend to the purchaser of my house that he employ the same solicitor as myself does not render that solicitor any the less the agent of my purchaser. I consider the point only to dismiss it.

6. The second piece of evidence is more important. It is suggested on behalf of the plaintiff company that agency is shown by the fact that the company was required to carry out certain duties which did not themselves form part of the shipment, that is to pick up the goods and deliver them to the aircraft. But I observe that when the plaintiff company charged for this particular service it included those charges upon the air waybill (Ex.2), a document which it quite clearly executed solely as agent for the airline. If these had been services rendered in its own capacity as agents of the defendant company one would have expected the charges to have been set out in a document of its own, and itemised separately in the final bill sent to the defendant company (Ex.4). Furthermore one might have expected the charges to have borne some relation to the actual cost of the transport and not have been based upon an arbitrary figure also imposed by the International Air Transport Association. I may add in parenthesis that I understand from the defence solicitor that the defendant company, fighting this claim as they are purely on a matter of principle, are quite willing to pay the pick up charges if the agency sought for by the plaintiff company is accepted. Apart from this it is hard to see how that company could recover at all for services it did not in fact perform.

7. Again it is suggested that there is a further separate duty as the defendant company's agent to follow up and pursue any claims which the customer might wish to raise against the airline, but in this respect the plaintiff does not appear to have been particularly helpful and indeed Mr. Mak was adamant that their duty finishes the moment the goods have been placed on board the appropriate aircraft.

8. Apart from the pick up charges the defendant company has paid, or rather is expected to pay, no money which goes direct to the plaintiff company. The freight rates with which it was billed are the full rates imposed by United Burma Airways, who in their turn pay commission thereon to the plaintiff. For convenience the plaintiff company deducts its commission when it settles its account with the airline, but this is only a book-keeping practice which cannot affect the general position that it is the airline, and the airline alone, which pays commission. I appreciate that payment of financial consideration is not an essential element in the appointment of an agent, but it is unusual in the commercial would for agency to be accepted without some form of payment and it may be reasonable to infer, where no payment is found, that agency does not exist.

9. I was referred to several authorities by Mr. Wong for the defendant company, but with respect to him they do not carry the matter much further, merely establishing the principle already conceded by the plaintiff, that an agent cannot sue directly upon a contract made on behalf of his principal, unless he has also in some way contracted personally or has some other course of action, as upon a negotiable instrument. Nor have I found the recognized textbooks of much assistance, for in the ultimate conclusion the existence or otherwise of agency in any particular circumstances depends upon the intention of the parties, that is, it is a question simply of fact, which may unfortunately in cases of this nature lead to the unsatisfactory situation of contrary decisions in circumstances which vary only slightly from each other. In the present instance, looking at the whole transaction, and bearing in mind the matters I have mentioned above, I have, after much hesitation, come to the conclusion that at no time was there any agreement by the defendant company that the plaintiff company should act as its agent.

10. It is accepted that the plaintiff company did not make payment of the freight charges to the carrier until after it had become aware that the defendant company was extremely dissatisfied with the services provided by the carrier. But in view of my finding that no agency existed between them, it would not seem either necessary or appropriate that I decide whether such failure amounted to a breach of an agent's duties. Nor does it seem necessary to deal with the defences raised by the amendments to the Defence, namely the lack or failure of consideration, which, with respect, seem to me to relate only to the matter of shipment and not that of agency and are therefore irrelevant to these proceedings.

11. Judgment is entered for the defendant dismissing the whole claim of the plaintiff, with costs.

20 NOV 1970

Representation:

Mr. Alexander Tsang (Alexander Tsang & Co.) for plaintiff coy.

Mr. Ronald Wong ( J.S.M. ) for defendant coy.

Judgment delivered on 20th November, 1970.