Philip Tye t/a Tye Enterprises Mercurio S.A. v. Meadowsfreight (Asia) Limted

Case No.HCA 6362/1984

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA006362/1984

IN THE SUPREME COURT OF HONG KONG	1984, No. 6362
HIGH COURT

BETWEEN

	PHILIP TYE trading as TYE ENTERPRISES	1st Plaintiffs
	MERCURIO S. A.	2nd Plaintiffs
	and
	MEADOWSFREIGHT (ASIA) LIMITED	Defendant

_____________________

Coram: Deputy High Court Judge Barnett

Date of Hearing: 6th & 7th May 1986.

Date of Delivery of Judgment: 14th May 1986

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JUDGMENT

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1. The first plaintiff, whom I shall simply call the plaintiff, deals in jewellery and precious stones and in the design of jewellery. He is undoubtedly a man of some skill and experience in that trade. He is, as we shall see, rather less knowledgeable about general business practice.

2. Part of the plaintiff's business is to receive gemstones from overseas customers. These he will incorporate into pieces of jewellery using his own designs and additional material. The finished pieces of jewellery are then returned to the customer who will pay for the plaintiff's design, labour and material. For many years the plaintiff has used the defendant, or connected companies, for the purpose of forwarding his consignments of jewellery overseas. For many years, this relationship ran smoothly.

3. It is common ground that on 8th December 1983 the plaintiff, in accordance with usual practice, advised the defendant that he had a parcel to be forwarded. The parcel was collected by a messenger from the defendant's office. The following day, the plaintiff learned from the defendant that the parcel had gone missing from the defendant's office overnight following a burglary. He immediately claimed compensation for the loss of the goods.

4. The plaintiff's claim for compensation was rejected by the defendant which referred him to their standard trading conditions ("S.T.C. "). In January 1984 he saw a copy of the S. T. C. for the first time and discovered the following conditions:

"2.	Meadows are Forwarding Agents, and, except in the special circumstances to which Sections II and III of these Conditions apply, act solely as agents in performing and securing services for the Customer and entering into contracts on the Customer's behalf with other persons. Except in the special circumstances to which Section III of these Conditions apply, Meadows are not carriers, and do not make or purport to make any contract for the carriage, storage, packing or handling of goods with the Customer, Meadows are not common carriers.
3.	These Conditions shall apply to all business undertaken by Meadows. All other terms and conditions are hereby expressly excluded. Should the Customer wish to contract with Meadows other than on the terms of these Standard Trading Conditions, special arrangements can be made and revised prices quoted provided that such arrangements shall only apply if reduced to writing and signed by a Director or the Secretary for the time being of Meadows. "
"10.	Except under special arrangements previously made in writing Meadows will not accept business relating to valuables, livestock or plants. Should any Customer, nevertheless deliver any such goods to Meadows of cause Meadows to handle or deal with any such goods other than under special arrangements previously made in writing. Meadows shall not be liable for any loss or damage to or in connection with the goods, however caused. "
"13.	Meadows will not insure the goods unless expressly instructed by the Customer in writing. Meadows shall not be obliged to effect a separate insurance on each consignment, but may declare it on an open or general policy. All insurances effected by Meadows are subject to the usual exceptions and conditions of the policies of the Insurance Company or Underwriters taking the risk. Any claim on the policy shall be made and any negotiations with or proceedings against the insurers shall be conducted by the Customer and not by Meadows, notwithstanding that the premium upon the policy may not be at the same rate as that charged to or paid by the Customer. "
"20.	Meadows shall not be liable to the Customer or Owner

(a)

for loss or damage caused by any failure to carry out or negligence in carrying out the Customer's instructions, or by any failure to perform or negligence in performing Meadows' obligations under any contract to which these conditions apply, unless such loss or damage is due to the wilful neglect or default of Meadows or their own servants;

(b)

for any loss or damage caused by delay or loss of market, or for consequential loss or damage, however caused;

(c)

for any loss or damage arising from or in any way connected with marks, weights, numbers, brands, contents, quality or description of any goods however caused.

21.	Without prejudice to Clause 20 hereof in no case shall the liability of Meadows, howsoever arising, and notwithstanding that the cause of loss or damage may be unexplained, exceed

(a)

the value of the goods in relation to which the claim is made, or

(b)

a sum at the rate of HK$8,000.00 per ton weight thereof whichever shall be the less, providing that Meadows' liability under (b) shall not be less than HK$500 in respect of any one consignment. "

5. It is conceded by the plaintiff that, in law, he had sufficient notice of the S. T. C. and is bound by them. He took no point on their validity or effect. If the matter rested there, the maximum compensation for which the defendant would be liable is $500.

6. As so often happens in business dealings between parties, the matter does not rest there. It is the plaintiff's case that in 1980 or 1981 he had a conversation with a Mr. Tung, an officer of the defendant, in which he asked whether his goods were insured all the way to the airport. He was told "yes" and that the defendant would be fully responsible if anything happened to the goods. In reliance upon that assurance, the plaintiff made no further inquiries and effected no insurance. And because of that assurance, he asserts that the defendant is estopped from relying on the S.T.C..

7. Did the conversation take place in the terms alleged by the plaintiff? The plaintiff gave evidence that in 1980 or 1981, because of the footnote on the defendant's documents referring to the S.T.C. and because of many burglaries and robberies, he was concerned about the safety of his shipments with the defendant. He telephoned the defendant and spoke to Mr. Tung, an employee of the defendants, who usually handled his shipments. The crucial conversation then took place. Because he trusted the defendant and its staff, the plaintiff said he did nothing further but, if he had been told that his goods were not insured, he would have insured them.

8. Following the loss of his goods in December 1983, the plaintiff said that on 23rd January 1984, accompanied by his assistant, Miss Lam whom he wanted as a witness, he went to the defendant's office. There he first saw Mr. Tung who repeated that all goods were insured and that the defendant would compensate the plaintiff. Then he saw a manager, Mr. Cheung, who said the defendant usually rejected such claims and that the claim should be put through lawyers.

9. The plaintiff consulted his solicitors who wrote to the defendant on 7th February. In their letter, the solicitors referred to the conversation between the plaintiff and Mr. Tung some years before.

10. Mr. Tung gave evidence on behalf of the defendant. He said he remembered the conversation with the plaintiff which, after initially saying it was in 1980, he put as being in 1981. He maintained, however, that in answer to the plaintiff's question about what would happen if a consignment was lost, he said the matter would be dealt with in accordance with the S. T. C.

11. Mr. Tung denied that he had a meeting with the plaintiff on 23rd January 1984, although he knew the plaintiff and a lady visisted the defendant's office.

12. The only dent which Mr. Wei, for the defendant, made in the plaintiff's evidence was, to my mind, the question of valuation of the plaintiff's goods for the purposes of insurance. It was the plaintiff's own evidence that the value of each consignment inserted in the shipper's letter of instructions represented only the value of the plaintiff's material and labour, and did not include the value of his customer's own gemstones. The plaintiff explained the reason for this but could not satisfactorily answer how the defendant was to know in what sum each consignment should be insured.

13. Generally, the plaintiff told a consistent story throughout. Further, the 1981 conversation did not emerge, as such stories often do, at a belated stage, but in the first and very prompt solicitors' letter.

14. The plaintiff's evidence was supported in part by Miss lam, whose own evidence was not challenged. She confirmed the meeting with Mr. Tung on 23rd January 1984 at which the plaintiff asked about insurance. It is true that she said that Mr. Tung's reply was not clear but that he said he would take it up with his manager. In my view, however, that does not detract from her evidence that the meeting took place, a matter which Mr. Tung would not admit; nor does it undermine the plaintiff's evidence on this point.

15. In spite of his explanation, I found it surprising that Mr. Tung could recall so easily and clearly the 1981 conversation. He said he remembered it because it was unusual for a customer to ask such a question. As Mr. Mackay for the plaintiff pointed out, however, Mr. Tung would have had many phone calls from many customers over the intervening 2 years.

16. It is also significant that Mr. Tung said, in chief, that when he joined the defendant in 1980 he was not told what to do if goods were lost although he was aware of there being S. T. C. In cross-examination, Mr. Tung conceded that he had not been insturcted to familarize himself with the S. T. C. although he regarded them as of importance in the freight business. Nor did he send or offer to send a copy of the S. T. C. to the plaintiff in 1981.

17. I accept the evidence of the plaintiff. As I remarked earlier, his business acumen did not extend beyond the jewellery business. He relied on the defendant for the safe conduct of his goods and, like so many persons, was no doubt less than confident in dealing with insurance. Mr. Tung, a relatively new employee of the defendant, no doubt out of commendable zeal gave a quick but unthinking and inaccurate reply to the plaintiff's question about insurance.

18. I find as a fact, therefore, that the 1981 conversation took place as claimed by the plaintiff.

19. For the defendant, Mr. Wei did not argue that the assurance given by Mr. Tung could not amount to an estoppel. I think he was right not to do so. Clearly, a representation was made by a person having sufficient authority to bind the defendant. Upon this representation the plaintiff acted, and in my view reasonably, to his detriment as a result of which the damage that has now occurred inexorably flowed. It is a classic example of the "laying to rest" or "quieting" cases.

20. Mr. Wei makes 2 points. First, he contended that the plaintiff is using the estoppel as a cause of action. Secondly, that this is a case where the promisor may go back on his promise.

21. For his first proposition, Mr. Wai relied on Combe v. Combe⁽¹⁾ in which it was laid down that the High Trees principle does not create new causes of action where none existed before. After reviewing various authorities, Denning, L. J. said:

"

The principle stated in Central London Property Trust ILd. v. High Trees House Ld. (1947) K.B. 130 and Robertson v. Minister of Pensions (1949) 1 K.B. 227, is that, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word.

But this principle does not create any new cause of action where none existed before; so that, where a promise is made which is not supported by any consideration, the promise cannot bring an action. "

22. Mr. Wei's difficulty is, I think, that he has misinterpreted the plaintiff's claim. Although the amended statement of claim is pleaded in several alternatives, Mr. Mackay made it plain in opening that he relied primarily on the defendant's breach of duty as bailee and custodian for reward. That is the cause of action and it is only in response to the defendant's attempt to invoke the S.T.C. that the plaintiff relies on estoppel.

23. In its most favourable light, the defendant's representation could be part of, or supplementary to, the plaintiff's cause of action as envisaged by Denning, L.J. In my view, however, this argument fails.

24. Mr. Wei then took me to Chitty on Contracts, (paras. 197 and 201) for the proposition that the defendant might go back on its promise or representation. He contended that the plaintiff had placed himself under an obligation, if his evidence of the representation is accepted, to be full and frank in disclosing the value of his consignments. This the plaintiff failed to do. As a result, the defendant was not in a position to effect proper insurance had it sought to do so.

25. The person to suffer from this would be the plaintiff who would have found his consignments under-insured. I see no reason why the defendant should be absolved from its representation.

26. I hold, therefore, that the plaintiff is entitled to rely on the estoppel.

27. It was not argued that there was no bailment as, indeed; there must have been. I have to consider, therefore, whether the defendant was in breach of its duty to take reasonable care of the goods in question. There was uncontradicted evidence from Miss Lam that Mr. Tang told her that the package was left in the office floor. It was admitted that the package was not kept in a safe or locked container. There is no question but that the defendant was aware of the value of the package. I have no difficulty in finding that the defendant was in breach of its duty.

28. As to quantum, the plaintiff explained with clarity that the package that was stolen was, like all other consignments, made up of jewellery containing customers' stones. The value placed on each package in the shippers' letters of instructions was the value only of the plaintiff's labour, materials and design. This was to prevent the customer having to pay double duty on his own stones; to avoid misleading the Trade Department as to the true amount of business being transacted; and to ensure being taxed on the appropriate sum.

29. I accept this explanation and, having been taken through the invoices and work sheets relating to this consignment, I am satisfied that the true value of the package was US$14770.00, being the value of the plaintiff's materials and labour, plus US$9786.30 being the value of the customer's gemstones for which, as bailee himself, the plaintiff would be obliged to indemnify the customer.

30. Accordingly, there will be judgment for the plaintiff for US$24556.30 with interest and costs.

31. The 2nd plaintiff did not pursue its claim which is accordingly dismissed with costs.

(N.J. Barnett)

Deputy High Court Judge

(1) (1951) 2 K.B., 215

Representation:

Mr. G. Mackay (Lousichi & Co.) for Plaintiff.

Mr. P. Wei (Deacons) for Defendant.