Cargo Traders SA P/L v Miller & Anor - [2005] SADC 143

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
CARGO TRADERS SA P/L v MILLER & ANOR
Judgment of His Honour Judge Clayton
14 October 2005
PROCEDURE
SUMMARY JUDGMENT - CARRIAGE OF GOODS BY SEA – CARRIERS LIEN
An appeal for summary judgment for cost of carriage and storage of goods dismissed.
Appeal against order for summary judgment directing sale of machinery owned by unrepresented third party allowed.
HELD: There was a serious question to be tried as to whether a freight forwarder has a lien over goods.
Appeal against defendants’ claim for summary dismissal of plaintiff’s claim against first defendant dismissed.
Application referred back to Master.
Warehouse Liens Act 1990 ; Enforcement of Judgments Act s.17; District Court Rules R.2501, 25.02 , 25.03 & 55.06, referred to.
Skinner v Upshaw (1702) 2 Ld Raym 752; 93 ER 3; Halsbury's Laws of Australia Vol 6, para 110.2095; Palmer on Bailment 2nd ed at 1013, considered.

CARGO TRADERS SA P/L v MILLER & ANOR
[2005] SADC 143

The plaintiff is a freight forwarder. It acts as an agent for persons who wish to ship goods overseas.
In this action the plaintiff has claimed an amount alleged to be due pursuant to a contract under which two 40’ shipping containers packed with used metal working machinery were to be transported from Port Adelaide to Port Kelang in Malaysia. The defendants terminated the shipping arrangements when a problem arose with the finance for the purchase of the goods.
The plaintiff commenced proceedings and sought immediate relief pursuant to Rule 25 against both Mr Stephen Leslie Miller and MGE Investments Pty Ltd. The application was heard by Master Bampton who found that there was no serious question to be tried between the plaintiff and the second defendant and entered summary judgment against the second defendant in the sum of $46,997.50 plus interest and costs. Her Honour also made an order giving leave to the plaintiff to sell the machinery, which is held in storage, to satisfy the judgment and to pay additional storage charges and the costs of sale.
The defendants have appealed against the whole of the judgment. The grounds of appeal are that the learned master erred in that she failed to give the defendants an opportunity of filing an answering affidavit, she drew inferences from the affidavits which were inappropriate in an application for summary judgment and did not take into account the ownership of the goods.
On 3 August 2005 Master Norman ordered that the judgment and order of Master Bampton be stayed pursuant to section 17 of the Enforcement of Judgments Act.
The substantive appeal is an appeal against a final judgment and as such is an appeal stricto sensu and not an appeal by way of rehearing.
The plaintiff's case was that in about July 2003 the defendant Mr Miller, acting on behalf of the second defendant, orally instructed Mr Batchelor, an employee of the plaintiff, to procure two 40 foot shipping containers and arrange the export of used metal working machinery from Port Adelaide to Port Kelang in Malaysia.
On 7 October 2003 the defendants gave details of the equipment, the overseas purchaser and the delivery address.
On 10 October 2003 the plaintiff provided a document entitled "Export FCL Booking Confirmation" to the defendant. The contract was said to be subject to the plaintiff's standard trading terms which were available on request.
In late October 2003, after the goods had been prepared for shipping and packed into the containers, Mr Miller instructed the plaintiff not to release the two containers from the plaintiff's holding depot because there was a problem with finance. In passing I observe that this instruction from Mr Miller was a variation of the contract. The plaintiff continued to hold the two containers in accordance with the new instructions and incurred ongoing container hire and storage costs.
In the middle of December 2003 the plaintiff unpacked the containers and placed the goods in a secure area at a transport depot. In following both the defendants’ original and varied instructions the plaintiff incurred expenses including costs of container hire and handling, cartage, packing, unpacking, storage and other associated costs.
The Statement of Claim sought judgment against the first and second defendants jointly and severally and contained an endorsement for summary judgment pursuant to Rules 25.01 and 25.03.
The plaintiff’s application was supported by an affidavit of Mr T P E Bland, a director of the plaintiff company. Mr Bland deposed that in about July 2003 Mr Miller contacted the plaintiff by telephone to arrange the exportation of two shipping containers from Port Adelaide to Malaysia. He said that the plaintiff orally advised Mr Miller of their fees, charges and trading conditions. He also said that Cargo Traders had dealt with Mr Miller on a previous occasion. Mr Bland deposed that Mr Miller instructed the plaintiff to place the account in the name of MGE Investments Pty Ltd and to render tax invoices to MGE Investments Pty Ltd.
Annexed to the affidavit is the "Export FCL Booking Confirmation". It was addressed to MGE Investments Pty Ltd for the attention of Steve Miller. The form recited that the plaintiff was pleased to offer confirmation of the booking and referred to shipping on a vessel operated by ANL Container Line Proprietary Limited estimated to depart from Port Adelaide on 3 October 2003. The equipment was described as "used metal working machinery". As I have mentioned the confirmation specified that all business undertaken was subject to the plaintiff's standard trading terms and conditions which were available on request.
A further document entitled "Export FCL Cartage Advice" confirmed the information. Two empty containers were to be delivered to MGE Investments Pty Ltd at an address in Gillman.
Mr Bland said that on 22 September 2003 the plaintiff received a copy of a letter of credit regarding the machinery which was ostensibly issued by Deutsche Bank in Hamburg. The letter of credit noted that the bank had issued an irrevocable transferable documentary credit in favour of MGE Investments Pty Ltd for US $1.422 million. The letter of credit was payable upon the sighting of specified documents which included the bills of lading. It stated that all charges were to be for the account of the beneficiary.
On 7 October 2003 Mr Miller transmitted to the plaintiff a copy of the invoice of the defendant MGE Investments Pty Ltd to its client. The invoice identified the client as Steeltek Asia Pacific Sdn. Bhd. and showed a delivery address in Kuala Lumpur. The total price for the machinery described in the invoice was AU $2,022,800.
Mr Bland said that in late October 2003 Mr Miller instructed Cargo Traders not to release the shipping containers because the defendants had failed to receive letters of credit from the overseas purchasers. There was a suggestion that the letter of credit to which I have referred was a forgery. Fortunately it is unnecessary to open up that issue. For present purposes all that matters is that the proposed sale to the Malaysian purchaser fell through.
Mr. Bland said in his affidavit that the plaintiff telephoned Mr Miller on a regular basis to ascertain what was happening and to keep him informed of escalating freight and storage costs.
On 4 December 2003 the plaintiff wrote to the defendants expressing concerns about the plaintiff's inability to make contact by telephone and the fact that the plaintiff was being pressed for payment of the charges of the shipping company and the contractors involved with the cartage and packing of the containers. The letter advised that there was no end in sight and that the container company was insisting that the containers be shipped forthwith or be “dehired” back to them. Mr Bland said he enclosed a "further" copy of the plaintiff's trading conditions and a tax invoice for the plaintiff’s charges to that time.
The tax invoice which was for an amount of $21,279.72 was addressed to MGE Investments Pty Ltd. The way in which the amount was arrived at was particularised. There were 18 separate items which included port service charges, cartage, packing and demurrage on the containers. The invoice left no doubt about the way in which the charges had been calculated. Many of the charges were a direct consequence of the fact that shipment did not take place as originally planned but the machinery had to be held in storage pursuant to the new instructions.
Mr Bland said that on about 15 December 2003, after a telephone conversation with Mr Miller, the plaintiff decided to unpack the cargo and place it in a suitable secure area in a depot. That occurred and the cargo was placed for storage in the premises of Symons & Clark Transport Pty Ltd. The two containers were "off hired" and returned to the shipping line.
On 29 January 2004 an updated tax invoice was forwarded to MGE Investments Pty Ltd for amount of $37,345.00. Container detention made up $26,280.00 of that amount. Again the way in which the invoice had been calculated was clearly set out.
Mr Bland stated that the plaintiff had difficulties contacting Mr Miller at various times but that when the plaintiff was able to speak with him Mr Miller was informed as to the whole process including costs. Further tax invoices were rendered from time to time, the last being an invoice for $46,997.50 which was issued in March 2005. Storage costs had continued to accrue since then at the rate of $643.50 per month.
On a date after service of proceedings, which is not identified in the appeal book, the defendants applied for an order that the plaintiff's claim against the first defendant be struck out. That application is relevant to one of the orders which the defendants have appealed from.
Mr Miller filed an affidavit sworn 27 May 2005. He deposed that the plaintiff quoted about US $4,000 for the shipping costs of the two containers. He said the plaintiff did not discuss or mention terms and conditions apart from the quote. There is therefore a factual dispute as to whether the terms and conditions had been discussed. Mr. Miller said they spoke of general terms of shipping but not of storage. He said he told an employee of the plaintiff that the goods were owned by the Commonwealth Bank of Australia and leased to Steeltek International Pty Ltd. The arrangement was that Steeltek would sell the goods to the second defendant which would on-sell them to a purchaser in Malaysia. Steeltek is shown in the plaintiff’s invoice as the “client”.
Mr Miller disputed that the defendants were provided with a copy of the plaintiff's terms and conditions. In my opinion that dispute is inconsequential, because the plaintiff’s terms and conditions were incorporated into the contract by reason of the reference to them in the Export FCL Booking Confirmation. A standard set of terms may be incorporated into a contract by a reference to the terms in a contract document without setting them out in full. Halsbury’s Laws of Australia, Vol 6, para 110-2095.
Mr Miller complains that the plaintiff did not keep the defendants informed of escalating freight and storage costs until after the defendants were unable to find another financier. Mr Miller said that he was first told that there would be a storage charge a few days before the letter of 4 December 2003. He complains that the amount shown in that invoice, which was in excess of $21,000.00, was significantly higher than the plaintiff’s oral quote. He also complains that the account "was mainly the storage". That is not correct. The invoices itemise the specific charges. As I have mentioned the significant item was container demurrage. Mr Miller said that he told the plaintiff's representative that the storage fees were ridiculous and that the defendants should have been told of the fees earlier.
Mr Miller said that the second defendant would pay an account with respect to the two containers but that the plaintiff had to first amend the invoice to reflect a reasonable amount for storage. The plaintiff refused to do that and said that the goods would be unpacked and would only be released when the invoice was paid. Mr Miller complains that the defendants were not told that further costs would accrue as a result of the unpacking and storage of the goods, although he does say, "we were aware... that Symons & Clark would be charging storage". Mr Miller said he reminded the plaintiff's representative that the goods belonged to CBA who leased them to STI. I digress to observe that ownership of the goods is not relevant to the question of who is contractually liable to pay the plaintiff’s charges, although ownership may be relevant to the appeal against the order for sale.
Mr Miller complains that the plaintiff did not warn the defendants of escalating costs apart from the Symons & Clark storage. The unfortunate fact is that the container hire and other costs escalated as a consequence of Mr. Miller’s instruction not to ship the cargo. When he gave that instruction in late October 2003 the nature of the contract changed. The quote for shipping the containers to Malaysia ceased to be relevant to the amended contract. Mr Miller should have realised that the revised instructions would result in additional charges.
While Mr Miller has applied to have the plaintiff’s claim against him struck out his affidavit states that "the second defendant has always been prepared to pay an invoice from the plaintiff if that reflected the initial quote a reasonable amount"(sic). That statement contains an admission of liability on the part of the second defendant with the consequence that the only real dispute as to the first part of the judgment of the master goes to the quantum of the plaintiff’s claim.
Counsel for the appellants (defendants) disputed that there was an admission of liability. He says, “it was simply an offer”. I disagree. In my opinion the learned master correctly interpreted the statements of Mr Miller as an indication that the second defendant was prepared to pay a reasonable fee. If the master was wrong in finding that there was an admission there was evidence on which the master could have found, absent any admission, that the second defendant was liable to pay the plaintiff’s reasonable charges as the person who had requested the services. Mr Bland said in his affidavit that Mr Miller instructed the plaintiff to place the account in the account of MGE Investments Pty Ltd and to render the tax invoices to that company. Mr Miller did not deny that evidence. Additionally, the second defendant never sought to argue that it was not liable for reasonable charges.
I find that the learned master correctly found that the affidavit of Mr Miller amounts to an admission of liability on the part of the second defendant to pay the plaintiff’s charges.
In an answering affidavit sworn 9 June 2005, Mr Bland observed that the process of shipment started in late September 2003 and would have been finalised in late October 2003. Shipment was not finalised because Mr Miller instructed the plaintiff not to release the two containers. Mr Bland repeated that the first defendant had previous dealings with the plaintiff and that Mr Miller was aware of the plaintiff's trading terms because of the earlier dealings and also because the terms were annexed to the letter of 4 December 2003 which is referred to above. There is a dispute as to the defendants’ knowledge.
I have found that the defendant is bound by the plaintiff’s trading terms because of the reference to them in the confirmation of the contract. The dispute raised by the defendant as to whether the trading terms had been discussed or provided or whether the defendants knew of the trading terms because of the defendants’ previous dealings does not answer the simple fact that the plaintiff’s trading terms applied by reason of the reference to them in the confirmation document. Any dispute as to whether the defendant knew of the terms by reason of previous dealings is therefore inconsequential. I find that the plaintiff’s trading terms do apply.
Mr Bland said in his second affidavit that the plaintiff has no knowledge of the defendants’ dealings which he submitted are not relevant to the plaintiff's case. I agree. The dealings between the defendants and third parties, such as the owner of the goods, are not relevant to the present claim. The plaintiff dealt with the defendants and the defendants’ liability for the plaintiff’s charges will depend upon the dealings between the plaintiff and defendants. As I have mentioned Mr Miller said that the invoice should be sent to MGE Investments Pty Ltd. Also, the defendants had received a copy of the plaintiff’s terms and conditions before the time when Mr Miller gave instructions to unpack the goods. The terms make it clear that the defendants would be liable for storage charges. Even if there was no reference to storage charges in the terms the defendants were liable to pay the reasonable costs of complying with its instructions. If the second defendant wished to terminate the obligation to pay ongoing storage costs Mr Miller should have taken appropriate steps when he gave the instructions to unpack the containers. Counsel said that the defendants were quoted a particular amount to ship the goods and “there was no discussion about storage, no terms of trade about storage given. It was simply this is the cost to ship these containers”. Counsel said his clients disputed the right to charge storage. That submission highlights the real nature of the dispute between the parties.
The defendants have claimed that the fee has increased because the plaintiff will not release the goods until payment is made in full. The logic of the complaint is simple to understand. However, the validity of the complaint depends upon whether the plaintiff is entitled to charge for storage and whether the fees that have been charged are reasonable.
I have found that the plaintiff is entitled to charge storage by reason of its trading terms. I find that the second defendant has accepted responsibility for the plaintiff’s charges. The only dispute therefore can be whether the charges are reasonable.
I find that there is no question to be tried as to the reasonableness or amount of the charges.
The charges are listed in the tax invoices. On their face they are normal commercial charges. The charges relate to items such as hiring the containers, packing the goods into the two containers, cartage, storing the containers, unpacking the containers and the storage with Symons & Clark since the goods were unpacked in January this year. The ongoing storage charge of $643.50 per month is not an unreasonable charge.
It is significant that many of the charges which the plaintiff seeks to recover are arms length commercial charges raised by third parties for the services which they have provided to the plaintiff. For example, the container detention charge is a charge made by the shipping line and the ongoing storage is a charge which is payable to Symons & Clarke. It is reasonable that the plaintiff should be indemnified in respect of the actual costs which it has incurred in the ordinary course of business in carrying out the instructions of the defendants. Similarly, the plaintiff is entitled to its own commercial charges for carrying out the defendants’ instructions. Clause 3 of the plaintiff’s trading terms entitles the plaintiff to be paid “all brokerages, commissions, allowances and other remunerations customarily retained by or paid to shipping and forwarding agents”. Clause 13 entitles the plaintiff to the costs of warehousing and holding, pending, forwarding and delivery.

In my opinion there was no question to be tried as to the amount of the plaintiff’s claim. The items listed in the invoices are ordinary commercial charges in respect of the services requested by the defendants. To the extent that the charges differ from the quote that is a consequence of the fact that the defendants’ instructions changed. The quote did not cover the services which became necessary as a result of the changed instructions and the quote has ceased to be relevant.
I find that there was no serious question to be tried so far as the claim against the second defendant for the sum of $46,997.50 was concerned. The plaintiff has established that the charges are normal commercial charges and are reasonable and the defendants have not raised any reasonable basis for finding that the charges were not appropriate. When asked, counsel for the defendants was unable to indicate what a reasonable charge would have been. I find that the plaintiff has satisfied the onus. I agree with the conclusion of the learned master. There is no basis to set aside that part of the judgment against the second defendant.
The order giving the plaintiff leave to sell the equipment raises different questions.
The Notice of Appeal does not assert and counsel for the appellant did not argue specifically that the learned master fell into error in making the order for sale; but the correctness of the order is raised indirectly by the ground of appeal which asserts that the learned master was in error in that she did not take into account the ownership of the goods.
The basis upon which the learned master made the order for sale does not appear from the reasons the judgment.
Before the master, counsel for the plaintiff contended that the plaintiff was entitled to exercise a lien and to sell the goods. On appeal counsel for the plaintiff contended that there was a lien over the goods pursuant to the terms and conditions of the contract. He said that the plaintiff sought an order from the court for the purpose of putting its right to sell the machinery beyond dispute.
Clause 21 of the plaintiff’s trading terms provides that the plaintiff:
...shall have a special and general Lien on the goods and a right to sell the goods whether by public or private sale or option without notice, for freight, demurrage, detention charges, duty, fines, penalties, salvage average of any kind whatsoever and without limitation and for any and all debts, charges, expenses or other sums due and owing by the customer or the customs principals, servants or agents; in addition the Lien shall cover the costs and expenses of exercising the lien and such sale including reasonable legal fees. The Lien and rights granted by this clause shall survive delivery of the goods and the company shall be entitled to retain the proceeds of sale of the goods in respect of any outstanding amounts referred to in this clause.
The plaintiff relies upon its trading terms to establish that it had a contractual lien over the machinery such as to justify the order for sale.
I have already found that those trading terms were incorporated into the contract between the plaintiff and the defendant. The question is whether the terms of the contract between the plaintiff and the defendants can affect the rights of the owner of the goods. Put another way, could the defendants create a lien over the property of another person. More importantly, if the machinery was sold pursuant to the order of the court, would the purchaser obtain good title vis a vis the owner.
In my opinion the Warehouse Liens Act 1990, which was mentioned in passing during argument, does not apply to the plaintiff’s claim because the plaintiff is not an operator of a warehouse within the definition in that Act, namely "a person lawfully engaged in the business of storing goods as a bailee for fee or reward". The plaintiff is engaged in the business of a shipping agent.
A common carrier has a particular lien over consigned goods in respect of unpaid freight (Skinner v Upshaw[1]). However, the plaintiff is not a common carrier. That appears from both the nature of its business and its own trading terms.
[1] (1702) 2 Ld Raym. 752; 93 ER 3
Palmer on Bailment 2nd edition at 1013 doubts whether a private carrier enjoys a common law lien, particularly for unpaid freight, because the private carrier has not improved the goods. However, the learned authors say that the position may be different where a carrier repacks the goods, although that lien may only extend to the repacking costs and not the freight. At page 1014, Palmer states that as a general principle, a carrier or other bailee has no right to charge warehousing fees in relation to goods over which a lien is asserted.
Palmer says that where a consignor stops goods in transit he becomes liable to pay the freight even though he is not a party to the contract. That may be a reason why the present defendants are liable to pay the plaintiff’s charges, but it does not establish a right to sell. In this case the defendant MGE was the consignor of the goods. MGE had agreed to pay the cost of freight. However, neither defendant was the owner of the goods.
The question of whether the plaintiff had a lien over the machinery and the question of whether the plaintiff had a right to sell the machinery was not fully argued either before the master or myself. The plaintiff was not a common carrier and was not a person who had carried work on the goods. The plaintiff was a shipping agent and had no dealings itself with the owner of the goods, but dealt only with a consignor. The authority of the defendants to deal with the goods was not established. The relationship between the defendants and the owner remains unclear.
So far as the order for sale is concerned, I am not satisfied that there was no serious question to be tried. I think that the question of whether the plaintiff has a lien or some other right to sell the goods of a third party did amount to a serious question to be tried. Likewise the power of the court to order the sale of the goods of a third party without notice of the proceedings to the owner requires consideration. I think there were questions to be tried so far as the order for sale of the goods was concerned.
I think that part of the order of the learned master which directs the sale of the goods should be set aside. That is not to say that the claim for an order for sale should be dismissed. The claim should proceed to trial and full argument in the ordinary course rather than be determined on an application for summary judgment. It is significant that the rights of third parties may be affected.
I turn to discuss another ground of appeal. The notice of appeal complains of a failure of the learned master to dismiss the claim against the defendant, Mr Miller. The appeal book contains a copy of an unsealed and undated notice for specific directions taken out by the defendants’ solicitors seeking an order that the plaintiff's claim against the first defendant be struck out. The notice purports to invoke Rule 55.06 of the District Court Rules. On the hearing of the appeal counsel for the defendants argued that the claim against the first defendant should have been struck out summarily.
The application to strike out the claim against Mr Miller was referred to by Her Honour in paragraph 32 of the reasons. Her Honour adjourned the application. She said that she was not satisfied that the plaintiff had not pleaded a cause of action against the first defendant. She gave liberty to the parties to make further submissions regarding the issue if so advised. Accordingly, that application was not resolved by Her Honour. There is no relevant order from which an appeal can lie and an appeal from that part of the order is premature.
The plaintiff’s Notice for Specific Directions seeking an order that the plaintiff’s claim against the first defendant be struck out remains to be determined by the learned master.
The ground of appeal which asserts that the master failed to give the defendants an opportunity to file an answering affidavit is not made out on the facts. The defendants’ counsel made the following statement to the master:
In any event, I’m still happy to proceed with the application today but on the basis that if there’s anything that arises in this affidavit that I need to get instructions from my client on that the matter be adjourned so I can file an answering affidavit if need be. I don’t think that will be necessary but that’s only because I’ve had a cursory glance at it. But if my friend points out a particular clause that’s going to have significance that we haven’t responded to it’s only because I’ve only received it today and in that situation that I’d leap up and seek that the matter be adjourned so I could answer it. Apart from that I’m happy for the application to proceed.
The matter of a further answering affidavit by the defendants was not raised again and no draft affidavit was produced on the appeal. On the hearing of the appeal counsel stated that “it was only later on when the judgment was delivered that (the answering affidavit) was obviously a initial point (sic)” and it was never made clear how a further affidavit would have assisted the defendants’ case.
The ground of appeal alleging that the master drew inappropriate inferences was not argued on the appeal and has not been made out.
For these reasons:
1The appeal is dismissed in so far as it relates to the judgment against the second defendant in the sum of $46,997.50 plus interest.
2The appeal is allowed as to paragraph 4 of the order of the learned master which gave the plaintiff leave to sell the equipment held in storage. The order for sale contained in paragraph 4 of the order of the learned master on the application for summary judgment is discharged. The plaintiff’s claim for an order for sale should proceed to a trial.
3That part of the appeal which relates to the application to strike out the claim against the first defendant is dismissed on the basis that application remains to be dealt with by the Master.
I will hear the parties as to costs and the stay of execution granted by Master Norman.