Van Dieman Seafoods Pty Ltd v R & W Lyons Investments Pty Ltd
[1992] TASSC 111
•10 August 1992
Serial No B34/1992
List “B”
CITATION: Van Dieman Seafoods Pty Ltd v R & W Lyons Investments Pty Ltd [1992] TASSC 111; B34/1992
PARTIES: VAN DIEMAN SEAFOODS PTY LTD
v
R & W LYONS INVESTMENTS PTY LTD
TA LYONS TRADING INTERNATIONAL
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO.: 355/1992
DELIVERED: 10 August 1992
HEARING DATES: 30 June, 1, 2, 3, 6, 7, 8, 9, 10, 14 July 1992
JUDGMENT OF: UNDERWOOD J
CATCHWORDS:
Contracts – Breach – Custom of the trade – Estoppel.
REPRESENTATION:
Counsel:
Plaintiff: Mr P Roach
Defendant: Mr B McTaggert
Solicitors:
Plaintiff: Howard Piggot
Defendant: Jennings Elliott
Judgment category classification:
Court Computer Code:
Judgment ID Number: B341992
Number of paragraphs: 21
Serial No B34/1992
List "B"
File No 3551992
VAN DIEMAN SEAFOODS PTY LTD v R & W LYONS INVESTMENTS PTY LTD TA LYONS TRADING INTERNATIONAL
REASONS FOR JUDGMENT UNDERWOOD J
10 August 1992
Introduction
Strong, live and undamaged crayfish are a valuable commodity. They command high prices on overseas markets such as Europe, Hong Kong, Taiwan and Japan. However, the business of trading in live crayfish (or lobsters as they are called overseas) is fraught with economic risk. The crayfish are fragile. Keeping them alive and in good condition from the time they are landed until the time they reach their overseas destination is not easy. The trade depends on fast communications and transport. Large sums of money change hands in short periods of time as the crayfish are traded on their way to an overseas dining table.
Both parties to this action are engaged in this trade. The plaintiff has a crayfish processing factory at Dover in Tasmania. The defendant has a similar establishment at Botany in Sydney. Between March 1991 and March 1992 there were seventy–eight shipments of live crayfish from the plaintiff to the defendant. The pre–export value of the crayfish was in excess of $1.2 million. The plaintiff‘s case is simply that the defendant owes it $39,169.94 being the balance due for crayfish sold and delivered. Subject to a claim for the return of money had and received, the defendant does not dispute the plaintiff's claim but counter–claims damages for breach of contract and seeks to set off the damages against the amount claimed by the plaintiff. Resolution of the issues in this action depends principally on the credit of the witnesses.
The writ was issued on 24 March 1992. Pre–trial orders were made that all questions and issues arising in the action, other than the question or issue of the quantum of damages claimed by paragraph 27 of the counter–claim, be tried as preliminary issues before the question or issue of the quantum of those damages, and that, subject to the determination of the issue of liability for such damages in favour of the defendant, the issue of damages be tried subsequently in such manner as may be directed by the trial judge. Application of case–flow management principles enabled this hearing to be brought on ninety–eight days after the proceedings commenced.
The Parties
The plaintiff company was formed in 1987. It is owned and controlled by Mr and Mrs Dillon. Mr Dillon is the managing director. He began working in the crayfish processing business in 1979 when he built a factory and started a business known as "Tas Crays". This business was sold in 1981, but Mr Dillon remained the general manager until 1987 when he left to start up his present company. Approximately 95 per cent of the plaintiff‘s present business is in crayfish. During the thirteen years he has worked in the industry, Mr Dillon traded in live crayfish for export. Mr and Mrs Dillon both work full–time in their business. Mrs Dillon keeps the books and works on the factory floor. Mr Dillon buys and sells the crayfish as well as working on the factory floor. Their son, David, aged thirty, is employed by the plaintiff and is responsible for packing the crayfish sold for export overseas. In addition to the Dillon family, the plaintiff employs Mr Russell, a full–time factory hand, and a number of casual employees when required.
The defendant company owns a business called R & W Lyons Trading International. The company is owned and controlled by Mr and Mrs Lyons. In September 1990 the defendant bought an interest in premises, plant, equipment and goodwill of a crayfish processing business. The business was and is almost exclusively confined to the export of live crayfish. Mr and Mrs Lyons had no prior experience in the crayfish processing business. However, both had extensive general managerial business experience. Mr and Mrs Lyons work full–time in the business. Mrs Pomroy is employed as factory production manager and casual labour is engaged when required. Mrs Pomroy maintains the stock records. Mr and Mrs Lyons attend to the other business records as well as working on the factory floor. They have a son who was a trainee pilot. One of Mr and Mrs Lyons' plans when they went into the business was for their son to fly to Tasmania and South Australia to collect live crayfish for the Sydney factory and subsequent overseas export.
The Trade
The business of buying and selling live crayfish for export overseas is well established. Evidence was given by a Mr Nicholson of the custom of the trade and it was accepted by both counsel, that in the absence of an express term, the contractual relationship between the parties was governed by the custom of the trade.
In Australia, the principal sources of crayfish are off–shore Western Australia, South Australia and Tasmania. In Tasmania it is lawful to catch male crayfish the year round except between the end of August and 1 November. The season for female crayfish is from 1 November to 30 April. The crayfish are graded according to size. A and B grades are undersize crayfish and cannot be taken. C grade crayfish weigh between 570 and 690 grams, D grade weigh from 690 to 810 grams, E grade from 810 grams to 910 grams and F grade from 910 grams to 1020 grams. Anything weighing in excess of 1020 grams is G grade. The price is calculated according to weight and is the same for grades C to F inclusive. The price per kilogram is less for G grade crayfish. The most sought after crayfish for the live export market are C and D grade red crayfish, an in–shore variety.
The plaintiff‘s business begins at the wharf. There, the catch is weighed and a price per kilogram paid. This is known as the "beach" price. The fishermen give the plaintiff an estimate of what proportion of the catch comprise G grade crayfish. On arrival at the factory the crayfish are turned out on the floor, reweighed and the estimate given by the fishermen checked. Each crayfish is examined. Those that have lost more than three legs or are weak ("slow crayfish") are put to one side. They are later drowned in fresh water, cooked and sold on the cooked crayfish market. Those that are very slow are "tailed". Cooked crayfish tails have a market of their own. Dead crayfish are thrown out, often referred to in these proceedings as rubbish. Care is taken before a crayfish is consigned to the rubbish for characteristic behaviour of a crayfish is to remain immobile, as if dead. "Playing possum" is the expression used in the trade for this behavioural characteristic. The strong, healthy and relatively undamaged crayfish are "swum"; ie, put into salt water tanks at the plaintiff's factory to await sale on the live crayfish market.
It is not feasible for Tasmanian processors to ship direct to an overseas market. The absence of direct international flights from the State means that the time in transit overseas is too long for the crayfish to survive. To overcome this problem, Tasmanian suppliers, such as the plaintiff, sell live crayfish to exporters in Melbourne and Sydney, such as the defendant. On arrival in Sydney, the crayfish are again "swum" in salt water tanks to regain strength before being repacked and despatched on direct international flights.
In the case of the parties to this action, a shipment may have sometimes resulted from an inquiry by the defendant to the plaintiff to see if the latter had, or was likely in the near future to have, crayfish for sale. Sometimes a shipment resulted from the plaintiff advising the defendant that there were crayfish in the tanks or crayfish due to arrive at the wharf. Immediately following an agreement to sell a quantity of crayfish for a fixed price per kilogram, the selection and packing of live crayfish for export, known as a "packout", began. Ordinarily, a "packout" was done by Mr Russell, Mr and Mrs Dillon and David Dillon. More often than not, they started in the early hours of the morning so that the crayfish could be sent on the first flight of the day from Hobart to Sydney.
Mr Russell started the "packout" by draining the water from the tanks. Next he selected the crayfish he considered to be of export quality. These crayfish were left to drain for about half an hour. If crayfish are not drained properly before packing, the water drains out during transit and the crayfish weigh less on arrival than they did on departure. It was common ground that the trade between the plaintiff and the defendant was confined to export quality live crayfish and that this meant crayfish weighing less than a kilogram, alive, strong, and missing not more than one leg and one feeler. The crayfish Mr Russell selected were then packed into boxes by Mr David Dillon. He also checked each one to ensure it was of export quality. Those he considered not to be sufficiently strong or otherwise unsuitable, were put in a bin for later drowning and cooking. Whether a crayfish is of export quality is a matter for the judgment of the person handling it.
Each box held an average of sixteen crayfish packed in two layers of eight. They were packed in polystyrene chips or wood wool to prevent movement and damage in transit. The top and bottom of the box was lined with paper. To keep the temperature down, a plastic bottle filled with frozen salt water was packed in the middle of the box. When full, the lid of the box was securely taped down. It was then weighed, usually by Mrs Dillon. Before weighing any packed box, Mrs Dillon tared the scales. To do this a sample box was filled with the packing material and a full bottle of frozen water. This was weighed to establish the tare for each box in the consignment. This weight was entered into the scales which thereafter automatically deducted it when measuring the weight of a box packed with crayfish. Mrs Dillon made a record of the weight of the contents of each box. When the "packout" was complete she made out a consignment note showing the number of cartons in the shipment and the total nett weight of the shipment. The consignment note was put in an envelope which was pasted to the outside of one of the boxes. The whole shipment was then driven from Dover to the Hobart airport and sent by plane to Sydney. Advance details of the flight were sent by facsimile message from Dover to Sydney.
On arrival at Sydney, the consignment was collected from the airport by an employee of the defendant and driven the short distance from the airport to the defendant‘s factory.
On arrival, each box was weighed and the gross weight noted on a work sheet. The consignment was then unpacked usually by and under the supervision of Mrs Pomroy. As each crayfish was taken from the box it was inspected. If it was alive, strong and undamaged it was placed in a tank of salt water to be "swum". If it was slow, it was placed in what is called a recovery tank. The recovery tank has a separate reticulation and filter system which increases the oxygen supply and biological activity in the water to help the crayfish regain strength. If the crayfish was too slow for recovery, dead, or missing more than one leg or both feelers, it was put to one side for later drowning and cooking. Badly damaged crayfish were tailed and the dead put in the rubbish. After sorting and "tanking" the crayfish, each box was refilled with the packing material and the ice bottle and reweighed. This weight was also recorded on the work sheets and the nett weight of the consignment into the factory calculated. Every few hours, the recovery tank was checked. Those crayfish that regained their strength were put with the others in the main tank and those that did not were drowned and cooked.
The defendant also bought live crayfish from suppliers other than the plaintiff. The crayfish from each supplier was kept in a separate tank. When the defendant had an overseas order to fill, a "packout" was done. The process in Sydney was basically the same as the one in Dover but this time, the crayfish were despatched on an international flight for an overseas market. At the end of each "packout" it was customary for the defendant to cull the tanks, put any dead crayfish in the rubbish and drown and cook the slow or damaged ones. A record of stock holdings was maintained by Mrs Pomroy.
Terms of Contract
It was common ground between the parties that the first communication between them was by telephone on 22 February 1991. Mr Lyons was anxious to find a reliable supplier of export quality live crayfish to satisfy markets he had secured in Japan and Taiwan. There was a conflict between the evidence of Mr Lyons and Mr Dillon with respect to what was said during this and the following telephone call which led to the first consignment of crayfish being sent. Mr Dillon gave no evidence–in–chief about what was said during either telephone call. During cross–examination, he gave me the clear impression that his recollection of them was virtually non–existent. On the other hand, Mr Lyons appeared to have a good recollection of what was said on the telephone on these occasions. The substance of his account is consistent with what was likely to have been said between the two of them, each keen to establish a business relationship. His account was also consistent with the subsequent events and the facsimile transmissions which followed each telephone call.
I find that on 22 February 1991 Mr Lyons told Mr Dillon that he had overseas markets for live crayfish and needed a supplier. He told Mr Dillon that he wanted something in the order of 1.5 – 2 tonnes a week, preferably red crayfish, weighing between 600 – 800 grams. Mr Dillon said that he could supply that kind of crayfish in that quantity. I find that there was also a discussion between them about freight, and that during it Mr Dillon said he was able to offer his crayfish at an attractive price which included the cost of freight to Sydney because he had an arrangement with the airlines for cheap freight rates. I also find that there was some discussion about the possibility of freighting the crayfish from Dover to Sydney in a charter aircraft flown by Mr Lyons' son. No order for crayfish was placed on 22 February 1991. The telephone conversation was followed by a facsimile dated the same day:
"Dear Ian,
Further to our phone call this morning, our company is the holder of DPI reg. No4846 and we export live lobsters (when we can get them) to customers in Japan, Taiwan and Europe.
We would like the opportunity of establishing a permanent supply relationship with someone such as yourself and we are looking to 1.5 – 2 tonnes per week to start with. We are also looking for supply of abalone and perhaps doing an experiment to see whether scallops can be exported live.
Our main interest at this moment however is supply of live lobsters, preferably in size 600gms – 1kg.
Kind regards
Russell Lyons"
No doubt, Mr Dillon made some enquiry about the credit status of the defendant. The value of a tonne of crayfish was then in the order of $23,000. On 5 March 1991 the following facsimile transmission was sent by the defendant to the plaintiff:
"Dear Ian,
Following our phone call this morning – and your call just a few minutes ago – we confirm our order for approx 800kgs live lobsters at $22.50 per kilo, plus approx 50 kilos of very large lobsters at $18 per kilo. Payment seven days.
Many thanks for your help,
Russell"
I find that during either the telephone conversation of 22 February 1991 or the following one on 5 March 1991, it was agreed between Mr Lyons and Mr Dillon that payment for each shipment would be made within seven days of shipment by the defendant depositing money in a branch of the Commonwealth Bank to the credit of the plaintiff‘s account. I reject Mr Dillon's assertion that he told Mr Lyons in February or March 1991, "My responsibility stops at Hobart airport". During the course of his evidence Mr Dillon frequently made this assertion. An important aspect of the plaintiff‘s defence to the counter–claim was Mr Dillon's assertion that property and risk in the goods passed on delivery to airline staff at the Hobart airport. However, Mr Dillon was unable to give an account of even the substance of what was said between him and Mr Lyons during their conversations on the telephone in February and March 1991. Agreement that all risks passed to the defendant at Hobart airport on delivery of the cartons to commercial airline staff is inconsistent with trade custom and inconsistent with the parties‘ subsequent dealings. The evidence of Mr Nicholson, called to give evidence of trade custom, was to the effect that the custom of the trade was for the property to pass on delivery into the hands of the consignee and that all risks of loss and damage, other than those arising from mishandling or delay by the airlines, passed at the same time. Evidence was given by Mr Lyons that, during the year the parties traded with each other, there were occasions when some of the boxes were damaged on arrival in Sydney. As this damage appeared to be due to mishandling, he completed cargo damage reports. Although Mr Lyons claimed that he told Mr Dillon about the damaged boxes over the telephone, he did not fax him copies of the cargo damage reports nor give him any estimate of the losses suffered by reason of the damaged boxes. Further, as the defendant promptly paid the plaintiff in full, any successful claim by the latter would have been an extra profit in its hands. The conduct of the parties was consistent with the custom of the trade concerning the passing of risk and I find that this custom of the trade governed all the transactions between the parties until the end of the 1991 crayfish season.
Between 5 March 1991 and the end of the 1991 season, there were twenty–nine shipments of live crayfish from the plaintiff to the defendant. The price varied during the course of the season but the total price paid for all these shipments was $346,205.10. Each shipment during the first season was the result of a separate contract. Each time an offer was made and accepted by telephone or facsimile or both. Each time, a price was agreed. Once the contract had been performed there was no obligation on either party to continue to trade. The terms of each contract, except the price, remained constant throughout the season and were set by the parties during the course of their initial discussions, the custom of the trade and their conduct. Each of the shipments was paid for by bank transfer, made more or less within seven days of delivery of a consignment. Due to a small error, by the end of the 1991 season, the defendant's account with the plaintiff was $30 in credit. Notwithstanding prompt payment in full of all invoices, part of the defendant‘s counter–claim relates to the shipments made in the first season.
The Counter–Claim (First Season)
The defendant's counter–claim has two parts to it. The first relies upon a claim that some of the shipments weighed less than the invoiced and charged weight. Evidence was adduced on behalf of the defendant that, with respect to many shipments, the nett weight of crayfish received in Sydney was less than that shown on the plaintiff‘s invoice and in respect of which the price was calculated. The defendant paid in accordance with the invoiced and charged weight. It knew before it made each payment that, according to its measurement, it was paying for more kilograms of crayfish than it actually received. With respect to this part of the counter–claim, the defendant claims damages for breach of contract or alternatively, for the return of money had and received. Neither claim can succeed with respect to transactions during the first season for the following reasons:
1I am unable to find on the evidence which of the two weights was correct. As crayfish tend to lose weight whilst out of the water, it is possible, at least in some instances, that both weights are correct. Both parties described their weighing process. Both appeared satisfactory although, having regard to the quantity of boxes and quantity of packing material, both systems give rise to the possibility of error. There is nothing in the evidence which would permit a finding with respect to any one shipment, that the defendant's method of weighing should be preferred to the plaintiff‘s method and the result achieved by the former accepted as accurate. Thus, insofar as the counter–claim relies upon an allegation of short weight delivered, the factual basis for it is not established.
2Even if the defendant had been able to establish that the quantity of crayfish delivered was less than that invoiced and charged, no breach of contract is made out. Each transaction occurred as a result of an agreement for the sale and delivery of an approximate weight of crayfish at an agreed price per kilogram. On any view of the facts, that approximate weight was delivered. It was not a term of any contract that an exact weight of crayfish would be supplied. Payment was claimed with respect to an exact weight but delivery of that weight was not a term of the contract. The Sale of Goods Act 1896, s35(1) provides:
"Where the seller delivers to the buyer a quantity of goods less than he contracted to sell the buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them at the contract rate."
Subsection (4) provides that that provision is subject to any usage of the trade, special agreement, or course of dealing between the parties. The parties' agreement to buy and sell an approximate weight of crayfish derogated from the effect of s35 and gave the parties a latitude with respect to the weight of crayfish the plaintiff was obliged to deliver and the defendant was obliged to accept. It was not suggested that the claimed weight discrepancy was of such magnitude to be outside the approximate weight ordered. The plaintiff‘s contractual obligation was to deliver an approximate weight of crayfish. This it did. The defendant's obligation was to pay a sum calculated by multiplying the weight delivered by the agreed price per kilogram. The defendant claimed it overpaid the plaintiff. The plaintiff may have claimed too much money and the defendant may have paid too much money but the plaintiff was not in breach of contract.
3. With respect to the alternative claim for money had and received, the defendant must establish not only that the demand for payment was illegal or wrongful, but also that it was made under coercion. See Smith v William Charlick Ltd (1923–24) 34 CLR 38; Malone & Anor v Taylor & Anor, Full Court, 111978. There was no coercion with respect to the making of payments. They were made voluntarily and in the knowledge that, according to the defendant‘s calculations, the invoiced weight exceeded the delivered weight. In Maskell v Horner [1915] 3 KB 106, Lord Reading CJ said at 118:
"If a person with knowledge of the facts pays money, which he is not law bound to pay, and in circumstances implying that he is paying it voluntarily to close the transaction, he cannot recover it. Such a payment is in law like a gift, and the transaction cannot be re–opened."
4. In any event, application of the doctrine of estoppel prevents the defendant from successfully maintaining any proceedings with respect to alleged short weight delivered during the first season. Since Waltons Stores (Interstate) Ltd v Maher & Anor (1988) 164 CLR 387 and Commonwealth of Australia v Verwayen (1990) 95 ALR 321 the law of estoppel in Australia has been settled. In Verwayen, Mason CJ at 330 referred to estoppel as "a label which covers a complex array of rules spanning various categories" and said that all the various categories "are intended to serve the same fundamental purpose, namely protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted." In Verwayen, Mason CJ said at 333 with respect to the essential elements of estoppel:
"The result is that it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption."
Promptly after each shipment was received the sum invoiced and claimed was paid. Although, on occasions, Mr Lyons may have spoken to Mr Dillon about the weight of a shipment, and the latter said something to the effect that he would fix it up, the whole tenor of the defendant‘s conduct was that it accepted each shipment, and that it was satisfied in each case with the reasonableness of the price claimed. By making payment in full and later proceeding with another transaction without claiming or making any deduction in payment, Mr Lyons clearly induced Mr Dillon into relying upon an assumption with respect to each shipment, that no claim for alleged short weight would be made. Mr Dillon thereby acted to his detriment by entering into subsequent transactions without giving any consideration to his system of weighing with a view to altering it in order to avoid possible subsequent disputes over claims of short weight delivered.
The second part of the defendant's counter–claim relies upon an assertion that not all the crayfish delivered in Sydney were of live export quality. It was claimed that some were dead on arrival, some were slow on arrival and did not recover, and some were damaged. With
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respect to dead, slow and damaged crayfish, the defendant‘s case was that it was a term of each contract that, on arrival in Sydney, every crayfish would be of export quality. The plaintiff's case on this aspect of the counter–claim was that it was a term of the contract, express or implied that, of the total weight of each shipment, a percentage allowance must be made for mortality (ie death or irrecoverable weakness) during transit.
According to Mr Dillon, nothing was said by him to Mr Lyons about an allowance for mortality and weight loss until the two of them met in person for the first time at the end of the first season on 4 September 1991. On the plaintiff‘s case there was no need to mention either mortality or weakness because the property in the goods and all risks of loss and damage passed at the Hobart airport. According to Mr Lyons, nothing was said about an allowance for mortality either at the meeting on 4 September or on any other occasions. He said that in the many telephone conversations between him and Mr Dillon, he complained about mortality and slow crayfish and Mr Dillon always promised him he would "fix it up".
On 4 September 1991, Mr Lyons travelled to Dover to visit the plaintiff's factory and discuss the forthcoming season with Mr Dillon. According to Mr Lyons, the visit had a dual purpose. It was to make complaint about the quality and weight of the crayfish delivered during the first season and to try and establish a supply of greater quantities of quality crayfish in the forthcoming season. Mr Lyons said, "I said to [Mr Dillon] that we‘d had a few problems during the year, that we'd had a few short weights and there were a few – we had a few occasions when we had some dead in the delivery and with that Ian started to speak very strongly to David."
On this visit Mr Lyons stayed overnight at the Dillon house. According to Mr Dillon it was during this visit that he "advised" Mr Lyons when fixing his sale price for the overseas market to allow 5 per cent for weight loss and 3 per cent for mortality on each consignment from Hobart. The nett effect of making any such percentage allowance would be to increase the purchase price per kilogram of the stock into the tanks at Sydney. Mr Lyons denied that anything was said on his visit to Dover about a percentage allowance for weight loss or mortality. According to Mr Lyons, as well as short weight during the first season, many shipments contained dead andor very slow crayfish. Under cross–examination, Mr Lyons said that when he went to Dover on 4 September 1991 it was his belief that during the first season he had paid for about a tonne of crayfish that he had either not received or which had been dead on arrival or too slow to recover. Mr Lyons said that he had paid the full amount claimed on the invoice for the consignments because, following complaint by him from time to time over the telephone to Mr Dillon, he was told not to worry about it and that he, Mr Dillon, would "fix it up". Mr Lyons said in effect, that when he visited Dover on 4 September 1991, he believed that there had been breaches of several of the contracts entered into during the first season and his guess was that Mr Dillon owed him in excess of $20,000. I do not accept Mr Lyons‘ evidence with respect to this matter. I do not accept that he was under the impression either that there had been a breach of contract or that Mr Dillon owed him any money. Further, I do not accept the defendant's submission that the plaintiff‘s obligation was to deliver all the crayfish in export quality condition weighing precisely the same on arrival in Sydney as they had on departure from Dover. Both are inconsistent with the following:
1. Payment for each shipment was made promptly, more or less within seven days of delivery, in the full knowledge that the invoiced weight was less than the received weight and that some of the crayfish were either dead or very slow. I do not accept Mr Lyons' explanation that he made the payments either because he was too busy to calculate the exact extent of his claim andor he was led astray by Mr Dillon‘s promises to "fix it up".
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2. There is no facsimile transmission of complaint during the first season. There are twelve such transmissions from the defendant to the plaintiff during this time. There is no hint in any one of them that any shipment received and paid for was other than in accordance with the terms of the agreement between the parties.
3. Mr Lyons admitted that, even though a purpose for his visit in September was to speak about the poor standard of shipments during the season just finished and to seek compensation, he did not ask Mr Dillon to make financial reparation nor had he precisely calculated the extent of his claimed entitlement to financial reparation.
4. The principal purpose for Mr Lyons' visit to Dover was to secure even larger supplies of crayfish during the next season. Mr Lyons gave Mr Dillon a small gift. He admitted that he hoped that Mr Dillon would regard him as a favoured customer in the new year. Such conduct is totally inconsistent with repeated deliveries of crayfish other than in accordance with the terms of the contract.
The probabilities are that there was some discussion at Dover about weight loss and mortality, for reduction of both increases the profit of all those who trade in live crayfish. Considerable skill and experience is required to maintain the crayfish in a strong, healthy and undamaged condition as they pass from trader to trader. It is therefore highly likely that this important aspect of the business in which the two men were engaged was discussed. It may well be that Mr Dillon told Mr Lyons that, when fixing his price, he allowed for 5 per cent weight loss and 3 per cent mortality. It may well be that, as he claimed in his evidence, Mr Dillon advised Mr Lyons to do the same, but I do not accept that percentages were discussed in such a way that the parties intended that any particular percentage would be a term of future contracts between them nor that any particular percentage was a term of any contract made during the first season. Mr Dillon did not claim that Mr Lyons either accepted or rejected his advice that Mr Lyons should allow 5 per cent and 3 per cent for weight loss and mortality respectively. He gave no evidence of any response by Mr Lyons to his "advice".
I accept the unchallenged evidence given by Mr Nicholson of the custom of the trade. Counsel for the defendant did not submit I should do otherwise. By way of background, Mr Nicholson described how offers to buy and sell live crayfish are made and accepted within twenty–four hours or less, how the crayfish are packed and sent within hours of a contract being finalised and how transactions are closed by payment, usually made within days after delivery. Mr Nicholson said it was an accepted practice in the trade for any complaint about the quality of a shipment to be made immediately after receipt of the shipment and, in the case of mortality, financial adjustment would be made straight away. I find that it is a custom of the trade that no claim for poor quality shipment is entertained unless a claim is made immediately after receipt of the shipment. The following passage is taken from the evidence–in–chief of Mr Nicholson:
"WITNESS: In my experience if a claim is made then the customer will make this very quickly, because we are dealing with a very high priced article and with an article that requires a continuous cash flow through your business. So if a claim is made it is usually made upon receipt of the product – or certainly not more than twenty–four hours later. In the particular case of my customer in Sydney – who is my principal customer – they are forwarding back payment the day after the product is received and that gives them an opportunity to look at the product and the following morning to look at the product in the tanks, and then they immediately make payment. If something is wrong with the product then, of course, they wouldn‘t make the payment.
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MR ROACH: Is it practice in the industry for customers to pay for products known to be defective? ... If there's any defective product then, of course, it‘s a matter for negotiation. It's, in my experience, if there is some mortality in the product, then it‘s an agreement between the supplier and the buyer and usually a price of 50 per cent for that mortality is agreed.
[The precise meaning of the last few words was not further explored either in the cross–examination or evidence–in–chief].
And how soon is it agreed? ... Not more than two days."
Mr Nicholson said that there was always a risk of mortality either in the tanks or during transit but, in the ordinary course of events, he would expect negligible mortality and weight loss of export quality live crayfish in transit from Hobart to Sydney. He said that he would expect any weight loss that did occur over that journey to be recovered after the crayfish were put into tanks in Sydney.
It was clear from Mr Nicholson's evidence that the custom of the trade is to accept some allowance for weight loss and mortality but there is no settled customary percentage. That depends on the distance the crayfish have to travel and the conduct of the parties to the transaction. I find that, in accordance with the custom of the trade, it was a term of each contract made between the parties during the first season that no claim by the defendant against the plaintiff could be maintained unless the defendant had given the plaintiff details of it very shortly after receipt of the consignment and in any event, before payment. I also find that, in accordance with the custom of the trade, it was a term of each contract that a reasonable allowance for weight loss and mortality would be made and what was reasonable depended upon the circumstances attending each shipment and that any difference about the percentage figure would be resolved following the making of a claim, by its settlement or failing that, curial or arbitral resolution.
That finding is not only in accordance with the evidence concerning the custom of the trade, it is consistent with the conduct of the parties and the evidence of Mrs Lyons. Mrs Lyons described "excessive weight loss" as being more weight loss than was acceptable to her and mortality as being higher mortality than was acceptable to her. The following is taken from her cross–examination :
"And what mortality is acceptable? ... Mortality for local – in fact there shouldn‘t be any – but we do accept 2 per cent mortality.
And overseas? ... The overseas is 5 per cent depending on the hours. If it's going forty hours into Europe it‘s higher than that.
If it's going forty hours into Europe it‘s over? ... Into Europe it is higher. It is a higher mortality allowance.
What is it? ... Generally 8 per cent.
Now the simple fact of the matter is that you're dealing with a very fragile creature, correct? ... Yes.
Where problems of weight loss and mortality are just a characteristic of the trade, is that correct? ... Yes, that‘s quite right.
And that's been your experience of it? ... Certainly with our export experience, yes indeed.
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And your Australian experience? ... Yes, it can be.
And so an element of the whole exercise has to be to allow for, what I‘ll call for the moment, an acceptable weight loss limit and acceptable mortality? ... That's right.
And so that this may be monitored there needs to be an information flow, a very prompt one? ... Yes, yes.
Reporting on what‘s happening? ... Mmm.
And reporting – or recording it formally if it's to be a problem? ... Mmm.
And as between buyer and seller it‘s important that a problem if it arises, be determined very quickly? ... Mmm, yes indeed.
Because until you know how much you'll have to pay for your marketable fish you don‘t know your true costs? ... Mmm."
Mr Lyons' evidence was also to the effect that the agreements between the defendant and the plaintiff were governed by the custom of the trade. In his cross–examination he said:
"And do you agree, as Mr Nicholson said, this is such a delicate and sensitive and fast moving trade, that speed of communication is of the essence? ... Absolutely – whole heartedly agree.
And if any purchaser has a dispute with his supplier he raises it immediately? ... Yes. I whole heartedly agree. [I asked the witness to explain with what he was expressing agreement].
WITNESS: I‘m agreeing that that's the general practice in the industry."
The finding made with respect to the custom of the trade and that the custom was a term of the contracts between the parties, is corroborated by evidence concerning four shipments in the second season. With respect to three of them, claims were made by the defendant for a reduction of the invoiced price on the basis that it was not the agreed price per kilogram for the crayfish. The plaintiff allowed two of the claims but not the third. All of this was done within five days of the first disputed shipment and before payment was made for any one of them. On 13 February 1992, the defendant made a complaint about the quality of the shipment received that day and an allowance of $1,000 was made by the plaintiff. I shall refer to this shipment later. For present purposes it is sufficient to say that I find that the complaint was made and settled on the telephone within hours of the shipment being received in Sydney even though the plaintiff did not issue a credit note until eleven days later.
Apart from Mr Lyons‘ evidence of general complaints he made to Mr Dillon about the quality of the shipments there is no evidence that claims were made in accordance with the custom of the trade during the first season.
With respect to contracts made in the first season, the counter–claim fails.
The Counter–Claim (Second Season)
I find that the terms of the contracts made by the parties during the second season were the same as those in the first season except with respect to five shipments. The first shipment in the second season was on 5 November 1991. Mr Lyons came to Dover in a
[Page 12]
chartered light aircraft to collect it. He assisted with the selection and packing of this shipment. It was packed into specially shaped boxes designed to fit neatly into the chartered aircraft. The boxes were driven to the Hobart airport and loaded onto the aircraft by the plaintiff's employees. In the circumstances, it can easily be inferred that the term concerning the passing of property and risk which governed the transactions in the first season was varied so that property and all risks passed to the defendant upon delivery at the Hobart airport.
Between then and 13 February 1992, there were thirty–eight shipments weighing, in total, something in excess of 3 tonnes. Only four of them were taken from Dover to Sydney in a chartered aircraft. It was found to be more economical for the crayfish to be sent on commercial aircraft as they had been sent during the first season with the plaintiff paying the cost of the freight and including that in the price. Accordingly, all the other shipments from the plaintiff to the defendant were packed and despatched in the same manner as had been the shipments during the first season. I find that the terms of the contract for each shipment were the same as those governing the shipments in the first season.
I shall deal first with the thirty–nine shipments made between the beginning of the first season and 13 February 1992. The defendant‘s claim was that every shipment delivered weighed less than the invoiced and charged weight. The claimed percentage difference varied from shipment to shipment but was commonly around 2 per cent although in a few cases it was higher, rising to about 6 per cent. In the case of each shipment, the invoice was paid in full (subject to the two reductions in the per kilogram price), more or less within the agreed seven day period. Apart from a complaint specifying the weight difference and weight of crayfish lost in a facsimile transmission on 21 November 1991 and evidence from Mr Lyons about general complaint, there was no evidence of a claim being made in respect of short weight within a reasonable time after receipt of the consignment and before payment. For the reasons given earlier in this judgment concerning the first season, the defendant's claims based on short weight of shipments up to 13 February 1992 fail.
It was also the defendant‘s claim that each of the thirty–nine shipments contained either dead or very slow crayfish and with respect to these the defendant is entitled to damages for breach of contract.
On receipt of the shipment made on 21 November 1991 Mrs Pomroy sent a fax that day in the following terms to Mr Dillon:
"Dear Ian,
I have finished tallying up today's delivery. Your docket states 524.30kg of lobsters. My figures are 513.28kg less 13 kilo that I cannot use because the [sic] are dead – no legs – or too weak.
I feel that they were not packed very well. There was next to no wood wool or polyfill in any of the boxes. Ice bottles, some full, a lot only part filled and all thawed out.
Regards Pat"
Mr Lyons said that he authorized the despatch of that facsimile. It was the first time that Mr Dillon had been given detailed particulars of the amount of weight loss and the weight of the dead, slow or damaged crayfish. Mr Lyons said that he authorized the sending of the fax "to put on record our dissatisfaction with the shipments that had already been received." He said the response from Mr Dillon was a telephone message with the same answer as given
[Page 13]
previously, "Don‘t worry, we'll fix it up. I‘ll look after you." Payment for that shipment was made in full. There was no evidence of the complaint or claim being discussed subsequently.
On 8 December 1991 Mrs Pomroy sent another facsimile message to Mr Dillon. It read:
"Dear Ian,
Received shipment of live lobsters. On arrival we had 38kg dead and about 30kg which are very weak. No ice bottles and only one small air hole in each box.
Regards Pat"
Mrs Pomroy said she was simply reporting this to Mr Dillon at the request of Mr Lyons. According to him, Mr Dillon's response was the same as it had always been. Payment for the invoiced amount was made and the matter not raised again. During the balance of December there were a number of facsimiles from the plaintiff to the defendant asking for payment of outstanding invoices and the payments requested were duly made. On a facsimile dated 19 December 1991 showing a copy of a deposit to the credit of the plaintiff‘s account at the Commonwealth Bank, Mrs Lyons wrote, "Helen, I thought Russ had faxed this last night – apologies". No suggestion was made by Mr or Mrs Lyons to either Mr or Mrs Dillon that any of the claimed outstanding amounts should not have been paid or should have been reduced because of delivery of poor quality crayfish.
In February there were more facsimile transmissions from the plaintiff to the defendant requesting payments by way of deposit into the bank account. On 3 February 1992 Mrs Dillon advised that "Our bank is jumping up and down – we have bought so much crayfish. Please fax details." The details of the deposit were faxed by either Mr or Mrs Lyons two days later and the copy of the deposit receipt was followed by the words "kind regards and thanks".
On 29 January 1992, the plaintiff sent a consignment of crayfish to the defendant. The invoice weight was 1028.27 kilograms. According to the defendant, the received weight was 993.27 kilograms. In a diary maintained in the defendant's office by Mrs Pomroy, there is an entry:
"Van Dieman in 993.77kg drowned 20.08kg = 973.69
balance 2954.39kg"
The last part of that entry is a reference to the total holdings of live crayfish after receipt of the Van Dieman shipment and the drowning of 20.78 kilograms. According to Mrs Pomroy‘s evidence, which I generally accept, she used the term in the diary "dead" or "drowned" interchangeably. Either word was used to describe crayfish that were dead on arrival at Sydney and those which Mrs Pomroy judged to be too weak to recover export quality. What occurred with respect to the shipment on 29 January 1992 illustrates the fragility of the live crayfish trade. The crayfish judged to be of export quality were put in a tank. On making one of her regular checks of the tank water Mrs Pomroy noted a very high ammonia reading. According to the evidence of Mr Nicholson, crayfish will give off ammonia if they have been subjected to a stress such as that which occurs if their boxes are roughly handled or dropped during transit.
Mrs Pomroy drained the tank and obtained fresh supplies of salt water. The tank was refilled. Over the next three days the ammonia level continued to rise and the tank was constantly emptied and refilled. Mrs Pomroy and Mrs Lyons worked long hours. They moved all
[Page 14]
of the crayfish out of the tank into another tank. Each day more crayfish were judged unfit for the live export market and were drowned. The defendant claims that it lost 600 kilograms of live export crayfish during the few days following 29 January. These crayfish were cooked and sold on the cooked crayfish market. These 600 kilograms form part of the defendant's counter–claim. However, the evidence does not establish that the crayfish were not of export quality on arrival in Sydney. There was evidence that defective filtration was a possible cause of the build up of ammonia in the tanks. It was possible that the crayfish exuded ammonia either as a result of mishandling in transit or because they had not been swum for long enough before the "packout" at the plaintiff‘s factory. It was not and is not possible to establish the cause of the ultimate loss of the export quality crayfish. The defendant accepted this. A facsimile was sent by Mrs Lyons to the plaintiff on 5 February 1992:
"I have been trying for several hours to make contact with you – finally spoken with Karen who tell [sic] me you are at the Hobart Cup.
I have phoned Aust Airlines and cancelled Thursday and asked to put back to Friday. Russell is still working on the filters and we do need the fish swum for more than twenty–four hours before putting in our tanks.
Sorry for this however we are now almost paranoid about the quality of both lobsters and our water after this week's debacle.
Ian, would you kindly speak with Aust Airlines for further arrangements."
With respect to this shipment no claim was made by the defendant against the plaintiff and the invoice price was paid.
It is unnecessary to make a finding of fact as to whether or not any one of the thirty–nine shipments between 5 November 1991 and 13 February 1992 contained dead or very slow crayfish because any claim for damages for breach of contract is now barred by reason of a failure to make a claim in accordance with the custom of the trade and before payment.
Further, for the reasons given earlier, the defendant‘s conduct estops it from relying upon any breach of contract that may have occurred with respect to these thirty–nine shipments. Mr Lyons' evidence was that he was "constantly ringing [Mr or Mrs Dillon] and they were speaking with me – ringing back ... [I said] that we were having problems. That we were having short weights, that we were having dead and slow crayfish." Mr Lyons went on to say that each time Mr Dillon‘s response was, "Don't worry I‘ll look after you, we'll fix it" and Mrs Dillon always said, "You‘ll have to speak to my husband". Although there may have been some occasions prior to 13 February 1992 when Mr Lyons complained to Mr Dillon about short weight and poor quality, I am unpersuaded that they were as frequent as Mr Lyons contended. Payment for every shipment was made in full. I do not accept that any response by Mr Dillon led Mr Lyons to believe that in due course, an appropriate financial adjustment would be made. It was not suggested that any details, weights or numbers of the dead or slow crayfish were given during the course of these telephone conversations and I find that they were not claims within the meaning of the custom of the trade but more in the nature of occasional general unspecified complaint about the quality of the shipment. Acceptance of the shipment was evidenced by the payment.
On 13 February 1992, the plaintiff sent a shipment with an invoiced weight of 765.30 kilograms. According to the defendant, the received weight was 755.42 kilograms. Mrs Pomroy's entry in the diary for that day reads, "Van Dieman in 755.42. Drowned 598 = 166.42. Bal 976.89".
[Page 15]
I accept Mr Lyon‘s evidence that, on opening the first three boxes of this consignment, he found that many of the crayfish were either very slow or dead. There was a strong smell of ammonia. I also accept his evidence that he immediately telephoned Mr Dillon and complained about the quality of this shipment. Mr Lyons' evidence is corroborated by Mrs Pomroy. Of that shipment she said:
"Q. If it be suggested that 589 kilo out of 755 kilo of fish were either dead or so weak to be not worth trying to recover them, that would be an absolutely extraordinary situation wouldn‘t it? ... Yes sir.
Q. And if those cartons had been packed by competent, experienced people some hours before, it would suggest that either something quite exceptional had happened since they were packed, or that the packing had been deliberately of very substandard fish. Could there be any other explanation than those two? ... I don't think so sir."
I accept Mr Lyon‘s evidence that Mr Dillon said on the telephone in effect, that he could not understand what had happened, that he would come up to Sydney and try and find out what had happened and that he offered to reduce the invoiced price by $1,000. Mr Dillon did go to Sydney five days later and shortly after his return a credit of $1,000 was entered onto the defendant's ledger. Mr Dillon‘s account of how he came to give the credit of $1,000 is nothing short of fanciful and I reject it. Similarly, I reject his account that he went to Sydney on 18 January at Mr Lyon's request to give Mr Lyons advice about the proper management of his crayfish processing business. However, as to the cause of the loss it was not suggested to Mr Dillon or any of the plaintiff‘s witnesses that they had on this occasion packed substandard fish. With respect to the shipment on 13 February 1992, I find:
1. 589 kilograms of crayfish were not of live export quality on arrival in Sydney.
2. In accordance with the terms of the contract the defendant made a claim on the plaintiff immediately on receipt of the consignment.
I am unable to make a finding as to the cause of the loss. I cannot exclude the possibility of stress due to mishandling after delivery to the airline staff at Hobart airport and consequently, am unable to make a finding that there was any breach of contract.
In any event I find that the claim was settled by an allowance of $1,000 accepted either on the telephone on 13 February or during Mr Dillon's visit to Sydney on 18 February.
The defendant‘s counter–claim with respect to this shipment fails.
Between 13 February 1992 and Mr Dillon's visit to Sydney on 18 February 1992 there were two further shipments, one on 14 February of an invoiced weight of 893.90 kilograms and one the following day of an invoiced weight of 1020.80 kilograms. Mrs Pomroy‘s diary entries for those days reads:
"February 14 'Van Diemen in 884.20kg – drowned 37kg? = 847.20 bal 1803.59‘.
February 15 'Van Diemen in 1003.40kg – drowned 136.75kg = 866.65kg‘."
However, from Mrs Pomroy's evidence, it is impossible for me to determine from those entries what weight of fish was rubbish or slow on arrival and what weight was taken from either the holding or recovery tanks being rubbish or slow. The admitted principal purpose of the
[Page 16]
diary was to maintain a continuous record of stocks and although Mrs Pomroy expressed an opinion in re–examination that about 85 per cent of the crayfish culled from the tanks came from the recovery tanks, the records of dead and slow fish are so unreliable that generally speaking, no finding can be made as to the source of the crayfish recorded as drowned or dead.
Even if it were possible to determine what weight of fish were not of export quality on arrival and that such quantity constituted a breach of contract, the defendant cannot now recover with respect to the shipments on 14 and 15 February 1992 because no claim was made within a reasonable time of either shipment.
The plaintiff‘s bank statements disclose that, on 17 February 1992, the defendant deposited two cheques to the credit of the plaintiff's account. One was for an amount equal to the invoiced price for a shipment on 29 January 1992 and the other was equal to the total of the invoiced prices for the shipments made on 8 and 10 February 1992. The former cheque was returned unpaid but, I accept Mr Lyons‘ evidence that this was due to some minor breakdown in communication. It was met on representment. I find that the two cheques were payment in full, as invoiced, for the shipments made on 29 January and 8 and 10 February. This was the last time the defendant paid an invoice in full.
On 18 February a shipment of 763.20 kilograms (invoiced weight) was sent. The same day Mr Dillon went to Sydney.
According to Mr Lyons, the shipment was unpacked in Mr Dillon's presence and dead and slow fish were discovered. A shipment from another supplier, "Royale" arrived about the same time and Mr Lyons invited Mr Dillon to see how that company packed their fish. Mr Dillon said he was not interested in how "Royale" packed their crayfish. Mrs Pomroy‘s diary for the day records:
"Royale in 619.66kg – drowned 6.2kg = 613.40kg.
Van Diemen in 749.72kg – drowned 161.90kg = 587.82kg."
With respect to that weight of 161.90 kilograms Mrs Pomroy was unable to say what proportion represented crayfish dead on arrival and what proportion represented crayfish too slow to be capable of recovering if put in the recovery tanks.
According to Mr Lyons, he drew Mr Dillon's attention to the fact that a very high percentage of this shipment was either dead or very slow and that Mr Dillon said he just could not understand it. Mr Lyons said that Mr Dillon then went to his office and used the telephone. On return, Mr Dillon told Mr Lyons, in somewhat colourful language, that he had complained to his son David about the quality of the shipment. Mr Lyons said that there followed quite a discussion between the two of them during which Mr Dillon promised that he would "fix it up".
Mr Dillon gave quite a different account of this part of his visit to Sydney. It is worth setting out his evidence–in–chief about this:
"Yes, what was said? ... After some boxes, several boxes, Mrs Lyons said to me ‘Ian, I have a few slow ones here and a couple of dead ones there.' That‘s what she said and I looked at them, I looked at the slow ones – 'yes‘, I said: 'Yeah, no problem. They‘re suitable to cook.' And there‘s some – Mrs Lyons said: 'No, I‘ll put them in a recovery tank for a while to see what happens'. And she gave them to the lady called Pat to put them in the recovery tank‘.
...
[Page 17]
Yes and what about the dead fish? ... I put them aside. Put them aside. I picked up a couple of fish that I didn't consider completely dead – dead sort of, that had slight movement, that could have been cooked, or possibly tailed whatever you wished to do. I was sort of – I couldn‘t do much, because at that stage the fish weren't my fish."
Mr Dillon denied that he telephoned his son from the office and denied that there was any discussion about the poor quality of the shipment. His evidence in this respect was evasive and unconvincing and I have no hesitation in rejecting it and, preferring the account given by Mr Lyons. Accordingly, I find that more than a reasonable percentage of the shipment delivered on 18 January was not of export quality. I find that Mr Dillon did not suggest that this condition was due to stress or act or default of the airlines. I find that there was a breach of contract. I find that the defendant made a claim upon the plaintiff with respect to this breach immediately on receipt of the shipment and it was accepted by the plaintiff but its resolution not achieved.
The next payment made by the defendant after 18 February was by way of deposit to the credit of the plaintiff‘s bank account on 20 February. The amount deposited was $45,000. For the first time in the dealings between the parties the deposit was of a round sum, not a specific amount which could be matched to a shipment. Such payment could not be construed as settlement or waiver of the claim made two days earlier. This deposit is consistent with the defendant making a payment on account while awaiting resolution of the claim. $45,000 was considerably less than the value of the shipments delivered on 13, 14, 15 and 18 February. Mrs Lyons said that the decision to stop making payments shipment by shipment was a conscious one, the sum of $45,000 was selected because it seemed a "comfortable figure" and that she was concerned that if more were paid they would be "over paying" Mr Dillon.
There was a further shipment on 19 February. The invoiced weight was 1027 kilograms. The only evidence with respect to this shipment came from Mrs Pomroy and the diary. The diary for that day recorded:
"Van Diemen 1006.50kg – dead & drowned 22.34kg = 984.16kg
Dead & drowned 18.76kg. Bal 350.259"
Those entries are confusing and Mrs Pomroy was unable to say what weight of fish was dead on arrival and what weight of fish was taken from the tanks and drowned. The defendant has failed to establish on the balance of probabilities that there was a breach of contract with respect to this shipment and in any event, there is no evidence that any claim was made shortly after its receipt.
The next shipment was the following day, 20 February 1992. The invoiced weight was 1027.7 kilograms. The diary entry for that day reads:
"Van Dieman in 988.70 – Drowned 54.70 = 934.kg."
The next day, Mrs Lyons sent the following facsimile transmission to Mrs Dillon:
"DEAR HELEN,
CONFIRMING $45000.00 WENT INTO YOUR ACCOUNT YESTERDAY – COPY DEPOSIT.
WE HAD A VERY DISAPPOINTING SHIPMENT YESTERDAY – COPY PAT'S MORTALITY SHOWN ON DELIVERY DOCKET. WE ALSO COOKED NEARLY 150KGS OF WEAK ONES FROM WEDNESDAY‘S SHIPMENT. OFFERRED [SIC] FRESH COOKED YESTERDAY BUT OUR FELLOW HAD NO BUYERS FOR FRESH COOKED.
[Page 18]
YESTERDAY WE AVERAGED 5 PER BOX VERY WEAK FOR OUR RECOVERY TANK AND WE SHALL LEARN THIS MORNING HOW THEY WENT. YESTERDAY THERE WAS STILL THE, WHAT I BELIEVE TO BE A MAJOR FACTOR, FACT THAT THE LOBSTERS FILLED ONLY TO APPROX. TWO THIRDS OF THE BOX. THE TOP ROWS WERE IN DISARRAY IN ALL BOXES. ALSO MOST BOTTOMS HAD BEEN BADLY GOURGED [SIC]. A DOUBLE SHEET OF NEWSPAPER IS NO GOOD AS THE ONLY COVER INSIDE BOTTOM OF BOX. IT WAS SOAKED AND IN TATTERS. WHAT WE NEED IS AS FOLLOWS:
1) IF NEWSPAPER IS BEING USED, AT LEASED [SIC] A THICKNESS OF 12 SHEETS – EVEN 20 – ROYALE'S NEWSPAPER HAS VERY LITTLE MOISTURE AND THE THICKNESS OF THE NEWSPAPER ON THE BOTTOM HOLDS FIRM, BETTER TO HAVE REASONABLE QUANTITY OF WOODWOOL.
2) LOBSTERS ON BOTTOM ROW TO BE SECURED IN – YESTERDAY THEY WERE ALSO JUMBLED. THIS MAY BE BECAUSE THE REST OF THE BOX WAS LOOSE.
3) ON TOP OF BOTTOM LAYER AGAIN A LAYER OF WOODWOOL TO TAKE THE ROW ABOVE AND TO ACT AS A CUSHION. ALL WOODWOOL TO BE LIGHTLY DOUSED IN SEAWATER – WE SPRINKLE WITH WATERING CAN. THE ICE BOTTLES SHOULD THEN KEEP THE DAMPENED WOODWOOL COLD IN THE BOX.
4) THE NEXT LAYER OF LOBSTERS MUST BE PACKED SECURELY IN PLACE. PLEASE DO NOT PUT NO. 17 ACROOS [SIC] THE BOX ON TOP ROW. ALMOST WITHOUT EXCEPTION YESTERDAY THIS LOBSTER WAS DEAD OR TO BE DROWNED.
5) WOODWOOL ON TOP TO ACT A CUSHION OR PADDING TO KEEP LOBSTERS FROM MOVING IN BOX. EVEN USE THE NEWSPAPER ON TOP WITH POLYSTYRENE PIECES TO UNDERSIDE OF LID LINE.
IT IS VITAL THAT THERE IS NO MOVEMENT INSIDE THE BOXES. I THINK THIS IS A MAJOR PART OF OUR PROBLEM. ALOS [SIC] THE ICE BOTTLES ARE WITHOUT ANY SIGN OF ICE. SOME LIDS ARE NOT SCREWED ON TIGHTLY. THIS CAUSES EXTRA FLUID IN BOTTOM OF AFFECTED BOXES AND DROWNED LOBSTERS.
I HAVE EXPLAINED TO IAN ABOUT THE WEIGHT LOSS. DURING THE PAST FEW WEEKS WE WERE QUITE SATISFIED WITH THIS. YESTERDAY YOU DEBITED US FOR 1025.7 – WE PUT 988.7 IN TANKS (WEIGHT LOSS NEARLY 3.5% OF THE 988.7KGS WE COOKED IMMEDIATELY 54.7KGS.
HELEN CAN WE PLEASE HAVE TWO ICE BOTTLES EACH BOX – ON TOP OF EACH OTHER PERHAPS THIS WILL HELP KEEP THE BOXES COLDER.
OVER THE WEEKEND I WILL FAX YOU DETAILS OF THE ACCOUNT. I MUST NOW GO TO HELP PAT PREPARE FOR SUNDAY PACKOUT.
KIND REGARDS
WENDY"
On the bottom half of the second page of that facsimile there appears a photographic reproduction of a deposit to the credit of the plaintiff‘s bank account of the $45,000 to which I have already referred, and a reproduction of the invoice for the shipment. On that invoice Mrs Pomroy has written "received 988.70, dead and drowned 54.70." After its receipt, Mrs Dillon wrote on that facsimile that the weight loss was 3.9 per cent and "should allow 5%".
There was no oral evidence to the effect that this facsimile transmission constituted a claim by the defendant against the plaintiff. Its terms do not convey the impression that the defendant regarded the fish delivered as being a breach of contract. Its tenor is one of disappointment and general complaint about the shipment notwithstanding the reference to precise weights. It does not suggest that there should be any financial adjustment between the parties with respect to the shipment and I find that it does not constitute a claim.
On 24 February there was a further shipment of an invoiced weight of 377 kilograms. There is no diary entry to support any claim for damages for breach of contract with respect to this shipment and there is no evidence of any claim having been made. That same day the defendant deposited a further $45,000 to the credit of the plaintiff's bank account. The
[Page 19]
next shipment was on 2 March. The invoiced weight was 369.20 kilograms. There is no diary entry to support a claim for damages for breach of contract with respect to this shipment and no evidence that any claim was made. The same day $10,000 was paid to the credit of the plaintiff‘s bank account. On 4 March a further $15,000 was similarly deposited. This was the last payment made by the defendant to the plaintiff.
The final shipment was made on 5 March. The invoiced weight was 495.50 kilograms comprising 470.9 kilograms of crayfish weighing less than 1 kilogram, and 24.6 kilograms of crayfish weighing in excess of 1 kilogram. According to the diary, live crayfish were supplied from two other suppliers as well as the plaintiff on 5 March. The diary entry is reproduced below:
"Southern Ocean 175.78kg – 1 dead
South East (Con) 316.58kg – dead
Van Dieman 475.42kg – dead 91.80kg– DEAD 50.00KG"
Mr Lyons said that, on opening the boxes, he noticed a number of dead crayfish and crayfish too slow to recover. He immediately rang Dover. Mr Dillon was not there. Mr Lyons complained to Mrs Dillon who answered the telephone. She kept on repeating that she could not understand it. The unpacking continued. More dead and very slow crayfish were discovered. Mr Lyons became very angry and he rang David Dillon and abused him for sending such a poor quality shipment. Fifteen minutes after this telephone call, Mr Ian Dillon telephoned Mr Lyons and complained about him berating David Dillon. According to Mr Lyons he said to Mr Ian Dillon:
Ian, this is not the point, we've got a very poor shipment, the quality‘s absolutely appalling. We've got dead all over the place, they‘ve turned round in their boxes, they've just not stayed in the boxes. They‘re all torn underneath. It's not good enough."
Mr Dillon responded by saying that he thought it would be better if he stopped supplying crayfish and Mr Lyons agreed and slammed the telephone down.
Mr Dillon said he could not recall that telephone conversation but he did not deny speaking to Mr Lyons by telephone on 5 March. Mr Dillon added however, that the reason supply stopped was because "he never paid the bill". Mr David Dillon said there was an acrimonious telephone conversation between him and Mr Lyons but placed its context and the sequence of events differently from that described by Mr Lyons.
I accepts Mr Lyons‘ account of the events of 5 March. His evidence in this respect was unaffected by cross–examination and was given with a clarity and certainty absent from the evidence given by Messrs Ian and David Dillon. It is also consistent with the facsimile transmission sent the following day by Mrs Dillon at the direction of Mr Dillon. It reads:
"RUSSELL – REF TO LAST NIGHTS SHIPMENT – AGAIN I STRESS THOSE FISH LEFT HERE PERFECT – DAVID PACKED EVERY BOX AS SINCE COMING TO SYDNEY I DO NOT TRUST ANYONE ELSE – I WATCHED HIM PACK THEM TIGHT – HELEN TAKE THEM TO AIRPORT THERE WAS NO MOVEMENT WHATSOEVER IN BOXES DURING PACKING OR TRANSPORT – I AM DEVASTATED AS TO WHAT THE REASON THIS TIME. WE PACKED THEM IN WOODWOOL AS INSTRUCTED BY WENDY TO DAVID – PERSONALLY WE THINK PAPER & POLY CHIPS ARE BETTER – BUT WE PACKED AS WE WERE INSTRUCTED – WE DO NOT HAVE THIS PROBLEM WITH ANYONE ELSE – HONESTLY I AM ASTOUNDED – WE HAVE BEEN GETTING EXCELLENT RED FISH WHICH WE ALWAYS KEEP THE BEST FOR LIVE MARKET – I.E. YESTERDAY WAS A HOT DAY OVER HERE – WE BOUGHT A LOAD OF FISH FROM STRAHAN
[Page 20]
– THEY WERE BAGGED FOR 2 HRS PRIOR TO OFF LOAD AT PORT – TRUCKED TO DOVER APPROXIMATELY 7 HOURS – LANDED AT DOVER PERFECT CONDITION
WE DO NOT WANT TO LOOSE [SIC] YOUR BUSINESS AS IN THE PAST WE HAVE HAD A GOOD RELATIONSHIP HOWEVER I HAVE NO ANSWER FOR YOU.
REGARDS
IAN DILLON"
The contents of that facsimile transmission corroborate Mr Lyons' account of the shipment sent on 13 February 1992 and Mr Dillon‘s visit to Sydney on 18 February 1992. It also corroborates Mr Lyons' evidence that the trouble with the shipment of 5 March 1992 was movement in the boxes during transport. It was submitted by counsel for the defendant that I should construe the facsimile as meaning that the shipment the day before was of crayfish that had come from Strahan. It was common ground that crayfish that had travelled by road from Strahan to Dover were unlikely to remain in good quality condition after a further journey to Sydney. I do not accept the submission. Mr and Mrs Dillon both explained that the reference to the Strahan shipment was made to illustrate why they could not understand why the shipment to Sydney had been so bad. Crayfish that had travelled for a longer time without proper packing had survived.
With respect to the last shipment I find that more than a reasonable percentage of the shipment was either dead or too slow to recover on arrival in Sydney. There is nothing in the evidence to suggest that this condition was due to the fault of the airlines. With respect to those crayfish I find that more than a reasonable percentage were not of export quality. I find there was a breach of contract. I find that the defendant made a claim on the plaintiff with respect to this breach immediately on receipt of the shipment. The claim was neither accepted nor rejected nor resolved.
It remains to measure the extent of the two breaches of contract in respect of which the defendant is entitled to recover damages. This is not an easy task having regard to the terms of the contract and paucity of records.
Having regard to the evidence of Mr Nicholson and Mrs Lyons it would be reasonable to allow 2 per cent mortality, ie dead or too slow to recover on arrival. With respect to the shipment of 18 February 1992 such an allowance would constitute about 15 kilograms. Mrs Pomroy‘s diary entry records "Drowned 161.90 kilo" for that day but whether that weight is confined to the shipment unpacked on 18 February or whether it includes crayfish from earlier shipments put in the recovery tanks is not entirely clear. Doing the best I can on the evidence I would measure the breach of contract on 18 February 1992 at 120 kilograms.
With respect to the breach of contract on 5 March 1992 the evidence to measure this breach is confined to the entry in the diary set out above. Apart from those figures there was neither evidence–in–chief nor cross–examination. The diary discloses that the preceding shipment from the plaintiff arrived on 2 March. Apart from an entry on 4 March "2 DEAD. 1.5kg" there are no mortality records between 2 March and 5 March. That tends to prove that both entries on 5 March next to the word "DEAD" relate to the shipment of that day. However, a check of the arithmetic over that period does not verify as accurate the figure shown for stock holding on 5 March if the 50 kilograms secondly recorded as dead is taken into account. As stated earlier the diary record is not a precise record and there is a distinct possibility that the rounded figure of "DEAD. 50kg" is an addition made some time after 5 March.
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Taking into account those matters, and again doing the best I can on the evidence, I measure the breach of contract on 5 March at 80 kilograms.
I find that the plaintiff is entitled to recover from the defendant $39,169.34, less a set off being an amount to be assessed for damages for the two breaches of contract.
I will hear counsel with respect to the further disposition of these proceedings.
REASONS FOR JUDGMENT
0
2
0