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||Neutral Citation Number:  EWHC 840 (QB)
||Case No: HQ12X01004
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.
(sitting as a Judge of the High Court)
|| COSCO CONTAINER LINES COMPANY LIMITED
||- and -
||ROBERT JOHN BATCHFORD (trading as County Contractors)
GUNTER SCHELLER (trading as Kent International Freight Services UK Ltd.)
Colin Challenger (instructed by James Chan & Co.) for the claimant
Shomik Datta (instructed by BTMK Solicitors LLP) for the first defendant
The second defendant did not appear and was not represented
Hearing dates: 18, 19, 20, 21, 22 and 25 March 2013
HTML VERSION OF JUDGMENT
Crown Copyright ©
His Honour Judge Richard Seymour Q.C. :
- The claimant in this action, Cosco Container Lines Co. Ltd. ("Cosco") is, as I understand it, a company incorporated in the People's Republic of China. It is based in Shanghai and is one of the world's largest shipping companies. Cosco operates in the United Kingdom through a shipping agent, Coscon (UK) Ltd ("Coscon"). In this action Cosco sought to recover unpaid amounts of shipping charges in respect of the carriage of containers from various locations in England first to Felixstowe, in Suffolk, by road, and then, by sea, to Haiphong, Vietnam, together with various other charges, principally "demurrage" said to be due in respect of the failure of the consignees in Haiphong to collect the containers, alleged to have been incurred in connection with the various contracts of carriage governing the transport of the containers from Felixstowe to Haiphong. The total sum claimed was £146,053.11.
- The detailed circumstances surrounding the arrangements for the carriage of the various containers to Haiphong needed to be considered in order to establish whether, as was contended on behalf of Cosco, Mr. Robert Batchford, the first defendant, was liable to pay Cosco the sum claimed. Judgment was entered against the second defendant, Mr. Gunter Scheller, by order of Master Leslie made on 26 February 2013 for breach of an "unless" order made on 13 February 2013. Mr. Scheller did not appear at the trial and was not represented at it.
- It appeared that Mr. Scheller operated at the time material to the claims made in this action as a freight forwarding agent. He seems to have used, at least sometimes, for the purposes of that business, the name of a company, Kent International Freight Services UK Ltd. ("the Company"). However, the Company was dissolved on 20 July 2004, with the consequence that whatever Mr. Scheller did ostensibly on behalf of the Company was, in law, attributable to him personally. Mr. Scheller seems to have recognised that, because he used what was properly a trading style, Kent International Freight Services, on some occasions, rather than the name of the Company.
- At paragraph 3 of the Defence served on his behalf in this action what was said of Mr. Batchford was, "The First Defendant (trading as County Contractors) operates a waste management business, which deals (inter alia) in the disposal of tyres."
- In total some 79 containers were carried by Cosco from Felixstowe pursuant to 10 contracts of carriage. Each container appears to have contained a quantity of used vehicle tyres, many, but not all, of which seem to have been incorporated in bales. There was, apparently, space in a 40 foot long high cube ("HC") container for 32 bales of tyres. However, there remained space unfilled when 32 bales were in place in such container, and the remaining space was filled with used vehicle tyres. It was common ground before me that the import of used vehicle tyres into Vietnam is contrary to the laws of the Socialist Republic of Vietnam.
- The case for Cosco was that Mr. Batchford had entered into the relevant contracts ("the Contracts") of carriage in relation to the 79 containers ("the Containers") the subject of this action and that consequently he was liable to pay for costs of shipping and associated charges arising out of the non-collection by the consignees of the containers on arrival, as it was alleged, in Haiphong and other incidents of the attempts by Cosco to perform its obligations under the Contracts. It was accepted that Mr. Batchford had not dealt directly with Cosco, but it was contended that Mr. Scheller had entered into all of the Contracts on behalf of Mr. Batchford as his freight forwarding agent. Mr. Batchford's case was that Mr. Scheller had not been acting on behalf of Mr. Batchford in dealing with Cosco, but had been acting on his own behalf, and/or on behalf of himself and Mr. Rasmus Kjelgaard-Petersen, trading as Eco Euro Waste. Essentially the liability, or not, of Mr. Batchford in this action depended upon whether, on the evidence, the appropriate conclusion was that Mr. Scheller had indeed been acting on behalf of Mr. Batchford in his dealings with Cosco. Those dealings on the Cosco side were in fact undertaken by Coscon.
- Before coming to the evidence adduced at the trial it is, I think, helpful to remind oneself of these observations of Diplock LJ in Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd.  2 QB 480 at page 505, in relation to evidence of the authority of an alleged agent:-
"It follows that where the agent upon whose "apparent" authority the contractor relies has no "actual" authority from the corporation to enter into a particular kind of contract with the contractor on behalf of the corporation, the contractor cannot rely upon the agent's own representation as to his actual authority. He can rely only upon a representation by a person or persons who have actual authority to manage or conduct that part of the business of the corporation to which the contract relates."
- Those observations were approved by the House of Lords in Armagas Ltd. v. Mundogas SA  AC 717 in the only substantive speech in that case, that of Lord Keith of Kinkel, at page 778.
- The present was not a case in which it was contended that Mr. Scheller had apparent authority to act on behalf of Mr. Batchford, for it was alleged that he had actual authority. However, reliance was placed, in support of that contention, upon statements of Mr. Scheller to the effect that he was acting as agent on behalf of Mr. Batchford. As it seems to me, the value of such evidence is limited in a case in which the issue is whether the alleged agent was acting on behalf of a professed principal, or acting as principal on his own behalf, in circumstances in which it might be to the advantage of the alleged agent to be found to have been acting merely as an agent.
The evidence in relation to liability
- A considerable number of copies of contemporaneous documentation were adduced during the trial on behalf of Cosco. Essentially, in advance of cross-examination of Mr. Batchford, the case for Cosco relied upon such copies of contemporaneous documentation and what were said to be inconsistencies in the case advanced on his behalf from time to time. It is convenient to consider that documentation first in this judgment, then to turn to the case of Mr. Batchford as put from time to time, and then to come to his cross-examination.
- It seems that the first contact with Coscon in relation to the possibility of obtaining the carriage of shipping containers to Haiphong was made by Mr. Scheller in an e-mail sent at 09.58 hours on 24 May 2010. In his e-mail, which he signed above the name of the Company, Mr. Scheller wrote:-
"We have to load a total of 9x 40' HC [that is, high cube] containers this week, all with 25 to[nne] payload of building blocks in bales.
4 are from Witney, Oxon OX29, 2 from Church End, Herts and 3 from Chelmsford CM1.
POD [Port of discharge] is Haiphong/Vietnam.
Please advise your best rates and check availability of equipment."
- The business of Mr. Batchford is based at, and conducted from, Chelmsford in Essex.
- Elaina Wilding of Coscon replied at 10.37 hours on 24 May 2010. There were various elements in the rates quoted. One was ocean freight, which was US$ 1,745 for a 40 foot HC container from Felixstowe to Haiphong, but with additional elements for documentation and an Aden Gulf surcharge, amongst other things. Another element was what was called "line's haulage", which covered the collection by road from the point of despatch in England and carriage by road to Felixstowe. Unsurprisingly the cost of "line's haulage" quoted depended on the distance from the point of collection to Felixstowe, ranging from £301 per container from Witney, to £181 per container from Chelmsford, with potential uplifts depending upon the weights of the containers. One point made in the "Notes" to the quotations was:-
"Above rates do not apply for shipment of dangerous cargo, smelling and obnoxious cargo, and commodities that can be [sic] damage the container. Commodities such as scrap, wastes, used motors, used monitors and TVs."
- Mr. Scheller responded to the quotations in an e-mail sent at 15.05 hours on 24 May 2010;-
"Many thanks for your prompt quotation. We are pleased to place some of the bookings with yourselves as follows:
Please place 2x40' HC containers on Wednesday, 26.5.2010 at 13.00h and 14.30h resp[ectively] at
Country [sic] Contractors
Hadham Industrial Estate
Little Hadham, Ware, Herts SG11 2DY
Tel. 07767478937 contact Bob after arrival on this mobile
And 3x40' HC containers on Friday, 28.5.2010 at 09.00h, 10.30h and 12.00h resp. at
Country [sic] Contractors
25 Beachs Drive
CM1 2NL Chelmsford
Tel. 07767478937 contact Bob after arrival on this mobile
Each container to be loaded with 32 bales of building blocks totalling 25 to[nne] ea[ch] for shipment with next available vessel from Felixstowe to Haiphong/Vietnam on prepaid basis as per your quotation of today.
Kindly let us have your booking confirmation and intended schedule."
- The first booking, which it appeared did not proceed for some reason, set the pattern for those to follow. The second, which was the first effective booking, was made by an e-mail sent by Mr. Scheller at 16.12 hours on 26 May 2010 and related to four 40 foot HC containers each weighing 25 tonnes and containing 32 bales of building blocks to be collected from "County Contractors" at an address in Cambridge, those collecting the containers to telephone "Bob" on the number set out in the e-mail quoted in the preceding paragraph after arrival at site. Later bookings were arranged in very much the same way, all of the relevant e-mails from Mr. Scheller being very similar in terms, mutatis mutandis.
- The collection of most of the containers was effected by a company called Maritime Transport Ltd. ("Maritime"). In respect of each occasion upon which there was a collection by Maritime a number, determined by the number of containers to be collected, of collection notes were produced. One of these collection notes was completed in typescript, as I understood it by Coscon. It showed, at the top, the collection note number, the customer (identified by a code number) and the branch. Below that the collection note was divided into two sections, one on the left hand side of the page and the other on the right hand side. On the left hand side the next subsection was for "Driver's Instructions". That was followed by details of the type of container to be transported, the type of trailer to be used and the identification of the haulier (Maritime), plus the registration number of the vehicle to be used. Below that there was space for "Vessel", "Num", "Port" and "Ref." The "Port" was completed as HKG/Haiphong, VT". That indicated that the shipment to Haiphong was to be via Hong Kong, where the container would be off-loaded from the vessel which brought it from Felixstowe and then loaded onto a vessel intending to proceed from Hong Kong to Haiphong. The next subsection gave details of the address from which the container was to be collected, and the date and time of collection. Below that were details of "Container and Seal Number(s)". There followed a subsection "TO BE COMPLETED BY SHIPPER". That subsection included provision for insertion of the date and times of arrival, collection and departure. Then, above the words, "Container Received Seal Intact" there were spaces for "Name", "Signature" and "Seal No." On the right hand section of the page the top subsection, below the name and address of Maritime, there was a space for instructions as to what the driver might be required to do, for example, "LOAD EMPTY CONTAINER: RELOAD EX IMPORT DELIVERY. RELOAD". Below that were the details, in each completed instance, "UNLOAD FULL CONTAINER" at Trinity Terminal at Felixstowe. Below those words were spaces for "Description of Goods" and "Weight". In each completed collection note, save two, the "Description of Goods" was "BUILDING BLOCKS". In those instances in which the "Description of Goods" was not "BUILDING BLOCKS", in one case it was "SCRAP TYRES" and in the other "WASTE".
- The other collection notes in respect of collection of any of the Containers by Maritime on any particular occasion were not completed in typescript, but were produced in the form of a template showing what sort of information could be inserted in particular parts of the collection note. Generally, in the versions adduced in evidence, all that was recorded in manuscript on any of these collection notes was the address at which the collection was to be made.
- I think that most of the collection notes produced by Maritime copies of which were adduced in evidence were signed by Mr. Batchford. Usually he signed on the left hand side in the subsection marked "TO BE COMPLETED BY SHIPPER". However, he sometimes signed opposite that subsection, in a subsection marked "TO BE COMPLETED BY DRIVER".
- On some occasions other hauliers were used to transport containers to Felixstowe. These other hauliers used their own standard forms of collection notes. Rather than use the term "shipper" to describe anyone, other than the driver, signing a collection note, these other standard forms either used the description "customer", or made no specific reference to the capacity in which the person signing did so, confining itself to including a declaration, "container received seal intact", or words to that effect, above the signature.
- No copy of a collection note was provided to Cosco or to Coscon in the ordinary course of events. However, a haulier retained by Coscon on behalf of Cosco would produce a copy of a collection note if requested to do so.
- As I understand it, Mr. Batchford did not himself complete, in whole or in part (for example, by signature), or directly cause to be completed, any other document relevant to any of the Containers which were collected by Maritime, or another haulier, and were the subject of a collection note of which a copy was put in evidence. However, other documents were produced as a result of instructions given by Mr. Scheller. One type of document was called an "EXPORT PRE-LODGEMENT ADVICE". That type of document was produced on the instructions of Mr. Scheller by a customs clearance agent, George Baker Shipping Ltd. ("Baker"). In documents of that type Mr. Batchford was named as "Consignor". Another type of document produced was a customs declaration. This type of document was also produced by Baker, the name of which appeared on the face of each, on the instructions of Mr. Scheller. In documents of this type the "Consignor/Exporter" was named as "County Contractors" and the address stated was that of Mr. Batchford's business premises in Chelmsford. In such documents the "Consignee" was usually named as Thanh Toan Co. Ltd. ("Thanh Toan"), with an address in Mong Cai City, Vietnam, but in one instance was named as Tri Cong Co. Ltd. ("Tri Cong"), with an address in Cai City, Quang Na, Vietnam, and in another case was named as Truong Hung Ltd., with an address also in Mong Cai City. In each customs declaration the goods packed in the containers to which the customs declaration related – there was not one declaration per container, but one declaration per shipment of however many containers – were described as "building blocks". Both Export Pre-Lodgement Advices and customs declarations were given to Cosco, which needed them in order to be able to export the relevant containers from the United Kingdom.
- In respect of each shipment – that is to say, under each of the Contracts entered into by Cosco – Cosco produced a bill of lading. Each bill of lading named "County Contractors" as "Shipper" and the relevant Vietnamese entity as "Consignee" and "Notify Party". The "Port of Loading" named was always Felixstowe, and the "Port of Discharge" was always Haiphong. The "Description of Goods" was always the number of the containers in the shipment "x 40' containers said to contain building blocks".
- At the foot of each bill of lading were printed words which included:-
"The merchants agree to be bound by the terms and conditions of this Bill of Lading as if each had personally signed this Bill of Lading."
- On the reverse of the bill of lading in each case were standard form "Terms and Conditions" ("the Terms"). The Terms included:-
"Carrier" means COSCO container lines company limited.
"Merchant" includes the consignor, the shipper, the receiver, the consignee, the owner of the Goods, the lawful holder or endorsee of this Bill of Lading, or any other person having any present or future interest in the Goods or this Bill of Lading, or anyone authorized to act on behalf of any of the foregoing.
2. CARRIER'S TARIFF
The terms of the Carrier's applicable Tariff and other requirements regarding charges are incorporated into this Bill of Lading. Particular attention is drawn to the terms contained therein, including, but not limited to, free storage time, Container and vehicle demurrage, etc. Copies of the relevant provisions of the applicable Tariff are obtainable from the Carrier or his agents upon request. In case of any inconsistency between this Bill of Lading and the applicable Tariff, this Bill of Lading shall prevail.
12. MERCHANT'S RESPONSIBILITY
(1) The parties defined as "Merchant" in clause 1 hereof shall, where applicable, be jointly and severally liable to the Carrier for the due fulfilment of all obligations undertaken by any of them under this Bill of Lading.
(2) The Merchant warrants to the Carrier that the particulars relating to the Goods as set forth on the front of this Bill of Lading have been checked by the Merchant on receipt of this Bill of Lading and that such particulars, and any particulars furnished by or on behalf of the Merchant, are adequate and correct. The Merchant also warrants that the Goods are lawful Goods and are not contraband.
(3) The Merchant shall indemnify the Carrier against all liabilities, costs, losses, damages, fines, penalties, expenses or other sanctions of a monetary nature arising or resulting from any breach of the warranties in Clause 12(2) hereof or from any other cause in connection with the Goods for which the Carrier is not responsible.
13. FREIGHT AND CHARGES
(1) All Freight shall be deemed fully, finally and unconditionally earned on receipt of the Goods by the Carrier and shall be paid and non-returnable in any event whatsoever.
(4) If the Merchant's description of the Goods in this Bill of Lading or in any document or certificate furnished to the Carrier by or on behalf of the Merchant shall prove to have been inaccurate, incorrect or misleading in any respect, the Merchant shall pay for the actual damage suffered by the Carrier.
(6) The parties defined as Merchants in clause 1 hereof shall, where applicable, be jointly and severally liable to the Carrier for payment of all Freight, demurrage, General Average and charges, including, but not limited to, court costs, expenses and reasonable attorney's fees incurred in collecting sums due [to] the Carrier, failing which shall be considered a default by the Merchant in payment of Freight and charges.
19. MATTERS AFFECTING PERFORMANCE
If at any time the carriage is or is likely in the judgment of the Master to be affected by any hindrance, risk, delay, difficulty or disadvantage of any kind, other than the inability of the Goods to be safely or properly carried or carried further, and howsoever arising (even though the circumstances giving rise to such matters as stated above existed at the time this contract was entered into or the Goods were received for shipment), the Carrier (whether or not the carriage is commenced) may, at his sole discretion and without notice to the Merchant:
(3) abandon the carriage of the Goods and place the Goods at the Merchant's disposal at any port or place where the Carrier may deem safe and convenient, whereupon the responsibility of the Carrier in respect of such Goods shall entirely cease. The Carrier shall nevertheless be entitled to full Freight on the Goods received for shipment, and the Merchant shall pay any additional costs of the carriage to, and delivery and storage at such port or place.
26. LAW AND JURISDICTION
(1) This Bill of Lading is governed by the laws of the People's Republic of China. …"
- I do not think that it was in dispute that, in the event, the Containers were carried from Felixstowe by Cosco. At least 30 of the Containers appear to have reached Haiphong. However, five containers, at least, seem to have got no further than Hong Kong, en route to Haiphong. Those which made it to Haiphong appear to have been carried back to Hong Kong, where the contents ("the Sold Goods") of 77 of the Containers were sold on or before 26 September 2010 by Cosco to Ocean Luck Corporation Ltd. ("Ocean Luck") for an amount said to be the equivalent, in yuan renminbi, of £21,777.04. The evidence in support of that sale took the form of a letter dated 26 September 2010 written by Johnson Ng of Ocean Luck to Captain Feng of Cosco in English in which, having identified those of the Containers in which the Sold Goods had been carried by reference to the bills of lading relating to them, the letter went on:-
"Regarding to those goods contained in the above-mentioned containers, we have offered the price of RMB 3,000 per Unit to buy them.
Please be specially reminded that all of those goods have been picked up already; please kindly take note, thank you very much!"
Obviously the rate of exchange as between sterling and RMB fluctuates, but in recent times seems to have hovered around £1 = 10 RMB. It thus appears that the contents of each container was sold for the equivalent of about £300. For reasons to which I shall come, it appears that the Sold Goods were delivered to Ocean Luck between 21 and 26 September 2010.
- If Mr. Scheller had, in truth, been acting on behalf of Mr. Batchford in making the arrangements which I have described for the collection of the Containers and their carriage by sea from Felixstowe to Haiphong, then it would follow that Mr. Batchford was liable, as principal under the Contracts evidenced by the bills of lading, to pay to Cosco whatever sums were properly due under the Contracts. However, Mr. Batchford contended that Mr. Scheller had not been acting on his behalf, but either on his own behalf, or on behalf of a partnership of Mr. Scheller and Mr. Kjelgaard-Petersen. At the trial it was contended on behalf of Mr. Batchford that his role in relation to the Containers had been limited to attending at various places where bales of used vehicle tyres, and some used tyres not in bales, needed to be loaded into one of the Containers intended to be transported to Felixstowe simply in order to load the bales and tyres into the relevant Container, for which service he was paid by those to whom the service was provided. He accepted that he signed the collection notes which it was contended that he had signed, but simply in order to record that, in each instance, the relevant container had been sealed satisfactorily in his presence.
- The documents to which I have so far referred in this judgment were, as it seemed to me, as consistent with Mr. Batchford's case as with the case for Cosco, if one proceeded on the basis that Mr. Scheller's instructions to third parties were not evidence of his actual instructions from Mr. Batchford. Although there came a time at which, objectively, it was very much in the interests of Mr. Scheller to present himself towards Cosco as merely an agent in his dealings with Cosco and others, acting on behalf of Mr. Batchford, it was not obvious why he should have sought to misrepresent to Cosco and others the actual relationship between himself and Mr. Batchford from the commencement of his dealings with Cosco concerning the Containers.
- Another aspect of Mr. Batchford's position which was very difficult to understand, even before coming to the elements of flexibility to which I am about to turn, was how the transactions which he sought to represent as the true dealings which he had concerning the contents of the Containers actually worked. I shall return to that problem later in this judgment.
- The invoices upon which Cosco sued in this action were originally addressed to Mr. Scheller. When Mr. Scheller did not effect payment the invoices were re-issued addressed to County Contractors and dated 5 November 2010. In a letter dated 16 November 2010 Mr. Kostas Ladas, at that time describing himself as "Claims Manager" of Coscon, but who, when called to give evidence at the trial of this action called himself "Commercial Manager", wrote to County Contractors so far as presently material in these terms:-
"We refer to the above mentioned B/Ls and we have repeatedly requested outstanding payment through your freight forwarder Kent International Freight Services (UK) Ltd. your [sic] behalf and until to date you / or your agent failed to respond and / or settle the outstanding charges which have now reached a [sic] the amount GBP 167,830.15. As your agents can avoid liability claiming to be acting as your agents, all invoices raised in their name have now been re-issued into the name of their principals and / or the shippers named for these mis-declared consignments."
- Mr. Batchford replied to that letter by a letter dated 19 November 2010:-
"Please find your returned invoices these are for Kent International Ltd. and Rasmus Flemmart Kjelgaard Peterson [sic].
1. We only loaded containers on Rasmus instruction, my payment was only loading charge for fork lift and ramp hire which was paid by yard at which we loaded.
2. Rasmus as the seller took all instructions from buyer and shipper, which is Yap Yoon in USA company name
JD1, LLC 1002 75T, Sioux City Iowa 51101 USA.
3. Rasmus dealt with all Yap shipping around the world, all payments for shipping where [sic] paid to him and Gunter at Kent International, or Rasmus bank account at Lloyds TSB London.
4. On this next point we have no written contract with Cosco or Gunter or Rasmus, we have not booked nothing [sic] with your company.
5. There is no way we would book containers at these prices you are saying we owe in these returned invoices.
6. We think Rasmus and Gunter where [sic] insider dealing at his company.
7. As for these 75no. containers where are they now in Haiphong port? We were told all containers were going to Hong Kong or Port Kelang.
We will try to help to resolve this problem amicably however not at my cost as we have not made one penny out of this deal as all buyers paid them and they paid your company."
- What Mr. Batchford appeared to be contending in that letter was that his only involvement had been to load containers on the instructions of Mr. Kjelgaard-Petersen, for which he had been paid by the operators of the yards at which the loading had taken place; that the contents loaded in each container had been purchased by Mr. Yap Yoon ("Mr. Yap"), on whose behalf Mr. Kjelgaard-Petersen was acting, so that Mr. Yap was in truth the shipper; and all payments in respect of the contents were made to Mr. Kjelgaard-Petersen or Mr. Scheller. However, Mr. Batchford obviously thought that it was appropriate to add the points that he had no written contract with Cosco; that he would not have booked the passage of containers at the rates charged by Cosco; and that he was uncertain where the containers actually were.
- Mr. Batchford then sent an e-mail dated 23 November 2010 to Coscon in which he made points which were not altogether consistent with the points made in his letter dated 19 November 2010. What he wrote was:-
"For clarity I need to make clear that my company has and never has been was [sic] anything other than an Agent that loaded the containers with the baled tyres under instruction from Kent International Freight Services who indentified [sic] the buyers and recieved [sic] all monies from the transactions. My company has never been paid nor were we aware that the B/L showed us or the tyres in an incorrect way.
In light of the above we must make clear that your debt sits with Kent International Frieght [sic] Services and not with us. We never have had nor were we ever aware of what a B/L contained nor ever authorised our company to be held out as the shipper.
On behalf of County Contractor [sic]
Regarding the product description, once again this was totally controlled by the FW."
- Within four days, therefore, the instructions upon which Mr. Batchford contended that he had acted had changed from Mr. Kjelgaard-Petersen to Mr. Scheller, and it seemed to be contended that the seller of the tyre bales was not Mr. Yap, but Mr. Scheller, who received all payments for the goods. Interestingly Mr. Batchford also thought it right to grapple with an issue which was not raised in Mr. Ladas's letter, namely the description of the goods shipped. That he sought to deal with the point suggested that he was more familiar with the problems encountered by the attempts to ship the Containers to Vietnam than a mere loader of the Containers, a matter to which I shall return later in this judgment.
- Subsequently Messrs. James Chan & Co. ("Chan"), solicitors acting on behalf of Cosco, wrote a letter before action dated 8 March 2011 to Mr. Batchford. Mr. Batchford instructed solicitors, BTMK Solicitors LLP ("BTMK"), to act on his behalf. BTMK wrote a letter dated 1 April 2011 to Chan which was apparently intended as an answer to the letter before action. Under the rubric "Our client's position" BTMK set out in the letter a further version of Mr. Batchford's contentions:-
"Broadly, our client's position can be summarised as follows:-
1. Our client runs a business in waste management, and most specifically undertakes the recycling of rubber tyres. Historically our client used [to] collect scrap tyres from his various contacts in the UK and then shred them.
2. More recently our client invested in a tyre baler and began turning scrap tyres into tyre bails [sic] for export. As you are no doubt aware tyre bails [sic] are used by the construction industry in the UK, and for a variety or [sic] reasons overseas. Our client manufactured these tyre bails [sic] to a PAS108 size and standard. Our client concentrated his efforts on preparing tyre bails [sic] for export.
3. Our client instructs that his involvement with the export of tyre bails [sic] was limited to loading containers in the UK and at his premises. At no point was he involved in arranging or contracting with any shipping lines or similar. He certainly never instructed your client under the disputed bills of lading.
4. It is our client's position that Mr. Rasmus Kjelgaard-Petersen and Mr. Gunter Scheller were responsible for all of the logistics and paperwork necessary to export the tyre bails [sic]. Unfortunately it seems that these individuals have used our client's name as the shipper, and this is simply not correct.
5. These two individuals carried on business as Eco Euro Waste and our client would therefore contend that these two individuals were the shippers in this matter, and that your client's claim should correctly be directed at them.
6. Our client was at all times aware of the legislation and regulations applicable to the export of tyre bails [sic]. It was our client's belief throughout his involvement with the export of tyre bails [sic] that they were being exported to permitted countries. However, we would reiterate that our client's involvement did not go any further than loading the bails [sic] into containers for exportation, in accordance with instructions.
7. It therefore follows that our client believes that Mr. Kjelgaard-Petersen and Mr. Scheller may have falsified records, re-routed cargo without our client's knowledge to blacklisted destinations and attempted to defraud our client. Our client instructs that at all times the Annex 7 documents and bills of lading were raised and controlled by them.
8. We are instructed that two other shipping lines, CMA and Hang Jin, have raised a similar complaint with our client and that they have found our client to be blameless."
- The version set out in the letter dated 1 April 2011 written by BTMK again made no reference to Mr. Yap. However, the account given in the passage quoted bordered upon the incomprehensible. Although, at paragraph 2, it was said that the business of Mr. Batchford was transformed into "turning scrap tyres into tyre bails [sic] for export", and that he "concentrated his efforts on preparing tyre bails [sic] for export", at paragraph 3 it was asserted that "his involvement with the export of tyre bails [sic] was limited to loading containers in the UK and at his premises". In the ordinary use of the English language a business which consists in exporting goods of some kind involves selling those goods to someone outside of the United Kingdom. A business which consists simply in loading containers is not, by any stretch of the imagination, a business involved in export. If the business comprises just the loading of containers, the person undertaking the business has no conceivable interest in what happens to the containers once loaded. Consequently the points made at paragraph 6 in the passage quoted are extremely difficult to understand. Mr. Batchford had no need of any knowledge concerning "the legislation and regulations applicable to the export of tyre bails [sic]" if all he did was load containers. He did not need to have any belief at all concerning what was intended to be done with the containers, still less a "belief … that they were being exported to permitted countries". Assuming that Mr. Batchford was aware of the relevant legislation and regulations, that suggested that indeed it was Mr. Batchford who was exporting tyre bales, rather than some other party, as he apparently contended.
- If Mr. Batchford merely loaded tyres or tyre bales into containers, it would seem that that was a service provided to the owner of the tyres or tyre bales, presumably in return for payment. It was obviously possible in theory that Mr. Batchford purchased the tyres or tyre bales from the original owner, even if he was, as it were, paid to take them away. If that were the true nature of the arrangement, then obviously Mr. Batchford did have an interest in what happened to the containers into which he placed what had become his own goods. Again, in theory he could, on this hypothesis, sell the tyres or tyre bales to some third person, which third person then arranged for shipment of the containers outside of the United Kingdom. That was, perhaps, suggested at paragraphs 4 and 5 of the letter dated 1 April 2011 as the nature of the arrangement between Mr. Batchford and Mr. Kjelgaard-Petersen and Mr. Scheller, but it was odd, if Mr. Batchford contended that he had sold the contents of the containers to Mr. Kjelgaard-Petersen and Mr. Scheller and that they then sold them on outside of the United Kingdom, that the letter dated 1 April 2011 did not state that in terms. On the other hand, if the role of Mr. Kjelgaard-Petersen and Mr. Scheller was not that they were purchasers of tyres or tyre bales from Mr. Batchford, but only that, as contended at paragraph 4 of the letter, they "were responsible for all of the logistics and paperwork necessary to export the tyre bails [sic]", the question arose to whom that responsibility was owed. If it was not owed to Mr. Batchford, there is no obvious reason why he should know of that responsibility – owed, on this hypothesis, to some third party – still less why the fact of such responsibility to a third party was relevant to the position of Mr. Batchford. The fact of Mr. Batchford's knowledge, and the deploying of the point as to the extent of his knowledge, were suggestive of the nature of the arrangement between Mr. Batchford and Mr. Kjelgaard-Petersen and Mr. Scheller being that the latter were acting as the freight forwarding agents of Mr. Batchford.
- The problems in understanding the nature of Mr. Batchford's case which arose from the letter dated 1 April 2011, quite apart from the differences between that account and what he had said in his own letter dated 19 November 2010 and in his e-mail of 23 November 2010, were rather compounded by some of the pleas in his Defence in this action. In particular, in the version advanced in the Defence Mr. Yap made a re-appearance in a starring role. Paragraph 5 of the Defence included these allegations:-
"(a) as part of the First Defendant's waste management business, he formerly shredded tyres;
(b) costs of this process were increasing in about 2008 to 2009 and so he purchased and imported a tyre baler from the USA in order instead to recycle tyres into tyre bales which would be used (inter alia) in the construction industry and for building sea defences …
(c) tyre bales were accordingly created by the First Defendant to conform to recognised industry standards (BSI PAS 108);
(d) at or around the time of the purchase of the tyre baler (in the USA) the First Defendant was introduced to a businessman called Yap Yoon (also known as Mr. Yap), who operated a company called JD1 incorporated in Sioux City, Iowa, and who was involved in the export of tyre bales to markets in Asia;
(e) at the material time, the First Defendant was operating under the instructions of Mr. Yap, who was the buyer and shipper of the relevant tyre bales;
(f) the First Defendant's involvement in the process was limited to manufacturing the tyre bales and supplying them to Mr. Yap by loading the same into containers in accordance with the instructions of Mr. Yap's freight forwarders;"
- So now it was contended, it seemed, that Mr. Batchford had sold tyre bales to Mr. Yap and that it was those tyre bales, property in which had passed from Mr. Batchford to Mr. Yap, which were loaded by Mr. Batchford into the Containers which were carried to Felixstowe. At paragraph 5(k) of the Defence it was, on the face of it, made plain that Mr. Batchford was not contending that he had sold any tyre bales or tyres either to Mr. Kjelgaard-Petersen or to Mr. Scheller:-
"the First Defendant also understands that as well as acting as forwarders for Mr. Yap, the Second Defendant and Mr. Kjelgaard-Peterson [sic] may have been trading on their own account (as exporters of tyre bales) under the trading style Eco Euro Waste, but it is not known whether such trading relates to any of the containers in question herein;"
- The pleaded case of Mr. Batchford, at paragraph 5(m) of the Defence, was that he had himself manufactured the tyre bales which he loaded into Containers:-
"to summarise, the First Defendant's only involvement with any containers relevant to the claims herein was to load the same with tyre bales he had manufactured on the instruction of the Second Defendant and/or Mr. Kjelgaard-Peterson [sic] for and on behalf of Mr. Yap;"
- No copies of any documents were produced on behalf of Mr. Batchford which supported the contention that he had sold tyres or tyre bales to Mr. Yap. There were, for example, no copies of any invoices addressed to Mr. Yap, or any delivery notes, or any evidence of any payments having been made by Mr. Yap, or on his behalf, to Mr. Batchford. The closest documentary evidence of dealings between Mr. Batchford and Mr. Yap appeared to come was an e-mail sent by "Yap Yap" to Mr. Batchford dated 27 May 2010:-
"Hope all is well. As you can see the 10 containers you last shipped were very expensive. I am working with Rasmus to try to get better shipping rates. Please continue loading containers with heavy weight to offset high shipping costs. Thanks again. If you need to reach me I am currently in the states. My number is 712-577-1126."
- That e-mail ante-dated the dealings involving Cosco in relation to shipping Containers, and it was not possible, without more, to understand what exactly the e-mail was about.
- Mr. Batchford prepared a witness statement dated 15 February 2013 for the purposes of this action. In this witness statement the case of Mr. Batchford was both expanded from previous versions, but also yet further modified. In a section of the witness statement appearing under the rubric "Yap Yoon" Mr. Batchford said:-
"16. During the trip to America I met a gentleman called Wally Welander. He was the sales manager at Eagle International (the seller of the baler). Out of interest I asked him how the tyre bales were moved around in America and he said that construction using tyre bales was only allowed in certain states.
17. Wally told me that every time someone bought a baler from him he put them in contact with Yap because Yap dealt in scrap tyre bales. Wally said to me that he thought that Yap Yoon paid around $500 per container in the USA.
18. Wally provided me with a contact number for Yap Yoon. He said that Yap was in the recycling business and had contacts all over the world. I thought to myself that this would be great for my future business.
19. I made contact with Yap by telephone to see if he would be able to take bales from me. He would then, using his contacts, dispose of the bales with his clients in and around Asia. I wasn't too interested in the intricacies of his business, I was just happy to have found a contact that could take the bales from yard.
During the telephone call he explained the whole process of exporting tyre bales to me. He said that he could find destinations all across the world for tyre bales. At this time I was under the impression that tyre bales were a construction commodity (used in flood defences, road construction and building construction) and that they could be moved freely across the world as explained in the PAS108 Specification Pamphlet.
20. I asked Yap what the market was for tyre bales and he said that the market value was constantly moving. He said that he would not be able to pay me the same amount as he pays to people in America because of the shipping charges. He told me to find out what the UK haulage, terminal handling and tax charges would be and then come back to him.
21.I then contacted Paul Bond at Transmotions, a small freight forwarder based in Essex. I understand that Paul then spoke to Yap's shipping agent and they discussed the likely charges.
We came to an agreement (via Paul) that Yap was going to pay the shipping freight (from the point of departure in the UK to its international point of arrival). I was to pay the UK haulage, terminal handling charges and taxes.
22. I would collect tyres from various places in my local area and I would typically be paid between £1 - £1.50 per tyre by my clients. …
23. I started shipping from my premises with Yap in around 2006/2007 [which Mr. Batchford corrected when he came to verify his statement to 2008/2009] under the arrangement set out above."
- The arrangement thus described appeared to be that Mr. Batchford acquired used vehicle tyres from his own sources, by which he was paid £1 - £1.50 per tyre to remove them; he converted the tyres into bales using his baler; he then sold the tyre bales to Mr. Yap; Mr. Yap in his turn sold them on to his contacts. The cost of shipping from the point of departure from the United Kingdom Mr. Yap was to meet, but it was unclear from what Mr. Batchford said whether Mr. Yap was himself to arrange the shipping or whether he was simply to reimburse Mr. Batchford the cost he incurred in organising such shipping. Mr. Batchford elaborated upon his business model at paragraph 25 of his witness statement:-
"I was paid by my clients (mostly tyre centres and garages) for collecting tyres from their premises. In that payment I would factor in the costs of actually collecting and then recycling the tyres and then paying for the UK haulage fees to have them taken away from my premises. Whatever was left after I had paid the above fees was my profit for the job. This all took place at my own yard at 25 Beeches Drive, Chelmsford."
- All this explanation about Mr. Batchford using a tyre baling machine and baling tyres at his own premises seemed to have little to do with any issue in this action, for all of the Containers which were entrusted to Cosco were filled other than at Mr. Batchford's premises, as was emphasised on his behalf by his counsel, Mr. Shomik Datta. Mr. Batchford did produce copies of invoices issued by him to various customers for what appeared to be loading containers with tyre bales. The photocopies put in the trial bundles seemed to be of originals which were themselves carbon copies, and so they were not very easy to read. The legend on the invoices, insofar as it could be read, did not make it clear whether the property in the tyre bales loaded was intended to pass to Mr. Batchford, or whether the service provided was simply in the nature of providing labour and machinery for the physical task of loading. However, at paragraph 35 of his witness statement Mr. Batchford said:-
"I would only get paid by my customer for loading the containers. I attach at pages 44 to 62 copies of the sort of invoices that I provided to my clients. I had no involvement at all with the shipping lines or shipping costs. My involvement ended once the containers left either my or my client's premises."
- I think that it is obvious that Mr. Batchford was the owner of tyre bales produced in his own premises, so that at least in those cases, unless he had sold to someone who was using the containers in question for delivery, it had to be Mr. Batchford who was using the containers to effect delivery to his customer. In other words, in those cases he was the shipper of the container.
- Quite apart from noting the inconsistencies in the different accounts advanced by, or on behalf of, Mr. Batchford concerning his involvement in the shipment of Containers using the services of Cosco, and the inherent improbabilities of some of the contentions advanced, other material was put before me which suggested that in fact the involvement of Mr. Batchford was much more significant than he asserted.
- In addition to the ten transactions which were relied upon on behalf of Cosco as giving rise to the claims made in this action as against Mr. Batchford, it was common ground that there was an intended eleventh transaction which was aborted. That was a transaction in relation to which it had been planned that containers would be collected on 8 July 2010 from premises of a company called Fraser Evans in Witney, Oxfordshire. There was a dispute as to who exactly identified the problem, but it was common ground that the problem identified was that the intended destination of the containers to be collected on that date was Vietnam. Once that problem was identified the collection was cancelled. A version of the circumstances came to the notice of Coscon and that prompted Cosco to fear that what had been carried in containers previously collected from sites where the loading had been undertaken by Mr. Batchford was not "building blocks", as declared on the relevant bills of lading, but something else, specifically used vehicle tyres. By this time some of the containers consigned to Haiphong had arrived, but had not been collected. That circumstance appears to have heightened suspicion. Five containers which had not arrived in Haiphong were intercepted in Hong Kong and were inspected by marine and cargo surveyors called MCW International Surveyors Ltd. ("MCW") on 2 August 2010. A report ("the Survey Report") was prepared by MCW and dated 3 August 2010. In the "Circumstances" section of the Survey Report what was said was:-
"Under the terms of FCL/FCL, the captioned laden containers were shipped per vessels from Felixstowe to Hong Kong for transhipment to final destination port: Hai Phong, Vietnam. However, it was then turned out that some other containers from the same shipper previously shipped to Hai Phong had been abandoned in the carrier's container yard, and that such containers were found to contain Used Tyres instead of the declared goods: Building Blocks. Parties concerned therefore suspected the goods in these containers were also Used Tyres instead, and requested us to hold a survey on the goods in this port later."
- It was unclear, on the evidence led before me, whether that account of events was entirely accurate, for in his witness statement dated 6 February 2013 prepared for the purposes of this action Mr. Ladas said:-
"12. Immediately the Witney information came into my hands I reported the matter to the Claimant who instructed that the shipments still short of Hong Kong should be inspected there. There is now produced and shown to me marked KL1 (pages 1 to 9) the inspection survey report prepared at Hong Kong in connection with the contents of the containers seized there. Pages 3 to 9 are a series of photographs showing the contents of the containers as seen upon inspection, fee note and labour charges. Those photographs were sent by the inspector to Captain Feng Chonggang at Claimant's Shanghai office and then forwarded by Claimant to me by email."
- Whatever precisely prompted the survey by MCW, what was found in Hong Kong on inspection of the five containers was reported as follows in the Survey Report:-
"On 2 August 2010, we attended at the carrier's container depot located as above where we found the containers were apparently sound with original seals intact. Together with staff members of the depot, we had the container doors opened and inspected the contents in situ without removing the contents. After inspection, we found all five containers contained no Building Blocks but Used Tires/Tyres instead."
- Photographs attached to the Survey Report which were adduced in evidence showed each Container was loaded with a number of tyre bales, with some loose used tyres fitted above or around the tyre bales. Included within the documents copies of which were adduced at trial was an invoice dated 3 August 2010 rendered by MCW to Cosco Container Line Agencies Ltd. at an address in Hong Kong which demonstrated that the charges made by MCW in respect of the inspection of the five containers and the taking of the photographs amounted to HK$3,200, at current rates of exchange the equivalent of about £270.
- Documents copies of which were adduced in evidence indicated that, at least in relation to shipments of containers using a shipping line called CMA CGM ("CMA"), which appeared to be based in Marseille in France, but to be represented in England by a subsidiary company, CMA CGM (UK) Shipping Ltd. ("CMA (UK)"), Mr. Batchford actually used Mr. Scheller as his freight forwarding agent to enter into shipping contracts with CMA through CMA (UK). There were put in evidence copies of two agreements in writing, one dated August 2010 and the other dated September 2010 which were made between (1) CMA (UK) (2) Mr. Batchford and (3) Mr. Scheller. In each of these agreements Mr. Batchford was described as "Shipper" and Mr. Scheller was called "Shipper's Agent". Each agreement was concerned with alterations to the original bills of lading issued in respect of a particular consignment of containers so as to substitute a new consignee. The two agreements were not in precisely identical terms, but each contained a number of recitals. The first recital in each agreement again was not in precisely identical terms, but was in similar terms. The September 2010 agreement was signed, as he accepted, by Mr. Batchford. The first recital to that agreement was as follows:-
"CMA CGM entered into various contracts of carriage (the 'Contracts') between it, the Shipper and the Shipper's Agent as detailed in Schedule 1, (the 'Cargo'), in consideration for which payment of the agreed freight and pre-carriage charges as listed would be made to CMA CGM by the Shipper and/or the Shipper's Agent"
- Unsurprisingly Mr. Batchford was asked in cross-examination about the September 2010 agreement and why he signed it. His explanation was not straightforward, but seemed to be to the effect that he just wanted to help resolve the problems which had arisen involving CMA. Why he should have wanted to interest himself in solving such problems if, as he would have it, they were nothing to do with him, never clearly emerged.
- The signing of the September 2010 agreement by Mr. Batchford could have achieved nothing of value unless, as the first recital on its face recorded, he was a party to the contracts there referred to – in other words, unless Mr. Scheller had actually been acting as agent of Mr. Batchford in entering into contracts of shipment of containers with CMA. When I pointed that out to Mr. Batchford he did not appear to have any answer. I think that the only proper conclusion is that Mr. Scheller did act as agent of Mr. Batchford in entering into the contracts with CMA in relation to the containers to be shipped by CMA. That, of course, as Mr. Colin Challenger, who appeared on behalf of Cosco, submitted, was exactly the same position as, on Cosco's case, prevailed in relation to the arrangements made through Mr. Scheller with Cosco. It would, as it seems to me, be strange if, in relation to containers loaded by Mr. Batchford and consigned to CMA, Mr. Scheller acted as agent of Mr. Batchford, who was the seller of the contents of the containers and the person on whose behalf the contracts of carriage were made, yet, so far as the Containers loaded by Mr. Batchford and consigned to Cosco were concerned, Mr. Batchford had no role beyond loading the Containers.
- Copies of other documents relating to dealings with CMA showed, in my judgment, Mr. Batchford taking an active role apparently as a party in contract with CMA. Mr. Batchford signed three forms of indemnity addressed to CMA and respectively dated 11 August 2010, 13 August 2010 and 7 September 2010. Each form of indemnity was in identical form as printed, but the manuscript details, inserted, Mr. Batchford told me, by Mr. Scheller, differed. The manuscript details were not important to any issue in this action. What was important was the printed sections:-
"We had duly provided you with shipping instructions to establish bills of lading for the shipment above. After having approved these documents, we are obliged to ask you to modify the following data:
[Manuscript details of the changes]
We hereby undertake to hold Messrs. CMA CGM, its underwriters, subsidiaries, agencies, sub-agencies, all their representative directors and employees harmless in respect of any liability, loss or damage of whatsoever nature which you may sustain in respect with your complying with our instructions and confirm that we shall not make any claim, nor issue any proceedings for wrongful delivery of cargo."
- As it seems to me, it is inconceivable that Mr. Batchford would have given such indemnity unless he was a party to the bills of lading the modification of which was required, and the goods in the relevant containers belonged to him at the time of despatch from the United Kingdom. Each letter of indemnity seems to have been sent to CMA in Marseille under cover of a letter on the printed stationery of County Contractors, signed (save, perhaps, in one case) by Mr. Batchford, and stating, in each case:-
"We herewith request amendment of Bill of Lading as per attached letter of indemnity with all relevant details."
- There was in fact positive evidence, in the form of a copy of an e-mail dated 3 August 2010 sent by Mr. Scheller to Mr. Batchford, that there was a link between the transactions involving CMA, those involving Cosco, and those involving another shipping line, Hanjin. The "subject" of the e-mail was stated as "demurrage/detention in Haiphong". The text of the e-mail was:-
"I enjoyed talking to you earlier today. It was a long call, but I am sure well worth in view of things to come …
As you know we have used only 3 different shipping lines so far for the 153 containers: CMA CGM, COSCO and Hanjin.
Hanjin have advised demurrage for 1 container HJCU 1341220 is USD 260 – to date.
Demurrage on the other s/ment with 8 containers will start on 9.8.2010 at USD 30,- per 40' HC per day.
The rate for the other two lines will be similar per day.
Obviously, the question of demurrage is an issue and probably a stumbling block for your negotiations with Shin as it will add up to a bit of money by the end of the day as and when (and if) the containers are being released for delivery. Strictly speaking, this would be Yap's responsibility, but will we ever hear from him again …?"
- From a copy of an e-mail sent by Mr. Scheller to Mr. Batchford at 10.29 hours on 2 August 2010 it appeared that Mr. Scheller had sent copies of bills of lading in respect of shipments to Haiphong to Mr. Batchford as attachments to the e-mail, for what Mr. Scheller wrote in the e-mail was, "Further to our earlier telecon here are some B/L copies of shipments sent to Haiphong." The attachments were identified by file numbers, but the only one which could readily be translated into an identifiable bill of lading was "4001669130.pdf" as the number of the pdf quoted was that of the booking number shown on a bill of lading issued by Cosco in which County Contractors was named as shipper, Thanh Toan was named as consignee and Haiphong was named as the "Port of Discharge". Thus it appeared that, at least no later than 2 August 2010 Mr. Batchford had a copy of a bill of lading in which his trading style was shown as the shipper of what were in fact 24 containers. That did not, at least so far as any copy of any e-mail or other document produced by Mr. Batchford at the time is concerned, elicit any expression of horror, dismay, discontent or anxiety. At 13.56 hours the same day Mr. Scheller wrote a further e-mail to Mr. Batchford:-
"Here are the B/L copies or drafts of all containers which already arrived at Haiphong.
As already mentioned over the phone earlier we only work with draft or proforma B/L's. Once the freight is paid the containers will be telex-released from the line,
and no originals need to be presented anywhere. This is the economical way of dealing with it, it saves you sending couriers backwards and forward.
Will send you the remaining B/L for shipments which are still on the water by separate mail."
- Some, at least, of the relevant bills of lading, could be identified from the documents said to be attached to the e-mail, as some of the attachments took the form of pdfs with numbers which corresponded with booking numbers on bills of lading issued by Cosco, the booking numbers in question being 4001666520, 4001667330, 4001668400, 4001668200 and 4001668440. The bills of lading in question covered 19 containers. In cross-examination Mr. Batchford accepted that he had received copies of the relevant bills of lading. His explanation of why they were sent to him and what he did about them focused on his contention that there was to be a new consignee and that he was manipulated by Mr. Scheller into trying to help sort out the problem caused by the fact that the containers had ended up in Haiphong, to which, according to Mr. Batchford, they should never have been sent.
- At 15.40 on 2 August 2010 Mr. Scheller sent Mr. Batchford a further e-mail saying:-
"And here are the copies of the B/L drafts of the remaining containers which are currently on the water. Some of them may have arrived over this last week or are due any day now – I have not been able to check that on the various tracking websites."
- From the stated attachments to the e-mail it could be seen that they included bills of lading with the booking numbers 4001668890, 4001669130 (which had been sent earlier) and 4001669910 issued by Cosco, which covered 44 containers. Thus on 2 August 2010 Mr. Batchford was provided by Mr. Scheller with copies of eight of the ten bills of lading issued by Cosco, covering 63 of the Containers shipped by Cosco.
- Mr. Batchford appears to have transmitted copies of the relevant bills of lading as attachments to an e-mail which he sent to a Mr. Shin Mitsuda at 11.34 p.m. on 2 August 2010. The purpose of sending Mr. Mitsuda the copies of the bills of lading seems to have been to try to persuade Mr. Mitsuda to buy the contents of the Containers, or some of them. Mr. Scheller wrote an e-mail to Mr. Mitsuda, copied to Mr. Batchford, on 4 August 2010 in which he explained the circumstances in this way:-
"We would like to take this opportunity to introduce ourselves as the freight forwarder involved in the shipment of 153 x 40' HC containers from U.K. to Haiphong in close co-operation with Bob Batchford of County Contractors, Chelmsford.
I think Bob has already explained to you the unfortunate circumstances we find ourselves in after the freight charges for all of these boxes have not been paid and the actual client has disappeared for something like 3 weeks now without making any contact and not being contactable at all.
We are obviously delighted to hear that there is a very real possibility that you will take the containers instead as the new consignee after amending the documents accordingly. As some of these containers have already arrived in Haiphong and incur demurrage it is important to move this forward as quickly as possible in order to minimise further costs."
- Matters did not in fact proceed with Mr. Mitsuda. However, the way in which the problem was explained to Mr. Mitsuda was suggestive of Mr. Yap being the buyer of the contents of the Containers, rather than having some other role.
- The impression that Mr. Yap was the buyer, or at least the person who identified the buyer, was rather confirmed by the terms of an e-mail which Mr. Scheller sent to Mr. Batchford on 5 August 2010 at 19.25 hours:-
"If we don't get much further with the Japanese Shin tomorrow and I don't get a reply from that Nanning factory in China of which you provided the number we have to apply plan C.
Before we do that I believe you should go back to where you got the initial contact with Yap from – Rasmus tells me you got it from an American guy. He may have an idea of Yap's whereabouts. I phoned that number in U.S. which you provided – I got an automated recording that the mailbox is full and cannot take any more messages.
All very funny.
Plan C involves you (maybe along with me although I can't really go away from here under the circumstances) going over the weekend or Monday down to Haiphong, spend a night there, get a taxi the next morning to the address mentioned on the B/L and find out what is going on with these containers and where Yap is. …"
- It was unnecessary for me to reach any conclusion as to the actual role, if any, of Mr. Yap in the loading and shipping of any Containers beyond that he was not, as Mr. Batchford sometimes contended, the owner of the contents of the Containers shipped via Cosco or the party contracting with Cosco as "shipper". In the event, as he admitted, Mr. Batchford did visit Vietnam, but not until September 2010. What he said in his witness statement about it was:-
"56. It is correct that I travelled to Vietnam on Monday 20th September 2010. I was invited by Miss Chung to go there.
57. The purpose of this trip was to meet Miss Chung, a new buyer for the containers originally meant for Yap. Miss Chung was a contact provided by Gunter and Rasmus via EcoWaste this is the company that they used to sell the containers. This is the company that they advertised the containers for sale under on the internet. At pages 71 to 77 are e mails and adverts showing that Gunter and Rasmus were trading as Eco Euro Waste. Gunter calls himself 'Operations Manager' in these e mail [sic].
58. Whilst in Vietnam I met with Miss Chung and we discussed the containers. She introduced me to two people called Jack and Kim. Both of these individuals were running large companies dealing with recycling materials from around the world.
59. In this meeting Miss Chung, Jack and Kim told me that they wanted to buy the containers. I said that they had to deal with Gunter and Rasmus and they held the shipping documentation. They wanted to speak to me in person about how the containers were loaded in the UK and exactly what was in the containers. I was able to show them photographs. I thought that we would be visiting the containers with the buyers and so I could show them exactly what was in there. Otherwise there was no benefit to me being there. The whole experience was extremely intimidating.
60. Whilst I was there they all asked me where the containers were at that time. I said that I thought that they were all in Vietnam as this is what Rasmus and Gunter had told me. I am now aware that the containers shipped by the Claimant were not in Vietnam because they had been disposed of. I was still shocked that the containers had ended up in Vietnam in any event because I knew it was illegal to ship to this country.
61. I returned to the UK on Friday 24th September 2010 having not resolved anything save for confirming to the individuals that I met what products were inside the containers.
62. I reported back to Gunter and Rasmus and they said that they would continue to deal with Miss Chung and other buyers. I told them that my impression was that Miss Chung was willing to buy the containers."
- Thus one saw Mr. Batchford making the initial approach to Mr. Mitsuda to try to persuade him to take the contents of the Containers, or some of them, and then going to the trouble of going to Vietnam to seek other buyers.
- Mr. Batchford in cross-examination was not, I am afraid, at all impressive. He was incapable of providing any plausible reconciliation of the various inconsistencies in his accounts which I have mentioned. He was also unable to explain in any coherent fashion why his contention that all he did was load the Containers shipped by Cosco, yet he was to pay the haulage costs of the transport of the Containers to Felixstowe. I regret that I did not feel that I could rely upon the evidence of Mr. Batchford on any contested issue.
- I find that in truth Mr. Batchford did authorise Mr. Scheller to enter into Contracts with Cosco in relation to the Containers which formed the bases of the claims made in this action. He was, I am satisfied, actually the seller of the tyre bales and loose tyres incorporated in each of the Containers. He acquired title to those bales and tyres from those who, I accept, paid him to take them away. The intention was, ultimately, to sell the bales and loose tyres to persons identified by Mr. Yap who were named in the various bills of lading as the consignees of the Containers. It may well be that the profits to be made from such sales were intended to be shared between Mr. Batchford, Mr. Scheller, Mr. Kjelgaard-Petersen and/or Mr. Yap. Mr. Datta drew to my attention various documents which indicated that, under the scheme, Mr. Batchford was to meet the cost of road freight in England from the site at which he loaded tyre bales and loose tyres to Felixstowe, whilst Mr. Yap was to meet the cost of ocean freight. However, what mattered for the purposes of this action was who, under the scheme, was to contract with Cosco. I am entirely satisfied that it was Mr. Batchford, acting through Mr. Scheller.
- In summarising the nature of the claim made in this action against Mr. Batchford at the commencement of this judgment I indicated that it was a claim in contract for an amount of £146,053.11. That was, in essence, what was the claim, and it was how Mr. Challenger put it in the first sentence of his written opening note. However, the pleaded case was not as simple as it might have been, and the ways in which the various elements of the claim were pleaded became important when one reached the stage of assessing exactly how much it had been proved Mr. Batchford was liable to pay to Cosco. In the prayer of the Particulars of Claim there was no claim for a liquidated sum, merely a claim for "Damages to be assessed as above;", interest and costs. True it was that at paragraph 13 there were allegations of breaches of contract, including breaches alleged to consist in not paying sums that should have been paid, but conventionally a claim for a sum of money said to be due under a contract or series of contracts is formulated as a claim for a liquidated sum, not a claim for damages for failing to pay the liquidated sum. Paragraph 13 of the Particulars of Claim was pleaded in this way:-
"In breach of contract the First Defendant and the Second Defendant:
(1) Failed to provide adequate and correct particulars of the Goods in each of the consignments referred to in that the Goods consisted of baled used tyres and not "Building Blocks";
(2) Failed to name a consignee who existed or in the alternative who was able and willing to collect each consignment upon delivery to Haiphong.
(3) Failed to pay freight and charges in respect of each cargo either before delivery of the Goods or at all.
(4) Failed to pay the additional costs incurred in respect of the consignments including but not restricted to demurrage until disposal could be effected and the costs of inspection at Hong Kong."
- As it seemed to me, describing what were in fact tyre bales and loose used vehicle tyres in the various bills of lading as "Building Blocks" did amount to breach of the warranty in clause 12(2) of the Terms, and therefore entitle Cosco to an indemnity against any loss or damage suffered by Cosco in consequence of that misdescription, pursuant to the provisions of clause 12(3) and clause 13(4). However, it is difficult to see that naming a consignee who either did not exist, or who at any rate did not appear to take delivery of a container, amounted to any breach of contract. Rather, if a container was not collected, the parties contracting with Cosco were potentially liable to pay "demurrage" pursuant to the provisions of clause 2 of the Terms. In an extreme case that liability could have continued indefinitely. As matters turned out, it seemed that the only costs to which Cosco was put consequent upon the misdescription of the contents of the various containers as "Building Blocks" were the costs of, and associated with, the inspection of the five containers in Hong Kong on 2 August 2010.
- Although claims in contract for sums alleged to be due pursuant to the various Contracts, to which it was alleged, and I have found, Mr. Batchford was a party, seemed to be the most obvious basis of claim against Mr. Batchford, in fact the main focus of the Particulars of Claim, at least in terms of the claims dealt with first in that statement of case, was allegations of fraud:-
"10. The false description of each consignment as "Building Blocks" and or the use of a false export code and or identification of consignees who did not exist alternatively were unprepared to accept the goods upon delivery to Haiphong in Vietnam amounted to fraudulent misrepresentation and or deceit of the Claimant.
PARTICULARS OF MISREPRESENTATION/DECEIT
(1) The Claimant will rely upon the facts at paragraphs 2-7 and 9 above as evidence of misrepresentation/ deceit.
(2) In particular, the court will be invited to infer from his actions in supervising loading and sealing of the containers and signing off the collection notes as shipper that the First Defendant knew the descriptions of their contents were false.
(3) The court will be invited to infer from a letter dated 19 November 2010 signed by the First Defendant, from his emails dated 23 November 2010 and 24 November 2010 (to Coscon (UK)) and a letter dated 1 April 2011 written on his behalf by BTMK solicitors to James Chan and Co., copies attached hereto and together marked XI that the First Defendant when signing collection notes as shipper knew that the contents of the containers were misdescribed (and consisted of baled scrap tyres), knew that they were for export and knew of the legislation and export regulations applicable to the export of scrap baled tyres.
(4) The court will be invited to infer from the evidence as a whole including the content of the invoices described at 9 above that the purported consignments were a sham and their shipment by the First Defendant, arranged by the Second Defendant, was designed to achieve disposal of quantities of waste tyres more cheaply than was possible if lawfully disposed of in the UK.
(5) The representation by the Second Defendant that he was entitled to trade as Kent International Freight Services (UK) Limited constituted deceit.
(6) During unsuccessful negotiation for the sale of the consignments of scrap tyres in Haiphong and Hong Kong the Second Defendant accepted that a declaration that the containers held "used tyres" would, "not cause any problems".
(7) Upon report of the finding described at paragraph 8 above that containers from three of the consignments had been found by a surveyor to contain baled rubber tyres rather than "Building Blocks", the Second Defendant did not dispute that fact.
(8) As against the Second Defendant, the court will be invited to infer in particular that his repeated assertions to Coscon (UK) that the consignments contained "Building Blocks" and his instructions to George Baker Shipping Limited in respect of each shipment misdescribing the contents of each container evidence an intention to deceive the Claimant and also HMRC.
11. But for the matters of complaint set out at paragraph 10 the Claimant would have declined uplift of the containers in the UK or their onward shipment to Haiphong. Accordingly Defendants' misrepresentations and deceit were the cause of the whole of the Claimant's losses arising out of the uplift of baled scrap tyres from the UK and the agreements to carry them by sea to Haiphong."
- As I have noted, on the evidence adduced before me the collection notes signed by Mr. Batchford were never produced to Cosco or to Coscon prior to the shipment of the Containers. On the facts, therefore, Cosco failed to prove that Mr. Batchford had made any representation to it, separate from the information provided by Mr. Scheller on his behalf in entering into the various Contracts, which was false, to his knowledge and which was made with a view to inducing Cosco to enter into any contract with Mr. Batchford. Mr. Batchford did not dispute that he knew what he loaded into the Containers. In the result the collection notes did not seem to be particularly relevant to any issue which I had to decide. Mr. Challenger submitted that, because Mr. Batchford signed Maritime collection notes often in the subsection designated as to be completed by the "shipper", that was some sort of acceptance that it was indeed he who had entered into Contracts with Cosco. In my judgment that conclusion was not justified by a signature immediately below the words "Container Received Seal Intact", notwithstanding that several lines above that on the printed collection note appeared the words "TO BE COMPLETED BY SHIPPER". In the light of my finding that Mr. Batchford was a party to the Contracts the point is of no significance anyway.
- The Particulars of Claim did not really address the losses said to have been caused by any alleged fraud or any losses caused by breach of, as opposed to sums said to be due from Mr. Batchford pursuant to, any of the Contracts. The pleaded consequences of the alleged fraud were put very generally in paragraph 14:-
"In the premises the Claimant which has suffered loss and damage is entitled under paragraphs 10 and 11 to damages for misrepresentation and or deceit by the First Defendant and the Second Defendant and under paragraph 13 to damages for their breaches of contract."
- Those pleas left entirely open what the loss and damage alleged to have been suffered was. Something of a clue as to the nature of some of the alleged losses contended for was to be found in what was pleaded in paragraph 9 of the Particulars of Claim:-
"The consignees named by the Second Defendant (at least two of whom were named in invoices from the First Defendant included with shipments) did not exist and or did not arrange collection of any of the consignments delivered at Haiphong. As a result the Claimant suffered substantial demurrage and other costs which it was obliged to pay prior to arranging the lawful disposal of the consignments each of which consisted of baled used tyres."
- Thus it appeared that the case for Cosco was that, as a result of the Containers not being accepted by consignees in Haiphong, Cosco had been required to pay "demurrage" to some third party. Were it proved that that were the case, it would seem that Cosco could recover what it had had to pay by way of damages, if the alleged fraud or deceit were made out.
- The Particulars of Claim ended, save for a claim to interest in the last paragraph, and the prayer, in this way:-
"15. Originally the Claimant invoiced the Second Defendant's dissolved company for freight and collection costs in its apparent capacity as the First Defendant's freight agent. Revised invoices including the additional costs incurred at Haiphong and Hong Kong together with a schedule showing their total of £167,830.15 were rendered to the First Defendant on 16 November 2010 and are attached hereto marked XIII. Nothing has been paid by either the Second Defendant or the First Defendant.
16. The Claimant was successful in mitigation of its loss in that it achieved clearance of 77/79 of the FEUs containing scrap tyres for lawful sale and received payment (less costs of sale) the equivalent of £21,777.04 thus reducing loss to £146,053.11."
- On the face of the Particulars of Claim, therefore, the case for Cosco on quantum seemed to be that its claims for the costs of freight due under the Contracts and, for damages, were set out in the invoices attached to the Particulars of Claim. There were indeed copies of invoices annexed to the Particulars of Claim. The invoices seemed to fall into one or other of four categories. The principal category was claims for ocean freight and related charges payable under the Contracts, such as Aden Gulf surcharge. There were ten such invoices, one in respect of each of the Contracts, in the total amount of £99,451.76. The other main category was for what was described in each of the eleven relevant invoices as "DEMURRAGE CHRG Charges occurred in Haiphong". Again there was at least one invoice in respect of each of the Contracts, but, for some reason, two such invoices in relation to one of the Contracts. The total amount claimed in respect of alleged demurrage charges in Haiphong was £66,304.16. The remaining two categories each produced one invoice. The first was in respect of the survey of five containers in Hong Kong on 2 August 2010, in relation to which a charge was made of £674.23 covering the survey fee of MCW and associated labour charges. The remaining invoice was for £1,400 in relation to the provision of the lorries for collection of containers on 8 July 2010, which collection was cancelled.
- In the Defence of Mr. Batchford Cosco was put to proof of all relevant allegations in paragraphs 14, 15 and 16 of the Particulars of Claim.
- At paragraph 36 of his written skeleton argument Mr. Datta made these points:-
"C has simply produced its own invoices in order to prove its loss [D192-209]. However such invoices are not adequate evidence of demurrage charges which should have been sought from C by the relevant port authority (in Haiphong). There is simply no evidence of payment (nevermind [sic] demand) of these charges. The demurrage charges represent some £66,304.16 [D209] – almost half of the total sum claimed."
- I do not think that there was any real challenge to the invoices relating to ocean freight and associated charges. There was evidence, which I have noted, that the basic charge for carrying a container from Felixstowe to Haiphong in the period May – July 2010 made by Cosco was US$1,745, to which certain additional charges, like the Aden Gulf surcharge, had to be added. I am satisfied that the sum properly due in respect of performance of the Contracts in relation to ocean freight was £99,451.76. I am also satisfied that the charges in respect of the survey in Hong Kong were properly claimable under clause 12(2) and clause 13(4) of the Terms. It was not suggested that the charge of £1,400 in relation to the abortive provision of lorries on 8 July 2010 was not appropriate. Four lorries were provided and there was evidence, to which I have referred, that the cost of collecting a container and transporting it to Felixstowe varied depending upon the distance of the collection point from Felixstowe, and for a collection from Witney, as at 24 May 2010, was £301. £1,400 for 4 lorries works out at £350 per lorry.
- However, the submission of Mr. Datta that there was no proper evidence in support of the claims for "demurrage" was sound. No evidence whatsoever was produced to show that Cosco had been obliged to pay any sum to any port authority, whether in Haiphong or in Hong Kong, in respect of any failure to collect any of the Containers consigned by, as I have found, Mr. Batchford. Mr. Ladas was cross-examined about the claims for "demurrage". From his cross-examination it emerged that the rates of "demurrage" which Cosco sought to claim in this action were not rates which Cosco had actually had to pay to anyone, but rather rates at which Cosco chose to charge in accordance with its Tariff if containers were not collected. Consequently the claims were not for damages – in the sense of being recompense for disbursements which Cosco had had to make – at all. They could only succeed as claims in contract. However, there was no plea in the Particulars of Claim of any relevant term in the Contracts under which a liability to pay "demurrage" at a rate chosen by Cosco might arise. On the face of it clause 2 of the Terms might have been an appropriate term, but there was no reference to it in the Particulars of Claim. If there had been a plea of clause 2 of the Terms in the Particulars of Claim, it would, I think, have been appropriate also to plead the relevant provisions of the Tariff there referred to, so stating, perhaps, that for each day in excess of x days that a container was not collected from the port of Haiphong Cosco would be entitled to be paid a charge of y. There was no such plea. Again, had it been desired to claim a contractual "demurrage" charge, one might have expected there to be a schedule attached to the Particulars of Claim indicating, in respect of each container in relation to which it was sought to make a charge, the date upon which the charging commenced and the date upon which the charging ceased. There was no such schedule. All of the copy invoices including claims for "demurrage" attached to the Particulars of Claim were completed to show the period in respect of which the charge was levied as commencing on 5 November 2010 and ceasing on the same date. It was not possible from the copy invoices making "demurrage" claims to calculate a rate of charge per container over any particular period. Each invoice simply stated a so-called "rate" in United States dollars as a lump sum and an amount in sterling which seemed to be the equivalent of the United States dollar figure.
- Mr. Challenger appeared to appreciate, at the end of the oral evidence, that there was simply no evidence to support any claim against Mr. Batchford in respect of "demurrage", for he sought to introduce a document entitled "Demurrage Charge List" ("the Demurrage List"). Mr. Challenger did not seek to establish any evidential basis for the Demurrage List. It was not accompanied, for example, by a witness statement from someone who had prepared it explaining how it had been prepared, or by any explanation of what it was said to show. Mr. Challenger told me that it had emanated from Cosco in Haiphong, and that may well be right. Mr. Datta, after some debate, was content that I should consider the document, principally because it appeared to be obviously inaccurate. The Demurrage List set out, by number, all of the Containers shipped by Cosco. There were then columns setting out the bill of lading number relevant to the Contract entered into by Mr. Batchford with Cosco concerning that Container; the size (40 feet long); the type (high cube); the alleged date of discharge; a column entitled "free time date" (a date usually, but not invariably 5 days after the alleged date of discharge); a column entitled "dem date" (what that meant was obscure, but it was the date, in each case, of the day after the "free time date"); a column stating the "empty return date"; a column entitled "TT days" (which seemed, without checking all of them, to be the number of days between the "dem date" and the "empty return date"; a column entitled "Dem/Det USD" (what that meant was wholly obscure); a column entitled "Storage charge at HPH" (which varied, so was obviously not a rate per container per day or any other type of periodical charge); and finally a column entitled "JO for storage", the meaning of which was again totally unclear. What could be seen from the Demurrage List was that all of the empty return dates, bar one, were 28 September 2010 or later. That was obviously unreliable as a record of the end date of any "demurrage" period as the document to which I have referred produced by Ocean Luck showed that the contents of at least 77 of the Containers had been sold by Cosco to Ocean Luck on or before 26 September 2010 in Hong Kong. The Demurrage List purported to show, according to Mr. Challenger, that all of the Containers consigned by Mr. Batchford had been discharged in Haiphong, the dates of discharge of a total of 44 of them being 14 August 2010. Those assertions again seemed obviously to be incorrect. As I have noted, five containers were opened in Hong Kong and surveyed on 2 August 2010. At that date a total of up to 44 containers appeared still to be afloat. Mr. Ladas in his witness statement said, at paragraph 13, about the consequences of the survey in Hong Kong on 2 August 2010:-
"Since the Claimant now knew that onward shipment to Haiphong of the cargoes inspected was illegal (and was also aware that the consignees were unlocated) it was now obliged to incur demurrage/port storage charges at Hong Kong for the inspected containers as well as at Haiphong. All of that cargo continued to occupy Claimant's containers which therefore were out of use for transport of any other cargo. "
- Mr. Challenger found himself in the interesting position in his closing submissions of inviting me to reject the evidence of Mr. Ladas which I have just quoted. Mr. Challenger submitted that I should prefer documentary evidence which, he contended, showed that, whatever Mr. Ladas thought, all of the Containers were taken to Haiphong. In fact the documentary evidence, as it seemed to me, was equivocal. It took the form of printouts from a computer system operated by Cosco which purported to record, in respect of any travelling container, the "discharge port". It was unclear whether that was supposed to record the intended port of discharge or the actual port of discharge. The printouts did not record in relation to any of the Containers that the "discharge port" was Hong Kong, not even the five which were surveyed in Hong Kong. For all Containers the "discharge port" was said to be Haiphong. The computer printouts were produced as attachments to the witness statement of Mr. Joeri de Mey, export department manager of Coscon. At paragraph 18 of his witness statement dated 31 January 2013 prepared for the purposes of this action Mr. de Mey said this about the printouts:-
"In my role as Export Manager I am authorised to interrogate Cosco systems including IRIS2. This is a secure in house system in which all transactions are recorded and tracked. I have interrogated the system for information relevant to the claim by searching under the booking party for each shipment, Kent International Freight Services (UK) Limited. I have made a print out of all information relating to its bookings which I produce as exhibit JDM2."
- While one would not, perhaps, in an ordinary case examine closely the words used in a witness statement as if they were in a contract, or a statute, to be construed, it may be noted that what Mr. de Mey said could be found in the printouts was "all information relating to its bookings", rather than an accurate record of where the Containers were in fact taken. Because the problem concerning what exactly Cosco was seeking to charge as "demurrage" did not arise until the evidence of Mr. Ladas, given after the evidence of Mr. de Mey, unsurprisingly Mr. de Mey was not asked what exactly he meant in paragraph 18 of his witness statement. However, what one did know was that the contents of 77 of the Containers were sold to Ocean Luck in Hong Kong and delivered on, or before, 26 September 2010. Logically those contents, insofar as taken to Haiphong, would have had to have been brought back to Hong Kong in order to be delivered, but, as I have said, there was no record in the printouts produced by Mr. de Mey of any of the Containers being discharged in Hong Kong.
- What one might have expected of a reputable shipping company which had become aware of illegal goods being imported by it innocently into Vietnam, causing it, according to the evidence of Mr. Ladas and the Survey Report, to intercept five containers in Hong Kong which were also found to contain goods which it was unlawful to import into Vietnam, would be, first, that the five intercepted containers inspected in Hong Kong would not then have been transhipped to Haiphong; second, that the up to 44 of the Containers on the high seas the contents of which were suspicious would not have been transhipped on arrival in Hong Kong to Haiphong; and, third, that the Containers filled with illegal goods in Haiphong would have been removed to somewhere where the import of those goods was not unlawful, like Hong Kong. The sale of the Sold Goods in Hong Kong on or before 26 September 2010 suggested that that is exactly what Cosco actually did.
- At the end of his closing submissions Mr. Challenger produced a document which he said he had himself prepared and which was entitled "Haiphong Storage Charges" ("the Challenger Document"). In an e-mail dated 7 September 2010 to Mr. Scheller Mr. Gary Waters, at that time export manager of Coscon, had indicated, in relation to those of the Containers which were the subject of a bill of lading numbered COSU4001668200, that Cosco calculated that "demurrage" was due, after a free period of five days, from 1 August 2010 to 5 August 2010 at a rate of US$20 per container per day, thereafter from 6 August 2010 to 7 September 2010 at a rate of US$35 per container per day, and from 8 September 2010 at US$24 per container per day. From this Mr. Challenger deduced that the "demurrage" charged by Cosco in Haiphong, of which there was otherwise no evidence, after a free period of five days, was US$20 per container per day for the next five days, then US$35 per container per day for the ensuing 33 days, and thereafter US$24 per container per day. On those assumptions, set out in the Challenger Document, Mr. Challenger calculated, on the assumption that the "discharge date" shown for each of the Containers in the Demurrage List was correct, "demurrage" for all 79 Containers from the relevant supposed dates of discharge at Haiphong until 26 September 2010, the supposed date of sale of the Sold Goods to Ocean Luck, and produced a total of US$116,237. It was possible to calculate, by dividing the declared US$ amount on each "demurrage" invoice by the declared sterling amount, the rate of exchange which had been applied to the US$ amount to reach the sterling amount. Usually the rate used was £1 = US$1.5948, but for some invoices the rate used was £1 = US$1.4430. If one applied the rate of £1 = US$ 1.5948 to Mr. Challenger's calculated figure of US$116,237, the sterling equivalent is £72,885. If one took the rate £1 = US$1.4430, the sterling equivalent of US$116,237 is £80,552.32. As the total sum claimed in Cosco's invoices in respect of "demurrage" was £66,304.16, it seemed that Mr. Challenger's efforts in the Challenger Document could not have been soundly based. Because his figure was, it seemed, in excess of what was claimed, his calculations must have been based on rates that were too high, periods that were too long, or both. Certainly Mr. Challenger's calculations did not justify the conclusion that the rates which he derived from the e-mail dated 7 September 2010 were those which were the actual Tariff rates of Cosco at Haiphong in the period July – September 2010.
- In the result I was not persuaded by the evidence, despite the valiant efforts of Mr. Challenger, that it had been proved on a balance of probability that Cosco was entitled to charge Mr. Batchford any amount in respect of "demurrage" for any of the Containers in Haiphong. However, I am satisfied that, subject to the point to be considered next, Mr. Batchford is liable to pay to Cosco freight in respect of the Containers, totalling £99,451.76, the costs of and associated with the survey by MCW, £674.23, and the costs of cancellation of the lifting of containers on 8 July 2010, £1,400. These items total £101,525.99.
- I well understand that, having discovered that the Containers shipped, on my findings, on the instructions of Mr. Batchford, were filled, or were very likely to have been filled, with goods which it was illegal to import into Vietnam, Cosco was faced with a dilemma. The apparent consignees had not attempted to take delivery of any of the Containers which had been taken as far as Haiphong, and so the question arose what to do with the Containers. One approach might have been to assemble, as on my findings actually happened, the Containers in Hong Kong, where they could be held lawfully, and to seek instructions from Mr. Scheller or his principal. That course, contemplated by clause 19(3) of the Terms, appears not to have commended itself as a long term solution to Cosco. Instead, after some negotiation with Mr. Scheller, to which I shall come, Cosco elected to sell the Sold Goods to Ocean Luck. What happened to the contents of the other two of the Containers was not revealed by the evidence led at the trial. It did not appear that any provision of the Terms entitled Cosco to assume the rights of an owner in respect of the contents of a container and to sell those contents. It was not suggested that there were any relevant provisions of the laws of the People's Republic of China, the law governing the Contracts, which gave such entitlement to Cosco in the circumstances of the present case. The analysis under English law of Cosco assuming the rights of an owner in relation to the sale of the Sold Goods was that it amounted to conversion of the Sold Goods.
- Insofar as it mattered, I was not satisfied on the evidence that either Mr. Batchford or Mr. Scheller knew, or had grounds for believing, that the consignees named in the various bills of lading issued pursuant to the Contracts either did not exist or were not expected to take delivery of those of the Containers which were consigned, respectively, to them. The terms of the e-mail dated 5 August 2010 from Mr. Scheller to Mr. Batchford from which I have quoted indicated that each believed that the companies named as consignees could be visited by Mr. Batchford and/or Mr. Scheller in Vietnam, if they went there. I imagine that there is in Vietnam some sort of companies registry which is capable of being searched to establish what companies have been properly incorporated pursuant to the relevant laws of the Socialist Republic of Vietnam, but I was not told during the trial that any search of that registry had been carried out in relation to the named consignees, or, if such search had been carried out, with what result. The way the case was presented by Mr. Challenger, with postulated alternatives of non-existence or unwillingness to take delivery, indicated that in fact no search had been attempted of the Vietnamese companies registry.
- Cosco seemed to recognise that it was on unstable ground in relation to the sale of the Sold Goods, because, as I have noted, it allowed as a deduction from the formulation of its claim for money (insofar as made) in this action, what were said to be the net proceeds of sale of the Sold Goods, £21,777.04.
- In the Defence of Mr. Batchford the following points were made in relation to the sale of the Sold Goods:-
"14. The Claimant is put to proof of paragraph 9, the contents of which are again outside the knowledge of the First Defendant. In relation to the asserted demurrage and lawful disposal, it is averred that:
(d) the First Defendant never received any notification from the Claimant of its intention to dispose of the contents of any or all of the relevant containers;
(f) in the circumstances, if it is found (which is denied) that the First Defendant is the shipper and so owner of the relevant goods or contents, the Claimant has wrongfully interfered with said goods and/or converted the same by disposing of the same without notice, reference or warning to the First Defendant, and at an apparent undervalue (for the sum set out in paragraph 16);
(g) accordingly, if the First Defendant is found to be the shipper and contracting party (contrary to its primary case) it will seek permission at trial to seek remedy and redress against the Claimant in relation to such unlawful interference and/or conversion.
23. The Claimant is put to proof of the matters set out in paragraph 16. It is averred that achieving £21,777.04 for the sale of the relevant goods was not adequate or reasonable mitigation. It is averred that the said contents should have realised some £88,000 on the open market. "
- A Reply to the Defence of Mr. Batchford was served. It was not contended in that Reply that Cosco had been entitled to sell the Sold Goods, still less was any attempt made to expand upon any asserted lawful entitlement to do so. Again, there was no specific plea that the sum said to have been realised from the sale was a fair or proper price, or the best reasonably obtainable. All that was pleaded was:-
"8. As for Defence paragraphs 14(f), (g) and 21 of the Defence the Claimant will say that any such cross-claim as is intimated cannot succeed by reason of the First Defendant's case (albeit that case is not admitted) which is that he had sold the goods to Yap Yoon or JD1 prior to the shipments."
- While it seemed clear that Mr. Batchford was not warned directly that Cosco was intending to sell the contents of the Containers, it did appear that Mr. Scheller had been warned. There was fairly extensive e-mail correspondence between Mr. Waters and Mr. Scheller in August and September 2010 concerning payment of the sums due to Cosco in respect of freight, and possible sale by Mr. Scheller and/or Mr. Batchford of the contents of the Containers. When matters appeared to be making no progress Mr. Waters sent Mr. Scheller an e-mail dated 10 September 2010 in which he said:-
"Please call me, I am under pressure to resolve these charges with you by Wednesday next week (15.9.10) or we will take possession of the goods and cargo will be sold to an alternative buyer of our choosing."
- Mr. Scheller's reply by an e-mail sent on 14 September 2010 at 09.07 hours was not encouraging:-
"Your message noted. I am still on the case without much further progress during the last 2 days.
Will certainly try hard to get some real progress by tomorrow."
- Mr. Waters responded almost at once, at 09.11 hours the same day:-
"Tomorrow is your last day to arrange payment for these 4 cntrs, after this I can do no more.
My HQ in Shanghai have already advised that they will take possession of the cargo and source alternative buyers if the cargo has not been paid for by Wednesday 15.9.10, as I have already explained to you in previous e mail.
Please contact me either way tomorrow so that I can reply accordingly to my HQ."
- Cosco did not proceed at once actually to sell the contents of the containers. In an e-mail written by Mr. Waters to Mr. Scheller sent at 11.45 hours on 16 September 2010 he said:-
"Below noted, however as advised to you previously, we will now try to source buyers for this cargo.
We have been very patient with yourselves and even agreed a 50% reduction on the storage costs, but as yet you have still not paid any monies to us.
If you are able to pay for any of the cargo then please get in touch and if it has not been sold we will release it to you."
- At 09.09 hours on 20 September 2010 Mr. Waters forwarded to Mr. Scheller an e-mail to Mr. Waters from Mr. Ladas, which included:-
"Unless we receive a written commitment for acceptance of charges and payment from the shippers their Freight forwarders and/or consignees we should proceed to cargo disposal as instructed by Capt. Feng at Coscon HQ."
- Mr. Scheller replied at 09.28 hours as follows:-
"Just to let you know that U.K. shipper is currently in Haiphong to finalise a deal there and then on the spot with one particular buyer who promised to take all remaining containers.
I should have more information on this by tomorrow."
- In his turn Mr. Waters responded promptly, at 09.31 hours, enclosing an e-mail which he had received from Cosco headquarters which was in these terms:-
"If still have no further proceeding for the cargo interests to pick up the containers and pay all extra charges before 0830L(+800) of Sept. 21st, 2010 we will inform "Ocean Luck" to pick up the containers for cargo disposal off to mitigate the losses on Sept. 21st, 2010.
Shipper and the forwarder should take all responsibility and pay all the charges occurred [sic]."
- At 07.57 hours on 21 September 2010 Mr. Waters forwarded a further e-mail from Cosco headquarters:-
"Do you get the written commitment for acceptance of charges and payment from the shippers their Freight forwarders and/or consignees?
If no result, we will inform "Ocean luck [sic]" to pick up the cntr."
- At paragraph 25 of his witness statement prepared for the purposes of this action Mr. Waters said:-
"No commitment was forthcoming from either Defendant hence the consignments were sold off at the best price available leading to the claim in the sum of £146,053.11 and interest."
- The real issue in relation to the disposal of the Sold Goods was whether the price at which the Sold Goods were sold to Ocean Luck represented a proper value of the goods. Mr. Batchford told me in cross-examination that he had been able to arrange the sale of the contents of containers shipped by CMA at US$1,700 per container. As I understood it from his evidence, the pleaded value in the Defence of £88,000 was based on an anticipated realisation of US$1,600 per container.
- The simple answer to Mr. Batchford's contentions was that he had tried, since about 2 August 2010, to find a buyer for the contents of the Containers, or some of them, and had failed. Those efforts included the unsuccessful visit to Vietnam. The equivalent of £21,777.04 was a real price achieved in circumstances in which Mr. Batchford had been wholly unable to find any purchaser. It was not a derisory amount and I am satisfied that it represented the proper price at which the Sold Goods could be sold in September 2010. Thus Mr. Batchford was entitled to credit in the sum offered, £21,777.04, against his liability to Cosco of £101,525.99, resulting in a judgment against him in the sum of £79,748.95.
Mr. Batchford's Part 20 claim against Mr. Scheller
- It remains to consider the Part 20 claim of Mr. Batchford against Mr. Scheller. At the same time as serving his Defence in this action Mr. Batchford commenced a claim under Civil Procedure Rules Part 20 against Mr. Scheller. What was claimed was an indemnity or contribution pursuant to the provisions of Civil Liability (Contribution) Act 1978 ss.1 and 2 on the grounds, pleaded in paragraph 4 of the Notice of Part 20 Claim, that:-
"It would be just and equitable for such indemnity or contribution to be ordered as the Second Defendant is the party responsible for the matters complained of. This is explained in the Defence. The First Defendant further adopts the allegations set out in paragraphs 10 and 13 of the Claimant's Particulars of Claim herein as against the Second Defendant in this regard."
- Those grounds were not very promising, for in his Defence Mr. Batchford denied any liability to Cosco at all, and the paragraphs of the Particulars of Claim mentioned were those in which allegations of misrepresentation and deceit, and breaches of contract, were made against both of Mr. Batchford and Mr. Scheller. Mr. Batchford had no necessity to succeed on his Part 20 claim against Mr. Scheller unless Mr. Batchford was found liable to Cosco. Insofar as I have found Mr. Batchford liable to pay ocean freight in respect of the shipping of the Containers, the contents of which I have found that he owned, there really seems to be no basis upon which it would be appropriate to order Mr. Scheller to make a contribution towards that liability. Mr. Batchford admitted that he had cancelled collection of containers which had originally been arranged on 8 July 2010, and again there was no obvious basis upon which to find that Mr. Scheller should contribute towards Mr. Batchford's liability to meet the costs of cancellation. That left the liability to pay £674.23 which related to the survey by MCW and arose out of the description of what were in fact tyre bales and loose used vehicle tyres as "Building Blocks". I am inclined to find that both Mr. Batchford and Mr. Scheller were aware that the description applied to the contents of the Containers in the bills of lading, based on information supplied by Mr. Scheller, was pursuant to a scheme in which they both participated, and which they both understood, as to its details, perfectly well. In what was treated as Mr. Scheller's Defence to the Part 20 claim Mr. Scheller contended that he was merely acting throughout as agent of Mr. Batchford. That is not what the evidence led before me indicated. However, as there is already judgment in this action against Mr. Scheller for an amount greater than that which I have found Mr. Batchford to be liable for to Cosco, it seems to me that it is not necessary or appropriate for me to make any order in relation to the Part 20 claim. Mr. Scheller is simply jointly and severally liable with Mr. Batchford in respect of Mr. Batchford's liability to Cosco, as well as solely liable for the excess of the judgment against him over the judgment against Mr. Batchford.
- There will be judgment against Mr. Batchford in the sum of £79,748.95, together with interest, as to which I will hear counsel.
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