Brown Jenkinson & Company Ltd v Percy Dalton (London) Ltd (Titania.)

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE MORRIS
Judgment Date03 July 1957
Judgment citation (vLex)[1957] EWCA Civ J0703-1
CourtCourt of Appeal
Date03 July 1957
Borwn Jenkinson & Co. Ltd.
Plaintiffs
and
Percy Dalton (London) Ltd.
Defendants.

[1957] EWCA Civ J0703-1

Before:

the Master of the Rolls (Lord Evershed),

Lord Justice Morris And

Lord Justice Pearce

In The Supreme Court of Judicature

Court of Appeal

Mr. JUSTICEC:ROSKILL.Q.C. and Mr B.J. BROOKE SMITH (instructed by Mecsrs William A. Crump & Son) appoared on behalf of the respondents (Plaintiffs).

The HON there. G ROCHE, Q.C. and Mr T.M. EASTHAM (instructed by MESERS Carters) appeared on behalf of the Appellants (Defendants).

THE MASTER OF THE ROLLS
1

: I will ask Lord Justice Morris to deliver who first judgment.

LORD JUSTICE MORRIS
2

The question which is raised in this appeal is whether on the facts of this particular case an agreement to indemnify against the consequences of issuing a clean Mil of lading is enforceable. The case is one in which the issuing of a clean bill of lading was not justified having regard to the condition of the goods which were shipped.

3

The Plaintiffs act as loading brokers and chartering agents for certsin shipping lines, including the Haraburg-London Linie, The Defendants had some barrels of concentrated orange juice which they wished to ship to Hamburg on the s.s. "Titania", one of the ships of that line. They communicated with the Plaintiffs, and following a telephone conversation they wrote to the Plaintiffs on the 28th March, 1956. The material parts of that letter are as follows (Correspondence page 16): "We would confirm our telephone conversation of to-day and detail hereunder specification and our requirements: 1. Consignment: 100 barrels concentrated orange juice - mark 'V'. 2. Weight: We are having these barrels weighed before delivery into the wharf, and shall instruct our driver to give you the weight as soon as this is done. 3. Consignee: Into 'Order' yourselves as agents for the shipper". Then, 4 was as to the bills of lading. One bill was to bo returned to Percy Dalton (London) Ltd., and one non-negotiable copy was to go forward in ship's bag. "Bills to be marked 'notify Vipa Internationale Handelsonderoeming'" at an address in Rotterdam, "stamped freight paid, as we shall pay freight here in London. We also require clean on board bills of lading". Then: "5. Charges to f.o.b. and freight will be paid by us". Then, under 6, it was said that the value was approximately £1,000.

4

It is to he noted that the Defendants stipulated that they would require clean on hoard hills of lading, Thereafter the Defendants sent 100 harrels to the docks. The representative of the cargo superintendents who acted for the Plaintiffs in superintending the loading of the ship saw the harrels on their arrival at the docks. They were old and they were leaking: liquid was seeping between the seams. The tally clerk descrihed the casks on his Tally Card as being "old and frail" and he recorded that some were leaking. The barrels were clearly not in good condition. The Plaintiffs informed the Defendants of the state of the barrels. The facts of the situation required that a claused bill of lading should be issued. But the Defendants required a clean hill of lading and accordingly the Plaintiffs, acting on behalf of the Master of the ship, signed a hill of lading recording that the 100 harrels were "shipped in apparent good order and condition". The Plaintiffs were only prepared to issue such a hill if they had the promise of the Defendants to indemnify "the Master, vessel, the owners or their representatives" against all losses or damage which might arise from the issuance of a cleam bill of lading. The Defendants gave such an indemnity. It is in the following terms (Correspondence page 26A); "We the undersigned hereby certify that we are aware that in connection with the undermentioned goods, v., 100 barrels concentrated orange juice Mark 'v', shipped on 4th April, 1956, per m.v. 'Titania' on hill of lading No. 5 at London and destined for Hamburg the following has "been noted at time of shipment: old and frail containers in leaking condition. 2. With a view, however, to avoid any misunderstanding with third parties we request that no mention he made of the ahove in the bills of lading covering these goods". Then, paragraph II: "On the other hand, we herewith undertake unconditionally and irrevocahly to indemnify the master, the vessel, the owners or their representatives against all losses or damages of any nature whatsoever which might arise from the issuance of clean bills of lading for the said goods. III. We do hereby irrevocably authorise the said master, vessel, the owners and their representatives, in the event of third parties bringing forward any claims against them, to make any arrangements with said parties for our account, which said master, shipowners or representatives may deem advisable. IV. Finally we the undersigned declare that we give our unqualified consent to a copy of this document being issued, if required, to receivers, underwriters and other persons, who, in the opinion of the master, shipowners or their representatives, may directly or indirectly be concerned", and that was signed on behalf of the Defendants, Percy Dalton (London) Limited, on the 4th April. It is on this contract that the claim of the Plaintiffs is brought. The indemnity was given to the shipowners but they have assigned the benefit of it and the right to enforce it to the Plaintiffs. The Plaintiffs cannot be in any better position so far as concerns the defences raised than the shipowners.

5

The Director of the Plaintiffs who gave evidence on their behalf was commendably frank and candid. Some of his answers can usefully be mentioned because they state the central facts with clarity. On page 8 of the transcript are the following passages: "(Q) It does not require a tremendous amount of skill to know whether a barrel is leaking or not, does it? (A) No. (Q) And will you once again agree with me – because I do not want to lose this point – that if barrels are leaking they cannot be in apparent good order and condition? (A) Yes. (Q) Let us now take the purpose of a bill of lading. So far you have told his Honour that you are prepared to do this – that is, to make a false bill of lading – in order to assist the shippers? (A) Yes. (Q) will you agree with me, however, that a bill of lading, to use my friend's own words, is a 'negotiable document'? (A) Yes, (Q) And it may either find itself in the hands of the original purchaser or anybody else to whom the bill is endorsed? (A) Yes." I may say that these questions and answers are in the cross-examination of Mr Broome. "(Q) Do not answer if you are not prepared to, because it is largely a question of law, but do you know, in fact, that the words 'in apparent good order and condition. by owners is a representation to the person who ultimately gets hold of the bill that the goods are in that condition? (A) I prefer to say that is a legal point. (Q) Then we will leave out the legal point and put it as a question of fact, because in due course I shall be able to show his Honour the authorities on that. You know perfectly well that persons who get hold of the bill of lading, either as the original purchasers or as purchasers who have subsequently re-purchased, are entitled to look to the bill of lading to see if it is a clean one or a dirty one, a claused one? (A) Yes. (Q) Again without going into any legal considerations, you know that whether or not a bill of lading is clean or claused is a matter of importance to persons dealing in the goods? (A) Yes, I agree with that".

6

On page 10 of the transcript, at "E", is the following passage, again in the cross-examination of Mr Broome: (Q) We know from this correspondence that Vipa's bank – Vipa being the purchaser – was Slavenburgs? (A) That was mentioned, yes. (Q) I am suggesting to you that the person who puts up the money (the banker) is very often only prepared to put up money if, in fact, the goods are shipped with a bill of lading which is clean, and is not prepared to put up the money if there is a claused bill of lading? (A) That is the reason shippers ask us to issue clean bills of lading in exchange for an indemnity. (Q) I am very satisfied with that answer. You agree that bankers will not put up the money where there is a claused bill of lading, and that is the reason, you say, why shippers ask for a clean bill, which you give them as against an undertaking of indemnity? (A) Yes". The learned Judge: "Is this about right: You know that bankers are apt not to advance money except An clean bills, and that is the reason you are asked to give clean bills against an indemnity? (A) Yes". Counsel: "And for that reason you accede to the request so as to assist the shippers, if I may finish it off? (A) Yes",

7

Then, lastly, again from the cross-examination of this witness, at "C" on page 11: "You intended to disclose on this negotiable instrument, the bill of lading, that the containers were old and frail? (A) Yes. (Q) Please do not think me unnecessarily offensive, but you were prepared to make the bill of lading false by not clausing it in that way, but by allowing it to read in apparent good order and condition' providing you received a Letter of Indemnity from the shippers? (A) We were prepared to issue a clean bill of lading providing we got a Letter of Indemnity from the shippers, yes. (Q) You were prepared, were you not, to issue a document which you knew to be false, because it did not have the clausing and it just had the words 'in apparent good order and condition'? (A) Yes. (Q) And that you knew at the time to be false? (A) Yes, you are right. (Q) Again look at pase 61, a letter of the 5th July from your Company, and again signed by you? (A) Yes. (Q) In the second paragraph you will see: '… in order to cover the owners we had to inform you that it was necessary to clause the bills of lading, unless you were prepared to...

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