Chellaram (K.) & Sons (London) Ltd v Butlers Warehousing and Distribution Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MEGAW |
| Judgment Date | 07 July 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0707-5 |
| Date | 07 July 1978 |
| Court | Court of Appeal (Civil Division) |
[1978] EWCA Civ J0707-5
Lord Justice Megaw
Lord Justice Ormrod and
Lord Justice Bridge
In The Supreme Court of Judicature
Court of Appeal
(Civil Division)
(On appeal from order of Mr. Justice Mocatta - Commercial Court - London)
Mr. JOHN HOBHOUSE, Q.C. and Mr. P. SIMON (instructed by Messrs. Clyde & Co.) appeared on behalf of the Appellants (Plaintiffs).
Mr. ANTHONY EVANS, Q.C. and Mr. CHARLES GIBSON (instructed by Messrs. Ashurst, Morris, Crisp & Co.) appeared on behalf of the Respondents (Defendants).
The judgment which I am about to deliver is the judgment of the Court.
This appeal, from the judgment of Mr. Justice Mocatta delivered on 21st December, 1976, arises out of a claim by the defendants that they are entitled to exercise a general lien against the plaintiffs on goods belonging to the plaintiffs in respect of a debt owed to the defendants by a person other than the plaintiffs: a debt of a. much larger amount than the amount of the charges properly referable to work done by the defendants in respect of the plaintiffs' goods in question.
This commercial action has had an unfortunate history. The dispute arose out of events at the end of 1975. The parties wished to have their rights decided promptly by the Commercial Court, The writ was issued on 24th February, 1976. A date was fixed for the hearing in April. The date was no doubt given on the basis of an estimate of the length of the hearing. The estimate proved to be a serious underestimate of the time which was required to complete the hearing in the way in which the case was in fact presented. As a result, after two days of evidence, the hearing had to be adjourned generally on 30th April, 1976. It could not be resumed until nearly eight months later, in December, 1976. The parties had unfortunately not agreed that the judge should be provided with a transcript of the evidence. In December, 1976, evidence was heard on a further two days. These facts should be borne in mind in connection with the judge's task of deciding questions of fact in this case. He has refrained from comment or complaint on what he might reasonably have regarded as imposing on him an intolerable burden.
The case at first instance, including the full text of the judgment of Mr. Justice Mocatta, has been reported at (1977) 2 Lloyd's Reports 192. Therefore we do not find it necessary to setout the facts or the relevant documents, or to refer to the arguments and the citations from authorities, as fully as might otherwise have been desirable.
The case arises out of the development of the practice of putting goods into containers for the purpose of long distance transport, particularly transport overseas. That has resulted in many changes in the practical operations involved in the commercial carriage of goods.
The plaintiffs, K. Chellaram & Sons Ltd., buy goods in this country and, having thus become the owners of the goods, export them for re-sale abroad. We are here concerned with their export of goods to Nigeria, via the ports of Southampton and Iagos. The goods are shipped in containers. The plaintiffs do not themselves carry out or arrange the packing of the goods into containers, their transport to the port of shipment, or their loading, carriage by sea, unloading and delivery to the consignees in Nigeria. Tinder contract between the plaintiffs and Africa Container line Ltd. ("A.F.C.L."), during the period of time with which this case is concerned, the arrangements for those various operations were made by A.F.C.L. Those who carry out such functions are known in the trade as "operators". It was they who arranged for the various operations, including the putting into containers and the sea carriage of the containers. For these services they were paid by the plaintiffs under their contract.
The plaintiffs used agents for the purpose of arranging for the calling forward of the goods bought by the plaintiffs in order that they might be loaded into containers, at the appropriate place and time, so as to be available when required for shipment in shipping space arranged by A.F.C.L. Those agents were All transport International Group Ltd. ("All transport").
The first stage of the export to Nigeria of the plaintiffs'goods was that, in co-ordination with A.F.C.L., All transport required the merchant from whom the plaintiffs had "bought the goods to send those goods, "by a particular date, to an Inland Clearance Depot ("I.C.D.") at Greenford, Middlesex. When the goods arrived there, if not before, the property in them would pass to the plaintiffs. So far as the possession of the goods is concerned, the theoretical legal position was that A.F.C.L., though not actually handling the goods either then or thereafter, became bailees of the goods, from the plaintiffs. At the same time, or a notional fraction of time later, the goods were sub-bailed to the defendants, Butlers Warehousing & Distribution Ltd., into whose actual possession they would come, at the I.C.D., for the purpose of putting them into containers. The defendants came in at this stage because, under a contract between the defendants and A.F.C.L., it was the defendants who undertook that work. The I.C.D. at Greenford belonged to, and was operated by, the defendants. It was part of a larger site at Greenford, owned by the defendants. Under a licence from the Commissioners of Customs and Excise, the I.C.D. is an approved depot at which containers, when they have been filled with packages of goods for export, can be sealed under Customs supervision. The containers were provided by A.F.C.L. to the defendants. The defendants' function in loading the goods into containers at the I.C.D. is apparently known in the trade as "consolidation". Presumably you "consolidate" by putting a number of different packages into one container. After the consolidation, the filled containers would be taken from the L.C.D. by road transport to Southampton to be loaded in shipping space arranged by A.F.C.L., for carriage to Lagos. Information as to the terms of the contract between the plaintiffs and A.F.C.L. is regrettably scanty. It appears, however, that it did not contain any express term which either authorised or forbade A.F.C.L. to sub-contract the work of consolidation of the goods intocontainers. By A.F.C.L.'s contract with the defendants, A.F.C.L. sub-contracted to them the performance of that part of their services. Under that contract they sub-hailed the plaintiffs' goods to the defendants at the I.C.D. Whether the plaintiffs knew, or are to be deemed to have known, of the sub-bailment and its terms is a question in issue.
The defendants were thus not in contractual relationship with the plaintiffs. Their only relevant contract was with A.F.C.L. The judge has held, we have no doubt rightly, that the terms of that contract included clause 8 of the Conditions of Contract of the National Association of Warehouse Keepers. It includes provision for a general lien. It reads; "The Warehouse Keeper shall have a lien on all goods for all money due to him for storage or carriage of and other charges or expenses in connection with such goods, and shall also have a general lien on all goods for any money due to him from the Customer or the. owners of such goods upon any account whatsoever, and in case any such lien is not satisfied by payment of such money within three calendar months, or, in the case of perishable goods, within three days, from the date upon which the Warehouse Keeper shall first give notice to the Customer or to the owner of the goods requiring payment of such money the Warehouse Keeper may without further notice to such owner or Customer sell the goods by auction or otherwise as he shall think fit at the expense of the person from whom such money shall be owing to the Warehouse Keeper without being liable for any loss thereby caused and the proceeds of sale shall be applied in or towards satisfaction of every such lien and any expenses and charges incurred by the Warehouse Keeper. If the goods are not owned by the Customer the Customer shall indemnify the Warehouse Keeper against all claims of whatsoever nature by the owner or owners of the goods".
The case depends upon the answer to questions relating to thatclause and its effect, if any, as affecting the legal relationship between the defendants and the plaintiffs.
The dispute arose because, as a result of troubles arising out of congestion in Nigerian ports, A.F.C.L. came into financial difficulties in the autumn of 1975. They went into liquidation in December, 1975. At the end of November, 1975, the defendants, exercising the general lien which they claimed that they lawfully possessed under clause 8, refused to part with any of the goods which they then held in their possession at the I.C.D. to the order of A.F.C.L. Those goods included goods belonging to the plaintiffs, delivery of which the plaintiffs had demanded from the defendants.
The defendants claimed that in law they were entitled to hold the plaintiffs' goods which were then in their possession until such time as they had been paid the whole of the debt due from A.F.C.L. to the defendants in respect of all their work for A.F.C.L. at the I.C.D. In the event of non-payment after notice they claimed the right, under the clause, to sell the goods. The total amount was about £48,000. But the defendants, as a matter of concession (which Mr. Justice Mocatta has described as "exercising their right., in a wholly reasonable manner"), did not demand the full amount. They divided up the total debt, as between the various goods-owners whose goods the defendants were holding to the order of A.F.C.L, at the relevant time, on a pro rata basis by weight. Thus, the amount which they claimed against the plaintiffs was...
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