Frans Maas (UK) Ltd and Samsung Electronics (UK) Ltd [QBD, 30/06/2004]
| Jurisdiction | England & Wales |
| Judge | Mr Justice Gross |
| Judgment Date | 30 June 2004 |
| Neutral Citation | [2004] EWHC 1502 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2002/1090 |
| Date | 30 June 2004 |
[2004] EWHC 1502 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEENS BENCH DIVISION
The Honourable Mr Justice Gross
Case No: 2002/1090
Miss Lexa Hilliard (instructed by Eversheds) for the Claimant
Nigel Jacobs (instructed by Clyde & Co) for the Defendant
Hearing dates : 2–5 February 2004; 9–12 February 2004
Approved Judgment
Mr. Justice Gross
INTRODUCTION
In the early evening of Sunday 10 th February, 2002, some 25,738 Samsung A300 mobile telephones, belonging to the Defendant ("SEUK"), were stolen from the warehouse facility of the Claimant in Hayes ("the theft", "FM" and "the warehouse", respectively).
The action commenced as a claim by FM against SEUK in respect of unpaid invoices for services rendered during the period 1999–200In the event, SEUK submitted to summary judgment under CPR Part 24 in respect of the FM claim, in the amount of £404,434.17, exclusive of interest and costs. Accordingly, the trial before me was solely concerned with SEUK's counterclaim to recover upwards of £2 million arising from the theft.
The principal issues at the trial were as follows:
i) What, if any, standard terms governed the relationship between SEUK and FM? ("Issue (I): Terms")
ii) Was any oral agreement entered into between SEUK and FM and, if so, what, if any, impact did it have on the terms governing their relationship? ("Issue (II): Collateral contract")
iii) In what circumstances did the theft take place? ("Issue (III): The theft")
iv) Was FM liable to SEUK in respect of the theft? ("Issue (IV): Liability")
v) Was any liability of FM to SEUK limited by the terms governing their relationship? ("Issue (V): Limitation of liability")
vi) If the liability of FM to SEUK would otherwise be limited by the terms governing their relationship, did such terms satisfy the reasonableness requirement of UCTA? ("Issue VI: UCTA")
vii) Limitation apart, what is the true quantum of SEUK's loss? ("Issue (VII): Quantum").
In very broad outline, the rival cases were as follows. For SEUK, Mr. Jacobs submitted that the relationship between SEUK and FM was one of bailment; by reason of confusion on the part of FM, no standard terms governed the bailment. In any event, an oral agreement had been entered into between SEUK and FM, of which FM was in breach, providing for on site security guards. That oral agreement operated as a true collateral contract, so that even if any standard terms would otherwise have been applicable, these were displaced by the oral agreement. The theft had been an inside job caused by the wilful default of an employee(s) of FM for which FM was vicariously liable and by the negligence of FM its servants or agents. Even if any standard terms were applicable, they did not serve to exclude the liability of FM for the theft. Given the wilful nature of the breach of duty, FM was not entitled to limit its liability; the relevant provisions (if applicable at all) did not apply to the dishonesty of employees or ex-employees of FM. If FM would otherwise have been entitled to limit its liability, any such terms failed to satisfy the requirement of reasonableness under the Unfair Contract Terms Act 1977 (" UCTA"), the burden resting on FM to establish reasonableness. SEUK was entitled to some £2.6 million by way of damages.
For FM, Ms. Hilliard accepted that there was indeed a bailment relationship but it was a bailment on standard terms, namely, those of the British International Freight Association ("BIFA"), alternatively those of the United Kingdom Warehousing Association ("UKWA"). No oral agreement for the provision of on site security guards had been concluded between the parties but, if there was such an agreement, it did not serve to displace the standard terms otherwise applicable. FM disputed that the theft was an "inside job"; but, even if it was, FM was not vicariously liable for those who had connived at it. While FM accepted some negligence on its part with regard to the security of the warehouse, such negligence was not causative of the theft or the loss. In the circumstances, liability was denied or excluded. In any event, FM was entitled to limit its liability in accordance with the provisions of BIFA or UKWA as the case may be; whichever terms were applicable, they satisfied the reasonableness requirement contained in UCTA. If, however, FM was not entitled to limit its liability, nonetheless the quantum of SEUK's (counter)claim was to be significantly reduced.
As to witnesses of fact, SEUK called Messrs. Graham, Elliot, Bartlett and Murphy; FM called Messrs. Harrowing and Roberts. Expert evidence was given by Mr. Gill (together with some factual evidence), called by SEUK and by Mr. Hack, called by FM.
By way of further introduction to the principal witnesses of fact, the key SEUK witness was Mr. Graham. He was a supply chain manager with SEUK; his responsibility, commencing at and from the port of arrival in the United Kingdom, was to ensure that the import process relating to SEUK's products ran smoothly. Mr. Eliot was an operations manager at SEUK and reported directly to Mr. Graham; his principal responsibility concerned the delivery of goods to customers. Mr. Murphy became financial controller of SEUK in March 2000; at all material times Mr. Graham reported to him.
As to the FM " camp", Mr. Harrowing was the company secretary of FM. Mr. Roberts was, from May 2001 until November 2002, the General Manager at the warehouse. For completeness, a Mr. Ferguson, who features from time to time in the events in question was and remains an FM employee at the warehouse but was not called to give evidence.
As will become apparent, it was a feature of this case that the factual evidence of both parties needed to be approached with considerable caution. As to the SEUK witnesses, Mr. Bartlett's evidence was, in the event, not of any particular consequence. There was no suggestion that Messrs. Graham, Elliot or Murphy were other than honest witnesses; but in my judgment, in important respects, each was mistaken – no doubt the product of persuading themselves of certain matters after the shock of the theft. With regard to the FM witnesses, Mr. Harrowing was undoubtedly honest, if from time to time prone to unnecessary if understandable defensiveness. Mr. Roberts, I regret to say, was an unreliable witness whose evidence was at least in part untruthful. Save where supported by other evidence or objective probability, I could not place reliance on Mr. Roberts' evidence.
Both experts sought fairly to assist the Court. Each was to some extent at least sub-consciously influenced by the perspective of the party calling him, Mr. Gill perhaps more so, possibly due to his commercial involvement with SEUK. It is therefore appropriate to proceed cautiously here too. However, in this regard, the common ground between the experts proved more significant than any unintended partisanship.
I observe in passing, as I was told, that SEUK is advancing a largely subrogated (counter)claim. As I understood the position, FM's insurers have reserved their position. Without more ado, I turn to the principal Issues.
ISSUE (I): TERMS
(1) Introduction: As foreshadowed, Mr. Jacobs contended that no standard terms were applicable to the relationship between SEUK and FM. This was because such notice as had been given of BIFA and UKWA terms was so confusing, inconsistent and uncertain that neither set of terms should be held to apply. In any event, Mr. Jacobs went on to submit, the contractual relationship between SEUK and FM was, at least at the material time, governed by an Agency Agreement dated December 2000, entered into between FM on the one hand and Tolos Co. Ltd. ("Tolos"), acting as agent for SEUK on the other ("the Tolos agreement"). The Tolos agreement did not incorporate either the BIFA or UKWA terms. It was not in dispute that there had been a bailment of the telephones (stolen in the course of the theft) by SEUK to FM. By whichever route, it was Mr. Jacobs' submission that FM's duties were to be determined by common law and statute and not by reference to the standard terms and conditions of either BIFA or UKWA.
Miss Hilliard's response was that there was no uncertainty or confusion; the BIFA terms were applicable but, if wrong about that, then the UKWA terms applied. The SEUK case on the Tolos agreement was misconceived; that agreement was no more than a principal to principal agreement between agents.
Before proceeding further, the reaction of commercial men on both sides is instructive. The cross-examination of Mr. Graham (of SEUK) included the following exchange:
"Q. You would be well aware, would you not, that freight forwarders and people in a similar type of distribution business routinely transact on standard terms ?
A. Yes, I would.
…..
Q. If you disagreed with the terms applying or if your superiors disagreed with the terms applying they would have simply taken their goods elsewhere and found someone who was not relying on BIFA terms?
A. It is not as straightforward as that. It is not like being able to decide 'we do not want to trade under these terms and conditions with you because you want to apply them'. All logistics companies apply them or try to apply them…."
In his evidence, Mr. Harrowing (of FM) said this:
"Going back to basics, the whole point is that no freight forwarder or haulier in their right mind would operate without standard trading conditions in place, because you simply do not know the value of the goods. On...
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