Soya G.m.b.H. Mainz Kommanditgesellschaft v White (Corfu Island, Teviotbank, Welsh City)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE DONALDSON,LORD JUSTICE O'CONNOR |
| Judgment Date | 12 November 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J1112-1 |
| Docket Number | 81/0446 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 November 1981 |
[1981] EWCA Civ J1112-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE COMMERCIAL COURT
Royal Courts of Justice
Lord Justice Waller
Lord Justice Donaldson
Lord Justice O'Connor
81/0446
1977 S. No. 8168
MR J. HOBHOUSE. Q.C. and MR B. RIX. Q.C., (instructed by Messrs. Clyde & Co.) appeared on behalf of the Appellants.
MR K. ROKISON, Q.C. and MR S. TOMLINSON (instructed by Messrs. Ince & Co.) appeared on behalf of the Respondents.
This is an appeal from a decision of Mr Justice Lloyd holding that the defendant, a representative underwriter at Lloyds, was liable to the plaintiffs, a German company, for the loss on two part cargoes of soya beans from Indonesia to Antwerp in the Summer of 1973 on board the "Welsh City" and the "Corfu Island".
Before I come to the appeal I will set out the background of the case by quoting from the judgment of the learned Judge: "Anyone who is familiar with commercial litigation over the last few years will at once recognise 1973 as the year during which the United States government imposed an embargo on the export of United States soya beans. As a result, there was a great shortage of soya beans for the European market and the price reached an unprecedented level on 10th/11th July, 1973. European importers were anxious to find alternative sources of soya beans. One of the directions in which they looked was Indonesia. The Indonesians had, of course, for many years been exporters of copra, manioc and other such commodities, but though they have also grown soya beans, they had never exported soya beans to Europe, save for insignificant quantities some years previously.
There was a company called Internationale Graanhandel Thegra N.V. based on Tilburg in Holland. It has now changed its name. It traded extensively with Indonesia. It insured its bulk shipments from Indonesia under an open cover taken out with Lloyds. In the course of the Spring and early Summer of 1973, Thegra were investigating the possibility of importing soya beans from Indonesia. On 6th June, 1973, their open cover was amended to include soya beans for the first time. Rates were agreed with underwriters, including a special additional of,25% to cover the risks of heat, sweat and spontaneous combustion—or H.S.S.C. for short. On 1st June, 1973, Thegra sold a quantity of 2,000 tons of soya beans to the plaintiffs, C.I.F. Antwerp Rotterdam, to be shipped on 8th/9th June, 1973, on a vessel called the "Teviot Bank". The contract was on F.O.S.F.A. Form 76. It provided for arbitration in London. On 7th June 2,000 tons of soya beans per the "Teviot Bank" were declared on the open cover but on W.A. terms only. Thegra did not insure the soya beans against H.S.S.C. risks. The "Teviot Bank" duly loaded a quantity of soya beans including the 2,000 tons which they had sold to the plaintiffs, plus 400 tons which they kept for their own account."
Besides the shipment on the "Teviot Bank" there were 3 other shipments of soya beans on the "Welsh City", the "Corfu Island" and the "Fleet Bank". The "Teviot Bank" arrived in Antwerp on 15th July and started to discharge the soya bean cargo on 18th July. By the 17th July the "Welsh City" and the "Corfu Island" had left Surabaya, each loaded with soya beans. When Mr. Theeuwes, the Managing Director of Thegra, saw the condition of the beans when unloading started he decided to procure insurance to cover the risks of heat, sweat and spontaneous combustion (H.S.S.C) under a separate policy for the account of the German buyers, the plaintiffs. He instructed his assistant, Mr, Van der Zwalm, to obtain a quotation and Mr. Van der Zwalm telephoned Mr. Monk of Minet and Co. in the afternoon of 19th July. The Judge found that Mr. Monk went straight round to Lloyds and saw Mr. Hill and obtained a quotation. In due course the plaintiffs gave instructions for the insurance to be placed and the slip was initialled on behalf of the insurers on 25th July. The "Welsh City" arrived in Antwerp on 29th August and the "Corfu Island" on 1st September, The beans arrived in a heated and deteriorated condition and it is the claim in relation to those two shipments which the underwriters have rejected and for which the learned Judge found that they were liable.
The first issue on which the Judge found against the defendant was on the defendant's claim to avoid the contract on the basis of non-disclosure of a material fact by the plaintiffs or their agents (see Section 18, Marine Insurance Act, 1906). The arrangements for the insurance were made between Mr. Monk and Mr. Hill, and the Judge found that: "Mr Monk did tell Mr. Hill that the 'Teviot Bank' had arrived and he further told him that there was damage but that such damage as there was was insignificant and negligible and would not have given rise to any claim". Before this Court the appellants accepted the Judge's finding about Mr. Monk's evidence, but submitted that (1) the Judge in his finding omitted to mention a material part of that evidence, (2) what was said was not an adequate and proper disclosure of every material circumstance.
(1) In my opinion it is not possible for this court to read Mr. Monk's evidence and come to a conclusion that the Judge did not adequately summarise it in his judgment. He heard the whole of the evidence given by Mr. Monk, The Judge heard him cross examined and had the opportunity of assessing his evidence and making a judgment. What he found was clearly supported by the evidence and in my judgment it is quite impossible for this court to say that he ought to have said more.
(2) The submission that what was said was not an adequate and proper disclosure was based on wider considerations. It was accepted that Mr. Van der Zwalm and Mr. Monk acted in perfectly good faith, but it was submitted that there was other information in the possession of agents for the buyers which disclosed greater damage and that the Judge should have paid more attention to contemporaneous written documents which supported this view. It was further submitted that their contents were such as to compel a conclusion that the condition of the cargo was much more damaged than Mr. Monk's statement suggested.
There were three documents relating to Mr. Theeuwes on which Mr. Hobhouse relied, two of them, a statement by Mr. Theeuwes made on 17th December, 1973, and a report made by Mr. Theeuwes on 25th March, 1974, described a situation that was rather worse than that reported by Mr. Van der Zwalm in that Mr. Theeuwes was said to have described the soya beans as "hotted up and heated" and said that "the cargo was not in a good state at the time of unloading". More importantly Mr. Hobhouse relied on a letter written on 28th July, 1973, by Mr. Dankers of Beckmann and Jorgensen reporting a conversation with Mr. Theeuwes. In the course of this Mr. Theeuwes said: "The beans were wet, brown, heated, mouldy and smelled. Only along a ship's walls and on the bottom a small layer of sound beans was established. Furthermore the lot was completely damaged."
Mr. Theeuwes in evidence accepted that he had said this and the Judge in reviewing this said: "The point is one which goes entirely, as I see it, to the credit of Mr. Theeuwes. It does not furnish any independent evidence as to the condition on the basis that the Judge was wrong in dealing with it only as a matter of credit and submitted that the document was evidence under Section 3, Civil Evidence Act, 1968. Since Mr. Theeuwes said it was an exaggeration the Judge, in my opinion, was entitled to take the line that he did. Because of this document and indeed the other two to which I have referred the Judge had reservations about Mr. Theeuwes' evidence and took that into account in reaching his conclusion.
Another letter on which Mr. Hobhouse placed some reliance was a letter from Mr. Hanno dated 28th July 1973, which reported the quality of the soya beans as being very bad and that the entire consignment was overheated at 50 degrees centigrade. Mr. Hobhouse submitted that this was a contemporaneous statement on which reliance should be put but the learned Judge regarded it as an exaggerated letter (in particular it conflicted with information in a letter from Mr. Dijkgraaf of Beckmann and Jorgensen, Mr. Bankers' firm, which said that the soya beans of the top layer were hand warm). The Judge regarded the letter from Mr. Hanno as an exaggeration pointing out that there was no other suggestion anywhere that the cargo had reached such a high temperature. The most important documents on which Mr. Hobhouse relied were two reports from Mr. Duytschaever dated 25th July, 1973. but held by the Judge to have been made later and antedated. The second report was a revision of the first. The Judge set out the two reports at length, and considered very fully the explanations which had been given for these amendments. I do not propose to repeat the Judge's consideration here; I entirely agree with it. His conclusion was: "I find that his second report is a contemporary document containing a genuine account of what he saw with his own eyes once the hearsay had been eliminated". Mr Hobhouse argued before us, as he had before the learned Judge, that even in the second report the damage was more serious than that described by Mr Van der Zwalm, The Judge said that in his view it was not a fair reading to say that it was serious, he said: "Mr Duytschaever is saying quite clearly that by the time he arrived on the 19th July the cargo being discharged was quite normal". In my opinion the Judge's conclusion on this aspect of the matter is entirely justified, and not one with which this court can...
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