prime aloyce vs malawi cargo centres ltd 2010 tzhccomd 21 30 september 2010

IN THE HIGH COURT OF TANZANIA

COMMERCIAL DIVISION

AT DAR ES SALAAM COMMERCIAL CASE No 71 of 2009

EPIMARK MAKOI PRIME ALOYCE................... PLAINTIFFS Versus MALAWI CARGO CENTRES LIMITED.................. DEFENDANTS

JUDGMENT MRUMA, J. The plaintiffs Epimark Makoi and Prime Aloyce are businessmen living and working for gain in Dar es Salaam. The defendants Malawi Cargo Centres Limited are a limited liability Company duly incorporated in Tanzania dealing with cargo handling. The plaintiffs' claims against the defendants are for the physical recovery and possession of a container bearing No. CMAU 160044-7 containing 204 bales of clothes imported from China. The plaintiffs are also claiming for payment of TZS 40,800, 000/= being loss of expected earnings and general damages the assessment of which was left to the court to decide. It is alleged in the plaint that sometimes in August, 2008 one Elina Godfrey signed a contract with a Chinese company Zhejiang Zhongyu Lace Company Limited under which the former bought on credit several bales of clothes from the later. 1 When the consignment was shipped to Dar Es Salaam sometimes in October, 2008, Elina Godfrey failed to pay the agreed price for two containers as a result of which the consignor in collaboration with a broker one Baraka Ngang'anyi decided to re-sale the two containers to any interested buyer. The plaintiffs were among the interested buyers and in November, 2008 the plaintiffs through the broker bought 578 bales packed in two containers namely FSCU 393673-3 with 374 bales and CMAU 160044-7. They were handed over with the original bill

of lading for each container. The purchase value for the two containers are said to be USD 7, 758. 00 and 7, 920. 00 respectively. In February, 2009 the plaintiffs instructed M/S Sky freight Ltd, a clearing agent to clear the container bearing number FSCU 393673-3 through customs and deliver it to them. The container was duly cleared and delivered to the plaintiffs. Sometimes in March, 2009 the plaintiffs instructed the same agent to clear and deliver to them container No CMAU 160044-7. By 9th April, the agent had already completed all the import clearing procedures including payment of all import taxes. The container was released by the customs. However, the defendants refused to deliver it to the plaintiffs agent M/S Sky Freight Ltd and hence this suit. The defendants in their written statement of defence denied every allegation made against them. They said that the defendants do not owe the plaintiffs any money as alleged or at all. They said that the consignment known to them belongs to Elina Godfrey and there is no change of consignee from Elina Godfrey to any of the defendants or both of them, therefore there is no basis for delivering it to the plaintiffs. Four witnesses, Baraka Nyang'anyi PW1, Song Ling- Li PW2, Epimark Makoi PW3, and Elias Furia Mwanga PW4, testified for the plaintiffs, while three witnesses namely Benson Elia Kasalile DW1, Gerald Galusa Ndowesa DW2

and Sebastian Lucas Chamdunda DW3, testified for the defendants. The plaintiff's case started with the testimony of Baraka Nyang'anyi PW1, a Tanzanian who lives in China. He told the court that although he is still a student in China but he is also a broker connecting Tanzanian businessmen to their 2 counterparts in China. He knows both plaintiffs in this case. He remembers that sometimes in October, 2008 he connected the plaintiffs to Gejan less company Limited, a Chinese factory which deals with the manufacturing and selling of less materials goods. He said that the factory had a cargo of less material clothes which was earlier on sold to another Tanzanian and was on its way to Dar es Salaam but the 1st buyer had failed to pay when she was required to pay for it. According to this witness the plaintiffs were interested and requested him to advise how they could pay for the cargo while in Dar es Salaam. Acting as a broker, PW1 duly advised the plaintiffs who paid for two containers. Thereafter he obtained bill of ladings for the two containers and sent them to the plaintiffs. The plaintiffs managed to clear the 1st container without any problem, but they failed to get the second container. It is the evidence of this witness that although the plaintiffs managed to clear the second container after paying all the duties and taxes required and was given clearance form, the

defendants refused to deliver the cargo to them for reasons that the name in the clearing documents was not that of the plaintiffs. The witness testified further that in the effort to assist the plaintiffs to get the container he obtained a letter from the shipping line and the factory showing that the holder of the cargo manifest, i. e. the plaintiffs were actually the new owner of the cargo therefore the container should be released to them but the defendants refused to release it. Song ling Li PW2 a Chinese national, is another witness who testified for the plaintiffs. He testified that he works with a Chinese company called Zhong Yu Lace Limited based in China. He remembers that his company did business with a Tanzanian called Lina Godfrey. According to this witness Lina paid advance payment for two containers containing bales of clothes. The balance of purchase price was to be paid on delivery. When the containers reached Dar Es Salaam, she failed to pay the balance so that cargo the manifest could be delivered to her. PW2 approached PW1 whom he considered as his agent in order to look for a person who could buy the two containers. He was connected to the plaintiffs who 3 paid the entire price for the two containers and were given the cargo manifest for the two containers. Later on PW2 realised that one of the two containers had not been delivered to the plaintiffs. He

wrote to the custom officials to notify them about the new owner of the cargo. Epimark Makoi PW3 and the 1st plaintiff in this suit is another witness who testified for the plaintiffs. He told the court that together with Prime Aloyce, PW4 they deal with ladies apparels and less materials at Kariakoo area herein Dar Es Salaam. He remembers that sometimes in October, 2008 they were approached by PW1 who informed them that there were two containers which were on sale after her original buyer had failed to pay the balance of purchase price. They get interested in the cargo and asked him to send samples thereof. PW1 sent samples of the said clothes by DHL and the plaintiffs were satisfied with the quality of the materials and agreed to buy them. They paid USD 7, 900.00 for the 1st container and USD 7, 700. 00 for the second one. Thereafter, PW1 sent the original bill of lading and they managed to clear and posses the 1st container through a clearing and forwarding agent called Sky Freight. The cargo document was in the name of Elina Godfrey, who happened to be the 1st buyer of the cargo. As regards the second container, it is the evidence of PW3 that the plaintiffs managed to clear the cargo through customs but the defendants refused to release it to them on the ground that the cargo manifest bear a different name from that of the plaintiffs. They communicated to PW1 who requested

them to send back the original bill of lading so that he could change the name of the consignee. It is further in the evidence of PW3 that because the original bill of lading had already been handed over to the defendants and the shipping line, they failed to send it back to china and he so informed PW1. PW1 gave them a letter indicating that the owner of the cargo has changed and that they were the new owners of the cargo but the defendants refused to heed to their demand for release thereof. Instead, the defendants told them that they can go anywhere they would like to. 4 According to this witness, had the container been released to them on time they would have sold each bale at a price of TZS 200, 000/= and because there were 204 bales, they could have realized TZS TZS 40, 800, 000/= which they are now claiming as loss of expected earnings. The last witness to testify for the plaintiffs is Elias Furia Mwanga PW4, the managing director of Sky Freight Limited, a limited liability company which deals with clearing and forwarding of cargos from the port of Dar Es Salaam and which was engaged by the plaintiffs to clear the container in dispute. According to this witness, the plaintiffs are his customers. He remembers that sometimes in February, 2009 the plaintiffs contracted him to clear two containers for them. They gave him original bill of lading and invoices bearing the name

of Elina Godfrey. The two containers had clothing materials. He processed the documents through the customs and paid all the duties as assessed by the customs. Thereafter, he was issued with a delivery order by the shipping line certifying that all due process had been complied with therefore the cargo can be released for further processes. He took the delivery order together other documents and presented them to TRA and Custom officials for cargo inspection. It is further evidence of PW4 that the cargo was duly inspected and he was issued with a release order which he attached together with the delivery order and presented them to the defendants for delivery of the cargo to him ready for handing it over to the plaintiffs. It is the evidence of this witness that the defendants released only one container and refused to release the second one. For the defence case two witnesses testified. The first is Benson Elia Kasalile DW1, an assistant operation manager of the defendant's company. He testified that the defendant's core function is to receive cargo from the shipping lines and store them for their customers while waiting for customs clearing processes to be completed. After the completion of clearing processes, they are required to hand over the cargo to the lawful owner. 5 He remembers that one time, which he could not remember, he saw the plaintiffs accompanied by their

agent, PW4 coming to the defendant's offices claiming that a container which bear another person's name belonged to them. According to this witness, the defendant's company refused to release the cargo to the plaintiffs because according to the cargo manifest the cargo belonged to one Elina Godfrey. It is further testimony of DW1 that they refused to release the container to the plaintiffs and their agent because at one time a cargo belonging to the said Elina Godfrey got lost while under their custody. Bearing that in mind, the defendants wrote to the shipping line to seek clarification as to whether there was any change of name from that of Elina Godfrey to that of the plaintiffs or any of them. The shipping line responded negatively, that is to say there was no such change of names of the consignee (Exhibit D2). Basing on that letter they found no justification to deliver the cargo to the plaintiffs. Another witness who testified for the defendants is Gerald Wakisa Ndowera DW2, a logistics manager of the defendant's company. The testimony of this witness was substantially geared on the procedures of releasing a cargo from their go downs. At the commencement of the trial four issues were framed as being issues in dispute in this case. The issues are: (1) Whether a bill of lading and Manifest are conclusive evidence of ownership of cargo (2) Whether the plaintiffs' are the

owners of the disputed cargo, that is to say the 204 bales of clothes (3) Whether the defendants are bound to release the cargo to the plaintiffs. (4) To what reliefs are the parties entitled. I beg to start with the first issue: whether a bill of lading and cargo manifest are conclusive evidence of ownership of the cargo. It is submitted by the plaintiff's counsel that although a bill of lading is a document of title this does not necessarily mean that it is a conclusive evidence of 6 ownership of a cargo. Two reasons are given to support this suggestion; one, it is stated that if the buyer fails to pay the agreed price, the seller is entitled to stop delivery of the cargo to the buyer or his agent; two, it is stated that under the circumstances in position one above, the seller retain power to re-sale the cargo to the second buyer. The counsel quoted the learned author Clive M. Schmitthoff in his book 'Schmith Thoff's Export Trade the Law and Practise of International Trade' 7th edition published by Stevens and Sons Limited, London 1980 at page 104 where the said author stated that:­ " If the buyer has become insolvent and the goods are still in transit, the seller is entitled to stop their delivery even where the bill of lading has been delivered to the buyer or his agent........” It is the plaintiffs' counsel submission this is what happened in this particular case. On the other hand it is submitted by the defendants' counsel that the fact that the bill of lading (though not tendered in evidence) and the cargo manifest tendered in evidence (as exhibit DI), give the name of the consignee as Elina Godfrey of P.

0. Box 2051 Dar Es Salaam is a conclusive evidence that the cargo belongs to the said Elina Godfrey and not to the plaintiffs as claimed in this suit. The learned counsel submitted further that a bill of lading may be regarded in three 'several' [sic] aspects, that: it is a receipt given by the master of a ship to acknowledge that the goods specified in the bill has been put on board, (2) it is the document that contain the terms of the contract of the carriage of goods agreed upon between the shipper of the goods and the ship owner (whose agent the master of the ship is) and three, it is a document of title to the goods of which it is a symbol". In his submissions the learned counsel was referring to the definition of the term bill of lading as defined by Black's Law Dictionary. He emphasized that because the document of title bear the name of Elina Godfrey, then goods described therein belongs to the said Elina. Admittedly, the bill of lading (though was not tendered by the parties in this suit), bears the name of Elina Godfrey as the consignee of the claimed cargo. There is 7 also no dispute that a bill of lading is a document of title. The fact that the bill of lading in dispute was in the name of Elina Godfrey was confirmed by the testimony of plaintiffs' own witnesses PW1, PW3 and PW4. Therefore there can be no dispute that the name of the consignee in both the cargo

manifest and the bill of lading is that of Elina Godfrey. These witnesses testified further that it is PW4 who on behalf of the plaintiffs surrendered it to the shipper. The only question that has to be resolved by this court is whether the fact that the said document of title bears the name of Elina Godfrey alone is a conclusive evidence that the cargo therein belongs to the said Elina. As rightly submitted by the defendants' counsel a bill of lading is a document issued by or on behalf of a carrier (owner of the ship) of goods by sea to the shipper (i. e. consignor), who is often the seller. It acknowledges the fact that the goods have been received and loaded in apparent good order and conditions. In addition it normally contains the terms of the contract of carriage and evidence of possession and ownership of the goods. As a result, the delivery of the goods at their destination is regularly made by the carrier to the holder of the bill of lading against the surrender of that bill. Bills of lading, therefore evidence the contract between the shipper of the goods, the carrier, and the consignee who ultimately receives the goods. These are multi­ faceted contracts which perform different functions according to their type, and depend upon who the possessor of the bill of lading is upon its surrender. In essence therefore, bills of lading have three functions: they operate as a

receipt for the goods shipped, as evidence of a contract of carriage itself, and lastly as stated by the learned counsel, it is a document of title. So, it is this latter function of the bill of lading with which we are presently concerned and which is of relevance in the context of the first and second issues in this matter. The defendants' counsel contends that possession of a bill of lading (which is a document of title), by Elina Godfrey is conclusive evidence of ownership by her of the cargo in dispute. On the other hand counsel for the plaintiff submits that mere possession of the document does not confer ownership upon the possessor. 8 The evidence adduced in this case shows that although the document bears the name of Elina, but at the port of discharge it was in the possession of PW4 who held it on plaintiffs behalf and surrendered it to the shipper on that behalf. How the document came in the possession of the plaintiff is well explained by PW1 Baraka Nyang'anyi and PW2 Song Ling Lin. According to these two witnesses the document was handed over to the plaintiffs after the first buyer of the goods Elina Godfrey failed to pay the agreed price when the goods were already in transit. The plaintiffs paid for the goods and the documents were handed over to them by the consignor or the seller. This testimony was not challenged by the defendant. Unfortunately, and for

reasons not clearly stated by the defendants, Elina was not called to testify in this matter. Elina could be an important witness in this matter because the dispute here is not between the consignee, Elina and the consignor or the shipper, but between the holder of the document of title (i. e bill of lading), who are plaintiffs and the defendants who are terminal operators and the gist of the dispute is the ownership of the goods between Elina and the plaintiffs. N.J J Gaskell Debattista and RJ.S Swatton in their famous book Chorley and Giles' Shipping Law, 8th edition Pitman, 1988 at 251, observes that the description of the bill of lading as a document of title has always been problematic to the extent that although the bill came to symbolize the goods described in it, it does not necessarily transfer ownership of the cargo when it is transferred from the shipper to the consignee (see also Halsbury's Law of England Butterworths Vol. 43 (2),-1 May 1997 at Para 1534). There is little agreement as to what constitutes a document of title. The author of Scrutiny Charterparties & Bills of lading (19th Edition), Sweet & Maxwell, 1984 at pg 1 describes a document of title as a document by endorsement of which the property in the goods for which it is a receipt may be transferred, or the goods pledged or mortgaged. Hare Shipping Law and Admiralty Jurisdiction in South Africa Juta &

Co, 1999 at 540 suggests that the expression 'document of title' may be too broad a description because a bill of lading more accurately evidences the right of possession to cargo and not necessarily ownership thereof. Carver in 9 Carriage by Sea (13th Edition), Stevens, 1982 at 1113, similarly places an emphasis on the right of the holder of the bill of lading to demand possession of the goods and to transfer that right. Whether the transfer of the bill of lading will result in the transfer of rights of ownership is dependent upon the underlying intention of the parties which may appear from the terms and conditions of the purchase and sale contract. The English Court of Appeal in Delfini's case, commonly cited as The Delfini [1990] 1 Lloyd's Rep 252 provides a useful explanation of the meaning of 'document of title' when it is applied in relation to bills of lading. The court said: '.............. It does not in this context bear its ordinary meaning. It signifies that in addition to its other characteristics as receipt for the goods and as evidence of the contract of carriage between the shipper and the ship owner, the bill of lading fulfils two distinct functions.

1. It is a symbol of constructive possession of the goods which (unlike many such symbols) can transfer constructive possession of the goods by endorsement and transfer: It is a transferable 'key to the warehouse'.

2. It is a document which, although not itself capable of directly transferring the property in the goods which it represents, merely by endorsement and delivery, nevertheless is capable of being part of the mechanism by which property is passed' It could therefore be concluded that the bill of lading and therefore the document of title and/or the cargo manifest is not a conclusive evidence of ownership of the goods mentioned therein. In the circumstances, the first issue is answered in the negative. The second issue is whether the plaintiffs are the owners of the disputed cargo. I would answer this issue in affirmative. There is evidence from PW1 who described himself as an agent therefore a go between the consignor or seller in China, and the plaintiffs who are said to be the second buyer of the disputed cargo. This testimony was corroborated by the evidence of Song Ling Lin PW2 the sales officer of Zhejiang Zhongyu Lace Co Ltd, a Chinese company which sold the cargo to the plaintiffs after its first purchaser Elina Godfrey had failed to pay for it. The cargo was sold while on transit. io As I have observed above, in common law systems if the buyer is incapable of paying for the goods, the seller retain his right to stop delivery and re-sale them while on transit even where the bill of lading has already been handed over to the buyer. In the case at hand the bill of lading

had not been delivered to the first buyer Elina Godfrey when the seller stopped delivery and re-sold the goods to the plaintiffs. The seller being the original owner of the goods had good title to pass to the plaintiffs. Surprisingly, the defendants do not dispute the fact that Zhejiang Zhongyu Lace Co Ltd is the consignor and therefore the seller in this transaction. Apparently the defendants' fears in delivering the cargo to the plaintiffs are based on the fact that 'there is no proof that the plaintiffs are the owners of the said cargo in view of a bill of lading which shows the consignee to be Elina Godfrey'. I have resolved the issue of ownership when answering issue one above. However, I feel duty bound to enquiry on the powers and duties of the defendants as depot operators in handling of cargoes. Do they have power to refuse to deliver goods already cleared by customs? It is submitted for the defendants that as terminal operators the defendants have powers under the provisions of section 125 (2) of the Customs (Management and Tariffs), Act Cap 403 RE 2002 to demand proof that the agent was duly instructed. It is submitted further that it was the duty of PW4 to satisfy the defendants that he was the agent of Elina Godfrey, the known owner according to the documents. I have already ruled that the documents in question do not confer ownership upon the person mentioned

therein. Regarding powers and duties of the defendants under the Customs Act, I am not convinced that the provisions of section 125 (2) of the Customs (Management and Tariffs) Act do give to the defendants, a private depot operators powers to demand proof from clearing and forwarding agents who come to collect their agents' cargoes from them. As rightly captured by the plaintiffs' counsel section 125 (2) of the Customs (Management and Tariffs) Act should not be read in isolation. The provisions of section 125 should be read in conjunction with sub­ section (3) of the same section and together with sections 2 and 3 (2) and (3) of the same Act. 11 While section 125 (2) deals with the qualification of 'a duly authorized agent of any owner' section 125 (3) is devoted to discretional power of the 'proper officer' to demand from an agent a proof that he is duly authorized. The law says: "The proper officer may require from any person purporting to be a duly authorized agent of any owner the production of his written authority and in default of the production of such authority the proper officer may refuse to recognise such person as a duly authorized agent" The term proper officer is defined under section 2 of the Act to mean:- "Any officer whose right or duty is to require the performance of or to perform the act referred to" Officer under the same section 2 of the said Act includes

any person other than a labourer, employed in the service of the Customs and the word Customs means 'the Custom and Excise Department'. The defendants are not employed in the service of customs properly so saying. In view of the above provisions of the law, the defendants are not for any purpose 'proper officers' within the ambit of the law. They have no duty to manage and administer customs, transfer tax and related matters as they would like this court to believe. In absence of evidence to the contrary I am prepared to hold that depot operators act as independent contractors. They can only withhold cleared cargoes if their storages charges are not paid. They are licensed to keep the cargoes and charge for their service. Their duties are to keep and deliver the cargo to owner upon production of release order from the customs. Under the provisions of section 126 of the Customs (Management and Tariff) Act, a duly authorised agent is deemed to be the owner of the goods and he is liable for the performance of all acts in respect of such goods which the owner thereof is required to perform. In South African case of the Mariannina 1976 (4) SA 464 (A) at 491-492 it was held that: 12 "The holder of the bill (in our case the agent) is entitled to the exclusion of others to receive the goods from the ship at the place of destination." From the evidence on record in the instant case,

this was done and the plaintiffs through their agent PW4 cleared the cargo. In law therefore, the defendants are bound to release the cargoes to PW4 who is the agent of the plaintiffs who are the owners thereof. This answers the third issue in the affirmative, that is to say the defendants are bound to release the cargo (204) bales of clothes to the plaintiffs. The last issue is about the reliefs. The plaintiffs are praying for the orders that the defendants be ordered to handover the said container with 204 bales to them. I think they are entitled to that order. They have been able to proof on the balance of probability that the cargo belongs to them. The cargo having being cleared and a release order issued by the customs to the plaintiffs, the defendants have no justifiable cause to continue to with hold them. I accordingly order that a container bearing number CMAU 160044-7 with 204 bales of clothes be handed over to the plaintiffs through PW4. The plaintiffs are also claiming TZS 40, 800, 000/= being loss of expected profit. The plaintiff's request for reliefs under this category is based on the ground that; 'the said bales are for business purposes. Thus, if the defendants would have delivered them in time, the plaintiffs would have earned Tshs 40, 800, 000/= by selling each bale for Tshs 200, 000/=. However as of today they (the bales) cannot be sold at such price as

they already out of fashion' I will start my discussion on the issue with the principle set out by English Court in the case of Robinson v Harman [18481 1 Exch 850 that states: "The rule of the common law is, that where a party sustains loss by reason of breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed" In the present case the plaintiffs bought the said bales of clothes with a view to recouping their expenditure initially and going on then to securing profit. In my opinion when assessing the total loss of profits expected from the transaction any 13 expenditure must be subtracted from the figure claimed, not doing so would put the plaintiff in a better position than he would have been if the wrong would have not been committed. The court must have regard to the plaintiffs' actual position and what would have been had the wrong not committed. The plaintiffs gave evidence to the effect that they paid USD 7, 920.00 as purchase price for the said 204 bales. This (if converted into local currency at the current rate of 1USS for Tshs 1500 ), is about Tshs 12, 000,000/=. As indicated above the plaintiffs are claiming Tshs 40, 800, 000/=. This means that the expected profits outweigh the initial capital by more than three hundred percent. To say the least this is unrealistic. In

business undertakings there are chances of making profits and also those of making losses. Business undertakings are also liable for taxes, duties and other costs. It will be highly unrealistic to assume that the plaintiffs would reap above three hundred percent profit in cloth businesses or any other formal business. The plaintiffs being experienced businessmen are apparently aware of this reality. Now taking into account the cash capital invested in the business, the time the cargo had unjustifiably been withheld by the defendants and the fact that I have already ordered the cargo to be handed over to the plaintiffs, I assess loss of expected profits at Tshs 10, 000, 000/= (say ten million only). The plaintiffs are also claiming for general damages at the rate to be assessed by this court. However, having order for return of the cargo to them and for payment of damages for expected profit, I feel that the common sense requires that no further award in terms of general damages should be granted. I therefore decline to award general damages. Regarding the interest, I find no basis for claiming compound interest at the rate of 30% per annum as prayed for by the plaintiffs. To the contrary and having in mind the fact that this matter involves commercial items, I would order the defendants to pay interest at the rate of 21% per annum for the award for loss of profit above from the date of filing this suit to the date of judgment. Further interest at court's rate of 7% per annum shall be charged from the date of this 14 judgment to the date of full payment of the decreed amount. The plaintiffs will have their costs in this suit. Order accordingly. A. R. MRUMA

JUDGE 15