|
OUTER HOUSE, COURT OF SESSION
[2006] CSOH 40
|
|
CA55/05
|
OPINION OF LORD CLARKE
in the cause
STORA ENSO OYJ
Pursuer;
against
PORT
OF DUNDEE
Defender:
________________
|
Pursuer:
Borland; Henderson Boyd
Jackson, W.S.
Defender: R I Macpherson, Solicitor Advocate, Simpson
& Marwick
8 March 2006
[1] This
commercial action relates to the destruction, by fire, of two consignments of
wood pulp while stored in a warehouse owned and operated by the defender. The pursuer, a Finnish company, sues for the
loss and damage which it claims it has suffered as a result of destruction of
the wood pulp. The defender has been
sued both on the basis of breach of contract and of negligence.
[2] In
Article 2 of Condescendence the pursuer avers as follows:
"The pursuer is
an international producer of, inter alia,
wood pulp. The pursuer was, and is, part
of the Stora Enso group of companies. In
January 2000, one of the companies in the Stora Enso group, namely Stora
Enso Fine Papers Oy ('SEFP') had certain quantities of wood pulp shipped to the
port of Dundee. The relevant vessel arrived at Dundee
on or about 18 January 2000. On its arrival, the wood pulp was transferred
to a warehouse at the port..... The said warehouse was owned and operated by the defender".
In Article 3 of Condescendence
the pursuer avers as follows:
"As at 22 February 2000, SEFP's wood pulp
remained in the defender's warehouse. On
that date, trespassers gained entry to the warehouse, and started a fire. SEFP's wood pulp was destroyed. SEFP was merged with the pursuer, under and
in terms of Finnish company law (the law of incorporation of both companies),
on 30 June 2001. The effect of the merger was that the pursuer
was the universal successor of SEFP. As
at 30 June 2001, SEFP's
assets and liabilities, including any claims open to it, were transferred, in
terms of Finnish law, to the pursuer.
The claims which are the subject of this summons were ones which
transferred to the pursuer, as aforesaid.
After 30 June 2001,
SEFP is regarded, for the purposes of Finnish law, as having ceased to
exist. As a result of the destruction of
the said wood pulp, SEFP (and hence the pursuer) suffered substantial losses,"
The defender in Answer 3 avers,
inter alia, as follows:
"With reference
to the Pursuer's averments regarding the merger between Stora Enso Fine Papers
OY and the Pursuer, it is admitted, under the explanation following: that such a merger did take place on
30 June 2001; that the effect of
the merger under Finnish law (Finland being the domicile of both companies) was
to transfer to the Pursuer from Stora Enso Fine Papers OY all of the latter's
assets and liabilities and other rights and obligations; and further that Stora Enso Fine Papers OY
was on that date dissolved at the same time as the transfer took place".
[3] The
defender has, in addition to a general plea to the relevancy, two other pleas
which are preliminary in nature. The
first of those pleas is plea-in-law no.2.
It was originally in the following terms:
"The Pursuer
having no title to sue on account of never having had title to the goods and
risk in the goods having passed from Stora Enso Fine Papers OY to the
consignees by the time of the fire, the action, insofar as directed against the
(First) Defender, ought to be dismissed".
(There was originally another
defender to the action, but the action as directed against that defender was
abandoned by the pursuer on 15 August
2005). The second of the defender's
two pleas referred to is no.3 which is to the following effect:
"No intimation
having been given by Stora Enso Fine Papers OY to the (First) Defender of any
transfer by it of any right of action against the (First) Defender, and that
defect now being incapable of being cured, the action brought by the Pursuer
against the (First) Defender is irrelevant and ought to be dismissed".
At a procedural hearing, on 10 October 2005, it was agreed that
the defender's plea-in-law no.2, and the averments in support thereof, should
be the subject of a preliminary proof and that the defender's third plea-in-law
should be the subject of a debate. It
was, furthermore, agreed that both the preliminary proof and the debate should
be dealt with at one hearing. I
pronounced an interlocutor to that effect.
[4] In
the event, at the hearing, after some discussion in relation to the defender's
third plea-in-law, the solicitor advocate for the defender intimated to the
Court that the defender was no longer insisting upon it and that it should be
repelled.
Evidence
[5] At
the preliminary proof the pursuer led two witnesses. The first of these was Mr Peter
Crane. He is employed as a sales
director by Stora Enso UK Limited. He
explained that during late 1999 he negotiated contracts for the supply of pulp,
on behalf of mills, operated within a group of companies, to which Stora Enso
UK Limited belonged. He was, in
particular, responsible for negotiating a contract for the supply of pulp to a
company known as Henry Cooke Limited. (The consignment of pulp to which the
second conclusion relates was to be supplied to Henry Cooke Limited). These
negotiations, he said, were carried out with Miss Catherine Gale of Henry Cooke
Limited, who was the other witness who gave evidence at the proof. The negotiations, Mr Crane said,
culminated in an agreement, the terms of which were set out in a document which
is no.2 in the agreed bundle of documents.
The document is in the following terms:
"WOOD PULP
SUPPLY AGREEMENT BETWEEN
HENRY COOKE LTD
AND STORA ENSO PULP
·
This agreement covers Northern Bleached Softwood
Kraft and Bleached Hardwood Kraft supplied through STORA ENSO PULP on behalf of
our Kemijarven, Enocell and Oulu Mills
·
This agreement is to cover the period from 1 January 2000 until 31 December 2000.
·
The total annual tonnage which HENRY COOKE LTD
agrees to buy and STORA ENSO PULP agrees to sell is approximately
7,500 tonnes. The grade split will
be roughly as follows:
6,000 tonnes
Bleached Softwood Kraft
1,500 tonnes Bleached
Birch Kraft
·
Prices will be mutually agreed in accordance
with market conditions.
·
Prices and the terms of delivery will be on a
CIP Dundee basis. A 6.5% inter-company
rebate will be granted on each invoice.
The invoice date will be the release date and payment will be at 60 days
from the end of the month of the release.
·
The releases are to be made as evenly as possible
during the year.
·
This Agreement will be in accordance with the
General Trade Rules for Wood Pulp.
At the foot of the document appears
the following.
'Signed Signed
Mr S Fors Ms C Gale'".
The document lodged in process is
not signed.
[6] Mr Crane
said that, generally speaking, pulp prices in Europe
were quoted on a CIF basis. When asked
what the expression "CIF" denoted in the pulp industry the witness said that it
denoted that the supplier of the pulp was to be responsible for all the costs
of delivery of the pulp up until the point that the consignment in question
arrived at the ship's rail. The cost of
taking the goods from the ship's rail, and the cost of any storage at the port
of delivery, and carriage costs, thereafter were borne by the purchaser. That was what the witnesses described, as "the
standard situation". The agreement
entered into with Henry Cooke Limited was, as has been seen, to endure for one
year. It was the position, in the pulp
supply industry, to negotiate for the supply of pulp to customers during what
was described, in the industry as "pulp week" which took place in November. Agreements were concluded during that time
which were intended to operate for the duration of the following year. Mr Crane said that his employers wanted
to make their terms a bit more attractive to the customer, Henry Cooke Limited,
by agreeing to bear more of the transportation and storage costs than was
usual. What they were proposing to offer
was to cover all the costs up until the pulp was loaded onto the lorry at the
port of delivery, for onward transportation to its ultimate destination. That would mean that the supplying company
would be responsible for the cost of unloading the pulp from the ship,
delivering it to the warehouse at the Port
of Dundee, the cost of storage at
the warehouse, and the cost of then placing the consignment on the customer's
lorry for onward transportation. This
proposal was acceptable to Miss Gale, acting on behalf of Henry Cooke
Limited. A shorthand way of describing
the position regarding the costs was to say that the pulp was to be delivered
"free on motor".
[7] Mr
Crane was to the effect that the reference in document 2 in the agreed bundle
to the agreement being "in accordance with the General Trade Rules for Wood
Pulp" was a reference he said to rules that applied to sales of wood pulp
worldwide. These rules are to be found
set out in document 42 of the agreed bundle.
The pre-amble to the rules state:
"1. PREAMBLE - These General Trade Rules
shall apply, except when altered by express agreement accepted in writing by
both the seller and the buyer".
Section 6 of the Rules is headed
"DELAYED PAYMENT AND OWNERSHIP OF THE GOODS".
Paragraph (c) provides:
"Delivered pulp
shall - to the extent permitted by the law of the buyer's country - remain the
property of the seller until the whole sum payable under the contract is paid
...".
Mr Crane said that he was
aware of the terms of para.6(c) when he negotiated the contract with Ms
Gale. When asked about the term "CIP",
which appears in document 2, Mr Crane explained that while the
parties had agreed that the costs would be dealt with on a "free on motor"
basis, as previously described, there was no such term to be found in a
document which is described as Incoterms 2000.
A copy of that document is no.44 of the agreed bundle. It appears it bears to be "ICC Official Rules
for the Interpretation of Trade Terms".
"ICC" is a reference to the International Chamber of Commerce. The copy of the document in question states
that it came into force on 1 January
2000. It is clear from the
terms of the document that it is itself a revision of a previous document. At paragraph 4 it is stated:
"In view of the
changes made to Incoterms from time to time, it is important to ensure that
where the parties intend to incorporate Incoterms into their contract of sale,
an express reference is always made to the current version of Incoterms. This may easily be overlooked when, for
example, a reference has been made to an earlier version in standard contract
forms or in order forms used by merchants.
A failure to refer to the current version may then result in disputes as
to whether parties intended to incorporate that version or an earlier version
as a part of their contract. Merchants
wishing to use Incoterms 2000 should therefore clearly specify that their
contract is governed by 'Incoterms 2000'". (My emphasis).
Mr Crane said, in evidence,
that he was keen, if possible, to employ an Incoterm to describe the parties'
agreement regarding the allocation of costs but found that "FOM" did not appear
as an Incoterm. His company decided,
therefore, to use Incoterm "CIP" which they considered most closely described
what the parties' agreement had been in relation to the allocation of
costs. At page 81 of
document 42 of the agreed bundle, there appears the following under the
heading CIP "Carriage and Insurance Paid to ..." means that the seller following
the goods to the carrier nominated by him, but the seller must in addition pay
the cost of carriage necessary to bring the goods to the named
destination. This means that the buyer
bears all risks and any additional costs occurring after the goods have been so
delivered. However, in CIP the seller
also has to procure insurance against the buyer's risk of loss of or damage to
the goods during the carriage.
[8] There
was, it will have been seen, no reference to Incoterms in document 2 of the
agreed bundle. The invoice issued in
respect of the consignment of pulp to which the second conclusion relates, is
no.14 of the agreed bundle. On that
invoice the sales agent is described as Stora Enso UK Limited. The witness explained that the particular
consignment of pulp was supplied by a Finnish company, Stora Enso Fine Papers
OY from their mill in Oulu, Finland. The buyer is stated, in the invoice, to be
Henry Cooke Limited. The terms of
delivery are said to be "CIP DUNDEE INCOTERMS 2000". The invoice is dated 18 January 2000.
The terms of payment are stated to be "net two monthly". The "net due date" is stated to be 31/3/2000 and the goods are said to
be in transit. At the foot of the
invoice appear the following words "The INSURANCE for these goods is covered by
Pohjola Insurance Company Ltd., Helsinki,
covering transport during the ordinary course of transit to consignee's
warehouse in the final destination named above.
Insured value: USD 276,991.00 (CIF + 10%) INCL. STORAGE IN DUNDEE". Mr Crane, in evidence, confirmed that
insurance was taken out by one or other of the Stora companies in respect of
the goods up until the point at which they were delivered to Henry Cooke's
mill. The expression "CIP Dundee
Incoterms 2000" would, he said, have been added by someone at the mill in Finland
who prepared the invoice. His
understanding was that, by the use of that expression, what was being meant was
that the supplier would pay the carriage and insurance of the goods to a
certain destination. In any event the
intention of the parties to the contract was that Henry Cooke Limited should
not have to bear any of the handling and storage charges up to the point at
which the pulp was placed on their lorry for transmission to their mill. Mr Crane advised the Court that, at the
time of the fire which resulted in the destruction of the pulp, Henry Cooke
Limited had not paid for the pulp. The
risk of the pulp at the time of the fire remained with his company.
[9] In
cross-examination, Mr Crane said that he had been responsible for drafting the
terms of document 2 in the agreed bundle but that the person whose name
appeared at the bottom left hand corner of the document. i.e. S Fors,
was the person who was finally responsible for agreeing the terms. That person was based in Düsseldorf. The agreement bore to be with Stora Enso Pulp
which was, he said a division of the group Stora Enso, which employed 46,000
persons worldwide. There were various
"divisions" of the group including e.g. a fine paper division and a pulp
division. The agreement with Henry Cooke
Limited was, he thought, with the pulp division, Stora Enso Pulp, based in Düsseldorf,
although he did not think that this was a separate corporate entity. The mills, however, were separate corporate
identities within the group. Stora Enso
Pulp effectively acted as agents for the mills.
Mr Crane said that, in discussing the agreement with Miss Gale
he told her that he intended to insert the expression "CIP" into the written
agreement. He had checked the
appropriateness of doing this with a Miss Sonja Aldergard, in the administration
section of his company. He intimated
that it was invariable practice to incorporate, in any contract relating to
supply of pulp by members of the Stora Enso Group, the General Trade Rules for
Wood Pulp. His evidence, furthermore,
was that the insured party in respect of the pulp until it arrived at Henry
Cooke's warehouse was Stora Enso. He was
quite clear that the intention of the parties to the contract had been that
Stora Enso would be responsible for the costs of transportation and storage of
the pulp up to the point of the goods being placed on Henry Cooke's
vehicle. The risk in the goods was to
remain with Stora Enso up until then and, accordingly, it was for them to insure
the interest in the goods up until that point in time. In fact the insurance taken out covered the
goods until delivery to the customer's warehouse because the additional cost
was minimal. He had thought that these
contractual arrangements could be appropriately described as a contract to
which the Incoterm CIP might apply. He
did seem to indicate, however, that he now appreciated that that term, perhaps,
did not achieve that purpose.
[10] Miss Catherine Gale, who gave evidence, advised the Court that
between May 1998 and August 2005 she had held the position of purchasing
and logistics manager with Henry Cooke Limited who are paper
manufacturers. She was responsible for
negotiating all contracts relating to the supply of wood pulp to her
company. In particular she was
responsible for negotiating the terms of the agreement whereby Stora Enso would
supply her company with wood pulp for the period 1 January to 31 December 2000. She carried out these negotiations with
Mr Crane. As regards the price of
the pulp to be supplied, the agreed price, she said, was to cover "all supply
chain costs" to the point when the pulp was placed on the vehicle of Henry
Cooke's nominated carrier at the port of delivery. Broken down, the price paid was to cover:
1. The
cost of the pulp itself.
2. The
cost of shipping the pulp from Finland
to United Kingdom.
3. Handling
costs at the port in the United Kingdom,
i.e. Dundee.
These costs were the costs incurred in moving the pulp from the ship to
the warehouse at Dundee.
4. The
cost of storing the pulp at the warehouse at the port.
5. The
handling costs involved in removing the pulp from the warehouse to the vehicle
of Henry Cooke's nominated carrier.
That price of the pulp included all
of the foregoing was commercially attractive to her company. Miss Gale confirmed that she was fully
familiar with the content of document 42 in the joint bundle, i.e. the
General Trading Rules and she understood that they were to apply to all the
supplies of pulp by Stora Enso to her company during 2000. She was, in particular, fully aware of Rule
6(c) at the time of negotiating the agreement with Mr Crane. She did not recall having any specific
discussion with Mr Crane about when risk in the pulp would pass to her
company. She was familiar with the
contents of document 44. The
Incoterms, she said, were not invariably used in contracts regarding the supply
of pulp. They did not have, as such, any
legal effect. They were simply available
"to aid understanding". Other suppliers
to her company employed the term "FOM" meaning "free on motor" which did not
appear in the Incoterms. When
Mr Crane inserted "CIP" in the document, no.2 of the joint bundle, she
said she queried whether that expression truly reflected what they had agreed
should be encompassed in the price for the pulp. Her recollection was that, after discussing
the matter with Mr Crane and his assistant, their position was that this
was just a different way of saying "FOM".
In any event, her company did not pay any transportation or handling
charges in relation to the pulp supplied under the contract up until the point
when the pulp was placed on their designated vehicle. Nor did they pay anything for the storage of
the pulp at the warehouse at the port of delivery. The date for payment of the price in relation
to the particular consignment would have been 31 March 2000. She
would have been the person responsible for authorising payment. Her company had not, to her knowledge, made
any insurance claim in respect of the destroyed pulp. Had there been such a claim she would have
been responsible for investigating it.
[11] In cross examination Miss Gale confirmed that she would
have seen the invoice relating to the pulp.
She would have been the person responsible for authorising payment of
it. She could not, at first, recall if
the invoice had been paid. She did
recall that a credit note was raised in respect of the sum involved. That meant that, in the meantime, the invoice
had been "processed" but that did not necessarily mean that it had been
paid. When the pulp was available for
collection at the port, she would have received a release note from the
supplier. The relevant note would have
been what would have allowed her to authorise payment of the price. Miss Gale said her company paid nothing
in respect of the insurance of the pulp.
[12] In re-examination the witness said that payment of the invoice
would not have been made before 31
March 2000.
Submissions for the pursuer
[13] Counsel for the pursuer invited me to repel the defender's
second plea-in-law. In doing so he made
some general submissions in relation to the proper approach to be adopted in
construing contracts. Reference was made
to Bank of Scotland v Dunedin 1998
655, particularly Lord President Rodger at page 661E and
665. I was also referred to the speech
of Lord Wilberforce in Prenn v Simmonds [1971] 1 W.L.R.1381,
particularly at page 1384A and 1385 for the proposition that it is
permissible, in construing a contract, to have regard to the circumstances in
which the contract came to be concluded, for the purpose of discovering the
factors to which the contract refers, and the commercial or business object of
the transaction. Counsel submitted that
following that approach to matters, in the present case, the use of the
expression "CIP" was being directed by the parties to the contract solely to
the question of costs. The use of a term
such as "CIP" was not determinative in relation to when property and risk in
the goods passed. Other provisions in
the agreement in question could establish that the use of such a term was
intended to do no more than show where the incidence of liability for certain
costs would lie as between seller and buyer.
Reference was made to the judgment of Roskill L.J. (as he then was)
in the case of "The Albazero" [1977]
A.C.774 at page 809 where his Lordship said:
"It is a trite
observation that what is sometimes called a true f..o.b. or a true c.i.f.
contract is a comparative commercial rarity.
Contracts vary infinitely according to the wishes of the parties to
them. Though a contract includes the
words f.o.b. or c.i.f. amongst its terms, it may well be that other terms of
the contract clearly show that the use of those letters is intended to do no
more than show where the incidence of liability for freight or insurance will
lie as between buyer and seller but it is not to denote the mode of performance
of the seller's obligations to the buyer or of the buyer's obligations to the
seller. In other cases, though the
letters c.i.f. are used, other terms of the contract may show that the property
is intended to pass on shipment and not upon tender of and payment against the
documents so tendered or though the letters f.o.b. are used, other terms may
show that the property was not intended to pass on shipment but upon tender and
payment, the seller by the form in which he took the bill of lading intending
to reserve his right of disposal of the property until he was paid against the
shipping documents. As Kennedy, C.I.F.
Contracts, 1st. ed. (1924) states, at p.139:
'It' (i.e. the
passing of property) 'is entirely a question of intention and no general rule
can be laid down as to when the property passes under a c.i.f. contract. The intention has to be gathered from the
terms of the contract, the conduct of the parties and the circumstances of the
case'".
The Court of Appeal's judgment in the Albazero was the subject of an
appeal to the House of Lords and was reversed by their Lordships on an aspect
of the case in relation to which the cited passage, from the judgment of
Roskill L.J., was not directed.
That passage was not subject to any criticism of the House of
Lords. In the present case, it was
submitted, it was established, by the evidence, that both parties to the
contract intended that the General Trade Rules applied to their agreement. Rule 6(c) of the rules dealt with the
question of when property was to pass.
Counsel for the pursuer then referred me to the provisions of sections
17 and 20 of the Sale of Goods Act 1979.
Section 17(1) is to the following effect:
"Where there is
a contract for the sale of goods or ascertained goods the property in them is
transferred to the buyer at such time as the parties to the contract intended
to be transferred".
Section 17(2) provides:
"For the purpose
of ascertaining the intention of the parties regard shall be had to the terms
of the contract, the conduct of the parties and the circumstances of the case".
Section 20(1) of the 1979 Act
provides:
"Unless
otherwise agreed, the goods remain at the seller's risk until the property is
transferred to the buyer, but when the property in them is transferred to the
buyer the goods are at the buyer's risk whether the delivery has been made or
not".
In the present case Rule 6(c) provided
when the property was intended to pass, viz on payment. Nothing had been discussed between the
parties to the contract to the effect that risk would pass at any other
time. Accordingly, section 20(1) applied
and the risk had not passed to Henry Cooke Limited because the price of the
goods had not been paid by them. There
was no reference in the agreed terms of the contract contained in document no.2
to the Incoterms 2000. The reference to
Incoterms 2000, appearing in the invoice, Mr Crane said had been added by
someone at the mill in Finland
whence the pulp was being supplied.
There was simply no evidence that, at the time at which the terms of the
contract were concluded, there was any common intention to incorporate
Incoterms into the contract. These terms
were only binding on parties if there was an express agreement by them to be
bound by ICC terms and conditions. There
was no incorporation of the ICC terms and conditions into the parties'
contract. The term "CIP" had been
employed in document no.2, as a shorthand to describe the parties' agreement
regarding what was to be covered in the price of the pulp and was not meant to
say anything about property and risk in the goods. The evidence had established that the pulp
had not been paid for before its destruction.
Accordingly, at the time of the fire, property and risk in the pulp had
not passed to Henry Cooke Limited. Title
to the goods remained with the pursuer's predecessor and therefore the pursuer
had title to sue in respect of its loss.
Submissions for the defender
[14] At the outset of his reply, the solicitor advocate for the defender
sought leave to amend the defender's plea-in-law no.2 by deleting the words
"never have had title to the goods and".
I allowed this amendment. At the beginning
of his submissions, the solicitor advocate seemed to be suggesting that
Mr Crane had had no authority to bind the pursuer's predecessors in
relation to this particular transaction.
That is not a matter that had been previously foreshadowed in the defender's
pleadings or in any note lodged on their behalf. The main thrust, however, of the submissions
made on behalf of the defender was that Mr Crane was fully aware of the
Incoterms and intended to use one of them, i.e. "CIP" as a provision in the parties'
contract. In cross examination,
Mr Crane had said that the parties' contract was intended to be governed
by Incoterms 2000 but he had said that its use had not achieved what the
parties had intended it to achieve.
Accordingly, at best for the pursuer, the position was that the contract
which was concluded was not the contract which Mr Crane and Miss Gale
thought they were entering into. The
expression "CIP" could only be a reference to the Incoterms. There was no other source for it. So either (a) there was no consensus between
the parties because one side thought that their agreement was governed by
Incoterms and the other did not or (b) the Court should find that the parties
had agreed that the contract would be governed by the Incoterms 2000, because
those terms did everything the parties wanted without derogating from their
agreement. The defender's solicitor
advocate was unable to put forward any explanation for the absence of any
reference in document 2 to Incoterms if it had been the intention of the
parties that their relationship should be governed by them. My attention was then drawn to the absence of
any evidence from the individual whose name appears at the foot of
document 2, Mr Fors. I was reminded
also there had been no documentary evidence placed before the Court regarding
the insurance of the goods. There had
been no signed version of document 2 produced.
These observations about absence of evidence were left somewhat in the
air, however. They did not develop into
a submission which I was invited to uphold
[15] From time to time, in his submissions, the defender's solicitor
advocate appeared to be suggesting that whatever the position regarding the
property in the goods might have been, the risk had passed from the pursuer's predecessors
at the time of the fire. That
suggestion, it seemed to me, appeared to be based on an understanding or belief
as to what the insurance position may have been in relation to the goods. Indeed what the defender seemed to be
implying, if not expressly suggesting, was that because of the operation of
subrogation in insurance law, the pursuer was not entitled to recover. But no case founded on any such approach has
ever been made, in terms, by the defender either in pleading or in any other
document presently before the Court.
Reply for the pursuer
[16] In reply counsel for the pursuer submitted that it was plain,
on the evidence, that Mr Crane had authority to bind the pursuer's
predecessors. He was acting as their
sales agent and clearly had ostensible authority to bind the pursuer's
predecessors. The solicitor advocate for
the defender had placed some stress on the appearance of the reference to
Incoterms 2000 on the invoice but that could not alter or add to the terms
of the parties' agreement. It was a
unilateral document tendered after the agreement was concluded. On the evidence, at the time the contract was
entered into the expression "CIP" was being used simply as a shorthand
expression in relation to the parties' agreement regarding costs. The solicitor advocate for the defender did
accept that the parties were in agreement as to what was covered by the
expression "FOM". The defender's case
was that the Incoterms had been incorporated into the parties' contract. The evidence clearly established that this
was not so. The evidence established
that at the time of the fire, the ownership of the pulp remained with the pursuer's
predecessors. The pursuer therefore had
title and interest to sue for its loss in that it met the requirements set out
in paras.4.29 and 4.33 of Macphail, Sheriff Court Practice, 2nd
Edition.
[17] As previously noted, the defender had initially sought to
debate, at the hearing, its third plea-in-law but in the event invited the
Court to repel it.
Decision
[18] I am satisfied that the defender's second plea-in-law falls
insofar as it relates to the pursuer's conclusion to be repelled. The evidence led at the preliminary proof, in
my judgment, has established that, at the time of the destruction of the pulp,
both the property and the risk in the pulp remained with the pursuer's
predecessors. It is a matter of
agreement that the pursuer has succeeded to any claim that its predecessors may
have had in this regard. It was
difficult, in the context of that agreement, to understand why the solicitor
advocate for the defender sought, albeit very faintly, to argue that
Mr Crane had no authority to enter into the contract in relation to the
supply of the pulp. As I have already
noted there was no notice given of any such case by the defender before the
hearing and, in any event, I have no hesitation saying that there was no
substance to it having regard to the evidence of Mr Crane, and the whole
circumstances of the case.
[19] There is no doubt that both parties to the contract, relating
to the supply by the pursuer's predecessor to Henry Cooke Limited of pulp
during 2000, agreed that the General Trade Rules would govern their
relationship. Rule 6(c) of the Rules is
unequivocal in its terms in providing that property in the pulp will not pass
from the seller until the whole sum payable under the contract is paid. Section 17 and section 20 of the Sale of
Goods Act, as has been seen, provide that it is for the parties to agree when
property in the goods under a contract of sale shall pass and, accordingly,
when risk in the goods is to be transferred.
The only question remaining is whether the use by the parties, of the
expression "CIP" in their agreement, in any respect, qualified or negated the
clear provisions of Rule 6(c). In my
judgment it did not. The evidence of
both Mr Crane and Miss Gale was that, in using that term, they were
simply agreeing a shorthand way of recording that part of their agreement which
was related to what was embraced in the price of the pulp. Neither of them, upon the evidence, intended
to incorporate the ICC Term of Contract into their agreement to rule on matters
such as when property and risk would pass.
There is no reference to Incoterms 2000 to be found in document 2
of the joint bundle. The reference to
Incoterms 2000, in the invoice, under the reference "CIP" came, in a
document, which post-dates the agreement between the parties, and, in any
event, did not, having regard to the evidence as a whole, reflect any agreement
about when risk and property would pass different from that contained in Rule
6(c) of the General Trade Rules and the provisions of the Sale of Goods Act
1979. I would respectfully adopt the
passage from the judgment of Roskill L.J. in "The Albazaro" at page 809 and the reference therein to "Kennedy, CIF
Contracts" as applicable to the circumstances of the present case. In the present case, the intention of the
parties to the contract, to be gathered from the relevant circumstances of the
case, was that property and risk in the pulp should not pass until
payment. It follows that at the time of
the fire, property and risk had not passed from the pursuer's
predecessors. The pursuer accordingly
has title to sue in respect of the second conclusion and the defender's second
plea-in-law (as amended) falls to be repelled insofar as it is directed to the
second conclusion. I shall also repel
the defender's third plea-in-law. The
case will require to be put out By Order for discussion of further procedure. While reference was made to the invoice,
(No.13 of the Agreed Bundle) which relates to consignment of pulp the loss of
which is sought to be received in the first conclusion, I heard no other
evidence or specific submission in relation thereto although my impression was
that the defenders did accept that the disposal of the issue of title to sue in
relation to the second conclusion should apply equally to the disposal of that
issue in relation to the first conclusion.
