Thursday, June 4, 2009

Syam’s Maritime Case Notes: Court holds the carrier liable to pay damages to shipper for loss of profit in case of delayed delivery.

(Note by Adv. V.M. Syam Kumar-Lecturer for Maritime Law, National University for Advanced Legal Studies, Kochi.)
In a recent landmark judgment, the carrier who breached a time bound delivery shipment contract has been directed by the Subordinate Judge’s Court, Cochin to return the freight charges collected as also the expenses incurred by the shipper for effecting shipment along with damages for loss of profits suffered by the shipper due to delayed delivery. The Learned Judge also directed the carrier to pay the costs of the litigation to the shippers.
Shippers were coir product manufacturers who had consigned the exhibition cargo for the renowned Domotex fair at Hannover, Germany. The special intent of time bound delivery had been informed to the carrier and had been noted by the carrier on the bill of lading/MTD. However the cargo reached so late that it could not be exhibited at the Domotex fair and the stalls taken by the shippers remained vacant as their rivals did brisk business. Shippers contended that they had been regularly participating in the fair since years and the loss suffered by them ran to millions of dollars. They claimed under various heads which included freight collected and the expenses incurred for shipment. Their principal claim was for loss of profit and they limited their total claim to a few lakh rupees.
Detailed evidence was adduced by both sides and after an elaborate hearing the entire claim raised by the shippers were allowed by decreeing the suit as prayed for by them with costs.
The following findings in the Judgment are crucial:
“…I am justified to say that the defendants were aware of the destination clearance and they had accepted notice of the destination clearance and they had accepted notice of the special object and had contracted with reference to it. The aspect regarding delivery before 15th January 2005 at Hannover was very well within the contemplation of the parties as is specified by the aforesaid abundant terms in Ext. A4. No other findings or justification or inference is possible and hence the issues are found against the defendants.”
“It is argued for the defendants that just because the 2nd plaintiff is the C & F agent of the first plaintiff it will not give them any right to proceed against the defendants. It is pertinent to note that as aforesaid 2nd plaintiff is the C & F agent of the first plaintiff. The case of the plaintiffs is that the breach of contract resulted in loss of reputation and goodwill to the 2nd plaintiff as a reliable C & F agent. In that way the 2nd plaintiff has a right and interest in the present suit. PW@ deposed that by the breach of the agreement he is equally aggrieved as his name and standing as a reputed c & F agent was tarnished before his regular coir exporting clients who regularly entrust the coir products to be transported to the annual fair held at Hannover. It was thus categorically specified has a right and interest in the present suit and entitled to be compensated for the loss of reputation and goodwill to it as a reliable c & F agent and hence even though there is no privity of contract, beyond the contract, in tort, the defendants are liable to the loss of reputation and goodwill to the 2nd plaintiff as a reliable C & F agent.”
“It is argued by the plaintiffs that …they have assessed said amount of Rs.10 lakhs with reasonable certainty. Of course absolute certainty is not required nor is there any necessity for direct evidence as to the amount. It is also relevant to note that damages are not uncertain for the reason that the loss sustained is incapable of precise measurement. Certainty to a reasonable extent is necessary and the loss or damage must be so far removed from speculation or doubt as to create in the minds of intelligent and reasonable men, the belief that it was most likely to follow from the breach of the contract and was a probable and direct result thereof. It must further be remembered that in the extreme case where the defendant has by his wrong put it out of the plaintiff’s power to prove the quantum of damage exactly the presumption is against the defendant and the burden is upon him to reduce the amount from the highest possible estimate. Hence from the aforesaid discussion evidence and facts, I am satisfied and justified to assess the damage ….”
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