Bowden Brothers & Co Ltd v Little [1907] HCA 14; (1907) 4 CLR 1364 (15 May 1907)

Bowden Brothers and Company Limited Plaintiffs, Appellants; and Robert Little, Trading as Robert Little and Company Defendant, Respondent.

This litigation between the appellants and respondent arises upon a contract for the sale of 450 tons of Japan onions. The appellants are a joint stock company registered in Queensland, carrying on business in Queensland and Japan, and having a branch in Sydney. The respondent is a merchant carrying on business in Sydney. The real transaction between the parties is embodied in a written contract dated 14th June 1905. [His Honor read the contract of that date, as already set out, and continued:] The onions were shipped from Japan and on arriving in Sydney were found not to be in merchantable condition, and the respondent refused to accept the drafts. Thereupon the appellants brought an action against the respondent to recover the contract price, and the respondent brought a cross-action against the appellants for a breach of the contract to deliver the onions. The appellants action was in form, as stated in the first count of the declaration, for refusing to accept the drafts or to pay the price, and the second count was a common money count for goods bargained and sold and for goods sold and delivered. [His Honor then read the material portions of the pleadings and continued:]

I remark as to the first count of the respondent's declaration that, if it was intended by it to allege that the onions were to be delivered in Sydney, then the question arises whether that was really the contract, while, if it was intended to allege that they were to be delivered in Japan, then on the jury's findings there was no breach.

At the trial voluminous evidence was given, and it appears that the learned Judge who presided at an early stage of the case directed the jury that upon such a contract as this, that is, to ship onions in Japan at a price c.i.f. Sydney, the risk of transit fell upon the vendor, and the vendor was bound to deliver them in a merchantable condition at the port of destination. He gave that ruling believing himself bound by the decision of the Supreme Court in the case of Lorimer v. Slade[1], and he adhered to that ruling when directing the jury. On His Honor's direction the jury were bound to find a verdict for the plaintiff in the respondent's action, in accordance with His Honor's direction as to the construction of a c.i.f. contract, and for the same reason were bound to give a verdict for the defendant in the appellants' action. They were asked some specific questions to which they gave answers, upon which the question now in debate depends to a great extent. [His Honor then read the questions submitted to the jury and the jury's answers and continued:] The jury, therefore, found that there were in existence in the port of Sydney two contradictory customs. On their answer to that question very little turns. But it appears to me that, if there are such inconsistent customs, there can hardly be said to be a custom at all in the sense in which that term is understood in law. Judgment was entered in accordance with the verdict.

A motion was made to the Supreme Court for a new trial in both actions, which had been treated as consolidated. The Supreme Court granted a rule nisi upon a subsidiary point, to which it is not necessary now to make any reference, but refused a rule upon the main point, the construction of a c.i.f. contract, considering themselves bound by the authority of an unreported case in the same Court in which they had followed Lorimer v. Slade[2]. I am unable to derive any light from that case; it seems to me entirely distinguishable. We have not the advantage of knowing the reasons of the learned Judges. We must, therefore, deal with the matter at large.

The appellants appealed from the refusal by the Supreme Court to grant a rule nisi, having obtained leave from this Court. The question is what is the real nature of the contract, and what are the incidents of it.

In construing a contract regard must always be had to the surrounding circumstances. It appears from the documents that there had been some preliminary negotiations between the parties. The subject matter of the sale was Japan onions, as they were called, to be shipped at Kobe in Japan. It appeared upon the evidence that the only onions procurable at the time of the year at which they were to be shipped were Sen Shin onions, which were procurable only in the neighbourhood of Kobe. The ships by which the onions were to be sent were specified, so that the dates of shipment were approximately fixed. It appears also from the evidence oral and written that onions are a cargo which carries very badly at that time of year, so that there was a very great risk of deterioration on the voyage, and both parties were fully aware of this circumstance. It appears, therefore, that the contract was for shipment at Kobe, Japan, of that season's onions in specified ships leaving at approximately specified dates, and subject to the term c.i.f., whatever that may mean. C.i.f. means literally, of course, cost, insurance and freight. One of the recognized legal incidents of such a contract is "that the shipper fulfils his obligation when he has put the cargo on board and forwarded to the purchaser a bill of lading and policy of insurance with a credit note for the freight." Per Lord Davey in Ströms Bruks Aktie Bolag v. Hutchison[3]. In Ireland v. Livingston[4], Blackburn J. in giving his own opinion, in which Hannen J. concurred, stated the incidents of a c.i.f. contract in terms that have since then always been accepted as correct. He said:—"The terms at a price, to cover cost, freight, and insurance, payment by acceptance on receiving shipping documents, are very usual, and are perfectly well understood in practice. The invoice is made out debiting the consignee with the agreed price, (or the actual cost and commission, with the premiums of insurance, and the freight, as the case may be), and giving him credit for the amount of the freight which he will have to pay to the shipowner on actual delivery, and for the balance a draft is drawn on the consignee which he is bound to accept (if the shipment be in conformity with his contract) on having handed to him the charter-party, bill of lading, and a policy of insurance. Should the ship arrive with the goods on board he will have to pay the freight, which will make up the amount he has engaged to pay. Should the goods not be delivered in consequence of a peril of the sea, he is not called on to pay the freight, and he will recover the amount of his interest in the goods under the policy. If the non-delivery is in consequence of some misconduct on the part of the master or mariners, not covered by the policy, he will recover it from the shipowner. In substance, therefore the consignee pays, though in a different manner, the same price as if the goods had been bought and shipped in the ordinary way." Price, of course, includes the total price on delivery at the port of destination. The same doctrine is expounded in the clearest manner in the Scottish case Delaurier & Co. v. Wyllie[5] to which my learned brother Isaacs referred in the course of the argument. That being the obligation of the shipper, it appears that the appellants shipped the cargo and sent the bill of lading, the policy of insurance, and other necessary documents. Their duty being to ship in Japan and not to deliver in Sydney, any complaint against them for a breach of duty must be founded upon their acts of commission or omission in Japan. The cases of Wancke v. Wingren[6] and Parker v. Schuller[7] are clear authorities for that position. It follows, therefore, that the respondent's action, which complains of non-delivery in Sydney, was wrongly brought, unless it was a term of the contract that the goods should be at the appellants' risk during the voyage; that is equivalent to a warranty that they should arrive in good condition. The first finding of the jury, that, having regard to the surrounding circumstances, Little did not agree to take all risks of transit, cannot be construed as a finding that there was such a warranty on the part of the appellants. No reliance was placed upon it in argument, and, it must be taken, I think, as merely negativing an express agreement by the respondent to take the risk. The obligations of the parties being thus left to be determined by the rules of law applicable in the absence of express agreement, strictly speaking, the appellants are entitled to a non-suit in the action by the respondent, or at any rate to a new trial. But it was suggested that the whole matter was fought out at the trial, and that there ought now to be an amendment of the pleadings so as to raise the real complaint which the respondent may be entitled to make against the appellants. It would be somewhat novel in New South Wales, to grant a new trial on pleadings to be amended in order to try a case not made in any part of the original pleadings. But that difficulty may not be insuperable. The respondent asks, however, to be allowed to retain his original counts, upon which he has failed, and on which the appellants are entitled to a non-suit, and so to save the action alive, and then in the existing action to add any other counts that he may think fit, or that the Court may formulate for him. I think it impossible to allow him to retain his original counts. With respect to his desire to add other counts and so substitute what is practically a new case, I venture to adopt the words of Bowen L.J. in "The Moorcock"[8], as to the nature of implied warranties such as that which the respondent wishes now to be allowed to set up:—"Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from an express contract or express warranty, really is in all cases founded on the presumed intention of the parties, and upon reason. The implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe if one were to take all the cases, and they are many, of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have intended that at all events it should have. In business transactions such as this, what the law desires to effect by implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances." The warranties which the respondent wishes to be allowed to set up are founded upon the rules now formulated in sub-secs. (1) and (2) of sec. 14 of the English Sales of Goods Act 1893, which is not in force in New South Wales. It was assumed in argument (though I must not be taken to accept the assumption without qualification) that in this respect that Act only declares the common law as stated in the fourth and fifth rules laid down in Jones v. Just[9]. In that case Mellor J. delivering the judgment of the Court, consisting of himself, Cockburn C.J. and Blackburn J. stated those rules in these words[10]:—

The application of the first of those rules depends upon the condition that the purchaser did in fact rely upon the judgment or skill of the seller. The question whether in a given state of facts it can or ought to be inferred that he did so rely may be one of great difficulty, but it is plain that the facts in any particular case may show that the purchaser did not so rely, or that his reliance was not absolute but qualified, or had reference to certain particulars of quality only. It cannot be implied, from the mere fact of a sale of goods to be shipped abroad, that the vendor enters into any warranty except that the goods shall be merchantable. The facts of the particular case may justify the implication of warranties of various effect. For instance, the circumstances might justify the implication of an absolute warranty that the goods shall be reasonably fit to undergo the risks of the particular voyage, or they might justify the implication of a warranty that the goods shall apparently be in that condition. Other warranties that might be implied from the circumstances are that the goods should be such in quality and condition as a reasonably prudent man, determined to make a shipment at that time, would ship on his own behalf, or that the vendors will take reasonable care that the goods when shipped shall be fit for shipment, or that they shall be as fit as is practicable with respect to such goods under the particular circumstances. But which, if any, of these or any other warranties that may be suggested, is the one which ought to be implied must depend upon the extent to which the buyer is shown by the facts to have trusted to the judgment and skill of the vendor. The obligation cannot be put higher than if it had been a contract of agency, as was pointed out in Ireland v. Livingston[15], which was a case of a contract in many respects analogous to that now in question. In that view want of reasonable care would be the foundation of the claim.

I express no opinion as to the proper warranty to be inferred in the present case, beyond saying that there must of necessity have been some obligation on the part of the shippers, not less than an obligation to ship onions merchantable in Japan (which the jury found they performed), and not greater than an obligation to ship onions reasonably fit in fact for the voyage to Sydney.

As, therefore, this is not a case in which the plaintiff should have general leave to amend, and it is not desirable to single out any particular amendment as specially suggested by the evidence, I think the most just course will be to direct a nonsuit in the case of Little v. Bowden Bros. In the case of Bowden Bros. & Co. v. Little there should be a new trial, the costs of the first trial being plaintiffs' costs in the cause.

I am of the same opinion. I need not analyse again the respondent's declaration. It is sufficient to say as to the case of Little v. Bowden Bros., that the first count has been treated all along by the plaintiff as a count for breach of a contract to deliver in Sydney, and so, of course, has the second. This is the impression that the respondent has left upon the case from end to end. The contract is what is here known as c.i.f., and in England as c.f.i. What such a contract means and implies has been already very fully stated. But I would mention the case of Tregelles v. Sewell[16], in which the plaintiffs bought from the defendants 300 tons of old bridge iron rails at so much per ton, which were, according to the contract, to be delivered at Harborough c.f.i., payment of net cash in London, less freight upon handing bill of lading and policy of insurance, a dock company's weight note or captain's signature for weight to be taken by the buyers as a voucher for the quantity shipped. It was held by the Court of Exchequer, and affirmed by the Exchequer Chamber, that according to the true construction of the contract the defendant did not undertake to deliver the iron at Harborough, but that, when he had put it on board a ship bound for that place and handed to the plaintiffs the policy of insurance and other documents, his liability ceased and the goods were at the risk of the purchasers. The next in order of the important cases on the point is Ireland v. Livingston[17], which His Honor has already cited. Then comes the case of Wancke v. Wingren[18]. There the defendant had contracted to sell to the plaintiff certain goods c.f.i., and ship them at a port in Sweden for an English port. They were to be addressed to the plaintiff at the English port, and on arrival he was to adopt the charter-parties and bills of lading and to pay the price. The defendant failed to perform the main portion of his contract, and the plaintiff brought an action for damages in England and applied for leave to serve notice of the writ of summons upon the defendant out of the jurisdiction, under Order XI. The question then arose whether the breach had been committed within or without the jurisdiction. It was held that upon the true construction of the contract all the defendant had to do was to ship the goods on board at the Swedish port; accordingly the breach occurred there and not at the English port, and that, as no cause of action arose within the jurisdiction, no leave to serve notice of writ of summons under Order XI. could be granted. That is to say, this case is a reaffirmation of what is stated in the case last cited, that where in the ordinary way goods are to be supplied and entrusted to a carrier, the carrier is the consignee's agent, and where the contract is c.i.f., and in pursuance of that contract the goods are entrusted to the carrier, and the necessary documents to entitle the purchaser to obtain possession of the goods are sent, then the seller has performed his part of the contract, and the risk thenceforth is on the buyer. The last cited case rests on the authority of Day J. and A. L. Smith J. To the same effect are the cases of Hamlyn & Co. v. The Griendtsveen Co.[19], and Parker v. Schuller[20], which need not be quoted at length. Then, in 1889, the same year as Wancke v. Wingren[21], came the case of Delaurier & Co. v. Wyllie[22], which was referred to by my learned brother Isaacs in the course of the argument. I intend merely to refer to the judgment of Lord Trayner in the Court below, because that judgment has practically the assent of nearly all the Lords of Appeal, and as to this portion of the case His Lordship said this:—"It (the coal) was sold to the pursuers by Stevenson & Co., as above mentioned, for a contract price, which included cost, freight, and insurance, and was shipped by Stevenson & Co. on board the George Moore at Troon. The defenders maintain that under a contract c.i.f. the shipping of the goods is not delivery to the buyer; that such a contract imports an obligation on the seller to deliver at the port of discharge; that no delivery takes place till that port is reached; and that, consequently, there had been no delivery to the pursuers of the coal in question." (That is practically the contention set up on behalf of the plaintiff Little in this case). His Lordship continued: "It is not open to question that in the ordinary case of goods shipped by a seller to a buyer at a distance, delivery on board ship as for the buyer, along with the indorsation and delivery of the bill of lading to the buyer, is delivery, vesting him with the property of the goods and all risk attaching thereto" (that is where the bill of lading is indorsed). "But the defenders maintain that a contract for the sale of goods c.i.f. imports an obligation to deliver at the port of discharge, and that where the bargain is to deliver the commodity at a particular place, the risk is with the seller till delivery at that place, so that if it perish on the voyage it is lost to the seller. I am of opinion that the defenders are wrong in their view of the construction and effect of a contract c.i.f., and they have cited no authority in support of it. It appears to me that a contract of sale c.i.f. is a contract under which the seller undertakes certain obligations which would not be incumbent upon him otherwise, but that these additional obligations have no reference to the question of delivery. The additional obligations undertaken by the seller are that—(1) He will, in respect of the contract price, insure the goods for the voyage free of any further charge or premium; and (2) that he will pay for the carriage of the goods to their destination. As, however, these additional obligations make no reference to the delivery of the goods, I think the question as to what delivery is sufficient to free the seller of risk, and where such delivery is held to be made, are not affected by these additional obligations, but are to be decided according to the ordinary rules of law applicable thereto. In short, a contract c.i.f. is not to be read as importing any obligation or right which it does not express. Such a contract binds the seller to pay something which otherwise would fall on the buyer; but except in so far as it shifts the obligation to pay, it remains a contract of sale, subject to the ordinary rules of law which regulate the rights and obligations to which that contract gives rise. It was said that the view submitted by the defenders of the effect and import of a contract c.i.f. was that which mainly distinguished it from a contract f.o.b. These contracts are no doubt different and distinguishable. The contract f.o.b. directly stipulates for delivery at a certain place, namely, on board ship, and delivery there (free of charge to the buyer) is fulfilment of the seller's obligation. But granting that, the defenders are no further forward; for it still remains that the contract c.i.f. does not stipulate for delivery at a certain place. If the defenders had averred that by the custom of merchants a contract c.i.f. meant, and was universally recognized as meaning, a contract under which the seller bound himself to deliver at the port to which the goods were consigned, that would have been a different matter. But no such custom is averred. Mere delivery of the coal on board the George Moore might not perhaps have been sufficient to transfer the property and risk thereon to the pursuers, seeing that the bill of lading is taken to order and might therefore have been indorsed and delivered by Stevenson & Co. to some person other than the pursuers. But in point of fact, Stevenson & Co. indorsed and despatched by post the bill of lading for the coal in question to the pursuers within twelve hours or so after the vessel sailed, and debited the pursuers in their books with the contract price. The letter containing the bill of lading was received by the pursuers in due course. In these circumstances, I entertain no doubt that the property in the coal was transferred to the pursuers at latest when the indorsed bill of lading was posted." The question in the present case is, where was the risk?

Now in the case of Ströms Bruks Aktie Bolag v. Hutchison[23], Lord Davey gave his opinion as to the meaning of a c.i.f. contract which has been cited by His Honor in the preceding judgment. There was, however, before that, in 1897, the case of Lecky & Co. Ltd. v. Ogilvy, Gillanders & Co.[24] which was a decision of the Court of Appeal. In the headnote of that case it is stated that under a c.f.i. contract of sale there is an absolute duty on the vendor to procure the shipment of the goods under such a bill of lading as will, subject to the exceptions therein contained, ensure their delivery at the port of destination mentioned in the contract. A c.i.f. contract provided for the sale of goods by the defendants to the plaintiffs, shipment to be from Calcutta to Tripoli. In that case a controversy had arisen out of the fact that there were two places called Tripoli, and the question arose whether the directions that the vendors had given did not mislead the carriers of the goods so that they brought about a delivery at the wrong Tripoli. In dealing with the meaning of the c.i.f. contract A. L. Smith L.J. said[25]:—"The obligation of the defendants at Calcutta under the contract, which they had entered into with the plaintiffs, was to put the bags on board ship at Calcutta with such proper shipping documents as would ensure the bags getting to Tunis. If that was done, the defendants had performed their part of the contract." And Collins L.J. in delivering a concurring judgment said[26]:—"The defendants, by their contract with the plaintiffs, were under an obligation to put the goods on board ship with such shipping documents as would ensure the goods being carried to the place mentioned in the contract, that is, Tripoli in Africa." Then he goes on to describe what happened afterwards as to the wrong direction of the goods, but that is not a matter with which we are now concerned. The judgments in these cases seem to me to show conclusively that under a contract of this kind the risk is on the buyer, when the goods are entrusted to the shipowners for transit, when they are placed on board by the vendor, and that the vendor does his part of the duty by procuring and forwarding every such document as in the ordinary course would ensure the delivery of the goods to the buyer. So much appears to have been done in this case. It seems to me, therefore, that the risk of the goods, if they answered the contract in other respects, was with Mr. Little upon their shipment at the port in Japan, Kobe.

Then the remaining question as to this part of the case is, what were the goods contracted for? Well, the contract says merely "Japan onions." It is obvious from the circumstances of the case that they were to be that season's onions; that they could not be anything else. And the question arises, inasmuch as the contract was not to deliver in Sydney, was there in terms of either of the counts of the declaration any breach of any stipulation as to the character or quality of the goods? I am unable to see that the proofs in this case support the plaintiff's declaration, and I am speaking now of the case purely in its aspect as it comes before us. Of course, if this case goes before a jury again the whole complexion of the case may be altered, so that nothing that may be said now must be taken to prejudice any right of either party, or to throw any obstacle in his way when he comes to assert his rights in future proceedings. But in this case, as the first count, and in fact the second, have been treated as counts for delivery in Sydney, and inasmuch as the contract was not for delivery in Sydney but in Japan, the plaintiff has not proved the contract relied on in his declaration. He has treated this as a contract with different incidents from those which the law attaches to it, where there are no controlling circumstances either in the contract itself or appearing from admissible evidence aliunde.

I am with His Honor the Chief Justice in thinking that, while some warranty must be presumed in this case, the matter is not before us in such a shape that we ought at this stage to state what the warranty is. He has stated it at its maximum and at its minimum. I think that some warranty must be presumed as to the condition of the goods, and it does seem to me to be a probable thing that the warranty would be that the goods were, as far as the vendors could reasonably procure such a result, of a quality that rendered them merchantable at the point where the risk was taken by the buyer. I do not express that as an opinion that would control the case in the event of its going down for a second trial. The fact that it may do so is sufficient warrant for the bench not being too specific in reading a meaning into, or placing constructions upon, the case as it has come to us, because its complexion may vary in future proceedings. If a warranty of that kind is the warranty to be implied from this contract, then it seems that the plaintiff has not proved specifically any breach of it, any more than he has proved any breach of the more exacting warranty that possibly might be presumed from the contract. Thus again it seems to me that he fails in his proof so far. He has not proved the contract he set out, as regards the obligation to deliver and as to the risk; nor has he proved it so far as regards the quality and condition of the goods or the point at which that quality and condition should be determined. I therefore think that upon the mere general issue of non assumpsit the plaintiff must fail in this case.

As to the amendment, it seems to me that he cannot at this stage with any show of justice be allowed to displace the whole of the pleadings and the case that he has set up, and enter upon a wholly new case instead of the old one by way of amendment. I scarcely think that in any case that would be within one's ordinary notion of an amendment. At any rate he is not prepared to forego the two counts upon which his proof has obviously failed, in order to substitute something for the counts as to which he has failed, or to vary them, but wishes to keep them and to add something in addition. In other words he wants to eat his cake and have it, to keep his two counts and add two others founded upon expressions that have fallen from the bench during argument. I agree with His Honor that that ought not to be done. The juster way to treat the case, in my opinion, is to nonsuit the plaintiff. That leaves him a larger option as to the way in which he should shape his case in future; and, as regards costs following upon such a result, I do not think that on the whole he is in a much worse position than if the amendment were made. He is thus left at liberty to shape his case as he pleases either upon the facts as they have already come out, or upon any new ones which may cause him to vary his opinion, and, therefore, I think that the treatment by way of nonsuit is the fairest and most just way to meet the case. But it would not be fair upon the facts before us, notwithstanding our opinion as to the action of Little v. Bowden Bros., to enter up judgment for the plaintiffs in Bowden Bros. & Co. v. Little, on this evidence, for the balance of the price, but, inasmuch as it will be at the respondent's option whether he brings his case on for a second trial or not, the fairer way, I think, is to order a new trial of the action, Bowden Bros. & Co. v. Little, and then upon the parties electing to fight out their battle again they would be placed in a position in which their rights can be most fairly ascertained.

I agree, therefore, that there should be a nonsuit in the one case and a new trial in the other.

The contract, which is in writing and dated 14th June 1905, is between R. Little & Co., described as of Sussex St., Sydney, and Bowden Bros. Ltd., described as of Kobe, Japan. The goods are stated to be 450 tons of Japan onions as follows:— 100 tons at £7,350 tons at £6 15s., subject to a brokerage if necessary of 1%. The prices are stated as "c.i.f." Sydney. The shipments were to be 100 tons in June, 225 tons by the "Australian" and "Waldemar," and 125 by the "Empire" and "Sigismund." The insurance was to be as usual and the finance is stated as "30 days S/draft against documents through Commercial Bank of Australia." The document also contained the following provision "packing to be in usual open boxes." It was signed by both parties. The onions arrived in Sydney in a very bad condition. Little sued Bowden Bros. for damages. The declaration set out the promise variously, the first count alleging a promise that the onions should be delivered in merchantable condition, the second count alleging the promise to be that upon the arrival at Sydney the onions would be in merchantable condition except for necessary and inevitable deterioration, the result of the transit. It was alleged that both these promises were broken. There was a third count, which may be laid aside as immaterial in view of the course the case has taken. The defendants denied the promise and the breach. There was a cross action by Bowden Bros. against Little for the price of the onions, which Little refused to pay; his defence to this action being practically his allegations in his own action. At the trial the pleadings were not strictly adhered to. Mr. Campbell in opening the case for Little stated "That if the obligation of the defendants was to deliver at Kobe, the defendants were to deliver at Kobe onions fit for voyage to Sydney under ordinary conditions." The jury was asked to make special findings, which they did. [His Honor then read the special findings in answer to the first four questions and continued:] The other answers may be regarded as immaterial. The jury returned a verdict for Little in both actions, finding damages in his own action at £3,729 15s. 10d.; they added the following:—"The jury find for the plaintiff in this action in accordance with your Honor's ruling as to the construction of the c.i.f. contract and award damages to the amount of £3,729 15s. 10d."

His Honor the presiding Judge directed the jury that Bowden Bros. were bound to deliver to the plaintiff Little merchantable onions in Sydney, except for such necessary and inevitable deterioration as would occur on the voyage. A rule nisi for a new trial was applied for to the Full Court on various grounds, but the Full Court, though granting a rule nisi, declined to include certain grounds, including one to the effect that the direction already mentioned was wrong. The appeal in this case included as one of the grounds that the direction was erroneous.

In my opinion that direction, having regard to the whole of the evidence, cannot be sustained. It was given upon what was understood to be the effect of Lorimer v. Slade[27]. That case may be perhaps considered to turn on its special circumstances but if it decides broadly that a c.i.f. contract requires the seller to deliver at the port of destination, it cannot be supported. A contract c.i.f. is well known, and its effect has been described by Blackburn J. in the case of Ireland v. Livingston[28] in the passage cited by the learned Chief Justice. It is plain from the statement of the law by that very learned Judge, whose opinions upon such a subject are entitled to especial weight, that the vendor's part is performed by shipping the goods in conformity with the contract, first insuring them and procuring the bill of lading and policy of insurance, and then promptly despatching these to the purchaser. In 1889 the case of Delaurier & Co. v. Wyllie[29] was decided by the Scottish Court of Session upon a case submitted to an opinion of the Judges of the whole Court. The plaintiffs, who were French merchants, had purchased from Stevenson & Co., of Glasgow, 1,000 tons of Ayrshire coal "c.i.f. Rochefort." Stevenson & Co. shipped the coal on defendant's ship and insured it, the ship was lost with her cargo, and the action was brought against the shipowner on the ground that the loss was through the fault of the master or other servant of the defendant. It became necessary to determine the meaning and effect of a c.i.f. contract. There were thirteen Judges, and it was held by the Court, dissentiente Lord Young, that the coals became the plaintiff's property on shipment or endorsement of the bill of lading, as the seller's obligation to pay insurance and freight did not imply a suspension of delivery till the port of arrival, and the plaintiffs therefore had a title to sue. The case came originally before the Lord Ordinary (Trayner) who made a decree against the defendant. The important passage from His Lordship's judgment read by my brother Barton indicates with great clearness the meaning and effect of a contract c.i.f. In the argument before the Full Court of Session the dictum of Blackburn J. in Ireland v. Livingston[30] was referred to, and the following passage from the judgment of Lord Wellwood[31] states tersely the view taken by the majority of the Court on the question:—"The meaning and effect of the expression c.i.f. simply is that the sellers undertake to insure for the purchaser and include in the invoice price the cost of the cargo, the insurance premium, and the full freight. From this they deduct the amount of the freight to be paid at the port of discharge, and draw for the balance upon the consignee. In substance, therefore, as Lord Blackburn says in Ireland v. Livingston4L.R. 2 Q.B., 99, and L.R. 5 H.L., 395. the consignee pays the same price as if the goods had been bought and shipped to him in the ordinary way." Lord Shand[33], says expressly that Rochefort was not the place of delivery under the contract. Lord Lee[34] said "In this case Messrs. Stevenson & Co. were the sellers of the coals, and I agree with the Lord Ordinary that the contract between them and the pursuers did not require that in order to transfer the risk to the pursuers the coals should be delivered at Rochefort. I think that the case was one in which Stevenson & Co. did all that was incumbent on them by arranging for the carriage of the coals, putting them on board of the vessel they had chartered, insuring them, and undertaking to pay the freight. The risk was with the buyer after such shipment, unless there had been a clear undertaking to deliver at Rochefort, implying that the risk was to remain with the seller until delivery at the place stipulated." The concluding words of the contract are of importance in connection with the first finding of the jury. As already pointed out, the same view has been put shortly by Lord Davey in Ströms Bruks Aktie Bolag v. Hutchison[35]. It therefore seems clear that the sellers in this case did not agree to deliver in Sydney but at Kobe, and the only question is whether the goods they shipped at Kobe as in pursuance of the contract were of the proper description. The goods being described as Japanese onions, there was an implied condition that the goods should be of merchantable quality. The jury have found that they were of merchantable quality as understood in Japan; but the purchaser contends that, besides the condition of merchantability, the sellers were bound to put on board onions reasonably fit for the voyage from Kobe to Sydney under ordinary conditions. There has been no finding of fact that the purchaser made known to the seller the particular purpose for which the goods were required, so as to show that the buyer relied upon the sellers' skill or judgment. It was urged, however, on behalf of the purchaser that the mere fact that the contract stated that the onions were to be shipped to Sydney, and that the sellers knew that the onions were to be shipped to Sydney, was sufficient to establish in law the further implied condition that the goods should be reasonably fit for the purpose of the voyage so as to arrive in Sydney in merchantable condition, except for the necessary and inevitable deterioration caused by the voyage. At the trial, and in the argument before this Court, it was put on behalf of the purchaser that the implied condition referred to necessarily arose as a matter of law.

In my judgment that is not a sound position. The mere fact that in the written document itself the fact and dates of shipment are referred to does not conclude the matter, because that is common to all c.i.f. contracts, and, unless such an implied condition exists in every contract of the character, the position contended for cannot be maintained. But that cannot be the case. Sub-sec. 1 of sec. 14 of the English Sale of Goods Act 1893 has been held by the Court of Appeal to be the same as the common law: Frost v. Aylesbury Dairy Co.[36], and it is the common law which still exists in this State. The suggested implied condition of reasonable fitness for the purpose must arise, if at all, on facts showing that the purchaser not only made known to the seller the particular purpose for which the onions were required, but also did this so as to show he was relying on the seller's skill and judgment. That this is a question of fact appears from several cases: Gillespie Bros. & Co. v. Cheney, Eggar & Co.[37]; Frost v. Aylesbury Dairy Co.[38]. In that case Collins M.R. said[39]:—"We arrive then at this result, that milk was supplied for a purpose known to the seller under circumstances which showed that the buyer relied on the seller's skill or knowledge," &c. In Wallis v. Russell[40], the Irish Court of Appeal dealt with this question exhaustively. Walker L.J. said[41]:—"The buyer has made known to the seller the purpose for which the goods are required, viz., for eating, and she has, as found by the jury, made that known in a manner that showed that she relied on the seller's skill and judgment, and not on her own." Holmes L.J. said[42]:—"Sec. 14, sub-sec. 1, enacts that this implication will arise when the buyer directs the attention of the seller to the purpose for which the goods are required in such a way as to convey that he is relying on the seller's skill and judgment to select a suitable article." The quotation by Fitzgibbon L.J. from Brown v. Edgington[43], and by Walker L.J. from Bigge v. Parkinson[44] support the same position. It is, therefore, plain that the mere fact that the seller knows the purpose without more will not of itself raise the implication. Looking at the facts in this case to see whether they are such as would entitle the purchaser to a direction that he relied on the sellers' skill and judgment to select onions fit for the voyage, I am clear that on the evidence no such direction could be given. The facts are certainly open to the construction, if the jury thought fit, that the purchaser did not rely on the sellers' skill and judgment. In view of the order the Court now makes I abstain from weighing the evidence. There being, however, so far no finding in plaintiff's favor of the fact essential to raise the implied condition of reasonable fitness, and the evidence not entitling him to a direction, it follows that the verdict cannot be sustained, and the appeal must therefore be allowed. I have not overlooked the first finding of fact, but this cannot be taken as amounting to an agreement by the sellers that they would bear the risk of transit, or, in other words, warrant merchantable condition of the goods on arrival at Sydney. No reliance was placed on this finding during the argument, nor, in my opinion, would it bear the construction that the sellers understood the buyer to rely on their skill and judgment to provide onions reasonably fit for shipment to Sydney. The only question as to which I have any doubt is whether a new trial should be ordered in both actions or whether a nonsuit should be entered in Little's action, and judgment for the plaintiffs in the crossaction. Strictly speaking, and in the absence of amendment, the sellers are entitled to judgment, and the purchaser cannot complain of a mistrial on the ground that by a mischance or other miscarriage for which he is not responsible the necessary facts were not found. He never asked for or intended that the facts as to reliance on the sellers' judgment should be found by the jury, see Nevill v. The Fine Art and General Insurance Co.[45]. The pleadings do not raise the issue, and even the extended form in which the case was treated at the trial did not include the question of fact whether the purchaser relied on the sellers' skill and judgment. To send the case down for trial again on the present pleadings, the defendants being under no obligation to travel beyond the issues as appearing on the records, would be futile; it would be only visiting the plaintiff with additional expense and exposing him to certain defeat. The Court offered the plaintiff an amendment so as to raise the necessary issue, provided he struck out the allegation as to delivery in Sydney which the Court considered untenable. This was refused, the plaintiff insisting on retaining his allegation of a contract for delivery in Sydney.

The Court must therefore deal with the matter as it stands. On that basis I agree to the order as proposed by the Chief Justice.

Appeal allowed. Order appealed from discharged. Verdict in respondent's action set aside and nonsuit entered, with costs, including the costs of the motion for a rule nisi in the Supreme Court. Verdict in the appellants' action set aside and a new trial ordered, the costs in that action to be the plaintiffs' costs in the cause.

[1] (1905) 5 S.R. (N.S.W.), 71.

[2] (1905) 5 S.R. (N.S.W.), 71.

[3] (1905) A.C., 515, at p. 528.

[4] L.R. 5 H.L., 395, at p. 406.

[5] 17 Court of Sess. Cas., 167.

[6] 58 L.J.Q.B., 519.

[7] 17 T.L.R., 299.

[8] 14 P.D., 64, at p. 68.

[9] L.R. 3 Q.B., 197.

[10] L.R. 3 Q.B., 197, at p. 202.

[11] [1841] EngR 324; 2 Man. & G., 279.

[12] [1829] EngR 487; 5 Bing., 533.

[13] 4 Camp., 169; 6 Taunt., 108.

[14] [1842] EngR 208; 3 Man. & G., 868.

[15] L.R. 5 H.L., 395.

[16] [1862] EngR 255; 7 H. & N., 574.

[17] L.R. 5 H.L., 395.

[18] 58 L.J.Q.B., 519.

[19] 6 T.L.R., 274.

[20] 17 T.L.R., 299.

[21] 58 L.J.Q.B., 519.

[22] 17 Court of Sess. Cas., 167, at pp. 172, 173, 174.

[23] (1905) A.C., 515.

[24] 3 Com. Cas., 29.

[25] 3 Com. Cas., 29, at p. 33.

[26] 3 Com. Cas., 29, at p. 37.

[27] (1905) 5 S.R. (N.S.W.), 71.

[28] L.R. 5 H.L., 395, at p. 406.

[29] 17 Ct. of Sess. Cas., 167.

[30] L.R. 5 H.L., 395.

[31] 17 Ct. of Sess. Cas., 167, at p. 189.

[32] L.R. 2 Q.B., 99, and L.R. 5 H.L., 395.

[33] 17 Ct. of Sess. Cas., 167, at p. 180.

[34] 17 Ct. of Sess. Cas., 167, at p. 198.

[35] (1905) A.C., 515, at p. 528.

[36] (1905) 1 K.B., 608.

[37] (1896) 2 Q.B., 59.

[38] (1905) 1 K.B., 608.

[39] (1905) 1 K.B., 608, at p. 612.

[40] (1902) 2 I.R., 585.

[41] (1902) 2 I.R., 585, at p. 627.

[42] (1902) 2 I.R., 585, at p. 635.

[43] [1841] EngR 324; 2 Man. & G., 279.

[44] [1862] EngR 414; 7 H. & N., 955.

[45] (1897) A.C., 68.

High Court of Australia

Bowden Brothers & Co Ltd v Little [1907] HCA 14; (1907) 4 CLR 1364 (15 May 1907)

HIGH COURT OF AUSTRALIA