The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Giannino Caruana Demajo and Mr Justice Noel Cuschieri, on May 31, 2013, in the case “Middle Sea Insurance plc in its own name and as subrogated in the rights of Salvo Grima & Sons Ltd vs Medserv in its own name and as agents of Agip Oil and H. Mifsud & Sons Ltd as agents of Augusta Supply Services SPA”, held, among other things, that the ship agent that released the cargo manifest as agent was certainly the legitimate person to be sued in an action of damages. It could not plead that, as soon as the container was loaded on to the vessel in Malta, its responsibility ceased.
The facts in this case were as follows:
Instead of at -18˚C, the container was kept at -5˚C
Agip Oil ordered from Corinthia a container of foodstuffs, to be furnished to one of its oil rigs, which was located in Libya.
On June 26, 2001, the food items prepared by Corinthia were stored in a refrigerated reefer container by Salvo Grima & Sons Ltd in one of its stores after the container was locked in the presence of a Customs officer. The next day it was sent to Medserv, loaded on to the vessel m/v Asso 11 leaving Malta, that same day.
When the container arrived, the operators of the rig refused to accept the food products, which had deteriorated in quality and had begun to stink. The products were, therefore, returned to Malta.
It resulted that, instead of at -18°C, the container was kept at -5°C which was not cold enough to preserve the foodstuffs.
As the goods were covered by an insurance policy issued by Middle Sea Insurance, Middle Sea paid for the damages of Lm7,198 and Lm212 in survey fees. It then proceeded to file legal proceedings to recover the damages from Medserv Ltd, in its own name and as agent of the foreign company Agip Oil and H. Mifsud & Sons Ltd as agent of the foreign company Augusta Supply Services SPA, owners of the vessel Asso 11.
Medserv contested that the damage was caused when the container was under its control. It also argued that it was not responsible for Agip Oil.
The court of first instance said that there was no doubt that the food had to be destroyed because it was not fit for consumption and that the damages occurred during the voyage to Libya. It was not satisfied with the evidence produced by Medserv, nor was it convinced that there were some defects in the container before the merchandise was packed.
Reference was made to “A. Calleja et noe vs C. Ellul Sullivan et noe (PA) dated December 15, 2004, on the legal status of the shipping agent.
The court noted that the local agent of a foreign shipowner was the legitimate person to represent the shipowner in an action of damages arising from an alleged improper performance of obligations in the carriage of goods and collateral damage.
The agent could be sued on behalf of the owner provided such acts against the owner did not exceed his mandate.
The court noted that in this case Medserv, which released the cargo manifest as agent of Agip Oil, was certainly the legitimate person to be sued in an action of damages. It could not plead that, as soon as the container was loaded on to the vessel in Malta, its responsibility ceased.
The first court condemned Medserv as agent to pay Middle Sea €15,345 as damages. It freed Medserv in its own name as well as H. Mifsud & Sons Ltd from the proceedings. It was not proven that H. Mifsud & Sons Ltd represented the owners of the vessel or that it was connected with any company which was legally involved in these proceedings.
As regards damages, the court considered the invoice value of the products and not their cost value.
Aggrieved by the court of first instance’s decision, Medserv entered an appeal. It requested the court to vary this decision; to confirm that part where it was freed from the proceedings and to revoke that part where it dismissed its other pleas, in particular where it was condemned to pay the damages.
Medserv raised five grievances:
• The correct name of its principal was Agip Oil Company Ltd;
• Medserv in its personal capacity should not suffer judicial costs once it was personally liberated from the proceedings;
• Medserv was not a juridical representative of Agip;
• The container in question was never in its possession and it was not to blame for the damages;
• The damages were computed on the invoice price and not on the cost price.
Regarding the precise name of Agip, the court noted that this grievance was not significant, as this company was easily identifiable and there was no doubt that reference was made to the correct company.
The court agreed that once Medserv was freed from the proceedings, it should not be ordered to suffer judicial expenses. At most, it could be ordered to pay as agent.
The court noted that, on the basis of the cargo manifest, Medserv appeared as agent for the delivery of the goods to the oil rig. This was expressly stated in the contract: “it shall provide, in name and on behalf of the company Agip some specified agency and various associated services for the handling, expatiates in transit from Malta and transportation of the company’s materials and equipment between the contractor’s base in Malta and the company’s offshore platforms in Bouri Field, as more specifically details in the Exhibit A ‘Scope of Work’.”
It noted further that Medserv’s responsibility did not end as soon as the container was loaded on the vessel, but it continued to be responsible until the goods arrived at their final destination.
It could not be stated that Medserv did not represent Agip.
The court agreed with the appreciation of the first court, that the damage was caused during the voyage. It was likely that the container was unplugged and when it was re-plugged, it operated in reverse position. It said that there was nothing to prove that the food was in a poor condition at the time it was packed in a container.
As regards the computation of damages, this court agreed with the first court, where damages were calculated on the invoice price. The damages not only consisted in the price of the food, but also in the delivery of the goods by Medserv and in the profits which would have been made.
The purpose of civil damages was to award, as far as possible, restitutio in integrum and, if this was not feasible, the person who suffered damages should be awarded compensation for all losses.
In this respect, the invoice price included the cost price for all work performed as well as for the lost profits.
For these reasons, on May 31, 2013, the Court of Appeal gave judgment by accepting Medserv’s appeal in part. It held that Medserv and H. Mifsud & Sons Ltd personally should not suffer costs. The judicial costs should be borne by Medserv as agent of Agip.
The court dismissed Medserv’s other grievances and confirmed the remaining part of the decision of the first court.
Dr Karl Grech Orr is a partner at Ganado Advocates.