Naruone Australia Pty Ltd v TNS Logis Pty Ltd & Anor

Judgment 1HIS HONOUR : The plaintiff is an importer of frozen foods from Korea. It seeks by way of mandatory interlocutory relief an order that the second defendant, P & L (AUST) Pty Ltd which operates as PNL Global Logistics ("PNL"), deliver up a container of frozen foods that is under PNL'S control. It seeks an order that PNL do all things necessary to cause the goods to be released from customs control to be delivered to the plaintiff. As I understand the evidence, the goods are no longer the subject of customs control but are held in a warehouse under an arrangement between PNL and the warehouse keeper. 2The plaintiff purchased the goods from two suppliers in Korea. It has paid the purchase price and the freight and, through its agent, has paid an invoice raised by PNL following PNL's obtaining control over the goods including port charges. 3The plaintiff claims delivery up of the goods on the basis that they are its property. Initially it sued only the first defendant, TNS Logis Pty Limited (TNS). It did so on the basis that the bill of lading provided to it from a freight forwarder in KR Sea & Air Inc specified TNS as the company to whom the plaintiff should apply for delivery of the goods. 4TNS's position was that the plaintiff was not its customer and it had not acted as a delivery agent for the seller, shipper or freight forwarder and was a delivery agent for goods transported by air. It said that PNL was the delivery agent in Sydney for KR Sea & Air Inc. The plaintiff then amended the summons to seek relief against PNL. 5PNL claims to be entitled to retain the goods on either or both of two grounds. First, it says that it is owed $26,274.40 for providing customs brokerage and delivery services to the plaintiff between August 2008 and October 2011. It says that it has seven outstanding invoices totalling that sum. These invoices are dated between 23 June 2011 and 31 August 2011. They do not relate to any services provided in connection with the shipment that is the subject of the current claim. Thus PNL asserts a general lien over the goods so that they stand as security for prior debts. 6The second basis upon which PNL asserted a right to detain the good is that KR Sea & Air Inc asserted to it on 17 November 2011 that it was owed moneys by one of the two sellers of the goods that the plaintiff purchased, namely, a company called Haemi Foods Co Ltd. KR Sea & Air Inc requested PNL not to deliver the container and threatened a compensation claim if it did so. 7However, there is nothing before me to indicate on what basis KR Sea & Air Inc would be entitled to any security over the container by reason of there being an outstanding debt owed to it by Haemi Foods Co Ltd. This second ground is of no substance. 8There is, however, the question whether PNL is entitled to a general lien over goods that have come into its control. Section 74 of the Supreme Court Act 1970 provides: " 74 Discharge of lien or security Where, in any proceedings: (a) a party claims the recovery of specific property other than land, and (b) the party from whom recovery is sought claims to be entitled to retain the property by virtue of a lien or otherwise as security for money but does not otherwise dispute the title of the party claiming the recovery, the Court may order: (c) that the party claiming the recovery be at liberty to pay into Court, to abide the event of the proceedings, the amount of money in respect of which the lien or other security is claimed and such further sum, if any, for interest and costs as the Court may direct, and (d) that, upon payment into Court, such judgment be given for recovery of the property as the nature of the case may require. " 9There is authority in England that the cognate rule of Court in England operates in such a way that unless the Court concludes that the person claiming a lien over the goods to which the plaintiff claims title is making that claim fraudulently or in bad faith, the Court has no jurisdiction to assess the validity of the claim for the lien or the proper value of the claim ( Segbedzi v Glah (1989) 139 NLJ 1303). In coming to that view the Court of Appeal followed certain observations made in Gebruder Naf v Ploton (1890) 25 QBD 13. But in Gebruder Naf v Ploton the question of the validity of the lien was not in issue. It has subsequently been held in Ismail v Richards Butler (a firm) (1996) 2 All ER 506 that the Rule of Court, RSC Ord 29, r 6, does not cover the field. 10In my view, and as a matter of principle, where, as in this case, the plaintiff clearly has title to the goods, but the person who has custody of the goods claims a title to retain them against non-payment of a debt, it is incumbent on the party asserting the lien to show that there is at least a serious question to be tried that he is entitled to the lien claimed, and a serious question to be tried as to the quantum of the debt for which the lien is claimed. 11In the present case PNL could be entitled to a general lien either as a matter of express contract, or if there were evidence that such a lien arises as a matter of trade usage, or if the law recognised that customs agents and freight forwarding companies are entitled to a general lien. 12PNL's business is that of customs agent and freight forwarding company. Here there is no evidence of trade usage and I was referred to no authority that shows a person in the position of PNL is recognised as entitled to assert a general lien. 13The seven outstanding invoices all state that the invoices are " subject to our standard trading conditions ". Belatedly, PNL tendered a document that is said to contain the standard trading conditions referred to in the invoices. I am satisfied that there is at least a serious question to be tried that the conditions tendered are the standard trading conditions referred to in the invoices. I also am satisfied that there is a serious question to be tried that, as a result of the continued provision of services by PNL to the plaintiff subject to invoices which referred to such standard trading conditions, those conditions have been included by reference as part of the terms of the agreement pursuant to which PNL provided services to the plaintiff. 14The standard trading conditions include cl 25 that provides: " All goods (and documents relating to goods) shall be subject to a particular and general lien and pledge for moneys due either in respect of such goods or for any particular or general balance or other moneys due from the customer to the company. " 15I think that condition raises a serious question to be tried that PNL is entitled to the lien it asserts if it has obtained possession of the goods pursuant to an express or implied contract with the plaintiff. 16I accept the submission of Mr Rollinson, counsel for the plaintiff, that cl 25 could not be construed as creating a general lien over the plaintiff's goods if PNL came in to possession of those goods without such a contractual relationship, that is, as an intermeddler or trespasser. 17The goods are the subject of two invoices. One was issued by KR Sea & Air Inc. It is the bill of lading to which I referred earlier in these reasons that identifies TNS Logis Pty Limited as the party to whom the consignee should apply for delivery. It named the plaintiff as the consignee. 18Another bill of lading was issued by the shipping carrier, Hyundai Merchant Marine Co Ltd. It specified PNL as the consignee and the party to be notified. 19Mr Sae Jun Kim, senior cargo manager for PNL, describes the practice that once KR Sea & Air Inc has shipped the goods through a carrier such as Hyundai it receives the master bill of lading from the carrier and sends a house bill of lading by fax or email to PNL as its agent. 20Before the cargo arrives in Sydney PNL receives an arrival notice and tax invoice and makes payment to the carrier. Once the carrier receives payment, PNL receives the delivery order from the carrier. Where PNL is appointed as customs agent it effects customs clearance by paying the relevant costs and fees. 21In the present case there is evidence PNL received a house bill of lading from KR Sea & Air Inc, being the second form of bill of lading issued by Hyundai. It received a freight notice and an arrival notice tax invoice from Hyundai in the amount of $553.87 and paid that invoice. PNL received a delivery order from Hyundai after it had made that payment. 22On 18 October 2011 PNL sent a tax invoice to Kago Australia Pty Ltd for $924 for its expenses and fees in respect of this particular cargo. Kago Australia Pty Ltd acts as agent for the plaintiff. It paid PNL's invoice. 23The plaintiff's evidence is to the effect that it made no contract with PNL in respect of this transaction and that the goods ought not to have been delivered to PNL. Hence, the plaintiff would say that even if the standard trading conditions are incorporated by reference into such contracts as it has had with PNL, no lien is created over these goods because PNL wrongly obtained possession of them. However, there is a serious question to be tried about this. 24PNL is named as the consignee and the party to be notified in the bill of lading issued by Hyundai. Its invoice for the services it provided in respect of the goods has been paid by the plaintiff through its agent. 25I am therefore satisfied there is a serious question to be tried that PNL is entitled to a general lien over the goods. 26A fortiori, PNL's claim to a general lien is not made fraudulently or in bad faith. 27In my view s 74 of the Supreme Court Act applies. There being no final hearing of the validity of the asserted lien, the plaintiff seeks recovery of specific goods pursuant to s 74. 28I will give judgment for the recovery of the property by ordering delivery up, but that order will take effect only upon payment into court of the amount of money in respect of which the lien is claimed and any further sum for interest or costs that I might determine. 29As I have said the asserted debt was $26,274.40. Mr Kim annexed correspondence from Mr Park of the plaintiff dated 26 October 2011 in which Mr Park asserted that the plaintiff had paid $4,000 off the debt on 23 September 2011. There was no evidence from PNL disputing that the payment had been made. Its statement does not show a credit for that amount. The statement only lists seven invoices and asserts the amount of the balance said to be outstanding in respect of each of them. In the case of an invoice dated 23 June 2011 the invoice amount was $4,744.34, the balance said to be outstanding was $500.74. 30I understood from submissions made for PNL that a credit of $4,000 had been given in arriving at the balance said to be outstanding of $26,274.40. However, there is no evidence to that effect. The only amount of the outstanding debt that PNL has identified is $22,274.40. 31I do not think that I ought to require payment into Court of any sum for costs. The lien would not at the moment secure any amount for costs. No moneys would be due for costs until an order for costs was made and the lien is only in respect of moneys due. I do not predict the outcome of a contested final hearing. Nor did counsel for PNL press a payment for interest. The lien is a lien for moneys due. No interest would become due unless and until an order were made under s 100 of the Civil Procedure Act 2005 for interest. 32For these reasons I propose the following orders subject to anything either party may have to say as to the precise form of the order to be made. 1.Upon the plaintiff by its counsel giving the usual undertaking as to damages, and upon the plaintiff paying $22,274 into Court, I order that, within 24 hours after the plaintiff's solicitor serves notice on the second defendant's solicitor that such moneys have been paid into Court, the second defendant deliver the goods referred to in para 1 of the amended summons to a carrier nominated by the plaintiff at the premises at 15-17 Byrnes Street, Botany, New South Wales. 2.Secondly, upon the plaintiff, by its counsel giving the usual undertakings as to damages, I order that until further order, or until compliance with order 1, the defendants, by themselves, their employees or agents, be restrained from dealing with the goods or adjusting the temperature at which the goods are stored. 3.I give liberty to the parties to apply on reasonable notice to the Duty Judge. [Parties addressed on costs.] 33The plaintiff's claim is against PNL and not against the first defendant. The plaintiff does not oppose an order that claims for relief in the amended summons against the first defendant should be dismissed. I make that order. 34Prima facie costs follow the event and the first defendant is entitled to its costs of the proceedings. The plaintiff contends that it acted reasonably in joining the first defendant as initially the sole defendant because, on the information it had, it was the party who would be expected to have control of the goods. I accept the plaintiff acted reasonably in joining the first defendant, but the principle that prima facie costs should follow the event applies, even where the unsuccessful party has acted reasonably in bringing, or defending, a claim. 35I do not think the circumstances are sufficient to warrant a departure from the usual rule. 4.I order that the plaintiff pay the first defendant's costs of the proceedings against it. 36That order is without prejudice to any application that the plaintiff might later bring as to how the burden of that costs order ought to be borne as between it and the second defendant. 5.I stand the proceedings over to the Registrar's list on 18 December 2011. 37So far as costs between the plaintiff and the second defendant are concerned, I think the costs should be costs in the cause. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 December 2011