Sinorama International v Champ Security & Anor [2003] NSWSC 1091 | Case summary

1 MASTER: At all material times, the plaintiff carried on a business known as "Lobster World". The business involved the purchase and sale of live lobsters. The lobsters were kept in tanks on the plaintiff's premises. 2 The business was taken over from Mr Fun in July 1991. Earlier, on 25 March 1991, the first defendant had installed an intruder alarm security system (as opposed to a plant and equipment alarm system) at the premises. A contract providing for the security service (including electric monitoring) was made on that day. A document known as a Commissioning Record (with terms of agreement annexed) was provided to Lobster World. The material written on the Commissioning Record included "MAINS FAIL-CALL KEY HOLDER ASAP". 3 In November 1997, the first defendant sold its security business to the second defendant. The defendants notified the plaintiff in writing that the contract with the plaintiff had been assigned. 4 On 13 June 1999, there was a power outage affecting a number of properties in the Bankstown area. It caused a mains power failure at the plaintiff's premises. It lasted from 10.58 pm until 12.25 am on 14 June 1999. A backup battery supplied power to the alarm system. 5 Another area outage occurred on 14 June 1999. The mains failure lasted from 12.51 am to 1.07 am. Again, the backup battery supplied power to the alarm system. 6 On 14 June 1999, it was discovered that about 4000 kilo of lobsters in four salt water tanks had suffered from reduced oxygen in the salt water and that many lobsters had died. The plaintiff sold off the dead and damaged lobsters and claims that it did so at a loss. 7 Neither defendant made contact with the plaintiff during the period from 10.00 pm on 13 June 1999 to 9.30 am on 14 June 1999. 8 The plaintiff sued both defendants in the Local Court claiming damages for the loss allegedly suffered. The claim was founded on breach of contract, breach of duty and provisions of the Trade Practices Act 1974. 9 There was a contested hearing. It took about three days. The learned Magistrate (Mr Still) delivered a written judgment. He found in favour of both defendants. 10 Dr Chang (a director of the plaintiff) and an employee of the plaintiff Mr Lam gave evidence on behalf of the plaintiff. Mr Peter Samartzis (the Managing Director of the first defendant) gave evidence on behalf of the first defendant. Mr Harris (a manager of the second defendant) gave evidence on behalf of the second defendant. There was an Agreed Statement of Facts. There was documentation (including the Commissioning Record). 11 The plaintiff has brought an appeal to this Court. The grounds of appeal may be found in the Further Amended Summons. There are nine of them. The grounds are as follows:- "1. His Worship's finding that the Plaintiff has given evidence specifically designed to bolster its case and sheet home to the First Defendant knowledge which the First Defendant did not have, is in error in that the evidence reasonably admits of different conclusions. 2. His Worship misdirected himself in law and is in error in noting that 'Mr Fun who was present with the First Defendant when commissioning occurred of the intruder alarm in March 1991, was not called to give evidence on the part of the Plaintiff. (sic) 3. His Worship erred in misdirecting himself on the law in finding that the meaning of the words in the commissioning record could not be decided without the calling of Mr Fun. 4. His Worship erred in misdirecting himself on the law in finding that in the absence of 'knowledge of special requirements on the Plaintiff requiring continuous electricity supply for his lobster business', neither the First or Second Defendant had any obligation to inform the Plaintiff of a mains failure (sic) 5. His Worship erred in misdirecting himself on the law of contract in finding that neither the First or Second Defendant had any obligation to inform the Plaintiff of a mains failure. 6. His Worship erred in not finding that the failure of the Second Defendant to notify the Plaintiff at all of mains failure, was in breach of the contract of the Second Defendant with the Plaintiff. 7. His Worship erred in misdirecting himself on the law of negligence in holding that the Second Defendant did not have a duty of care and any obligation to inform the Plaintiff of a mains failure as soon as possible. 8. His Worship misdirected himself on the law on s52, reliance (s.82) and causation within the meaning of the Trade Practices Act 1974, and thus fell into error. 9. His Worship erred in refusing leave to recall the First Defendant's Director, Mr Samartzis to allow further cross examination in relation to evidence which had emerged only after he had left the witness box." 12 The appeal is founded on alleged error of law. The plaintiff bears the onus of demonstrating error of law that justifies the disturbing of the decision of the learned Magistrate. 13 The plaintiff has prepared written submissions of considerable length. There were also oral submissions. Both defendants responded with written and oral submissions. 14 As a consequence a lengthy hearing took place. I have carefully considered all of the material (in particular the submissions made on behalf of the plaintiff). 15 The judgment of the learned Magistrate sets out the Agreed Statement of Facts and summarises the evidence given by the witnesses. 16 The evidence of the witnesses threw up conflict. The learned Magistrate made findings on credibility and the plausibility of evidence given by Dr Chang. These findings were material to his ultimate decision. 17 He then dealt with each of the causes of action as well as the question of causation. The plaintiff failed on each of the causes of action (including on the question of causation). All claims were dismissed. 18 I shall now expressly refer to some of the matters that were agitated during submissions. This reference is not intended to be exhaustive. 19 Dr Chang and Mr Samartzis gave conflicting evidence. There were inter alia particular areas of conflict. One concerned the occasion when the Commissioning Record came into being (on 25 March 1991). The other concerned various alleged conversations said to have taken place between Dr Chang and someone (called "Bob") from the first defendant concerning the alleged special requirements on needs of the plaintiff should the mains fail (the risk of asphyxiation). The learned Magistrate did not accept Dr Chang's evidence on these matters. He found that some of his evidence was improbable, if not impossible. Indeed, he preferred the evidence given by Mr Samartzis. These findings of fact were more than reasonably open on the evidence. 20 Mr Samartzis gave evidence that both Mr Fun and Dr Chang were present on the occasion of 25 March 1991. Dr Chang denied that he was present on that occasion. The contractual claim was particularised as being partly oral and partly in writing. As Dr Chang claimed that he was not present on 25 March 1991, he was not in a position to give evidence as to what happened on that occasion. The plaintiff bore the onus of proving what happened on 25 March 1991. The only witness who could have been called by the plaintiff to give such evidence was Mr Fun. The learned Magistrate observed that he had not been called by the plaintiff to give such evidence. In these circumstances, no evidence was put forward to prove the oral part of the claim. In my view, what was said and done by him does not give rise to any error of law. 21 The defendants took the view that what was being provided for the plaintiff was an intruder alarm system the purpose of which was to secure the lobsters from theft. By way of contrast, the thrust of the plaintiff's case was to transfer liability to the defendants in the event that there was an interruption of the supply of power which led to death or damage to lobsters kept on the premises. The learned Magistrate makes it clear that he appreciated that distinction. It illustrates the ambitious and misconceived case that was being propounded by the plaintiff. 22 Leaving aside all other matters, the case before the learned Magistrate was doomed to failure on the question of causation. It was agreed that lobsters had suffered from reduced oxygen. There was a concession that lobsters had asphyxiated. The plaintiff did not lead any expert evidence. There was no evidence of interruption with the power supply. The evidence was that the backup battery operated during the periods of area outage. The plaintiff failed to lead the evidence that demonstrated what caused the lobsters to die or become damaged. It failed to demonstrate that the alleged loss flowed from the alleged breaches and conduct. The evidentiary deficiencies stood in the path of success in the Local Court. 23 It may be that the expression of reasoning process needs to be carefully read. In any event, it seems to me that what was said gives little comfort to the plaintiff. In my view, it was not only reasonably open to the learned Magistrate to find that the plaintiff failed on the question of causation, it was the only possible conclusion. 24 There were other deficiencies which were also fatal to aspects of the claim. I shall merely mention some of them. There was a lack of evidence of communication to the defendants of the plaintiff's special needs. The case in contract relied on conduct that was subsequent to the contract date (25 March 1991). It is now well settled that subsequent conduct cannot be taken into account in determining the contract made between the parties (C H Magill & 1 Or v National Australia Bank Limited [2001] NSWCA 221). The Statutory claim was founded on the writing which contained material concerning the level of the security service to be provided. There was a lack of relevant conduct to support the alleged claim. 25 In the circumstances of this case there is no need to address all grounds or the many and various arguments that were advanced to make out those grounds. The appeal was doomed to failure by reason of the matters already mentioned. 26 In my view, the plaintiff has failed to demonstrate any error of law. Largely, what was advanced in the appeal was founded on misconception. 27 The appeal fails. The proceedings are dismissed. The plaintiff is to pay the costs of the proceedings. I reserve the question of the basis on which those costs are payable.

Sinorama International v Champ Security & Anor

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Judgment (7 paragraphs)

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Cases Cited (1)