Court awards reasonable remuneration for ship repairs where no prior agreement on costs existed.

[*504] 1972 May

(MALACHTOS, J.)

ADMIRALTY JURISDICTION

Associated Levant Lines (S.A.L.) and others,

Plaintiffs,

and

N. Anastassiou & Son,

Defendants.

(Admiralty Action No. 3/70).

Contract - Quasi Contract - Claim for money received over and above reasonable remuneration for services rendered and materials supplied - Court satisfied that there was no agreement between parties as to cost of labour and materials - Therefore reasonable remuneration only is payable - Plaintiffs' version on issue of reasonable remuneration preferred - Claim sustained.

G. Michaelides, for the Plaintiffs.

G. Economou, for the Defendants.

JUDGMENT

The following judgment was delivered by:-

MALACHTOS, J.: In the morning of the 12th May, 1969, the M/S "Beiteddine" called at Famagusta port [*505] in order to receive a load of carrots and potatoes. This ship belongs to the Associated Levant Lines (S.A.L.) of Beirut, Lebanon, who are plaintiffs No. 1 in this action. Plaintiffs No. 2 were at the material time the agents in Cyprus of plaintiffs No, 1. Plaintiffs 3 took over from plaintiffs No. 2 in July, 1969.

After the said ship was berthed it was found out that its refrigerating plant required certain repairs. For this purpose the defendant firm, who are manufacturers and repairers of refrigerators and cold rooms were engaged and who after carrying out the said repairs presented their bill (exhibit 1), dated 15th May, 1969, for payment of the sum of £822.500 mils. This sum, as it appears on the bill, was made as follows:

1. Change of filters, adjustments to the refrigerant controls and charged with gas freon 12;

2. Day and night attendance on board from 12th May to the 15th May, inclusive, one mechanic during the day time and two mechanics during the night. Costs of labour in accordance with the repairs, including overheads, say, £450.- only

£450.-

Spare supply freon 12 refrigerant quantity 390 kilos at 950 mils each

£370.500

One dryer at £2.-

£ 2.-

£822.500.

Discount

£70.-

£752.500- [*506]

As the said amount was considered exorbitant it was paid by plaintiffs No. 2 as agents of Plaintiffs No. 1 by cheque which was accompanied by a letter of protest dated 16th May, 1969, exhibit 2.

On the 1st July, 1969, plaintiffs No.

2 addressed to the defendants a letter, exhibit 3, informing them that they were at a loss to understand how three mechanics from the 12th to the 15th of May, nights included, could possibly charge £450.- and they further drew their attention to the fact that freon was invoiced at 5/- a.d. per kilo at Beirut and at Nicosia 6/- per kilo. They further suggested that the defendants should give them ample explanation for each item charged, asking them at the same time to revise their bill.

In answer to their above letter plaintiffs received a letter from the defendants dated 7th July, 1969 (exhibit 4). In the said letter the defendants give particulars of the hours of work totalling to 342 hours. They charged 15/- per working hour which is, as they say in their letter, the normal rate of fees for refrigerant mechanics. This comes to £256.500 mils. They also charged £123.500 mils for business lost while their shop was closed for nearly one week. They further state in their letter that they did not charge £450.- as stated in the letter of the plaintiffs but they made a discount of £70, which brings the total cost of labour to £380. They admit that freon 12 in Cyprus is quoted 6/- to 7/- per kilo depending on the quality but the freon [*507] 12 which they supplied is of U.S.A. origin and was in the market up

to 1963 and was quoted at 10/- and 11/- per kilo. This kind of freon 12 they had to supply to the ship at the request of the Chief Engineer. They make

up the price at 19/- per kilo counting and adding up the interest at 8% per annum for every year they had it in stock and this brings it to 16½/- per kilo, plus 2½ per kilo for transfer from their cylinders to the cylinders of the ship, loss of freon in the process plus their profit. This brings the price to 19/- per kilo.

On receiving exhibit 4 plaintiffs No. 3, who in the meantime had taken over from plaintiffs No. 2, by their letter dated 8th July, 1969, informed the defendants that they utterly disagreed with its contents and with the figures and calculations it contained and that they were sending a copy of the said letter, exhibit 4, to their principals in Beirut awaiting for further instructions. By their letter dated 28th November, 1969, exhibit 6, addressed to the defendants through their advocate, plaintiffs informed them that the owners of the ship had obtained an independent evaluation of the work.

According to that evaluation their bill should not exceed the sum of £438.360 mils. This sum was made up as follows: Labour costs £212.400 mils. Cost for refrigerant used £124.800 mils. Plus 30% to cover overheads and profit £101.160 mils, Total £438.360 mils. [*508]

The defendants were further informed that the said estimate was based on the total number of hours as well as the quantity of freon submitted by them in their letter of 7th July, 1969, exhibit

4. Therefore, the plaintiffs claimed a refund of an amount of £314.140 mils.

By a letter dated 1st December, 1969, (exhibit 7) the defendants through their advocate, wrote to the plaintiff advocate alleging that the charges made in their debit note of 15.5.69, (Exhibit 1), were fair and reasonable and, furthermore, that the freon 12 refrigerant was supplied to the above mentioned ship at the price of 19/- per kilo as agreed beforehand between the defendants and the Chief Engineer of the ship. The plaintiffs, therefore, instituted the present proceedings whereby they claim against the defendants -

(a) £314.140 mils money payable by the defendants to the plaintiffs as money received by the defendants for the use of the plaintiffs or, alternatively, the same amount by way of damages and/or otherwise as money received by the defendants over and above the reasonable remuneration and/or reasonable cost of repairs carried out by the defendants to the refrigeration plant of M/S Beiteddine at Famagusta harbour between the 12th and the 15th May, 1969.

(b) Legal interest and costs.

The defendants in their answer deny the claim of the plaintiffs and allege that the cost of labour as well [*509] as the freon supplied were agreed beforehand with the master of the ship. This appears in paragraph 2(b) and (c) of the answer which read as follows:

"(b) Before the Defendants commenced the vessel's repairs in the morning of 12.5.1969, they orally agreed with the Master of the vessel that for their services they would be paid £0.750 mils (15/-) for each working hour (overtime hours to be counted: One hour = 2 hours until midnight and one hour = 3 hours from midnight to normal morning working time) and in addition to £30/£40 for each day the repairs would take.

(c) Pursuant to the Master's said instructions and pursuant to the aforesaid agreement, the Defendants effectively repaired the vessel's refrigeration plant to the full and complete satisfaction of the Master and of the Lloyds Surveyor, thus saving the big cargo of carrots of the vessel. For the purpose of these repairs, the Defendants and their mechanics worked day and night almost without any interruption on 12, 13, 14 and 15 May, 1969".

Two witnesses gave evidence in support of the case for the plaintiffs and one witness in support of the case for the defendant firm.

Athanasios Alexandrakis in giving evidence as P.W. 1 stated that at all material times he was the [*510] accountant of plaintiffs 2 and 3. On the 12th. May, 1969, at 3.30 a.m. the ship in question was outside the Famagusta port and was berthed at 9 a.m. While lying in Famagusta harbour it was found out that her refrigeration plant required certain repairs. He, himself, contacted the defendants and instructed them to carry them out. No agreement was made between him and the defendants as to how much they were going to charge. When their bill was presented for payment it was not accepted as it was exaggerated. The defendants insisted on being paid the amount of £752. 500 mils otherwise they threatened to take legal steps to stop the departure of the ship. The ship was loaded with carrots and potatoes and the loading was completed on the 16th May, 1969, at 3.45 p.m. She sailed on the same day at

8.30 p.m. In view of the fact that the defendants threatened to stop the ship from departing he paid their bill by cheque under protest and retained Teklima Ltd. of Nicosia to estimate the work done. The work was estimated at £438.360 mils. This witness further stated that as a rule the master of a ship does not make agreements with local people or merchants. Any agreements have to be made through the representative of the company in Cyprus that owns the ship. The people responsible for payment of this kind of repairs are the owners of the ship who make payments in Cyprus through their agents. A bill in order to be paid must have the signature and the seal of the master of the ship. In the present case the agents of the ship owners were instructed by them to pay the bill under protest because it was exaggerated. [*511]

Stephanos Laurentziades, the Managing Director of Teklima Ltd., a mechanical engineer with specialization in refrigeration and air conditioning, in giving evidence as P.W. 2 stated that in November, 1969, he was requested by plaintiffs No. 3 to carry out the valuation of the work carried out on the ship in question, by the defendants. Regarding labour hours and quantities there was no way by which he would investigate into their correctness, and so he confined himself to the valuation based on the same number of hours and the same quantity of materials as stated by the defendants. He stated that the basic costs of one refrigeration mechanic for a firm is 400 mils per hour and for a first class supervising engineer £1 per hour. This is what costs a firm. The agents in Cyprus who import and sell freon

12 are Messrs. Tryphon & Sons Ltd., who used to sell it at 320 mils per kilogram. So the total cost to the firm as far as labour and refrigerant were concerned were estimate at £212.400 mils and £124.800 mils respectively. A 30% over and above these amounts to cover overheads and profit, that is £101.160 mils, this bringe up the maximum amount to which the defendants were entitled to £438-360 mils. On this amount, however, the sum of £2.- the value of one dryer supplied by the defendants should be added. This witness further stated that in assessing the said amount took also into consideration the maximum profit the defendants could make having in mind the kind of work done and the conditions under which they worked. [*512]

On the other hand, Socrates Anastassiou, one of the two partners of the defendant firm, a qualified mechanical engineer specialized in refrigeration and air conditioning engineering, in giving evidence as the only witness for the defendants, stated that on the night of the 11th or the 12th of May, 1969, a certain Savvas Constantinides of Famagusta, a ship chandler, contacted him on the part of Mr. Papadopoullos, a ship agent, and asked him to go down to the harbour as the refrigeration plant of a ship was out of order and needed repairs. So he proceeded with one of his mechanics and went on board the said ship at about 8 p.m.

They stayed on board until midnight and when they ascertained how the refrigeration system was operating they told the master that in the next morning they would resume work in order to repair it. There and then as regards labour he claimed 15/- per working hour and the master agreed. The work was carried out under very difficult conditions. The heat was unbearable and they had to work wearing only swimming trunks. After finding out and repairing the leaks of the refrigeration system they charged it with freon, which was kept as spare in cylinders on beard the ship. For the recharging of those cylinders the master or dered refrigerant freon 12 made in U.S.A. and agreed to pay 19/- per kilo. A quantity of 390 kilos of this kind of freon was supplied by the defendants. This defendant also stated that the claim of £193.500 mils for loss of business, on which he later on made a discount of £70.-, was justified due to the fact that [*513] during his absence his other employees at his shop were idle as he was not there to instruct them what to do.

When the bill was presented to the master for approval he refused to sign it saying that a discount should be made. After a discount of £70.- was made the master again refused to sign it before a commission of on the bill was given to him, and upon the defendant’s refusal to pay any commission to him the master signed the bill under protest. This defendant further stated that he paid a commission of 10% to the chief engineer of the ship and 10% to Papadopoullos who is the man who engaged him to carry out the repairs. He paid to each one of them the amount of £75.- in cash at the time when the account he presented was in dispute.

In cross-examination he stated that the analysis of the account excluding materials supplied was as follows:

Labour 342 at 15/- per hour

£256.500 mils

Loss of business

£193.500 mils

Total

£450.-

Discount on the loss of business

£ 70.-

Balance

£380.-

On the question of the price of freon

12 he admitted that this kind of freon might have been on the market at the material time and would cost about 6/- per kilo but as he had it in stock since 1963 and he purchased [*514] it then at 11/- per kilo, he added interest and overhead expenses and so he charged 1 9/- per kilo.

No doubt the defendants were engaged to carry out the repairs in question for the plaintiffs on payment. It is in my view immaterial whether they were so engaged through Papadopoullos or anybody else. The main question that falls for consideration is whether there was an agreement as to labour and the freon supplied or whether no such agreement was ever made, and, consequently, defendants should be paid reasonable remuneration for the work done, services rendered and materials supplied. I have considered the evidence adduced on this issue and I must say that the defendants failed to satisfy me that any agreement as to labour or freon was ever made. This in my view was an afterthought on the part of the defendants. I consider the evidence of Socrates Anastassiou D.W.1, on this point as entirely unreliable for the following main reasons:

1. Although he alleges both in the pleadings and in giving evidence before the Court, that such agreement was made with the master of the ship, yet in the letter dated 1.12.69, exhibit 7, there is an allegation that the agreement as to freon was made with the Chief Engineer.

2. If any such agreement was ever made surely the defendants would refer to it in their letter to the plaintiffs dated 7th July, 1969, exhibit 4, instead of trying to explain that their claim was reasonable. [*515]

It now remains to consider what is the reasonable remuneration of the defendants. On this point I must say that I accept, without any hesitation, the evidence of Stephanos Laurentziades P.W.2, the Managing Director of Teklima Ltd., whom I consider as an independent, truthful and reliable witness.

As to the value of freon 12, it is not disputed by the defendants that at the material time it was in the market at about 6/- per kilo. On the question of labour there is only a difference of £44.

100 mils between the estimate of this witness, which is £212.400 mils and the estimate of the defendants which is £256.500 mils. Needless to say that in the absence of any agreement the defendants are not entitled to the amount of £123.500 mils for alleged loss of business. This claim in my view was inserted in the particulars of their account appearing in exhibit 4 in order to make them tally with the exorbitant amount claimed in their original bill.

I also consider as an afterthought and an attempt to justify the exorbitant amount claimed by the defendants in their bill the allegation that the sum of £150.- was paid as commission to Papadopoullos and the Chief Engineer of the ship. It is really very difficult for me to accept that a man working in swimming trunks would carry an amount of £150.- in cash. Furthermore, there was no reason to pay as commission the sum of £75.- to the Chief Engineer and not to pay it to the master of the ship who, in his turn, would [*516] be ready and willing, according to the evidence for the defence, to approve the bill presented to him.

For all the above reasons I give judgment in favour of plaintiffs in the sum of £312.140 mils plus legal interest at per annum as from today to final payment with costs on this amount to be assessed by the Registrar.

Judgment and order as

to costs as above.