Kreglinger and Fernau Ltd v Irish National Insurance Company Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judgment Date: 21 December 1956
• Date: 21 December 1956

Kreglinger and Fernau Ltd. v. Irish National Insurance Co., Ltd.

KREGLINGER AND FERNAU LIMITED and HELMUT WILLIAM BRUNO SCHRODER, THE VERITAS TRUST (LIMITED) and SCHRODER CONTINUATION LIMITED, trading as J. HENRY SCHRODER AND COMPANY

Plaintiffs

and

IRISH NATIONAL INSURANCE COMPANY, LIMITED,Defendants. Frigorifico of Ireland Limited,E. A. Counihan & Son Limited, and Gerard Joyce Counihan, Third Parties

Contract - Construction - Contracts for delivery of cargoes of chilled meat - Issue of performance bonds by insurance company - Whether contracts of insurance or guarantee - Uberrima, fides - Non-disclosure of material facts - Onus of proof.

Witness Action.

In the months of February, March and April, 1953, the first-named plaintiffs entered into contracts with Frigorifico of Ireland Ltd., and E. A. Counihan & Son Ltd., for the delivery to them by the latter of cargoes of chilled meat. The parties entered into three similar contracts, dated the 16th February, 1953, the 19th March, 1953, and the 14th April, 1953, respectively. They were referred to between the parties as Contract no. 2, Contract no. 3 and Contract no. 4 and were for the delivery of 1,150 tons, 430 tons and 860 tons of chilled meat for the respective sums of £200,000, £75,000 and £150,000.

Contract no. 2 was as follows:—

"This Agreement made the sixteenth day of February one thousand nine hundred and fifty three Between Frigorifico of Ireland Limited and E. A. Counihan &Son Limited (hereinafter jointly referred to as 'the vendors') of the one part and Kreglinger and Fernau Limited(hereinafter called 'the purchasers') of the other part which may be shortly referred to as 'Frigorifico Contract No. 2' and supplemental to a previous contract between the same parties and dated the 25th November, 1952, which may be known as 'Frigorifico Contract No. 1.' Whereas the Vendors are engaged in the business of the export from Ireland of chilled beef and have entered into general agreements with Swift & Co. Ltd. carrying on business at Smithfield, London, for the sale of Irish Chilled Beef and Whereasthe purchasers have agreed to enter into this agreement for the purpose of facilitating the vendors in selling and exporting such chilled beef It Is Therefore Agreed By and Between The Parties Hereto as follows:—

1. The vendors will sell and the purchasers shall purchase 1150 (eleven hundred and fifty) tons of Irish chilled beef (British Ministry of Food Grade 'A' standard) the said beef to be cut in forequarters and hindquarters and packed in stockinette with the weight marked on each quarter. The said beef will be produced in the meat packing plant at Grand Canal Street, Dublin, the property of the vendors. The said beef so produced and packed as aforesaid shall be delivered in prime marketable condition at London not later than the 31st August, 1953.

2. The purchasers shall pay the vendors £200,000 (two hundred thousand pounds) for said 1150 tons of chilled beef (British Ministry of Food Grade 'A' standard) c.i.f. London, the said money to be made available in Dublin for the purpose of buying cattle for the implementation of this contract immediately upon satisfactory discharge of a former contract between the parties hereto dated the 25th November, 1952, and to completion of the following documents and their production to the purchasers in London:—

• (a) These presents duly completed and signed.

• (b) A satisfactory arrangement between the purchasers and Swift & Co. Ltd. for the resale of the said goods.

• (c) An insurance company's performance bond to the satisfaction of the purchasers.

The said money will be made available by means of a confirmed letter of credit opened not later than the 19th February, 1953, at Bank of Ireland, Dublin, and to be operative on the 1st March, 1953, conditional only on production of a joint letter signed by the duly authorised agent or agents for the vendors agreeing to accept the money in advance payment on foot of the contract between Frigorifico of Ireland Limited and E. A. Counihan & Son Limited the vendors of the one part and Messrs. Kreglinger and Fernau Limited the purchasers of the other part dated the sixteenth day of February, 1953, for the delivery of Irish chilled beef at London (being these presents) and a letter from the purchasers or their duly authorised agents stating that the conditions of this contract referred to in this paragraph have been fully discharged.

3. Force majeure shall not apply to this contract but if owing to circumstances beyond their control the vendors are unable to deliver the commodity in the agreed quantity standard and condition the purchasers agree subject to written confirmation by Swift & Co. Ltd. to grant a further thirty days to fulfil the contract and such extension if granted shall be at merchant bank interest rates.

4. The vendors being made aware that the purchasers have negotiated a sale of the goods covered by this contract through the firm of Swift & Co. Ltd. Hereby Undertake and Agree to indemnify the purchasers against any loss costs or damages consequent on such resale arising out of the deficiency of the said goods in either quantity standard or condition or any charges in connection with the forwarding of the goods to market.

5. Provided always and it is hereby agreed that if the British Ministry of Food price or the open market price at Smithfield for said Grade 'A' standard or its equivalent be varied, the total tonnage shipped and delivered shall be varied so as to implement the undertaking for sale given by Messrs. Swift & Co. Ltd. to the purchasers and dated the sixteenth day of February, 1953.

6. The vendors undertake with the purchasers to forward by the fastest possible route to J. Henry Schroder & Co. Bankers London (or as otherwise directed by the purchasers) the following documents as soon as the goods covered by this Agreement have been put on board ship:—

• (a) Blank endorsed bill of lading marked 'Freight prepaid through to London' (Charter party bill of lading allowed).

• (b) Insurance certificate for 10% above the invoiced value.

• (c) Certificate of origin.

• (d) 5 copies of invoice.

7. Provided always and it is hereby agreed that should the official U.K. bank rate be reduced during the validity of this contract then the purchasers will credit the vendors with such lesser interest calculated upon a day to day basis from the date of such alteration in the rate until the date of repayment at the rate of the reduction in the official rate. Conversely, should the official rate increase above the present rate of 4% then the vendors agree to credit the purchasers their successors and assigns with such greater interest calculated upon a day to day basis from the date of the alteration until the date of repayment at the rate of the increase in the official rate."

Contract no. 3 was in the same form save that it was not conditional upon the satisfactory performance of any previous contract. Contract no. 4 was similar to Contract no. 3 save that clause 7 was omitted and a clause inserted which provided that the contract was to be binding on and enure to the benefit of the successors and assigns of the vendors and/or the purchasers or any of them.

As appeared from the contracts the meat was being purchased by the first-named plaintiffs for re-sale to Messrs. Swift & Co. Ltd., a company engaged in the wholesale meat trade in London. Prior to each contract Messrs. Swift & Co. Ltd. gave to the first-named plaintiffs an undertaking to purchase from them the meat which they were purchasing under the contracts. The undertaking given prior to the execution of Contract no. 2 was as follows:—

"re: No. 2 Contract.

Swift & Company Limited. 58, West Smithfield,

London, E.C. 1.

UNDERTAKING

We, Swift and Company Limited acting on the instructions of our Principals, Messrs. E. A. Counihan and Son Limited, Dublin, hereby undertake to pay Messrs. Kreglinger & Fernau Limited or their assigns sums up to £216,000 (Two hundred and sixteen thousand pounds) against shipments of Irish chilled beef of approximately 1150 (one thousand one hundred and fifty) tons to be shipped from the Frigorifico of Ireland Limited, Dublin, for delivery to the British Ministry of Food in London or on the open market in London not later than 31st August, 1953, 90% (ninety per cent) of the above monies to be paid against presentation of documents, the balance remaining to be paid within 14 days of the delivery of the beef. It is hereby agreed that the tonnage of the chilled beef shipped may be greater or lesser than the 1150 tons always providing that the total tonnage will realise from the British Ministry of Food or on the open market the above mentioned sum of money (£216,000) plus charges incurred. Payment will be made against delivery of:—

Blank endorsed set of bills of lading showing freight prepaid through to London.

Certificates of origin,

Invoices.

We confirm that we effect insurance on an open cover for all Messrs. E. A. Counihan and Son Ltd. shipments of beef to England and that the said cover is with:—

Thames & Mersey Marine Insurance Co. Ltd.	50%
Marine Insurance Co. Ltd.	25%
Western Insurance Co. Ltd.	25%

The insurance is for our usual standard F.P.A. Meat Clauses including breakdown of machinery, plus War S.R. & C.C.

Swift & Company Limited.(Signed) C. F. Frank,Director & Secretary.

16th February, 1953."

Similar undertakings were given prior to Contracts nos. 3 and 4 save that the method of payment was varied. In all other respects they were similar to that given prior to Contract no. 2. The amounts which they undertook to pay were £80,625 and £159,217, respectively.

The contracts were financed in accordance with the contracts by confirmed letters of credit opened by the second-named plaintiffs at the Bank of Ireland, Dublin.

The amounts to be paid by Messrs. Swift & Co. Ltd. to the first-named plaintiffs in excess of the...