S. Smyth and Company Limited (appellant) v Aer Turas Teoranta (respondent). Negligence - Respondent transported calves to Italy on appellants behalf - Appellant unpaid for several consignments as a result of fraud involving document switching in Italian airport - Whether Italian ground staff negligent in allowing flood to occur - Whether Italian ground staff were agents of respondent - Whether respondent was vicariously liable - Whether there was an implied term in each contract between parties that respondent would be responsible for sale delivery of documentation.

The Supreme Court (Mr Justice O'Flaherty, Mr Justice Blayney and Mr Justice Keane); judgment delivered 3 February 1997.

IN the absence of authority to the contrary, the duty owed when providing services, is to perform the service in question in a normal, competent manner.

The Supreme Court so held in refusing the appellant's appeal against an order of the High Court which dismissed the appellant's claim for damages for negligence and breach of duty.

Donnell Deeny QC, Aidan McGavern SC and Mark Orr BL for the appellant; Hugh O'Neill SC and Rory McCabe BL for the respondent. MR JUSTICE BLAYNEY, delivering the unanimous judgment of the court, said that the appellant company was registered in Northern Ireland and between 1976 and 1978 had been principally engaged in exporting calves to Italy. These calves had been exported on flights operated by the respondent between Dublin Airport and the airport of Malpensa in Milan. Each consignment was accompanied by documentation, which included the appellant's in voice to the consignee and was given on arrival at Malpensa Airport to an official of SEA.

SEA was an Italian organisation which the trial judge found had a monopoly of providing ground services at Malpensa Airport for all aircraft except those operated by TWA. The documentation was brought by the SEA official to the SEA office in the airport building where the appellant's invoice was given to the consignee or his clearing agent. Thereafter payment for each consignment was made by the consignee's bank within about three weeks.

Outlining the events giving rise to the proceedings, Mr Justice Blayney said that between February and June 1978, the respondent had carried forty consignments of calves to Malpensa Airport on the appellant's behalf, but that the appellant had received no payment for these consignments. The appellant had subsequently discovered that it was the victim of a fraud which involved the substitution of a different invoice for its own. The appellant had obtained a judgment against the consignees but had failed to recover anything on foot of it and had, therefore, instituted the present proceedings against the respondent.

Mr Justice Blayney said that in the High Court the appellant had argued that there was an implied condition in each contract of carriage that the respondent's personnel would be responsible for the safe delivery of the relevant documentation for each consignment to the Italian Customs; that the SEA was its agent for that purpose and that the respondent was vicariously liable for the SEA's actions. The trial judge had held that there was no evidence to support the existence of such a term and that in the case of each consignment the respondent had performed its duty to safely deliver the documentation.

The trial judge had gone on to find that it was more likely that the invoices had been switched after the relevant documents were handed over by the SEA to the consignees. In addition, the trial judge was satisfied that the SEA were not acting as agents for the respondent in distributing the documentation and that the respondent had been obliged to use SEA's services.

In the Supreme Court, the appellant contended that the trial judge had erred in law and in fact in holding that the respondent's responsibility in relation to the documents was terminated by handing them to a representative of SEA; failing to hold that the respondent's responsibility was terminated only on handing the documents to the relevant Customs authority in Malpensa Airport; failing to hold that the respondent had failed in its duty of care or was in breach of contract; and failing to have any regard to the Warsaw or Hague Conventions.

Mr Justice Blayney said that the appellant had submitted that the trial judge had dismissed the case on the ground that there was no implied term in the contract that the respondent's personnel would be responsible for the safe delivery of the relevant documents but had not addressed the question of negligence. The appellant further submitted that as a carrier, the respondent had a duty to get the goods through Customs and that the fraud which had been perpetrated in this case was foreseeable. In addition the appellant claimed that the trial judge had been incorrect in finding that the respondent had been obliged to use SEA and argued that the relationship between the two was consensual rather than obligatory. Finally, it was submitted by the appellant that if the SEA officials had been taking any care they would have noticed that the name of the consignor in the in voice had been changed.

Turning to the respondent's submissions, Mr Just ice Blayney said that it was urged that the only duty of care owed by the respondent was to perform the service required of it in a normal competent manner. Evidence had been adduced that the respondent had the same method of dealing with documents worldwide. In addition it was submitted that the SEA had no duty to examine the documents; and that even if they had been negligent, the respondent was not vicariously liable for their negligence as the SEA were independent contractors. Mr Justice Blayney said that a totally different case had been made in the Supreme Court from that made in the High Court where the appellant had concentrated on the existence of an implied term in the contract between the parties. Now the appellant sought to impose a duty of care on the respondent to take reasonable care to furnish to the Customs authorities all the relevant documents relating to the goods furnished by the consignor to the carrier.

However, Mr Justice Blayney said that there was no authority to support the existence of such a duty of care. Instead the duty owed was to perform whatever was required in a competent manner. In addition, the court was satisfied that in using the services of SEA the respondent was in no way in breach of the duty of care which it owed to the appellant. Instead it was following what was the universal practice of airlines using Malpensa Airport and could not be faulted for that. Finally as the respondent could not have foreseen any risk of damage by using the services of SEA there could be no negligence on its part.

While there was nothing in the notice of appeal contesting the trial judge's finding that SEA had not been negligent, the matter had been argued before the court and Mr Justice Blayney thought it appropriate to address the issue.

Mr Justice Blayney said that it was clear from the transcript of evidence that the function of the SEA official was to give the in voice and other relevant documents to the consignee or his clearing agent and that it was the function of the latter to bring these documents to the Customs. The Court accepted the respondent's submission that it was not part of SEA's function to examine the documents or see that they were in order and was satisfied that the trial judge was correct in finding that the SEA was not negligent.

Thus the issue of the respondent's vicarious liability did not arise and did not have to be considered.

Mr Justice Blayney then referred to the respondent's counterclaim for a sum of money due for the transport of calves. Judgment had been obtained on the counterclaim in the High Court and it had been submitted on behalf of the appellant in the Supreme Court that the counterclaim should be dismissed as the founder of the appellant company had admitted that the money was owed by him personally.

However, it appeared to the Court that on all occasions the appellant had been dealing with the respondent and this aspect of the appeal was also dismissed.

Solicitors: Becker, Tansey & Co, (Dublin) for the appellant; Gore & Grimes (Dublin) for the respondent.