As informed, the principal asked the agent to arrange for the disposal of the materials upon the arrival of the principal’s ship in Australia, where strict local quarantine regulations apply.
The agent engaged the services of a licensed disposal company which, although it had previously been used to dispose of ship’s garbage and other more hazardous waste, was not the company the agent normally used to dispose of dunnage.
The agent instructed the disposal company by telephone, without verifying the total cost. The materials were disposed of and the disposal company submitted its bill for approximately Aus$70,000. When the owner questioned the unusually high charges, the disposal company said it had charged its usual rate for licensed waste disposal.
Meanwhile, subsequent enquiries by the agent confirmed that the amount which its usual dunnage disposal company would charge to deal with dunnage and packing materials would have been approximately Aus$7,000.
The owner was unwilling to pay more than the reasonable costs which should have been incurred. Because the agent had been negligent in its selection of the disposal company, ITIC reimbursed it the balance of the invoiced sum, amounting to Aus$63,000, which the agent was liable to pay the owner.