ABCO Transport Ltd v Suara Trading Ltd [2001] PGDC 2; DC113 (1 March 2001)

DC113
PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]
CASE NO 247 of 1997
ABCO TRANSPORT LIMITED
AND
SUARA TRADING LIMITED
Mt.Hagen
M Pupaka
01 March 2001
District Court Procedure - Summons upon Complaint - claim not denied - Defence & Cross-claim - Set-off. Cross-claim - Goods damaged on transit - General Disclaimer - Basic duty of care - Contractual duty to furnish report of damage. Costs - Demand lesser than Cross-claim - Refusal to settle out of court - Costs awarded to cross-claimant in the exercise of Court's discretion.

Counsel

Complainant/Cross-defendant, Mr. Peri
Defendant/Cross-claimant, Mr. Gonol
25th April 01

M. M. PUPAKA PM: These proceedings were initiated by ABCO TRANSPORT PTY LTD, (the complainant /cross-defendant), by way of a Default Summons claiming against SUARA TRADING PTY LTD, (the defendant /cross-claimant), outstanding balance of monies owing to the complainant for goods provided on credit to the defendant at the latter's request. A sum of K5275.00 was alleged to be balance outstanding on 7 separate Invoices. The defendant did not dispute liability in the sum claimed, but it filed and served upon the complainant a cross-claim, more particularly for an ascertainable sum of K6752.00 plus other heads of losses presumably to be assessed.
This judgement basically is as to the merits of the defendant's cross-claim against the complainant. The complainant's own claim is not otherwise disputed by the defendant. I might also add that both counsels agreed to file written submissions respecting their cases by March 26th. Suara Trading, the defendant /cross-claimant has filed its submission which I have carefully perused. I have likewise perused the late submission filed for the complainant ABCO Trading Limited. I would now proceed to consider the evidence and decide on the matter.
For reasons that would be much clearer later on in this judgement it is necessary to reprint paragraph 3 of the complainant's statement of claim in full:
"3. In February to April 1997 the Complainant provided goods on credit to the Defendant at the Defendant's request.
PARTICULARS
16/02.97 Invoice # 22587 K1,353.42
01/03/97 Invoice # 22585 1,585.17 03/03/97 Invoice # 22990 490.00
03/04/97 Invoice # 23033 1,390.50
07/04/97 Invoice # 23037 1,596.50 08/04/97 Invoice # 23915 209.02
Invoice # 23952 93.00
TOTAL K6717.61
Payment Received 989.61
BALANCE OUTSTANDING: K5,278.00"
Obviously it was an error for the complainant to plead "provided goods on credit to the Defendant at the Defendant's request". Ferrying cargo containers from the wharf to its destination is not exactly providing goods on credit, but the defendant did not raise issue with this and the undisputed facts which are discussed appropriately herein clearly bears out the reality. In any case the defendant conceded the complainant's claim aforesaid.
The complainant was at all material times a transport company. It was and still is involved in the carriage of cargo for paying clients between Lae and the main Highlands centres. The defendant is engaged in the wholesale and retail business generally. Prior to the events that are the bases of these proceedings the parties had enjoyed a business relationship for about a year. It basically involved the carriage of cargo for the defendant by the complainant. During the currency of their business relationship, the defendant's term of credit with the complainant was 30 days.
On or around 25/02/97 there was a container shipment of mutton flaps belonging to the defendant waiting to be collected from the Lae Wharf. It contained 160 cartons of mutton flaps. The defendant contacted the complainant to have the container of mutton flaps collected and deliver it to the defendant's base in Mt. Hagen.
At this juncture it is necessary to explain first how freezer containers are handled in transit. Freezer containers, whilst on board ships are plugged to power points to preserve its contents. Whilst awaiting collection, the containers are plugged to power points at the storage yard at the wharf. The complainant has a yard in Lae so after having collected such containers from the wharf; the complainant would keep the freezer containers plugged to power points in its yard specifically meant for these purposes, particularly if the containers are not to be delivered to its owner any quicker. For the first day the complainant does not charge the owner of a container for electricity costs. However the owner would be fully liable for all power costs for any further days a freezer container is plugged to a power source at the carrier's (complainant's) yard.
So on or around the 25/02/97, the complainant duly collected the container of mutton flaps from the Lae Wharf and took it to its yard (in Lae), from whence the container would later be ferried by one of its trucks to the defendant in Mt. Hagen.
This particular freezer container containing 160 cartons of mutton flaps was kept at the complainant's yard in Lae until the 03/04/97. When the container was finally delivered to the defendant on the 03/04/97, all 160 cartons of mutton flaps were ruined.
The complainant does not dispute that the defendant's 160 cartons of mutton flaps were ruined. In fact it concedes that the cargo of mutton was damaged whilst on transit, that is when the container was being transported from Lae to Mt. Hagen by one of its trucks.
I am unable to locate any defence to the cross-claim on file, but it is clear the complainant denies it is indebted to the defendant as alleged in the cross-claim.
The basis of the denial of liability seems to be that the complainant does not normally acknowledge or accept liability for lost or damage to goods on transit as per its own terms of carriage. The complainant says its clients know its standard terms of carriage. It also says that the defendant should collect from its insurers for its losses.
The mutton flaps were not delivered in the normal 2 to 3 days within which the container would otherwise have been delivered from Lae to Mt. Hagen. The complainant says that it caused the container to be retained at its yard in Lae to force the defendant to pay up on its invoices that remained unpaid by the defendant over the normal 30 days terms of credit allowed to the defendant.
The complainant's manager in Mt. Hagen, Mr. Jacob Arubil, testified for the complainant. Either deliberately or by an oversight counsel did not lead this witness to clarify just which set of overdue invoices caused the complainant to hold back delivery of the defendant's freezer container on or around 25/02/97. Whether the set of invoices listed in the statement of claim or any others caused the delay in delivery is not immediately clear. Mr Arubil just simply said that certain invoices remained unpaid.
However, the defendant's managing director Mr. John Kup says that there was no overdue invoices on or around the 25/02/97. He said all due invoices had been paid up to that time and any other invoice that remained unpaid were still current, meaning not overdue as per the 30 days term of credit. Mr. Kup further said there really was no good cause for the complainant to hold back his company's freezer container by the complainant in Lae. As alluded to above, the defendant does not deny liability as to the complainant's claim. It is quite clear the defendant has never denied liability and has attempted to settle it, and also get the complainant to settle up on the damaged mutton flaps.
One thing is clear though. The defendant was never in default of the terms of its line of credit (of 30 days) with the complainant on or around the 25/02/97. If it was, the complainant has not proved that. There is simply no evidence of which or what invoices or exactly how much was overdue and unpaid by the defendant on the 25/02/97. Evidently the defendant's terms of payment were either current or there were no debts created, particularly relative to the invoices listed in paragraph 3 of the complainant's statement of claim. The first of the invoices is dated 16/02/97. That invoice would have been due for payment in mid March 1997 so the term of credit on that invoice was still current as at 25/02/97. The next 5 invoices dated in order: 01/03/97; 03/03/97; 03/04/97; 07/04/97 & 08/04/97 had not yet been issued and the debts were not yet created as at 25/02/97. The last of the invoices (# 23952 for K93.00) is undated but it evidently was the latest and would have been issued after the first 6 invoices.
If the complainant had been prompt with its delivery, it would have delivered the defendant's freezer container to its destination in Mt. Hagen on the 27/02/97, or on the 28/02/97 at the latest. The delivery would have been effected well before all the invoices for which payment is claimed herein - with the exception only of the first invoice - were written out for payment. Under its 30 day term of credit to the defendant the complainant could not insist payment for the first invoice dated 16/02/97 on or around 25/02/97. Further, the complainant would not be at liberty to hold back delivery on the basis of unpaid invoices, which were not overdue. This must mean only one thing: The defendant's freezer container containing 160 cartons of mutton flaps was held back in Lae by the complainant for no good or valid reason.
The complainant also denied that it is liable to the defendant as to the cross-claim, for reasons other than under the 30 days term of credit.
It is said for the complainant that contractually or otherwise, it is not liable to its clients for any loss or damages to goods being transported by its trucks. It is said the owners of the containers (usually overseas based sellers) and the buyers of the goods being transported are aware of this position of the complainant as to liability. It is further said that the buyers of the goods being transported, in this case SUARA TRADING PTY LTD, would normally have to secure insurance coverage for all possible loss and damage to its goods.
The complainant tendered into Court a standard disclaimer of sorts headed TERMS AND CONDITIONS OF SERVICE ("Exhibit 7"), which is said to be evidence of this non-assumption of liability. The complainant specifically relies on Clause 3 (a) (b) and 4 of this disclaimer, which are in the following terms:
"3
(a) The Carrier SHALL NOT BE UNDER LIABILITY for any loss of or any damage to or mis-delivery, delay in delivery, concealed damage, deterioration, contamination, evaporation, non-delivery of goods held in their care, custody or control, or any consequential loss arising there from howsoever caused.
(b) In the event of the contract including any handling, installation, removal, assembly or erection of any kind whatsoever it is undertaken on the strict basis that the Carrier accepts no liability for any loss, damage or injury of any kind whatsoever, however arising, caused or incurred or occurring during any part of the movement. The disclaimer extends to include not only loss or damage to itemised equipment itself, but loss, damage or injury to any person property or thing damaged during the movement and to include any loss consequently or otherwise arising from any loss, damage or injury aforesaid.

The provisions of these conditions of carriage shall apply to the container or containers or other packaging containing the goods and to any pallet or pallets delivered with the goods to the Carrier. The Consignor shall be responsible for the conformity of such containers, packaging and pallets with any requirements of the Consignee and for any expense incurred by the Carrier arising from any failure so to conform."
In light of this standard disclaimer the question was posed to the complainant's only witness, Mr. Arubil, its Mt. Hagen based branch manager, as to whether the complainant assumed any normal business risks at all and the witness simply answered "no". I might add that both counsels thought it not of any consequence at all to have the disclaimer argued out properly in court.
The complainant conceded that the container of meat was damaged whilst in its care, between the time the cargo was taken from the Lae Wharf to the complainant's yard in Lae and kept there, to the time when the container was being transported to Mt. Hagen. This unforced concession was elicited from the complainant's own witness (Jacob Arumbil) during the process of re-examination. I think this (concession) only goes to highlight the absurdity of the complainant's argument in its final submission that "...the Defendant ought to summon the supplier or the shipping company, not the Complainant." As to just why the frozen meat cargo went bad is not clear. There would be any number of reasons why the container of meat went bad. However, in instances like this it is not proper for the Court to speculate. Suffice to say that the complainant had the duty and apparently the knowledge to inform the defendant at the time of the delivery of the damaged cargo, and more recently this Court at the trial, as to why the meat went bad. It did neither. It must also be noted that the evidence of the defendant that the complainant was duty bound to prepare a report, on the cause and extent of damage, for the defendant to seek indemnity from its insurers stands unrebutted. Further the defendant's evidence that the complainant, for reasons unknown, failed to discharge that duty for the defendant to lodge a recovery claim with its insurers also stands unrebutted.
Disclaimer clause or no such, the complainant owed a duty of care to the defendant. The complainant owed it to the defendant to ferry the latter's perishable meat cargo to its known destination with both due speed and due care. It further had a specific contractual duty to do a thorough report relative to the circumstances and the cause of damage occasioned to the cargo on transit and present it to the defendant for the latter to seek indemnity from its insurers. It is abundantly clear the complainant failed in both respects.
The complainant's failure to do a thorough report and present it to the defendant for the latter to seek indemnity from its insurers is a particularly serious breach of contractual duty on which account alone the complainant should be liable for the loss suffered by the defendant. All these is not withstanding the fact that the complainant triggered the whole chain of events by delaying delivery, for a long time as it finally turned out, for no good reason. Under these circumstances the defendant is entitled to its cross-claim.
As I alluded to earlier the defendant, in its cross-claim, claimed a specific loss of K6752.00. It also claimed loss and damages for what it referred to as being for:
"b) The business reputation & credibility of the cross-claimant as a seller of mutton flaps as part of its business by readily making available the said goods have been destroyed; [and]
c) Regular and potential customers had been turned away."
All I can say is that these heads of claim (as reprinted above) seem to be for damages for some perceived loss of reputation and credibility, and for loss of potential customers. Direct loss of profit consequential upon the damaged consignment of 160 mutton flaps was never specifically claimed for. Further there are no evidence with which any proper assessment of damages may be made as to clause (b) and (c) of paragraph 12 of the Cross-claim. Court proceedings and indeed assessment of damages of any alleged loss suffered (if at all) are not about assumptions. There must be evidence properly established in court so that first of all a conclusion that such damages had been suffered may be reached and secondly for appropriate amounts of damages to be assessed. There is evidence of neither. That should put paid to the additional claim in the cross-claim for damages.
There are a couple of discrepancies in the defendant's cross-claim. In the Defence & Cross-claim filed on the 16th of February 1998 the defendant particularised its loss, inter alia, as "160 carton of mutton flaps at K42.50 each = K6, 752.00." Actually if 160 cartons of mutton flaps were sold for K42.50 each, the total realised would be K6800.00 - not K6752. The difference was left unexplained. After filing the Defence & Cross-claim the defendant's manager (John Kup) had sworn to an affidavit which is dated 16th June 1998. In the affidavit the defendant's manager says quite clearly that the losses suffered by the defendant amounted to K5728.00. That is 160 cartons of mutton flaps costed at K35.80 each. Mr. John Kup had attested that the K5728.00 was the "actual costs of the discarded 160 mutton flaps".
Then at the trial in answer to a question put to him by Mr. Gonol of council thus, "How much would you have made if you had received your goods on time?" Mr. John Kup said: "Put it by way of margin, 25%. We'd have made profit of 25%. K42.00 is only the costs price". The last part of that answer is underlined to highlight how different and contradictory this answer is from the man's sworn attestation in his affidavit dated 16th June 1998 as alluded to above.
Quite clearly I can never be certain which of these figures is the correct cost price and which isn't. Both figures are said to be the cost price by the same person. However there are copies of letters exchanged between the parties which tend to indicate that the defendants were negotiating settlement on the bases that theirs was the lesser sum, that is K5728.00. That seems to be a lot more credible then the later assertion. Considering that it is only proper to be safe than sorry and considering all the circumstances herein I propose to accept K5728.00 as the actual costs of the 160 cartons of mutton flaps. I also propose not to accept the '25% profit' margin. It was not consciously claimed for in the Cross-claim initially, and the defendant's witness during evidence in chief proffered no evidence of it. The mere assertion "we'd have made 25% profit" was said at the prodding of the Court, (with hindsight the Court should not have so prodded). This mere assertion of a profit margin is of course not supported by evidence.
However I do not otherwise consider that these two discrepancies referred to above go to affect the veracity of the defendant's cross-claim.
Ergo the complainant would have its order for the sum of K5278.00. The defendant shall also have its order for K5728.00. As per section 154 of the District Courts Act Chapter No. 40, the defendant's claim shall be set-off against the complainant's claim. The cross-claim being the larger of the two, the defendant shall have judgement for the excess in the sum of K450.00, plus interest at 8%.
Finally there is the matter of costs of these proceedings. When the issues have been presented and decided logically on the facts, as this Court is bound to do, it all seems quite ridiculous that the parties have not settled out of court. Evidently some attempts were made by the defendant to settle, that is, it wanted to pay the complainant what it owed and get the complainant to pay up on the damaged mutton flaps. The defendant conveyed proposals to this effect to the complainant. The complainant never proceeded to actually consider the merits of the defendant's counter-claim. By a letter dated 5th September 1997, the complainant's general manager did raise the possibility of giving "thought to your Counter Claim", but he nevertheless made this 'giving thought' conditional to the defendant settling "the balance of the account and start using our transport facilities". It seems the complainant was quite content in the knowledge that it had a valid claim and that it was sufficiently protected against the defendant's counter-claim by its disclaimer.
However the complainant clearly started the impasse in the first place by holding back delivery of the defendant's cargo for no good reason. Then it was the complainant, which caused, or allowed or did nothing to prevent the defendant's frozen goods being damaged. Again it failed to seriously consider a settlement offer and proceeded to litigation. In the end the difference between the two claims comes down to a relatively insignificant K450.00, which incidentally is accruing to the credit of the defendant and not the complainant. Under these circumstances it is decidedly unfair to allow the defendant to meet legal costs that have been forced upon it. I therefore, in the exercise of my discretion, order that the complainant pay the defendant's costs of this proceedings. The same shall be taxed if not agreed to.
Warner Shand Lawyers: Complainant/Cross-defendant
Paulus Dowa Lawyers : Defendant/Cross-claimant