Pakelamb Plantation Pty Ltd v Kolio and Nondugl Tumbo Pty Ltd [1992] PGNC 10; N1042 (4 March 1992)

Unreported National Court Decisions

N1042

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS NO 741 OF 1988
PAKELAMB PLANTATION PTY LTD
V
ALFRED KOLIO
AND
NONDUGL TUMBO PTY LTD

Mount Hagen

Woods J
20 January 1992
24 January 1992
4 March 1992

CONTRACT - balance of monies due under oral agreement - no proper company records nor audited accounts

Counsel:

P Kunai, for the Plaintiff.

1st Defendant in Person.

2nd Defendant by its Chairman.

4 March 1992

WOODS J: The Plaintiff company own and runs a coffee plantation in the Nondugl District of Western Highlands. The First Defendant was at the relevant time the Manager of Nondugl Tumbo Pty Ltd the second Defendant. Nondugl Tumy Ltd owned and ran a CoffeCoffee Plantation and also operated a Coffee factory in the Nondugl area as well as other business activities.

The Owner and Manager of the Plaintiff Company alleges that there was an oral agreement with the second Defendant for the sale of coffee cherries to the 2nd Defendant. The Plaintiff alleges that there was an agreed price and over a period of time from February to October 1986 the Plaintiff supplied quantities of cherries to the Defendant. However, whilst most of the monies due for the sale were paid there was still an outstanding balance of K38,279.00 owing for cherries. These proceedings are to recover that outstanding amount.

The 2nd Defendant denies there is any monies outstanding and asserts that the Plaintiff has failed to take into account various amounts paid to the Plaintiff by the 2nd Defendant. In the pleadings filed the 2nd Defendant claimed that there was no agreement to buy cherries rather that the Defendant agreed to provide its facilities for the Plaintiff to process its cherries and further that the 1st Defendant had no power to enter into the agreement alleged on behalf of the 2nd Defendant. However at the hearing the 2nd Defendant presented evidence that all monies due to the Plaintiff had been paid. The 2nd Defendant also cross claimed that the agreement was an agreement between the Plaintiff and the 1st Defendant of which the 2nd Defendant had no knowledge and claims that the 1st Defendant is liable for any monies owing under that agreement.

Whilst the pleadings in this matter were conducted by Lawyers for all parties when it came to the time for hearing only one party namely the Plaintiff was represented by a Lawyer. The First Defendant appeared in person and the 2nd Defendant was represented by the Chairman of the Board of Directors of the company. This did make things difficult especially as some important evidence was the cash book of the Defendant company. I refused any further adjournment to enable the Defendants to seek new lawyers as this case has been given specific hearing dates over the past year which dates have had to be vacated each time.

The Plaintiff’s evidence was presented by Kis Kembis who is the owner and Manager of the Plaintiff Company. He stated that sometime late in 1985 he made an oral agreement with Alfred Kolio who was the Manager of Nondugl Tumbo to sell Coffee cherries from Pakelamb Plantation to Nondugl Tumbo. He then deposes that between February and October 1986 coffee cherries well in excess of 260 thousand kilograms were sold to Nondugl Tumbo. Mr Kembis submitted a statement showing dates, receipt numbers and quantities of cherries supplied during that period together with the values which totalled K152,000. He also states that he was paid amounts totalling K113,831. Towards that total and the difference is the K38,279 which he is now claiming. There is reference to a cheque for K10,000 which was paid to the Plaintiff but was dishonored when presented.

Mr Kolio gave evidence that at the relevant time he was the Manager of Nondugl Tumbo and was concerned with the general running of the Company. He confirmed that the company used to buy coffee cherries from various people and that with a large supplier like the Plaintiff, Nondugl Tumbo used to pay their account on a monthly basis. He says all matters involving the operation and management of the company were done with the knowledge of the Board of Directors and the Chairman. He says that in 1987 he was terminated as the Manager by the new Board. He does agree that some of the wages for Pakelamb Plantation were paid by Nondugl Tumbo and there is some suggestion that Nondugl Tumbo had some role in the Management of Pakelamb Plantation. Mr Kolio’s evidence thereby raises some question as to what was the true relationship between the Plaintiff and the 2nd Defendant

The Chairman of Nondugl Tumbo Mr Gispe gave evidence that he came in as Chairman in 1988 and also acts as Manager of the Company. Unfortunately he is unable to give any evidence related to 1985 and 1986 and he was only able to draw inferences from the status of the Company and its financial records. He was unable to present minute books of the company’s meetings nor properply audited financial accounts however he did produce a cash book for Nondugl Tumbo for the period of 1986 and entries in that Cash book suggest that Nondugl Tumbo may have made payments of wages for Pakelamb Plantation. Further Nondugl Tumbo may have paid the Workers Compensation Policy Premiums and Personal Accident Cover Premiums for Pakelamb Plantation. These payments seems to be entered separately from the payments for coffee cherries. A former director of Nondugl Tumbo gave evidence but generally he could not help the matter as he did not seem to be sure of Directors meetings and what decisions were made.

One problem that has appeared in the case as the case was presented in court was that the 2nd Defendant appears to have contradicted its defence as pleaded. In its pleadings the 2nd Defendant says that there was no agreement to buy cherries rather the Plaintiff used the 2nd Defendant’s facilities to weigh, record, pulp and dry its coffee cherries and then it arranged for the sale separately. However, in court the main import of the 2nd Defendant’s evidence and submissions is that the Plaintiff was paid for any cherries it delivered and sold to the 2nd Defendant. The question is should the evidence of the 2nd Defendant be regarded if it contradicts with it’s pleadings. Whilst the Court can look closely at the pleadings and the evidence and balance any contradictions with the appropriate weight given to the evidence, the initial onus in any case is on the Plaintiff to prove his case so this court needs to assess all the evidence both from the Plaintiff and the Defendants and be satisfied that the Plaintiff has proved its case.

I will now see if I can find any evidence about which there appears to be no doubts. It is clear that coffee cherries were delivered from the Plaintiff to the 2nd Defendant. I am satisfied that at that time the 1st Defendant was employed as the Manager for the 2nd Defendant. It appears that the 2nd Defendant had the facilities for processing coffee cherries and did so process coffee cherries not only its own but also purchased coffee cherries from other parties and companies which would include the Plaintiff. I find a bit of confusion in the financial transactions between the Plaintiff and the 2nd Defendant. Unfortunately there is no proper business records to clarify these transactions or arrangements. There are no sets of minutes of Directors meetings, there is no evidence from Auditors or the Financial Controllers of the two Companies who can clarify the situation. I have a cash book from the 2nd Defendant which indicates entries relating to the Plaintiff and the Plaintiff of course does not dispute many of these figures because the Plaintiff admits being paid for cherries. But I then ask the question what about the entries which refer to the payments recorded as wages or insurance premiums for the Plaintiff in the 2nd Defendant’s cashbook. At the end of the day the Plaintiff says it has taken into account all payments made to it by Nondugl Tumbo and claims that there are still some money outstanding. The 2nd Defendant says that the Plaintiff has not included K39,672 of the payments referred to in the cash book and if the Plaintiff had done this then there would be no case.

The way the evidence has been presented in this case puts the court in a very difficult position. The case involves business arrangements involving large sums of money with companies that are required under the law to keep proper records and file appropriate returns each year. If such records and returns were kept then in any such dispute the court would have access to the appropriate evidence properly documented and presented. If however the parties fail to keep the proper records required by law how can a court come to any conclusion when it is presented with unaudited sets of figures from the Plaintiff and a set of unaudited figures from the Defendant. In this case here the unaudited figures in the cash book presented by the 2nd Defendant whilst not really verified by an Accountant or by the accompanying cheques or bank statements is sufficient to start casting some doubts on the whole case put by the Plaintiff.

In the circumstances where businesses fail to properly comply and fail to present properly audited or prepared accounts but in effect rely on the court to have the power of a crystal ball then the court is entitled to say you have not proved your case. And this is what I must say here.

The Plaintiff has not proved its case. I dismiss the claim.

Lawyer for the Plaintiff: Joseph Mek Teine