Luke v Ralda [1992] PGNC 97; [1992] PNGLR 549; N1118 (6 November 1992)

N1118

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

JACOB LUKE

V

JOHN RALDA

Mount Hagen
Woods J

23 October 1992
6 November 1992

APPEAL - District Court - Sale of goods - Implied warranty - Lifting the corporate veil - Fairness of dealings - Underlying law.

CONTRACT - General principles of fair dealing - Sale of second hand car - Implied warranty - Lack of documentation confirming sale.

Facts

Appellant sold a second hand bus to the respondent for K4,800. After three (3) days, respondent found the vehicle to be not in good working order and returned it to the appellant, whereupon K2,100 was paid over to the respondent. It was not certain whether the K4,800 was full payment or part payment of purchase price. The lower court decided that the amount stated is the full purchase price and the defendant, now appellant is appealing against the decision.

Held

The appellant, being in the business of selling cars, failed to prove documentation of sale and Court must rely on the respondent's version.

6 November 1992

WOODS J: This matter started with a complaint filed in the District Court in August 1991. In November 1991, a judgment was given in the absence of the defendant. However, later on that judgment was set aside and the District Court proceeded to hear the evidence from both parties.

The evidence by John Ralda, the complainant, was that in October 1986 he paid Jacob Luke, the defendant, for a second hand bus. There were 3 payments made which totalled K4,800. John Ralda produced the receipts, which I note state the payment to be for deposit on a bus. I note further that the receipts were issued in the name of K J Motors. John Ralda said he took delivery of a bus but he returned it after 3 days as it was not going properly. He then refers to wanting another bus or having the money refunded. There is evidence that a sum of K2,100 was paid back to the people for whom John Ralda was acting.

On the matter of whether John Ralda was acting for himself or on behalf of others, there is evidence that a number of people contributed to buy the vehicle and John Ralda was given the money to do the negotiations. I find no problem or legal bar to John Ralda so acting or taking any proceedings necessary.

Jacob Luke's evidence is that he was an employee of J K Motors. He agrees that John Ralda paid K4,800 towards the purchase of a bus, but he asserts that that was only a part payment. There is no documentation produced to show that upon delivery of the bus there were other monies still to be paid and upon what terms.

He agrees that the bus was brought back, although he disputes on what basis this happened. He refers to wanting full payment before repairing the defects. He then talks about Joe Mark coming later and negotiating for another bus. Jacob Luke seems to think that the negotiations for the later bus were to replace the earlier bus. Jacob Luke agrees he paid back K2,100 to some of the contributors to the bus, as he felt sorry for them.

There are, therefore, serious differences in the two stories. The complainant suggests the K4,800 was the full price and that there was some implied warranty. The defendant suggests the K4,800 was only a part payment, but he gives no evidence of what the full payment was supposed to be. I have not been referred to any legislation or documentation which protects purchasers in this type of situation. The defendant agrees he wanted to settle the matter outside court and was prepared to pay half of the money each contributor paid.

The Court was faced with the story of events over 5 years old, where neither party seemed to be concerned about or have any understanding of prudent business practice. It is very hard for a court to decide what principles of law, whether strict commercial practice or under any underlying principles of fair dealings, should apply.

The District Court found that the defence case was muddled up and rather confusing and did not assist the court in its search for the truth. The District Court was apparently satisfied that the K4,800 was the full price for the vehicle. As there is no documentation showing any hire purchase or time payments arrangement, I would have to agree with that. The District Court lifted the corporate veil on the basis that Jacob Luke was the owner/manager of the company and, therefore, could be sued personally. The District Court seems to be applying an underlying principle of fairness of transactions in whether a party may have been conscious of dealing with a company or the individual who acted as though he was the company. To the man in the street or, as herein, the village, the defendant appeared to be putting himself out as the company or the legal entity. The Magistrate seems to have found that the defendant's evidence was so vague that he would be justified in finding that the part reimbursement of the original purchase monies was an admission of some warranty or obligation.

Whilst there is no reference to the Goods Act Ch 251 s 15, which refers to implied warranties, the later action of the defendant seems to support that the parties accepted an implied warranty.

I must sympathise with and agree with the Magistrate. Whilst it is very difficult to sort out stories of events that happened 5 years ago, there is very little documentation and the admissions by the defendant in reimbursing the sum of K2,100 clearly suggests some obligation. And the defendant Jacob Luke, being in the business of selling vehicles, must have the onus of having the documentation to support his version of the dealing. He has not, so the Court was left with the complainant's version of the dealing.

This is a case where the Court is faced with the question of what was the approach of the parties to the transactions. What was the underlying law or understanding of the parties? The defendant himself seems not to understand modern commercial practice or law, and the complainant was acting in good faith with the defendant. The Magistrate found the defendant's version muddled. So I am satisfied that this is a situation where I must agree with the Magistrate's finding which, in effect, is applying principles of an underlying law requiring fair dealings.

I dismiss the appeal.

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Lawyer for the appellant: P Dowa.