N4293

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 101 OF 2004

AMOS KUK
Plaintiff

V

KAMBANG HOLDINGS LIMITED
TRADING AS LUTHERAN SHIPPING
Defendant

Madang: Cannings J
2010: 19 March, 16 April, 21 May,
2011: 13 May

CONTRACT – agreement for sea carriage of cargo – alleged breach of contract by late passage of ship, causing loss of perishable items.

NEGLIGENCE – whether cause of action established by negligent failure of shipping company to notify passengers of alteration to ship's schedule, causing loss of perishable items.
 
The plaintiff purchased 62 bags of betel nut and brought them to a sea wharf, expecting that the defendant's ship would arrive so that he could load them as cargo and ship them to another port and sell them at a profit. The ship did not arrive until three days after the expected time. The plaintiff boarded the ship and loaded his bags on to it, and purchased a passenger ticket and was prepared to pay for the cost of carriage of the goods on arrival. However, by the time the ship reached its destination the betel nut was spoiled. The plaintiff refused to pay for carriage of the bags and commenced proceedings against the defendant, claiming damages of K25,420.00 for breach of contract and negligence.

Held:

(1)	The plaintiff could not prove a breach of contract as there was no contract entered into regarding carriage of goods.

(2)	The statement of claim was drafted in sufficiently broad terms to accommodate a cause of action in negligence, the elements of which were proven, in that: the defendant, being a regular provider of shipping services to the port to which the plaintiff brought his goods, had a duty of care to prospective shippers (customers) to give ample notice of any changes in its schedule; the defendant negligently failed to notify its prospective customers or the relevant authority of a change in its schedule; the negligence of the defendant caused economic loss to the plaintiff; and the type of damage the plaintiff incurred was not too remote.

(3)	As for assessment of damages, there was little evidence to support the plaintiff's claim, and account also had to be taken of the plaintiff's failure to mitigate his losses. Furthermore, he was guilty of contributory negligence.

(4)	Damages were assessed at K5,000.00 plus interest of K3,000.00, being a total judgment sum of K8,000.00.

Cases cited

The following cases are cited in the judgment:

Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Daniel Occungar v Luke Kiliso (2010) N4102
Kembo Tirima v Angau Memorial Hospital (2005) N2779

STATEMENT OF CLAIM

This was a trial on liability and assessment of damages for breach of contract and negligence.

Counsel

P K Kunai, for the plaintiff
L Tunian, for the defendant

13 May 2011

1. CANNINGS J: The plaintiff, Amos Kuk, trades in betel nut. In 2003 he was buying it in Popondetta, shipping it to Lae, then transporting it to the Highlands for sale. He would take his betel nut to the wharf at Oro Bay on Sundays as that was when a Lutheran Shipping ship would arrive and then depart on the return journey to Lae. This was well known. If there was any variation to the schedule Lutheran Shipping would notify the port authority, which then was PNG Harbours Ltd. Lutheran Shipping had no office at Oro Bay so people relied on PNG Harbours to get information on shipping movements.

2. On Sunday 2 November 2003 Mr Kuk took 62 bags of betel nut that he had purchased at Popondetta to the Oro Bay wharf and waited for the ship MV Rita. It did not come until Wednesday 5 November. Mr Kuk boarded the ship, which set sail for Lae. He purchased a passenger ticket on board and, in accordance with the normal practice, was intending to pay for the costs of his cargo on arrival in Lae. By the time the ship arrived in Lae the betel nut was spoiled. It had no economic value.

3. Mr Kuk is now suing the defendant, Kambang Holdings Ltd, the owner and operator of Lutheran Shipping claiming damages of K25,420.00 for breach of contract and negligence.

4. Four issues arise:

1	Is the defendant liable in breach of contract?

2	Is the defendant liable in negligence?

3	If liability is established, what damages, if any, should be awarded to the plaintiff?

4	Should an award of interest be made in favour of the plaintiff?

1 IS THE DEFENDANT LIABLE IN BREACH OF CONTRACT?

5. Breach of contract appears to be the primary cause of action pleaded in the statement of claim. However, I agree with Ms Tunian, for the defendant, that the only contract Mr Kuk entered into with the defendant was the contract to carry him as a passenger safely from Oro Bay to Lae. There was no contract for carriage of the betel nut as no prior arrangement had been made and Mr Kuk did not pay anything to the defendant for its carriage. He was so upset, upon realising the condition of the betel nut, that when he arrived in Lae he refused to pay anything more to the defendant.

6. If there is no contract, there can be no cause of action in breach of contract. Therefore this part of the plaintiff's case fails.

2 IS THE DEFENDANT LIABLE IN NEGLIGENCE?
7. The statement of claim is drafted in sufficiently broad terms to accommodate an alternative claim in negligence, which is a tort (a civil wrong) consisting of a number of elements (Kembo Tirima v Angau Memorial Hospital (2005) N2779). The plaintiff must prove that:

(a)	the defendant owed him a duty of care;

(b)	the defendant breached that duty (ie acted negligently – other than a reasonable person in its position would have);

(c)	the breach of duty caused him damage; and

(d)	the type of damage was not too remote.

8. As to (a), I consider that the defendant, being a regular provider of shipping services to and from Oro Bay, had a duty of care to prospective shippers (customers) to give ample notice of any changes in its schedule.

9. As to (b), there was, it appears, no statutory obligation imposed on the defendant to notify PNG Harbours or the public of its change of schedule. However, a reasonable shipping line, with knowledge of how heavily passengers and businesspeople rely on regular and timely shipping services, would appreciate the importance of giving advance notice of a change in its schedule. Here, there was evidence in the form of a statement by PNG Harbours' then Senior Wharf Superintendent at Oro Bay that no notification of a change in schedule was given:

… Lutheran Shipping and Rabaul Shipping do not have agents representing them here at Popondetta to provide ship movement information and other related matters.

As such regular clients and business houses took it for granted that every Saturday of the week is serviced by Rabaul Shipping and Sundays by Lutheran Shipping unless changes in schedules or diversion of a vessel is provided in advance to PNG Harbours Ltd.

With the above I insist that it was normal for MV Rita to call into Oro Bay on the 2nd November 2003.

10. The defendant adduced evidence of its Lae Operations Schedule for November 2003, which shows that MV Rita was due to sail Voyage No 660X, from Oro Bay to Lae on Wednesday 5 November. The ship sailed according to the schedule and there was no negligence on the part of the defendant, it was argued. This misses the point that the alleged negligence was the lack of notice of the change in schedule. I am satisfied that there was in fact a change in schedule and that the defendant's failure to notify the port authority of the change was a negligent omission.

11. As to (c), the causation element of the tort of negligence is satisfied as the defendant's negligent omission caused economic loss to the plaintiff.

12. Finally, (d): the type of damage the plaintiff incurred was not too remote. It was the type of damage that was reasonably foreseeable.

13. The plaintiff has proven liability in negligence.

3 WHAT DAMAGES SHOULD BE AWARDED TO THE PLAINTIFF?

14. The plaintiff is claiming:

•	general damages of K12,400.00 (calculated by multiplying the number of bags of betel nut by the cost per bag: 62 x K200.00 = K12,400.00); and

•	special damages of K620.00 (calculated by multiplying the number of bags of betel nut by the cost of transporting each bag from Popondetta to Oro Bay: 62 x K10.00 = K620.00); and

•	economic loss of K12,400.00 (calculated by multiplying the number of bags of betel nut by the estimated 100% profit per bag: 62 x K200.00 = K12,400.00); being

•	total damages of K25,420.00.
 
15. There is very little evidence to support these claims and I am going to have to come up with an estimate of what is reasonable (Daniel Occungar v Luke Kiliso (2010) N4102). The defendant wants me to award the plaintiff nothing but I do not think that would be doing justice to anybody. The plaintiff has proven that his betel nut was rendered worthless because of the defendant's negligence, and judicial notice can be taken of the fact that betel nut is a valuable and treasured commodity. As to how much betel nut was in each bag and how much the plaintiff paid for them, these are the sorts of facts of which there is little or no evidence. So I will heavily discount the amount of damages claimed and work on a figure of damages of K100.00 per bag: 62 x K100.00 = K6,200.00.

16. The award of damages must be reduced further still, as I am satisfied that the plaintiff failed to mitigate his losses and was guilty of contributory negligence. Once the ship did not turn up on Sunday he should have tried to dispose of the betel nut then and there rather than waiting another two days by which time he should have known that the prospects of it surviving the voyage to Lae were bleak. I deduct K1,200.00 and arrive at a total award of damages of K5,000.00.

4 SHOULD AN AWARD OF INTEREST BE MADE?

17. In the statement of claim the plaintiff claimed interest under the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. Section 1(1) is the appropriate provision. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this provision confers a four-fold discretion on the Judge: (a) whether to grant interest at all; (b) to fix the rate; (c) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (d) to fix the period for which interest will run. I exercise that discretion in the following way:

(a)	A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. The Court will order that interest be included in the sum for which judgment is given.

(b)	The conventional rate of interest is 8%. In view of current economic conditions in the country I think 8% is the proper rate of interest.

(c)	Interest should be payable on the whole of the sum for which judgment is given.

(d)	The appropriate period is the whole of the period between the date on which the cause of action arose and the date of the judgment. The cause of action arose on the day the ship failed to arrive when it was scheduled to, 2 November 2003. The date of judgment is 13 May 2011. The appropriate period, for the sake of mathematical convenience, is 7.5 years.

18. I calculate the amount of interest by applying the following formula:

•	D x I x N = A

Where:

•	D is damages;
•	I is the rate of interest;
•	N is the numbers of years;
•	A is the amount of interest.

Thus:

•	K5,000.00 x 0.08 x 7.5 = K3,000.00.

COSTS

19. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. In view of the amount of damages claimed by the plaintiff, K25,420.00, both sides have had a victory of sorts. It is appropriate in these circumstances that they pay their own costs.

ORDER

(1)	The defendant is liable in negligence to the plaintiff, who has established that he is entitled to damages.
 
(2)	The defendant shall pay to the plaintiff damages of K5,000.00, plus interest of K3,000.00, being a total judgment sum of K8,000.00.

(3)	The parties shall bear their own costs.

(4)	Time for entry of the order is abridged to the date of settlement by the Registrar which shall take place forthwith.

Orders accordingly.
____________________________
Kunai & Co Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the Defendant