N5895
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 941 of 2012

BETWEEN:

THOMAS TULIN
Plaintiff

AND:

TOYOTA TSUSHO (PNG) LIMITED
Trading as ELA MOTORS
Defendant

Waigani: Hartshorn J.
2014: April 9th, 14th,
2015: January 30th

Trial

Case:

Paal Wilson & Co v. Partenreederei [1983] A.C. 854

Counsel:

 R. Lains, for the Plaintiff
 T. Anis, for the Defendant

30th January, 2015

1. HARTSHORN J. The plaintiff alleges that he entered into a contract with the defendant to purchase two new five door Toyota Land Cruiser vehicles. The vehicles were not delivered and as a result he suffered loss. The plaintiff claims amongst others, damages including over K 2.1 million for what is alleged to be lost income. The defendant denies the plaintiffs claim.

2. The plaintiff in his amended statement of claim pleads amongst others that:

a) the plaintiff entered into a lease agreement on or about 31st August 2011 with Taquali Development Corporation Ltd (TDL) for TDL to lease for five years from the plaintiff, two five door Toyota Land Cruiser vehicles that the plaintiff would purchase;

b) consequent to the lease agreement the plaintiff entered into an agreement to sell with the defendant for the plaintiff to purchase two new five door Toyota Land Cruiser vehicles for K255,800. The defendant agreed to sell the vehicles within two weeks;

c) the plaintiff paid K255,800 to the defendant on 7th November 2011;

d) the defendant failed to deliver the goods;

e) as a result of the defendants non-delivery of the goods, TDC terminated its lease agreement with the plaintiff on 13th February 2012;

f) the plaintiff has suffered damage as a consequence.

3. The defendant in its amended defence pleads amongst others that:

a) it does not know, cannot admit and denies liability in regard to the lease agreement between TDC and the plaintiff;

b) there was no agreement to sell as alleged. The plaintiff offered to purchase two vehicles. The defendant informed the plaintiff of its normal customer terms and conditions, one of which was that it may accept an offer from a customer subject to the availability in its stock of the vehicles requested by the customer;

c) pursuant to normal acceptable practice, customers may make advance payments regardless of the availability of stock. The customer may withdraw advance payments for any reason at any time;

d) the defendant cannot guarantee delivery of vehicles on time and so there is an exit clause express or implied that the defendant can only accept an offer subject to availability;

e) in this instance the vehicles were not available at the material time;

f) the plaintiff requested for a refund and he was paid back his full deposit.

4. The parties agreed six issues for trial in a "statement of agreed and disputed facts and legal issues" that was filed on 22nd January 2014. They are:

i) whether there was a legally binding contract between the parties for the sale, purchase and delivery of the vehicles;

ii) if so, whether the material terms of the contract include availability of stock of the vehicles from the defendant's yard;

iii) were there stocks available at the material time?;

iv) whether the defendant breached the agreement when it failed to deliver the two vehicles to the plaintiff;

v) whether the plaintiff, by his action in not requesting the return of his funds earlier, is estopped from seeking damages against the defendant;

vi) if the court finds the defendant liable, what is the applicable relief and how much should be awarded to the plaintiff?

5. I will consider these issues after deciding a preliminary issue raised by the defendant.

Preliminary issue

6. The defendant submits that the plaintiff is not able to rely upon provisions of the Goods Act Ch. No. 251, as he purports to do in his extract of argument, and as he did in his oral and written submissions. This is because the plaintiff has not pleaded that he would be making a statutory claim and has not made reference in his pleading to the Goods Act or the particular provisions upon which he places reliance. Consequently submits the defendant, it has been taken by surprise by the submissions concerning the Goods Act.

7. From a perusal of the amended statement of claim, the amended reply to defence and the statement of agreed and disputed facts and legal issues, there is no reference made to provisions of the Goods Act by the plaintiff. 

8. Order 8 Rule 14 National Court Rules requires that amongst others, in a subsequent pleading a party shall plead specifically any matter which, if not pleaded specifically, may take the opposite party by surprise. Here there is no reference to provisions of the Goods Act in the amended reply to the defence, a subsequent pleading.

9. Given the above, I am satisfied that the defendant has been taken by surprise by the reliance of the plaintiff on provisions of the Goods Act. Consequently, the plaintiff is not able to rely upon the provisions of the Goods Act and I will not consider his submissions in that regard.

Issues 1, 2 and 3

10. The defendant submits amongst others that:

a) the defendant's offer to the plaintiff was conditional, that is, it was subject to the availability of its stock as per the specifications and descriptions specified in the quotation which was provided to the plaintiff;

b) the plaintiff paid the full amount of K255,800 to the defendant for the vehicles but the defendant submits that the implied condition in the offer was that the offer was subject to the availability of stock and the defendant did not have stock at the material time;

c) as the implied condition was not met, the plaintiff requested for a refund of the purchase price which the defendant did refund in full;

d) consequently the defendant submits that its offer was withdrawn/cancelled or was void and no contract existed between the parties. 

11. If there was a valid agreement between the parties, the defendant submits amongst others that:

a) an express material term of the agreement was that it was subject to the availability of stock;

b) the agreement was pending at the material time as the defendant was awaiting the availability of stock which had been "back-ordered" from Japan;

c) the plaintiff did not want to wait and requested a refund which was paid by the defendant. 

12. In essence, the defendant submits that any agreement between it and the plaintiff was conditional upon the defendant having the vehicles that the plaintiff had specified available to be supplied to the plaintiff, and that at the material time the defendant did not have that availability.

13. The defendant's quotation dated 28th October 2011 in evidence that was given to the plaintiff is for two vehicles with certain specifications. It does not specify individual vehicles. The defendant is able to argue at this point that if the quotation is accepted, any agreement that emanated was subject to availability of stock. It is not necessary to consider the merits of this argument in my view. This is because on the 8th and 10th November 2011, the defendant issued two invoices to the plaintiff for the two vehicles. These invoices are in evidence. These invoices specify individual vehicles by referring to the engine numbers and the stock numbers. It is clear in my view that the defendant by its relevant employees, knew precisely which vehicles were to be sold to the plaintiff and were the subject of the agreement with the plaintiff.

14. The evidence given by Willard Stephen on behalf of the defendant as to amongst others, the non-availability of vehicles of the type requested by the plaintiff, does not address the invoices and the particulars contained therein. Further, he does not address how, if the vehicles were not available, the engine numbers and stock numbers were able to be specified in the invoices. I am satisfied on the balance of probabilities that the two vehicles specified in the invoices were available at the defendant's yard when the invoices were generated.

15. I am of the view that if the agreement between the plaintiff and the defendant was conditional upon the availability of stock, the agreement became unconditional when the invoices were given to the plaintiff.

16. Given the above, I am satisfied that there was a binding contract between the parties for the sale, purchase and delivery of the specific vehicles and that the two vehicles were available at the time the invoices were generated.

Issue 4

17. The plaintiff submits that the defendant has breached the agreement by not delivering the two vehicles despite numerous requests by the plaintiff for delivery. The plaintiff then makes claim for damages pursuant to amongst others, the Goods Act. I have already considered the plaintiff's submissions concerning the Goods Act in paragraphs 6 to 9 above.

18. The defendant submits amongst others that:

a) the agreement between the parties was never discharged or terminated by the plaintiff and the plaintiff has not produced any evidence to prove otherwise;

b) the plaintiff has only produced evidence of a contract it had purportedly entered into with a third party which was purportedly terminated in February 2012. This third party contract has nothing to do with the plaintiff's agreement with the defendant;

c) the parties mutually abandoned the agreement between them.

19. The plaintiff did not make submissions on whether the agreement between the parties was abandoned, apart from denying that it was.

20. The defendant submits that the law on abandonment appears settled. It is that if both parties treat a contract as being at an end, it must be regarded as discharged even if there is no contract between them to that effect. 

21. The defendant submits that, amongst others, it did not breach the terms of the agreement between the parties, and that the parties mutually abandoned the agreement when the plaintiff requested and the defendant refunded to the plaintiff the total amount paid by him. 

22. It is not in dispute that the plaintiff did not receive delivery of the two vehicles and that as stated in paragraph 1 (f) of the statement of agreed and disputed facts and legal issues:

"The Defendant returned back the Plaintiff's money that is K255, 800.00 on or around April 2012, upon the Plaintiff's request."

23. As to "abandonment of a contract", I have had recourse to the case of Paal Wilson & Co v. Partenreederei [1983] A.C. 854, a decision of the House of Lords and persuasive in our jurisdiction. At 914, Lord Brandon of Oakbrook said:

"The concept of the implied abandonment of contract as a result of the conduct of the parties to it is well established in law: see Chitty on Contracts, 23rd ed. (1968), vol. 1, p. 577, para. 1231, and cases there cited. Where A seeks to prove that he and B have abandoned a contract in this way, there are two ways in which A can put his case. The first way is by showing that the conduct of each party, as evinced to the other party and acted on by him, leads necessarily to the inference of an implied agreement between them to abandon the contract. The second method is by showing that the conduct of B, as evinced towards A, has been such as to lead A reasonably to believe that B has abandoned the contract, even though it has not in fact been B's intention to do so, and that A has significantly altered his position in reliance on that belief. The first method involves actual abandonment by both A and B. The second method involves the creation by B of a situation in which he is estopped from asserting, as against A, that he, B, has not abandoned the contract: Pearl Mill Co Ltd v. Ivy Tannery Co Ltd [1919] 1 K.B. 78."

and then at 924, Lord Brightman said:

"To entitle the sellers to rely on abandonment, they must show that the buyers so conducted themselves as to entitle the sellers to assume, and that the sellers did assume, that the contract was agreed to be abandoned sub silentio. The evidence which is relevant to that inquiry will consist of or include: (1) What the buyers did or omitted to do to the knowledge of the sellers. Excluded from consideration will be the acts of the buyers of which the sellers were ignorant, because those acts will have signalled nothing to the sellers and cannot have founded or fortified any assumption on the part of the sellers. (2) What the sellers did or omitted to do, whether or not to the knowledge of the buyers. These facts evidence the state of mind of the sellers, and therefore the validity of the assertion by the sellers that they assumed that the contract was agreed to be abandoned. The state of mind of the buyers is irrelevant to a consideration of what the sellers were entitled to assume. The state of mind of the sellers is vital to a consideration of what the sellers in fact assumed."

24. In this instance, the defendant submits that it was entitled to assume and did assume that the plaintiff had abandoned the agreement when he requested a refund of the money that he had paid as the purchase price. The defendant accepted the plaintiff's position and refunded the money to the plaintiff and the plaintiff accepted the refund. The defendant, by making a full refund to the plaintiff, changed its position by abandoning its right to enforce the agreement. In making the refund after the plaintiff's request, the defendant assumed that the agreement had been abandoned, that each party had been returned to their original positions and that neither party had any claim against the other. Further, the plaintiff did not give any notice to the defendant that he reserved any rights that he may have had against the defendant in respect of the agreement.

25. From the evidence, I am satisfied that the agreement between the parties was abandoned by the conduct of the plaintiff, that the defendant was entitled to and did make that assumption and changed its position as a consequence.

26. Further, I agree with the submissions of the defendant that by his conduct, the plaintiff is estopped from bringing this claim. This is because he requested, received and accepted a refund of the funds he had paid, and did not reserve any rights that he may have had against the defendant in respect of the agreement. 

27. Consequently the plaintiff is not entitled to the relief that he seeks. Given this, it is not necessary to consider the other submissions of counsel.

Orders

28. The formal Orders of the Court are:

a) this proceeding is dismissed.

b) the plaintiff shall pay the defendant's costs of and incidental to the proceeding.

c) time is abridged.
____________________________________________________________
Steeles Lawyers: Lawyers for the Plaintiff 
Bradshaw Lawyers: Lawyers for the Defendant