Tulin v Toyoto Tsusho (PNG) Ltd [2016] PGSC 71; SC1555 (13 December 2016)

SC1555

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV.NO. 46 OF 2015

Review Pursuant To Constitution Section 155(2)(B)
In The Application By:
THOMAS TULIN

Applicant

AND
TOYOTA TSUSHO (PNG) LIMITED trading as ELA MOTORS

Respondent

Waigani: David J, Higgins &Lindsay JJ
2016: 13^th December

BREACH OF CONTRACT – damages for non-delivery of goods – s.51 Goods Act 1951 – whether an estoppel arises from demand for refund of the price paid – it does not – whether plaintiff purchaser thereby abandons right to damages – he does not – measure of damages including loss of chance to profit from third party contract.

PNG Cases cited:
Iamase v Motor Vehicles Insurance PNG Trust[1992] PNGLR 244
Polem Enterprises v AG[2006] PBNC28

Overseas Cases cited:

Back v Glenleigh Homes Pty Limited [2006] NSWCA 10
Central London Property Trust v High Trees House Ltd [1947] KB130
Clark v Macourt [2013] HCA 56
Commonwealth v Verwayen (1990) 170 CLR 394
Hadley v Baxendale [(1854) I Exch 341; 156 ER 145
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
Singh v Mishra [2013] FJHC 270
Tabcorp Holdings v Bowen Investments Pty Ltd [2009] HCA 8

Counsel:
Mr. Randop Lains, for the Applicant
Mr. Robert Bradshaw, for the Respondent

JUDGMENT

13^th December, 2016

1. BY THE COURT: In this matter the facts were not in dispute. The construction to be placed upon those facts certainly was.
   
2. The plaintiff/appellant/applicant sought to purchase from the defendant/respondent 2 Toyota Land Cruiser vehicles. A price of K255, 800 was agreed between the plaintiff and the defendant. The purpose of the purchase so far as the plaintiff was concerned was to enable him to perform a lease agreement he had entered into with Taquali Development Corporation Limited (TDL) for that company to hire as needed those vehicles at an agreed rental. The term of that agreement, dated 31 August 2011, was for 5 years. Despite a promise of delivery of the vehicles in 2 weeks from payment, that date being 7 November 2011, the defendant failed to deliver the vehicles even though it had, as the trial judge found, two vehicles available and designated for delivery to the plaintiff. Nevertheless, despite repeated requests, it failed to effect delivery.
   
3. The third party contract was terminated in February 2012, albeit that the plaintiff was never, by reason of the defendant’s default, in a position to provide vehicles pursuant to it.
   
4. The plaintiff then demanded a return of the money he had paid. This was finally effected in April 2012.
   

4A. this is an appeal against a decision by Poole J dismissing the plaintiff’s action for damages for breach of the agreement.

5. His Honour found the issue to be whether, by demanding and accepting a refund of his money and thereby relieving the defendant of any further obligation to provide the vehicles, the plaintiff had “abandoned” the contract. That was the inference he drew.
   
6. However, the correct inference to be drawn, in my view, was that the plaintiff was terminating the agreement by reason of the breach by the defendant of the most fundamental term of it, that being the timely delivery of the two vehicles. By then the plaintiff had lost the opportunity to turn his ownership of the vehicles into profit in reliance on the TDL agreement. The inference that he was abandoning any remedy for breach of the agreement was not reasonably open.
   
7. His Honour also found that the defendant had “changed its position” as a consequence of the plaintiff’s demand for his money back and was estopped from making any other claim. In truth, the defendant’s position was not altered to its detriment, a fundamental requirement for an estoppel as laid down in the classic decision of Denning LJ in the High Trees case (Central London Property Trust v High Trees House Ltd [1947] KB130).
   
8. That principle has been accepted both in Australia (see Commonwealth v Verwayen (1990) 170 CLR 394), in Fiji, (Singh v Mishra [2013] FJHC 270) and although not expressly in PNG, I have no doubt that it forms part of the underlying law (see Polem Enterprises v AG[2006] PBNC28).
   
9. His Honour sought to apply that principle expressing it as follows:

“[26] Further, I agree with the submission 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 he may have had against the defendant in respect of the agreement.”

10. However, as Iamase v Motor Vehicles Insurance PNG Trust [1992] PNGLR 244 makes clear, the representation to be relied upon as estopping the party making it, must be a promise not to enforce rights otherwise accruing in law so that the other party alters his, hers or its position to their detriment in reliance on the promise.
    
11. The plaintiff clearly had a right, on termination of the agreement, to be awarded damages for any consequential loss arising from the breach which was reasonably foreseeable by the parties.
    
12. The case of Tabcorp Holdings v Bowen Investments Pty Ltd [2009] HCA 8 is instructive. A tenant in breach of its lease “renovated” the foyer of the leased premises. The trial judge awarded damages based merely upon the diminution in value of the building. The Full Court of the Federal Court awarded the cost of reinstatement of the foyer. The High Court affirmed that the general rule is that the party who sustains loss as a result of a breach of contract is to be put, so far as damages can do it, in the same situation as if the contract had been performed. In the present case, the plaintiff was entitled to have the contract performed as agreed so that he could take advantage of the profits reasonably to be expected from his timely performance of the TDL agreement.
    
13. In Clark v Macourt [2013] HCA 56, the High Court discussed the principles underlying the award of damages where, as here, there had been failure to provide goods to be used in a business. Hayne J noted that the measure of loss was the benefit lost to the promisee if the promisor had not defaulted. In that case, the promisee obtained equivalent stock from another supplier. Crennan & Bell JJ similarly agreed upon the principle to be applied. So also did Gageler J who also noted at [62] that expectation damages (eg loss of prospective profits), are only for non-fulfilment of an expectation that could reasonably be supposed to be within the contemplation of the parties when they entered into the agreement.
    
14. The principal Judgment was that of Keane J, Gageler J dissented on grounds not material for present purposes. His Honour dealt with the contention that the availability of an alternate supply of goods negated any loss.
    
15. At [119] his Honour stated:

“Under the rule in Hadley v Baxendale [(1854) I Exch 341; 156 ER 145],the entitlement of a plaintiff to recover damages for breach of contract is limited to such damages as arise naturally, that is, according to the usual course of things, from the breach of contract, or such damages as may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of the breach.”

16. In Clark v Macourt(supra), the goods in question were a part (being stock) of a business sold for $386,950.91but the loss attributed to stock not delivered was $1,246,025.01. That, his Honour noted, at [135], was simply a consequence of the better bargain obtained by the purchaser. It was the revenue that stock was able to generate if sold by the purchaser as part of the business.
    
17. In like manner, it is no objection to an award of damages to the purchaser in this case that equivalent vehicles were obtainable for the sum paid to the vendor or less. In fact, the only vehicles which would have met the TDL contract were those to be supplied by the defendant.
    
18. It is clear enough that a loss of opportunity to earn monies will sound in damages. (see Malec v JC Hutton Pty Ltd (1990) 169 CLR 638).
    
19. There is, of course, a duty upon the plaintiff to mitigate his loss. It is a requirement of that duty that the plaintiff act reasonably. (see Back v Glenleigh Homes Pty Limited [2006] NSWCA 10 (per Handley JA @ [5]).
    
20. The plaintiff swears that he informed Kassman Api and Monica Kundi, employees of the defendant, of his agreement with TDL and requested that the vehicles be registered in the name of TDL accordingly. The defendant relied in defence only upon a “pre-condition” of stock availability and a denial of such availability. That latter contention was rejected by the trial judge.
    
21. In relation to damages, the defendant conceded that, if estoppel failed as a defence, it should pay interest on the monies it had held for the period the plaintiff was left out of his money. It contended that the third party contract was irrelevant.
    
22. With respect, that submission misunderstands the nature of the award of damages for breach of contract. If a potential loss is of a special nature, it is only if the vendor is aware of that potential loss at the time of the sale agreement that the vendor will be liable for the damage arising from that potential loss. Here the question was simply, whether the defendant was aware, when it agreed to sell the vehicles to the plaintiff that he intended to lease them to a third party for profit.
    
23. Whilst his Honour correctly observed that the plaintiff’s Amended Statement of Claim did not plead reliance upon the Goods Act 1951, it is the case that that Act merely codifies the underlying law on the sale of goods. As the Act itself recites, it is an Act:

“... to consolidate the law relating to dealings in goods.”

24. The instant claim, therefore, was not a statutory claim. It sought damages for the non-delivery of goods. Section 51of the Goods Act reflects the common law rules as first affirmed in Hadley v Baxendale (supra). It is the application of the law of contract to damages for non-delivery of goods.
    
25. From the foregoing, it seems to me that his Honour unfortunately fell into error being led down the path of “abandonment” of the contract. The plaintiff at no stage represented that, if he got his money back, there would be no claim for damages for non-delivery of the vehicles.
    
26. The evidence was that he had made known the purpose of his purchase of the vehicles and, hence obtained a promise to obtain delivery within 2 – 3 weeks, a time he allowed to extend until his third party contract was withdrawn. It follows that he was entitled to damages for the lost opportunity to make a profit from the lease of the vehicles as well as the costs of his attempts to obtain delivery.
    
27. It was not for him to prove that he had not represented to the defendant that he was foregoing his rights to damages on refund of his money. It was for the defendant, if relying on estoppel in pais, to establish those relevant facts.
    
28. That is quite apart from the fact that the only issue pleaded by the defendant was an assertion that it had not promised to supply the vehicles in question.
    
29. Of course, the quantum of damages remains a real issue. It is clear that the plaintiff was unlikely to have let the vehicles for 5 years at the agreed rental. Also, the payment made to the defendant represented a revenue stream that would have been foregone, to be offset by the payments from TDL.
    
30. In those circumstances, we uphold the appeal and remit the matter back to the National Court to assess damages.
    
31. The respondent should pay the costs of the appeal to be taxed if not agreed.
    

__________________________________________________________________
Putupen Lawyers : Lawyers for the Applicant
Bradshaw Lawyers: Lawyers for the Respondent